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Pioneer Natural Resources Reports Year-End 2010 Proved Reserves and
DALLAS, Feb 03, 2011 (BUSINESS WIRE) --
Pioneer Natural Resources Company (NYSE:PXD) ("Pioneer" or "the Company") today announced that the Company added proved reserves totaling 104 million barrels oil equivalent (MMBOE) during 2010 from discoveries, extensions, improved recovery, purchases of minerals-in-place and technical revisions related to performance improvements. These additions equate to replacing 232% of Pioneer's full-year 2010 production of 45 MMBOE (including reserves used for field fuel of 3 MMBOE). The drillbit finding and development (F&D) cost related to proved reserve additions was $9.96 per barrel oil equivalent (BOE).
Pioneer also added proved reserves totaling 59 MMBOE during 2010 as a result of positive price revisions. The prices used for 2010 reserves reporting purposes were $79.28 per barrel for oil and $4.37 per million British thermal units (MMBtu) for gas compared to $61.14 per barrel of oil and $3.87 per MMBtu of gas used to calculate proved reserves for 2009. The positive pricing revisions primarily reflect the addition of proved reserves in the Spraberry field due to the higher prices extending the economic life of the field's producing wells and the addition of proved undeveloped reserves (PUDs) that became economic with the increase in gas prices in the Raton field.
Pioneer's proved reserve additions from the drillbit, acquisitions and revisions totaled 163 MMBOE for full-year 2010. This equates to replacing 363% of full-year 2010 production and results in an all-in F&D cost for the proved reserve additions of $7.30 per BOE. After taking into account the Company's total production for 2010 of 45 MMBOE and divestitures of 6 MMBOE (mostly related to Pioneer's joint venture with Reliance Industries), proved oil and gas reserves totaled 1,011 MMBOE as of December 31, 2010, up 112 MMBOE, or 12%, from year-end 2009.
Scott D. Sheffield, Chairman and CEO, stated, "In 2010, we were able to achieve our production growth target of 10% from the fourth quarter of 2009 to the fourth quarter of 2010, deliver reserve replacement well in excess of production and were below our targeted drillbit F&D cost of $10 to $15 per BOE for the year. This strong performance is in large part due to the successful execution of our plan to significantly ramp up drilling in the Spraberry field and the Eagle Ford Shale. It also reflects our continued successful drilling on the North Slope of Alaska and the drilling program in Tunisia prior to the recently announced sale of this asset."
Approximately 97% of Pioneer's proved reserves are in the United States and 57% are proved developed (PD). Approximately 56% of proved reserves are oil and natural gas liquids (NGLs), and 44% are gas. Pioneer's proved reserves are long-lived with a total reserves-to-production ratio of approximately 22 years and a PD reserves-to-production ratio of 13 years.
The table below shows Pioneer's year-end 2010 proved reserves by asset in MMBOEs:
The Securities and Exchange Commission (SEC) implemented rules in 2009 which allow PUDs to be booked beyond one offset location where reliable technology exists that establishes reasonable certainty of economic producibility at greater distances. Pioneer did not record any additional reserves in 2010 under these rules. In 2009, the Company recorded an incremental 2 MMBOE of PUD reserves in Alaska under these rules.
These rules also suggest that five years is a reasonable timeframe to develop existing PUDs. All of Pioneer's PUD reserves, which total 433 MMBOE, are scheduled to be drilled before the end of 2015. 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.
Total costs incurred during 2010 were $1.2 billion, which included exploration and development spending, acquisitions, asset retirement obligations, capitalized interest and geological and geophysical G&A. Of this amount, $1.0 billion was attributable to development and exploration activities.
The commodity prices used for 2010 resulted in a pre-tax present value of future net cash flows discounted at 10% (PV-10) of $8.0 billion for Pioneer's proved reserves.
Netherland, Sewell & Associates, Inc. (NSAI), an independent reserve engineering firm, audited the proved reserves of significant fields. NSAI's audit covered properties representing approximately 90% of Pioneer's total proved reserves at year-end 2010.
Year-end proved reserves, costs incurred and a reconciliation of PV-10 to Standardized Measure are detailed in the attached supplemental schedules.
Information regarding 2010 reserves and finding costs will be discussed during Pioneer's quarterly conference call scheduled for Tuesday, February 8, 2011 at 9:00 a.m. Central Time, when Pioneer will also discuss its fourth quarter and full year 2010 financial and operating results and 2011 Capital Budget 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, then "Earnings Calls and Webcasts". For those who cannot listen to the live webcast, a replay will be available on Pioneer's website shortly thereafter. Or you may choose to dial (877) 718-5098 (confirmation code: 2034800) to listen to the call by telephone and view the accompanying presentation at the website. A telephone replay will be available through March 4 by dialing (888) 203-1112 (confirmation code: 2034800).
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, availability of equipment, services and personnel required to complete the Company's operating activities, access to and availability of transportation, processing and refining 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, derivative contracts and joint ventures 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, including the possible impacts of climate change, and acts of war or terrorism. 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," or "all-in F&D 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, discoveries and extensions and improved recovery. 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," 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 technical revisions of previous estimates, discoveries and extensions and improved recovery. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred.
"Reserve replacement" is the summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates, purchases of minerals-in-place, discoveries and extensions and improved recovery divided by annual production of oil, NGLs and gas, on a BOE basis.
PIONEER NATURAL RESOURCES COMPANY
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 (in billions):
SOURCE: Pioneer Natural Resources Company
Pioneer Natural Resources Company
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