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Pioneer Natural Resources Company Reports First Quarter 2020 Financial and Operating Results
President and CEO
“Drilling and completions efficiencies continued to improve, exceeding full-year 2020 targets in the first three months of the year, resulting in well cost reductions and greater capital efficiency than expected. This led to materially underspending our first quarter capital budget and underpins our revised full-year program that maintains similar production to 2019 levels while achieving a 55% reduction3 to our original capital budget.
“Pioneer entered this difficult environment with one of the strongest balance sheets in the sector and it is our plan to emerge from this downturn in a similar position. As evidenced by our additional capital reduction and other cost reduction initiatives, our business plan remains flexible and responsive to economic conditions. I am confident that our strong balance sheet, world-class assets and dedicated employees are competitive advantages that will continue to differentiate Pioneer.”
Pioneer maintains a strong balance sheet, with unrestricted cash on hand at the end of the first quarter of
During the first quarter, the Company’s drilling, completion and facilities capital expenditures totaled
Cash flow from operating activities during the first quarter was
For the first quarter, the average realized price for oil was
Production costs, including taxes, averaged
Pioneer continued to see strong efficiency gains during the first quarter, enabling the Company to place 85 horizontal wells on production. Drilling operations averaged greater than 1,100 feet per day and completions showed a similar trend, delivering greater than 1,750 completed feet per day, both surpassing full-year 2020 expectations within the first quarter. These accelerated efficiency gains, coupled with service cost deflation, are reducing well costs and significantly improving capital efficiency.
Additionally, the Company remains focused on lowering operating costs and expects a reduction of
The Company continues to transport oil, NGLs and gas from the
Full-Year 2020 Update
The Company expects its revised 2020 drilling, completions and facilities capital budget to range between
During the second quarter through the fourth quarter of 2020, the Company plans to operate an average of five to eight horizontal rigs in the
The Company continues to monitor the fluid macroeconomic environment and remains flexible and responsive to changing market conditions to preserve its strong balance sheet. Pioneer expects revised 2020 oil production to average 198 to 208 MBOPD and total production of 341 to 359 MBOEPD, which includes current voluntary curtailments of approximately 7 MBOPD. The Company’s production outlook does not include the potential for any additional curtailments. Due to the unprecedented volatility and uncertainty in commodity markets, the Company's quarterly production guidance is suspended.
Pioneer continues to maintain substantial oil derivative coverage in order to protect the balance sheet, providing the Company with operational and financial flexibility throughout this period. The Company’s financial and derivative mark-to-market results and open derivatives positions are outlined in the attached schedules.
Second Quarter 2020 Guidance
Production costs are expected to average
Environmental, Social & Governance
Pioneer views sustainability as a multidisciplinary focus that balances economic growth, environmental stewardship and social responsibility. The Company emphasizes developing natural resources in a manner that protects surrounding communities and preserves the environment.
Pioneer is focused on reducing emissions and emission intensities. Between 2016 and 2018, the Company's greenhouse gas (GHG) emissions have been reduced by 24%, total GHG emission intensity has decreased by 38% and methane intensity has declined by 41%. Additionally, between
Socially, Pioneer maintains a proactive safety culture, supports a diverse workforce and inspires teamwork to drive innovation. The Board of Directors has a
For more details, see Pioneer’s 2019 Sustainability Report at pxd.com/sustainability.
Earnings Conference Call
Telephone: Dial 800-949-2175 and enter confirmation code 6548030 five minutes before the call.
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, the impact of a widespread outbreak of an illness, such as the COVID-19 pandemic, on global and
Footnote 1: Free cash flow is a non-GAAP measure, see reconciliation to comparable GAAP number in supplemental schedules.
Footnote 2: Excludes acquisitions, asset retirement obligations, capitalized interest, geological and geophysical G&A and corporate facilities.
Footnote 3: Reflects midpoints of capital guidance ranges.
Footnote 4: Unusual items include the following: (i)
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 periods in which the Company realizes net income attributable to common shareholders, the Company's basic net income per share attributable to common shareholders 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. 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 Company's net income attributable to common stockholders is reconciled to basic and diluted net income attributable to common stockholders as follows:
EBITDAX, discretionary cash flow ("DCF") (as defined below) and net debt to trailing twelve months EBITDAX are presented herein, and reconciled to the GAAP measures of net income 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, DCF and net debt to trailing twelve months EBITDAX 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 or net cash provided by operating activities, as defined by GAAP.
The Company's net debt to trailing twelve months EBITDAX is calculated as follows:
Adjusted income attributable to common stockholders excluding noncash mark-to-market ("MTM") adjustments and income attributable to common stockholders excluding noncash MTM adjustments and unusual items are presented in this earnings release and reconciled to the Company's net income attributable to common stockholders (determined in accordance with GAAP), as the Company believes these non-GAAP financial measures reflect an additional way of viewing aspects of the Company's business that, when viewed together with its GAAP financial results, provide 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 these non-GAAP financial measures may enhance investors' ability to assess the Company's historical and future financial performance. These non-GAAP financial measures are not intended to be a substitute for the comparable GAAP financial measure and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP. Noncash MTM adjustments and unusual items may recur in future periods; however, the amount and frequency can vary significantly from period to period.
The Company's net income attributable to common stockholders as determined in accordance with GAAP is reconciled to income adjusted for noncash MTM adjustments including (i) the Company's derivative positions, (ii) contingent consideration attributable to the 2019
Free cash flow ("FCF") is a non-GAAP financial measure. As used by the Company, FCF is defined as net cash provided by operating activities, adjusted for changes in operating assets and liabilities, less capital expenditures. The Company believes this non-GAAP measure is a financial indicator of the Company’s ability to internally fund acquisitions, debt maturities, dividends and share repurchases after capital expenditures.
Pioneer Natural Resources Company Contacts:
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