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Pioneer Natural Resources Company Reports First Quarter 2018 Financial and Operating Results
Pioneer reported first quarter net income attributable to common
First quarter financial and operating highlights included:
Pioneer’s full-year 2018 update includes:
President and CEO
“Our cash flow continues to benefit from our strategy to enter into firm
transportation contracts for our increasing volumes of
“Our transition to a
“Looking forward, our deep, low-risk inventory of high-margin
Permian Basin Operations Update and Outlook
Pioneer is the largest acreage holder in the
The Company implemented a completion optimization program during 2015 in
Pioneer placed 47 Version 3.0 wells on production during the first quarter of 2018. The Company also placed 16 wells on production during the first quarter of 2018 that utilized higher intensity completions compared to Version 3.0 wells. These are referred to as Version 3.0+ completions. Results from the 20 Version 3.0+ wells completed in 2017 and early production results from the 16 Version 3.0+ wells that were placed on production in the first quarter of 2018 are significantly outperforming production from nearby offset wells with less intense completions. The Company originally planned to test approximately 45 Version 3.0+ completions during the first half of 2018, with the remaining wells for 2018 expected to be predominantly Version 3.0 completions. However, based on the success of the higher intensity completions to date, the Company is evaluating adding more Version 3.0+ completions in the second half of 2018.
The Company has entered into firm pipeline commitments to deliver
approximately 160 MBOPD, or 95% of current
The Company remains well positioned to move its
First Quarter 2018 Financial Review
Sales volumes for the first quarter of 2018 averaged 312 MBOEPD. Oil sales averaged 183 thousand barrels per day (MBPD), NGL sales averaged 66 MBPD and gas sales averaged 379 MMCFPD.
Similar to most companies, the Company adopted the new revenue
recognition standard Accounting Standards Update No. 2014-09 (ASC 606),
“Revenue from Contracts with Customers,” effective
The average realized price for oil was
Production costs, including taxes and the effects of ASC 606, averaged
Second Quarter 2018 Financial Outlook
The Company’s second quarter 2018 outlook for certain operating and financial items is provided below.
Total production is forecasted to average between 312 MBOEPD to 322
Production costs are expected to average
General and administrative expense is expected to be
The Company’s effective income tax rate is expected to range from 21% to
25%. Current income taxes are expected to be less than
The Company’s financial and derivative MTM results and open derivatives positions are outlined on the attached schedules.
Earnings Conference Call
Telephone: Dial 800-281-7973 and confirmation code 3052979 five minutes before the call. View the presentation via Pioneer’s internet address above.
A replay of the webcast will be archived on Pioneer’s website. This
replay will be available through
Pioneer is a large independent oil and gas exploration and production
company, headquartered in
Except for historical information contained herein, the statements in
this news release are forward-looking statements that are made pursuant
to the Safe Harbor Provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements and the business
prospects of Pioneer are subject to a number of risks and uncertainties
that may cause Pioneer’s actual results in future periods to differ
materially from the forward-looking statements. These risks and
uncertainties include, among other things, volatility of commodity
prices, product supply and demand, competition, the ability to obtain
environmental and other permits and the timing thereof, other government
regulation or action, the ability to obtain approvals from third parties
and negotiate agreements with third parties on mutually acceptable
terms, completion of planned divestitures, litigation, the costs and
results of drilling and operations, availability of equipment, services,
resources and personnel required to perform the Company’s drilling and
operating activities, access to and availability of transportation,
processing, fractionation, refining and export facilities, Pioneer’s
ability to replace reserves, implement its business plans or complete
its development activities as scheduled, access to and cost of capital,
the financial strength of counterparties to Pioneer’s credit facility,
investment instruments and derivative contracts and purchasers of
Pioneer’s oil, natural gas liquids and gas production, uncertainties
about estimates of reserves and resource potential, identification of
drilling locations and the ability to add proved reserves in the future,
the assumptions underlying production forecasts, quality of technical
data, environmental and weather risks, including the possible impacts of
climate change, cybersecurity risks, ability to implement planned stock
repurchases, the risks associated with the ownership and operation of
the Company’s industrial sand mining and oilfield services businesses
and acts of war or terrorism. These and other risks are described in
Pioneer’s Annual Report on Form 10-K for the year ended
“Return on Capital Employed (ROCE)” is a non-GAAP financial measure. As used by Pioneer, ROCE is net income adjusted for tax-effected interest expense, net noncash MTM derivative gains and losses and other unusual itemsdivided by the summation of average equity plus average net debt.
Pioneer may repurchase shares from time to time at management’s discretion in accordance with applicable securities laws, including through open market transactions, privately negotiated transactions or any combination thereof.In addition, shares may also be purchased pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws.The amount and timing of repurchases are subject to a number of factors, including stock price, trading volume and general market conditions, and the program may be modified, suspended or terminated at any time by Pioneer’s Board of Directors.The Company intends to fund repurchases under the program from existing cash flow, proceeds from asset divestitures or cash and cash equivalents.
This news release also contains a forward-looking non-GAAP financial measure, return on capital employed.Due to its forward-looking nature, management cannot reliably predict certain of the necessary components of the most directly comparable forward-looking GAAP measure, such as future noncash property impairments, gains or losses on future divestitures and future noncash MTM derivative gains and losses.Accordingly, Pioneer is unable to present a quantitative reconciliation of such forward-looking non-GAAP financial measure to its most directly comparable forward-looking GAAP financial measure.Amounts excluded from this non-GAAP measure in future periods could be significant.
Cautionary Note to U.S. Investors --The
The Company uses the two-class method of calculating basic and diluted earnings per share. Under the two-class method of calculating earnings per share, generally acceptable accounting principles ("GAAP") provide that share-based awards with guaranteed dividend or distribution participation rights qualify as "participating securities" during their vesting periods. During the periods in which the Company realizes net income attributable to common shareholders, the Company's basic net income per share attributable to common stockholders is computed as (i) net income attributable to common stockholders, (ii) less participating share-based basic earnings (iii) divided by weighted average basic shares outstanding and the Company's diluted net income per share attributable to common stockholders is computed as (i) basic net income attributable to common stockholders, (ii) plus the reallocation of participating earnings, if any, (iii) divided by weighted average diluted shares outstanding. During periods in which the Company realizes a net loss attributable to common stockholders, securities or other contracts to issue common stock would be dilutive to loss per share; therefore, conversion into common stock is assumed not to occur.
The following table is a reconciliation of the Company's net income (loss) attributable to common stockholders to basic and diluted net income (loss) attributable to common stockholders for the three months ended March 31, 2018 and 2017:
The following table is a reconciliation of basic weighted average shares
outstanding to diluted weighted average shares outstanding for the three
EBITDAX and discretionary cash flow ("DCF") (as defined below) are presented herein, and reconciled to the GAAP measures of net income (loss) and net cash provided by operating activities, because of their wide acceptance by the investment community as financial indicators of a company's ability to internally fund exploration and development activities and to service or incur debt. The Company also views the non-GAAP measures of EBITDAX and DCF as useful tools for comparisons of the Company's financial indicators with those of peer companies that follow the full cost method of accounting. EBITDAX and DCF should not be considered as alternatives to net income (loss) or net cash provided by operating activities, as defined by GAAP.
Income adjusted for noncash mark-to-market ("MTM") derivative losses, as
presented in this press release, is presented and reconciled to
Pioneer's net income attributable to common stockholders (determined in
accordance with GAAP) because Pioneer believes that this non-GAAP
financial measure reflects an additional way of viewing aspects of
Pioneer's business that, when viewed together with its financial results
computed in accordance with GAAP, provides a more complete understanding
of factors and trends affecting its historical financial performance and
future operating results, greater transparency of underlying trends and
greater comparability of results across periods. In addition, management
believes that this non-GAAP financial measure may enhance investors'
ability to assess Pioneer's historical and future financial performance.
This non-GAAP financial measure is not intended to be a substitute for
the comparable GAAP measure and should be read only in conjunction with
Pioneer's consolidated financial statements prepared in accordance with
GAAP. Noncash MTM derivative gains or losses will recur in future
periods; however, the amount and frequency can vary significantly from
period to period. The table below reconciles Pioneer's net income
attributable to common stockholders for the three months ended
Marketing derivatives. Periodically, the Company enters into buy and sell marketing arrangements to fulfill firm pipeline transportation commitments. Associated with these marketing arrangements, the Company may enter into index swap contracts to mitigate price risk.
The following table presents the Company's open marketing derivative positions as of May 1, 2018:
Pioneer Natural Resources Company
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