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Pioneer Natural Resources Reports Year-End 2009 Proved Reserves and
DALLAS, Jan 27, 2010 (BUSINESS WIRE) -- Pioneer Natural Resources Company (NYSE:PXD) today announced that the Company added proved reserves totaling 52 million barrels oil equivalent (MMBOE) during 2009 from discoveries, extensions and technical revisions. These additions equate to 114% of full-year 2009 production. The drillbit finding and development (F&D) cost for the proved reserve additions was $7.42 per barrel oil equivalent (BOE), a continuing downward trend in the Company's drillbit F&D cost.
Scott D. Sheffield, Pioneer's Chairman and CEO, stated, "Despite the dramatic curtailment in our 2009 drilling program in response to the commodity price downturn, we were able to grow production, deliver reserve replacement in excess of production and beat our targeted drillbit F&D cost of $10 to $15 per BOE. These significant achievements demonstrate the attractiveness of our large-scale, low-decline assets which require minimal maintenance capital. The significant cost reductions and operational improvements delivered by our employees during the year are also reflected in these strong results."
"The reserve additions were primarily attributable to continued successful drilling in the Kuparuk and Nuiqsut formations at Oooguruk on the North Slope of Alaska, additional discoveries in the Edwards Trend in South Texas, early drilling success in the Eagle Ford Shale in South Texas and a limited drilling program in the Spraberry field in West Texas. We also saw better production and cost performance across our assets, especially in the Spraberry, Edwards Trend and Raton areas."
The new Securities and Exchange Commission (SEC) reporting rules applicable for year-end 2009 reporting allow proved undeveloped reserves (PUDs) to be booked beyond one offset location where reliable technology exists that establishes reasonable certainty of economic producibility at greater distances. In accordance with the new rules, the Company recorded an incremental 2 MMBOE of PUD reserves in Alaska. The new rules also suggest that five years is a reasonable timeframe to develop existing PUDs. All of Pioneer's PUD reserves, which total 375 MMBOE, are scheduled to be drilled before the end of 2014. Based on current NYMEX strip prices and Pioneer's commodity derivatives position, the Company's currently forecasted cash flow over this period is expected to be more than sufficient to fund this drilling.
In addition to the above rule changes, the new SEC reporting rules require that year-end proved reserve volumes be calculated using an average of the NYMEX spot prices for sales of oil and gas on the first calendar day of each month during 2009. On this basis, the prices for oil and gas for 2009 reserves reporting purposes were $61.14 per barrel and $3.87 per million British thermal units (MMBtu), respectively. The prices used to calculate proved reserves for year-end 2008, when Pioneer's proved reserves were last reported, were $44.60 per barrel of oil and $5.71 per MMBtu of gas, representing the NYMEX spot prices on December 31, 2008 as required by the previous SEC reporting rules. These pricing changes resulted in net negative pricing revisions of 65 MMBOE. The negative pricing revisions were attributable to gas assets and were principally due to PUDs that became uneconomic in the Company's Raton field in southeastern Colorado at a low realized price of $3.06 per MMBtu (average 12-month NYMEX price less basis differential). At a $5 per MMBtu NYMEX gas price, the Company would expect to recover approximately 98% of Raton's year-over-year proved reserve loss, after adjusting for 2009 production. The negative gas price revisions were partially offset by positive oil and natural gas liquids (NGL) price revisions of 14 MMBOE due to the higher oil price.
After taking into account the Company's reserve additions during 2009, offset by production, a small divestiture and the negative price revisions, total proved oil and gas reserves were 899 MMBOE as of December 31, 2009, down approximately 6% from year-end 2008. Pioneer would expect to add gas reserves of 81 MMBOE (more than 100% of the 2009 negative gas price revisions) and oil and NGL reserves of 18 MMBOE at NYMEX prices of $6 per MMBtu for gas and $80 per barrel for oil.
The table below shows Pioneer's year-end 2009 proved reserves by asset using the SEC defined commodity prices and proved reserves that would be reported at an $80 per barrel NYMEX oil price and a $6 per MMBtu NYMEX gas price.
Excluding the impact of price revisions, the Company replaced 114% of its 2009 production at an all-in F&D cost of $9.15 per BOE. Approximately 98% of proved reserves are in the United States and 58% are proved developed (PD). Approximately 54% of proved reserves are oil and NGLs, and 46% are gas. Pioneer's proved reserves are long-lived with a total reserves-to-production ratio of approximately 20 years and a PD reserves-to-production ratio of 12 years.
Total costs incurred during 2009 were $472 million, which includes exploration and development spending, acquisitions, asset retirement obligations, capitalized interest and geological and geophysical G&A. Of this amount, $313 million was attributable to development and exploration activities.
The commodity prices used for 2009 resulted in a pre-tax present value of future net cash flows discounted at 10% (PV-10) of $4.4 billion for Pioneer's proved reserves. The PV-10 value would increase to $9.3 billion at NYMEX prices of $80 per barrel for oil and $6 per MMBtu for gas.
Netherland, Sewell & Associates, Inc. (NSAI), an independent reserve engineering firm, audited the proved reserves of significant fields. NSAI's audit covered properties representing approximately 93% of Pioneer's total proved reserves at year-end 2009.
Year-end proved reserves, costs incurred and a reconciliation of PV-10 to Standardized Measure are detailed in the attached supplemental schedules.
Information regarding 2009 reserves and finding costs will be discussed in the quarterly call scheduled for Wednesday, February 3, at 9:00 a.m. Central Time, when Pioneer will discuss its fourth quarter and full year financial and operating results with an accompanying presentation. The discussion will be webcast on Pioneer's website, www.pxd.com. The presentation will be available on the website for preview in advance of the call. At the website, select 'INVESTORS' at the top of the page. For those who cannot listen to the live webcast, a replay will be available shortly thereafter. Or you may choose to dial (877) 675-4751 (confirmation code: 9545624) to listen to the call by telephone and view the accompanying visual presentation at the website above. A telephone replay will be available by dialing (888) 203-1112 (confirmation code: 9545624).
Pioneer is a large independent oil and gas exploration and production company, headquartered in Dallas, Texas, with operations primarily in the United States. For more information, visit Pioneer's website at www.pxd.com.
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, international operations and associated international political and economic instability, litigation, the costs and results of drilling and operations, access to and availability of drilling equipment and transportation, processing and refining facilities, Pioneer's ability to replace reserves, implement its business plans or complete its development projects as scheduled, access to and cost of capital, the financial strength of counterparties to Pioneer's credit facility and derivative contracts and the purchasers of Pioneer's oil, NGL and gas production, uncertainties about estimates of reserves and resource potential and the ability to add proved reserves in the future, the assumptions underlying production forecasts, quality of technical data, environmental and weather risks, and acts of war or terrorism. Sensitivity price cases for proved reserves mentioned in this release may not be attained or sustained. These and other risks are described in Pioneer's 10-K and 10-Q Reports and other filings with the Securities and Exchange Commission. In addition, Pioneer may be subject to currently unforeseen risks that may have a materially adverse impact on it. Pioneer undertakes no duty to publicly update these statements except as required by law.
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 Society of Petroleum Engineers ("SPE"). A reserve audit as defined by the SPE is not the same as a financial audit.Please see the Company's Annual Report on Form 10-K for a general description of the concepts included in the SPE's definition of a reserve audit.
"Finding and development cost per BOE" means total costs incurred divided by the summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates, purchases of minerals-in-place and discoveries and extensions. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred.
"Drillbit finding and development 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 revisions of previous estimates and discoveries and extensions. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred.
PV-10 is the estimated future net cash flows from proved reserves discounted at an annual rate of 10 percent before giving effect to income taxes. Standardized Measure is the after-tax estimated future cash flows from proved reserves discounted at an annual rate of 10 percent, determined in accordance with GAAP. Pioneer uses PV-10 as one measure of the value of the Company's proved reserves and to compare relative values of proved reserves among exploration and production companies without regard to income taxes. Pioneer believes that securities analysts and rating agencies use PV-10 in similar ways. Pioneer's management believes PV-10 is a useful measure for comparison of proved reserve values among companies because, unlike Standardized Measure, it excludes future income taxes that often depend principally on the characteristics of the owner of the reserves rather than on the nature, location and quality of the reserves themselves. Below is a reconciliation of PV-10 to Standardized Measure for SEC oil and gas NYMEX pricing and a NYMEX $80 per barrel of oil and $6.00 per MMBtu of gas price sensitivity (in billions):
SOURCE: Pioneer Natural Resources Company
Pioneer Natural Resources
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