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Pioneer Natural Resources Company Reports Fourth-Quarter and Full-Year 2018 Financial and Operating Results; Provides 2019 Outlook
Fourth-Quarter and Full-Year 2018 Highlights
President and CEO
“In 2018, we again demonstrated a year-over-year increase in well productivity, while delivering best-in-class Permian cumulative oil production and oil composition. Our unique, low-cost basis Permian acreage, unencumbered by high cost acquisitions, generated a highly competitive return on capital employed of 9%.
“We embarked on many initiatives during 2018 to permanently streamline
the portfolio and increase corporate level returns. Throughout the year,
the Company diligently worked to divest non-core acreage and focused our
efforts on drilling high-return horizontal Permian wells. For 2019, the
substantial cost savings related to the strategic divestiture of our
pressure pumping assets and transition to
Pioneer continues to maintain a strong balance sheet with 2018 year-end
cash on hand of
Consistent with the Company’s focus on enhancing shareholder value,
Pioneer is committed to the return of capital to shareholders. The
Company increased its semiannual cash dividend in
Fourth Quarter Financial Results
For the fourth quarter, the average realized price for oil was
Production costs, including taxes, averaged
Pioneer placed 270 horizontal wells on production during 2018, of which 71 were placed on production during the fourth quarter. Well productivity continues to increase annually, with average cumulative production greater in 2018 as compared to the 2017 program. Many factors, such as incorporating data from machine learning into optimized completion designs and a focused approach to appraisal testing have contributed to the Company’s improving well productivity.
The Company’s second multi-zone Spraberry appraisal pad (Stackberry),
During 2018, the Company had several successful Wolfcamp D wells placed on production. This success continued into 2019 as a two-well Wolfcamp D pad was placed on production early in the first quarter of 2019, with an average 24-hour initial production rate of approximately 4,100 BOEPD, of which 72% was oil. This two-well pad also recorded a 20-day cumulative production of approximately 120 MBOE, with a 70% oil mix. The Company plans additional Wolfcamp D appraisals in 2019.
The Company continues to increase efficiencies, which are driving greater corporate returns. For example, large-scale developments enable operational efficiencies to be captured by performing drilling and completion practices over multiple wells. Additionally, large-scale developments decrease mobilization and non-productive time. Approximately 40% of the Company’s 2019 wells are planned to include projects consisting of four or more wells, compared to only 10% in 2018. Many of these projects will utilize “Pioneer Pads” enabling 24 wells to be drilled and completed from the same pad. The Pioneer Pad can reduce surface utilization by greater than 80%, benefiting the environment and further improving returns.
Demonstrating the benefits of long-term planning, the Company’s
comprehensive water strategy continues to play a critical role in the
continuing successful execution of Pioneer’s Permian development plan.
Pioneer’s vast water pipeline system is remotely operated from a control
room and allows for hundreds of thousands of barrels of water per day to
be efficiently directed across the Company’s large acreage position.
This system successfully transports the Company’s low-cost water across
the field and is built to support Pioneer’s long-term development plan.
Furthermore, Pioneer plans on increasing the volume of recycled water it
uses to approximately 30% in 2019. This effort to decrease the Company’s
dependence on fresh water not only increases corporate returns but also
demonstrates Pioneer’s commitment to the communities in which it
operates and its employees live. The Company plans to further reduce its
freshwater consumption by increasing the use of effluent water through
its investment in the
During the fourth quarter of 2018, the Company’s marketing of Permian
oil yielded premium Brent-related oil pricing, leading to an incremental
The Company expects its 2019 Permian drilling, completions and
facilities capital budget to range between
The Company plans to operate an average of 21 to 23 horizontal rigs in
This activity level is projected to deliver 2019 Permian production of
320 to 335 MBOEPD and 203 to 213 MBOPD, representing approximately 12%
to 17% growth over 2018 production levels. The Company expects 2019
forecasted operational cash flow of
First Quarter 2019 Guidance
First quarter 2019 Permian production is forecasted to average between
302 to 317 MBOEPD and 194 to 204 MBOPD, while Eagle Ford/
Total exploration and abandonment expense for the Company is forecasted
The Company’s financial and derivative mark-to-market results and open derivatives positions are outlined on the attached schedules.
The Company added Permian proved reserves totaling 304 million barrels
of oil equivalent (MMBOE) during 2018. These proved reserve additions
equate to a drillbit reserve replacement ratio of 290% when compared to
Pioneer’s full-year 2018 Permian production of 105 MMBOE, including
field fuel. The Permian drillbit finding and development (F&D) cost was
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 way that protects surrounding communities and preserves the environment. For access to Pioneer’s sustainability report, please visit www.pxd.com/values/sustainability.
Earnings Conference Call
Select “Investors,” then “Earnings & Webcasts” to listen to the discussion, view the presentation and see other related material.
Telephone: Dial 888-204-4368 and enter confirmation code 1773129 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
An audit of proved reserves follows the general principles set forth
in the standards pertaining to the estimating and auditing of oil and
gas reserve information promulgated by the
“Drillbit finding and development cost per BOE,” or “drillbit F&D cost per BOE,” means the summation of exploration and development costs incurred divided by the summation of annual proved reserves, on a BOE basis, attributable to discoveries, extensions and revisions of previous estimates.Revisions of previous estimates exclude price revisions.Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred.
“Drillbit reserve replacement” is the summation of annual proved reserves, on a BOE basis, attributable to discoveries, extensions and revisions of previous estimates divided by annual production of oil, NGLs and gas, on a BOE basis.Revisions of previous estimates exclude price revisions.
“Proved developed finding and development cost per BOE,” or “proved developed F&D cost per BOE,” means the summation of exploration and development costs incurred (excluding asset retirement obligations) divided by the summation of annual proved reserves, on a BOE basis, attributable to proved developed reserve additions, including (i) discoveries and extensions placed on production during 2018, (ii) transfers from proved undeveloped reserves at year-end 2017 and (iii) technical revisions of previous estimates for proved developed reserves during 2018. Revisions of previous estimates exclude price revisions.
Footnote 1: “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 items divided by the summation of average equity and average net debt.
Footnote 2: Includes 16.6 million shares of
Footnote 3: Other expense includes unusual items totaling
Footnote 4: Excludes acquisitions, asset retirement obligations, capitalized interest, geological and geophysical G&A and facilities.
Footnote 5: Assumes a WTI oil price of
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