Parsley Energy Inc. (NYSE: PE) sold off a portion of its nonoperated properties in the Permian Basin while reporting that company production stumbled and capex soared in fourth-quarter 2017.

The Austin, Texas-based company said it recently closed the sale of about 10,000 net acres in Martin, Howard, Reagan, Irion, Dawson, and Pecos counties in Texas for about $57 million. The assets averaged about 600 barrels of oil equivalent per day (boe/d), according to an operational update released after market close on Jan. 29.

Parsley said its divestiture is part of an ongoing initiative to high-grade the company’s acreage portfolio. The company made similar statements in third-quarter 2017, saying 2018 would include an emphasis on “portfolio optimization.”

Gabriele Sorbara, an analyst for The Williams Capital Group, senior equity analyst for The Williams Capital Group, said the assets sold at a “disappointing valuation.”

At $57 million, “the valuation falls short of our recently reduced estimate for this portion of the package, which was $130 million,” he said. “Recall, this was mostly acreage acquired from Double Eagle Energy in 2017.”

In April, Parsley bought about 71,000 net acres from Midland E&P Double Eagle Energy Permian LLC for $2.8 billion. Parsley estimated its Midland acreage costs at $20,000 per acre and the Delaware at $32,000 per acre.

Parsley’s acreage sale commanded between $3,000 and $3,600 per acre, said Kashy Harrison, a senior research analyst for Piper Jaffray & Co. The nonoperated acreage typically carries a discount for lack of control.

“Further, the majority of the acres divested were in lower value regions” including some not represented on the company’s acreage map. Despite the aforementioned, the valuation on the divestiture may end up screening light relative to expectations coming into the quarter.”

The divestitures already represent a drag on Parsley’s 2018 performance. Parsley’s operational update also noted that freezing weather and its divestiture would reduce its 2018 production growth estimates by 3.6% to between 65,000 boe/d to 70,000 boe/d. The company still anticipates year-over-year growth of 50% at the midpoint.

The company also expects capex to hit the high end of its $1.55 billion guidance due to likely service and equipment cost inflation. The company’s fourth-quarter 2017 capex was expected to be about $415 million, higher than the $360 million analysts anticipated, Harrison said. In part the additional spending was related to saltwater disposal rigs that were used in the fourth quarter rather than the start of 2018.

Parsley CEO Bryan Sheffield, who will leave his role to become executive chairman at the end of the year, said the company ended a transformational year “with substantial resource discovery, sizable acquisitions, a peer-leading activity ramp and compelling volume growth through which we are benefitting disproportionately from higher oil prices.”

“Our focus now turns to a simplified 2018 development program that applies 2017 delineation and testing results and will increasingly be characterized by more familiar areas, proven configurations and calibrated designs as we move through the year,” he said.

Darren Barbee can be reached at dbarbee@hartenergy.com.

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