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Pioneer Natural Resources Company Reports Third Quarter 2019 Financial and Operating Results
President and CEO
“The unique combination of our peer-leading asset base and increased efficiencies resulted in strong free cash flow2 generation of approximately
Ongoing Strategic Initiatives
The Company completed its corporate restructuring during the second quarter and achieved its targeted annualized general and administrative (G&A) savings of approximately
The Company continues to evaluate options to monetize non-core acreage not slated for near-term development, with such options including cash market divestitures and the use of DrillCo arrangements. This process, along with activities related to Pioneer's interest in the
Pioneer maintains a strong balance sheet, with unrestricted cash on hand at the end of the third quarter of
During the third quarter, the Company’s Permian drilling, completion and facilities capital expenditures totaled
The Company announced today that its Board of Directors declared a quarterly cash dividend of
For the third quarter, the average realized price for oil was
Production costs, including taxes, averaged
Pioneer placed 75 horizontal wells on production during the third quarter. Well productivity continues to improve annually, with average cumulative production increasing 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 limited Wolfcamp D appraisal program continues to yield strong results. Since
During the third quarter of 2019, the Company’s marketing of Permian oil yielded premium Brent-related oil pricing, leading to an incremental
Full-Year 2019 Update
Pioneer is lowering the top end of its 2019 Permian drilling, completions and facilities capital budget range by an additional
The Company plans to operate an average of 21 horizontal rigs in the
This activity level is projected to deliver 2019 Permian production of 336 to 340 MBOEPD, an increase of approximately 3% at the midpoint when compared to the original 2019 guidance, and 208 to 211 MBOPD, an increase of approximately 1% at the midpoint when compared to the original 2019 guidance. The increase in production guidance is attributable to higher gas processing plant NGL yields, including from the new Hopson and Pembrook gas processing plants that came online in 2019, positively impacting NGL production, and wells being placed on production slightly ahead of the forecast due to improvements in drilling and completion efficiencies.
Pioneer increased its oil derivative positions to 110 MBOPD for the remainder of 2019 at approximately
Fourth Quarter 2019 Guidance
Fourth quarter 2019 production is forecasted to average between 345 to 360 MBOEPD and 210 to 220 MBOPD. 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 approximately 24%, total GHG emission intensity has decreased by approximately 38% and methane intensity has declined by approximately 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 Health, Safety and Environment Committee and a Nominating and Corporate Governance Committee to ensure proper governance protocols are in place. These committees help to promote a culture of continuous improvement in safety and environmental practices.
For more details, see Pioneer’s 2019 Sustainability Report at pxd.com/sustainability.
Earnings Conference Call
Telephone: Dial 866-575-6539 and enter confirmation code 2038043 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, 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 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
Future dividends are at the discretion of the Company's board of directors, and, if declared, the board of directors may change the dividend amount based on the Company's liquidity and capital resources at that time.
Footnote 1: Excludes acquisitions, asset retirement obligations, capitalized interest, geological and geophysical G&A and corporate facilities.
Footnote 2: Free cash flow is a non-GAAP measure, see reconciliation to comparable GAAP number in supplemental schedules.
Footnote 3: Unusual items include the following: (i)
Footnote 4: The 2019 estimated cash flow number is a non-GAAP financial measure, representing January through
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 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:
Basic and diluted average common shares outstanding were 167 million and 168 million for the three and nine months ended
EBITDAX and discretionary cash flow ("DCF") (as defined below) 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 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 or net cash provided by operating activities, as defined by GAAP.
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 to (i) contingent consideration attributable to the
Return on Capital Employed ("ROCE") is a non-GAAP financial measure. As used by the Company, ROCE is net income adjusted for tax-effected noncash mark-to-market ("MTM") derivative gains and losses, unusual items and interest expense divided by the summation of average total equity (adjusted for net noncash MTM derivative (gain) loss, unusual items and interest expense) and average net debt. The Company believes ROCE is a good indicator of long-term performance, both absolute and relative to the Company's peers. ROCE is a measure of the profitability of the Company’s capital employed in its business compared with that of its peers.
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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