DALLAS--(BUSINESS WIRE)--May 2, 2018--
Pioneer Natural Resources Company (NYSE:PXD) (“Pioneer” or “the
Company”) today reported financial and operating results for the quarter
ended March 31, 2018.
Pioneer reported first quarter net income attributable to common
stockholders of $178 million, or $1.04 per diluted share. Without the
effect of noncash mark-to-market (MTM) derivative losses of $106 million
after tax, or $0.62 per diluted share, adjusted income for the first
quarter was $284 million after tax, or $1.66 per diluted share.
First quarter financial and operating highlights included:
-
producing 260 thousand barrels oil equivalent per day (MBOEPD) in the
Permian Basin, an increase of 9 MBOEPD, or 3%, compared to the fourth
quarter of 2017; first quarter Permian Basin production was at the top
end of Pioneer’s production guidance range of 252 MBOEPD to 260
MBOEPD; as previously announced, freezing temperatures in early
January resulted in production losses of approximately 6 MBOEPD;
Permian Basin oil production increased to 170 thousand barrels of oil
per day (MBOPD); 63 horizontal wells were placed on production;
-
producing 312 MBOEPD companywide, an increase of 7 MBOEPD, or 2%,
compared to the fourth quarter of 2017; production was near the top
end of Pioneer’s first quarter production guidance range of 304 MBOEPD
to 314 MBOEPD; in addition to the freezing temperatures in early
January that resulted in production losses of approximately 6 MBOEPD,
Pioneer’s first quarter production was negatively impacted by
approximately 2 MBOEPD due to a compressor station fire in the West
Panhandle field; West Panhandle production resumed in early April at
approximately 8 MBOEPD;
-
continuing to maintain a strong balance sheet with cash on hand at the
end of the first quarter of $1.8 billion (includes liquid
investments); net debt to forecasted 2018 operating cash flow was 0.3
times and net debt-to-book capitalization was 7% at the end of the
first quarter;
-
assuring movement of Pioneer’s increasing volumes of Permian Basin oil
and gas through firm transportation contracts; approximately 160 MBOPD
were delivered to the Gulf Coast under firm pipeline contracts during
the first quarter at Brent-related pricing; Pioneer exported 87 MBOPD
of the total volumes delivered to the Gulf Coast; approximately 75% of
the Company’s Permian Basin gas production of 216 million cubic feet
per day (MMCFPD) was tranported under firm pipeline contracts to the
southern California market where it is sold, with the remainder sold
primarily under term contracts at Waha;
-
enhancing cash flow by $16 million from premiums received on oil sales
to Gulf Coast refineries and export markets in the first quarter;
-
closing the sale of 10,200 net acres in the Eagle Ford Shale for $103
million;
-
adjusting Pioneer’s executive compensation program for 2018 to
incorporate return on capital employed (ROCE) and per-share production
and proved reserves growth targets; and
-
repurchasing approximately $17 million of common stock under the $100
million repurchase program to offset dilution from annual employee
stock awards.
Pioneer’s full-year 2018 update includes:
-
operating 20 horizontal rigs in the Permian Basin; expecting to place
250 to 275 wells on production during 2018; evaluating the timing of
rig additions later in 2018 to support the 2019 plan;
-
drilling the most productive wells in the Permian Basin that deliver
strong cash operating margins and high rates of return;
-
expecting to place approximately 45 Version 3.0+ completions on line
during the first half of 2018 as planned; Version 3.0+ completions
continue to significantly outperform Version 3.0 wells; the Company is
currently evaluating the number of Version 3.0+ completions to be
added in the second half of 2018; during the first quarter, the
Company completed 31 Version 3.0+ wells and placed 16 Version 3.0+
wells on production;
-
planning to appraise three additional Wolfcamp D wells with Version
3.0 completions during 2018; Pioneer’s first Wolfcamp D well with this
type of completion, which was placed on production during the fourth
quarter of 2017, has delivered 130-day cumulative production of 260
thousand barrel oil equivalents (MBOE), with an oil content of 72%;
-
expecting to appraise 19 wells in the Middle Spraberry Shale, Jo Mill
and Lower Spraberry Shale during 2018 to determine optimal long-term
development strategy;
-
progressing divesture process for the Company’s Eagle Ford Shale,
South Texas, Raton and West Panhandle assets, making Pioneer a Permian
Basin “pure play”; after all of the divestitures are completed,
reported cash operating margins and corporate returns will be
significantly improved;
-
funding 2018 capital spending from forecasted cashflow of
approximately $3.2 billion at current strip prices for the remainder
of 2018 ($66 per barrel for oil and $2.80 per thousand cubic feet
(MCF) for gas); the 2018 capital budget of $2.9 billion is expected to
be increased due to additional Version 3.0+ completions, late-year rig
additions preparing for 2019 and inflation;
-
forecasting Permian Basin production growth in 2018 ranging from 19%
to 24% compared to 2017; production is currently trending towards the
high end of this range; and
-
repaying the May 2018 debt maturity of $450 million from cash on hand.
President and CEO Timothy L. Dove stated, “The Company delivered another
solid quarter, with strong earnings, solid execution, robust oil
production growth and excellent horizontal well performance in the
Permian Basin. Our world-class Permian Basin asset is considered by many
to be the top oil shale play in North America. We are drilling the most
productive wells in the Basin that are low-cost and generate strong cash
operating margins and high rates of return.”
“Our cash flow continues to benefit from our strategy to enter into firm
transportation contracts for our increasing volumes of Permian Basin oil
and gas production. Our oil contracts to the Gulf Coast not only expose
us to Brent-related pricing, but also insulate us from the recent
widening of the Midland-Cushing oil price differential. Pioneer’s firm
transportation contracts for gas provide flow assurance, with more than
75% of our production being sold in southern California."
“Our transition to a Permian Basin ‘pure play’ is progressing according
to plan. The sale of selected Eagle Ford Shale acreage has been
completed. The data room for our remaining Eagle Ford Shale and other
South Texas assets has been active. We are making progress on the other
assets and expect to have all the data rooms open by mid-May. When the
divestiture of these non-Permian assets is complete, the Company will
report stronger cash operating margins and corporate returns due to an
increase in revenue per barrel oil equivalent (BOE) and a decrease in
operating cost per BOE.”
“Looking forward, our deep, low-risk inventory of high-margin Permian
Basin wells allows us to deliver increasing cash flow and corporate
returns. Our balance sheet remains among the strongest in the industry,
while our focus on capital discipline supports an economic, steady
long-term growth profile. We believe our high Permian ‘return on
capital’ will enhance shareholder value by delivering increasing ‘return
of capital’ to investors.”
Permian Basin Operations Update and Outlook
Pioneer is the largest acreage holder in the Midland Basin, with
approximately 550,000 gross acres in the northern portion of the play
and approximately 200,000 gross acres in the southern Wolfcamp joint
venture area. Pioneer’s contiguous acreage position and substantial
resource potential allow for decades of drilling horizontal wells with
lateral lengths ranging from 7,500 feet to 14,000 feet.
The Company implemented a completion optimization program during 2015 in
the Permian Basin that combines longer laterals with optimized stage
lengths, clusters per stage, fluid volumes and proppant concentrations.
The objective of the program was to improve well productivity by
allowing more rock to be contacted closer to the horizontal wellbore. In
2013 and 2014, the Company’s initial fracture stimulation design
(Version 1.0) consisted of proppant concentrations of approximately
1,000 pounds per foot, fluid concentrations of 30 barrels per foot,
cluster spacing of 60 feet and stage spacing of 240 feet. Beginning in
mid-2015, the Company enhanced its fracture stimulation design (Version
2.0), which consisted of larger proppant concentrations of approximately
1,400 pounds per foot, larger fluid concentrations of 36 barrels per
foot, tighter cluster spacing of 30 feet and shorter stage spacing of
150 feet. Beginning in the first quarter of 2016, Pioneer commenced
testing further-enhanced completion designs (Version 3.0), which
included larger proppant concentrations of approximately 2,000 pounds
per foot, larger fluid concentrations up to 50 barrels per foot, tighter
cluster spacing down to 15 feet and shorter stage spacing down to 100
feet.
Pioneer placed 47 Version 3.0 wells on production during the first
quarter of 2018. The Company also placed 16 wells on production during
the first quarter of 2018 that utilized higher intensity completions
compared to Version 3.0 wells. These are referred to as Version 3.0+
completions. Results from the 20 Version 3.0+ wells completed in 2017
and early production results from the 16 Version 3.0+ wells that were
placed on production in the first quarter of 2018 are significantly
outperforming production from nearby offset wells with less intense
completions. The Company originally planned to test approximately 45
Version 3.0+ completions during the first half of 2018, with the
remaining wells for 2018 expected to be predominantly Version 3.0
completions. However, based on the success of the higher intensity
completions to date, the Company is evaluating adding more Version 3.0+
completions in the second half of 2018.
The Company has entered into firm pipeline commitments to deliver
approximately 160 MBOPD, or 95% of current Permian Basin net oil
production, to Gulf Coast refineries and export markets. The Company
delivered 160 MBOPD to the Gulf Coast during the first quarter, of which
87 MBOPD were exported. The firm pipeline contracts insulate Pioneer
from the recent widening of the Midland-Cushing oil price basis
differential by providing exposure to Brent-related pricing. As a result
of this premium pricing, Gulf Coast refinery and export sales added $16
million of incremental cash flow in the first quarter of 2018. Pioneer’s
oil volumes under firm transportation contracts increase through 2021
commensurate with the Company’s forecasted Permian Basin oil production
growth. Pioneer is targeting to transport greater than 90% of the
Company’s long-term Permian Basin net oil production under firm pipeline
transportation agreements to the Gulf Coast for refinery sales and
exports. The Company expects exports in the second quarter of 2018 to be
similar to the first quarter. During the second half of 2018, export
volumes are expected to grow as Pioneer’s export capacity is increased
from approximately 110 MBOPD to 150 MBOPD.
The Company remains well positioned to move its Permian Basin gas
production. Approximately 75% of Pioneer’s Midland Basin gas production
is transported under firm pipeline transportation agreements to the
southern California market where it is sold. The remainder is primarily
sold under term contracts at Waha. Additional firm pipeline
transportation has been secured on Kinder Morgan’s Gulf Coast Express
pipeline, which is anticipated to be on line late in the third quarter
of 2019. Firm transportation on the Gulf Coast Express pipeline will
provide access to LNG exports, refineries, petrochemical facilities and
Mexican markets. The Company’s 2018 revenues from gas sales are expected
to be less than 5% of forecasted 2018 Permian oil, natural gas liquids
(NGL) and gas revenues.
First Quarter 2018 Financial Review
Sales volumes for the first quarter of 2018 averaged 312 MBOEPD. Oil
sales averaged 183 thousand barrels per day (MBPD), NGL sales averaged
66 MBPD and gas sales averaged 379 MMCFPD.
Similar to most companies, the Company adopted the new revenue
recognition standard Accounting Standards Update No. 2014-09 (ASC 606),
“Revenue from Contracts with Customers,” effective January 1, 2018.
Under this new rule, gas processing fees and associated downstream
fractionation and transportation fees that were previously reflected as
a reduction in the Company’s reported NGL and gas revenues are now
required to be recognized as an expense in the Company’s production
costs. As a result of the new rule, reported NGL and gas revenues and
associated price realizations will be higher, with an equivalent
offsetting increase to production costs. Adoption of ASC 606 results in
no change to the Company’s cash operating margins.
The average realized price for oil was $61.64 per barrel. Including the
effects of ASC 606, the average realized price for NGLs was $27.74 per
barrel, and the average realized price for gas was $2.59 per MCF. These
prices exclude the effects of derivatives.
Production costs, including taxes and the effects of ASC 606, averaged
$10.30 per BOE. Production costs would have been $8.77 per BOE excluding
the effects of ASC 606. Depreciation, depletion and amortization (DD&A)
expense averaged $12.72 per BOE. Exploration and abandonment costs were
$35 million, including $7 million for drilling, acreage and other
abandonments, $11 million for seismic purchases and $17 million for
personnel costs. General and administrative expense totaled $90 million.
Interest expense was $36 million. Other expense was $57 million,
including $34 million of charges associated with excess firm gathering
and transportation commitments. Accretion of discount on asset
retirement obligations was $4 million. The Company’s effective income
tax rate was 22%.
Second Quarter 2018 Financial Outlook
The Company’s second quarter 2018 outlook for certain operating and
financial items is provided below.
Total production is forecasted to average between 312 MBOEPD to 322
MBOEPD. Permian Basin production is forecasted to average between 268
MBOEPD to 276 MBOEPD.
Production costs are expected to average $10.00 per BOE to $12.00 per
BOE, reflecting the impact of ASC 606. DD&A expense is expected to
average $12.50 per BOE to $14.50 per BOE. Total exploration and
abandonment expense is forecasted to be $20 million to $30 million.
General and administrative expense is expected to be $90 million to $95
million. Interest expense is expected to be $30 million to $35 million.
Other expense is forecasted to be $60 million to $70 million and is
expected to include $40 million to $45 million of charges associated
with excess firm gathering and transportation commitments. Accretion of
discount on asset retirement obligations is expected to be $4 million to
$7 million.
The Company’s effective income tax rate is expected to range from 21% to
25%. Current income taxes are expected to be less than $5 million.
The Company’s financial and derivative MTM results and open derivatives
positions are outlined on the attached schedules.
Earnings Conference Call
On Thursday, May 3, 2018, at 9:00 a.m. Central Time, Pioneer will
discuss its financial and operating results for the quarter ended March
31, 2018, with an accompanying presentation. Instructions for listening
to the call and viewing the accompanying presentation are shown below.
Internet: www.pxd.com
Select
“Investors,” then “Earnings & Webcasts” to listen to the discussion,
view the presentation and see other related material.
Telephone: Dial 800-281-7973 and confirmation code 3052979 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 May 28, 2018. Click
here to register for the call-in audio replay and you will
receive the dial-in information.
Pioneer is a large independent oil and gas exploration and production
company, headquartered in Dallas, Texas, with operations in the United
States. For more information, visit 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, 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 December 31,
2017, 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. Accordingly, no assurances can
be given that the actual events and results will not be materially
different than the anticipated results described in the forward-looking
statements. Pioneer undertakes no duty to publicly update these
statements except as required by law.
“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 itemsdivided by the summation of average equity plus
average net debt.
Pioneer may repurchase shares from time to time at management’s
discretion in accordance with applicable securities laws, including
through open market transactions, privately negotiated transactions or
any combination thereof.In addition, shares may also be
purchased pursuant to a trading plan meeting the requirements of Rule
10b5-1 under the Securities Exchange Act of 1934, as amended, which
would permit shares to be repurchased when the Company might otherwise
be precluded from doing so under insider trading laws.The amount
and timing of repurchases are subject to a number of factors, including
stock price, trading volume and general market conditions, and the
program may be modified, suspended or terminated at any time by
Pioneer’s Board of Directors.The Company intends to fund
repurchases under the program from existing cash flow, proceeds from
asset divestitures or cash and cash equivalents.
This news release also contains a forward-looking non-GAAP financial
measure, return on capital employed.Due to its forward-looking
nature, management cannot reliably predict certain of the necessary
components of the most directly comparable forward-looking GAAP measure,
such as future noncash property impairments, gains or losses on future
divestitures and future noncash MTM derivative gains and losses.Accordingly,
Pioneer is unable to present a quantitative reconciliation of such
forward-looking non-GAAP financial measure to its most directly
comparable forward-looking GAAP financial measure.Amounts
excluded from this non-GAAP measure in future periods could be
significant.
Cautionary Note to U.S. Investors --The SEC prohibits oil and gas
companies, in their filings with the SEC, from disclosing estimates of
oil or gas resources other than “reserves,” as that term is defined by
the SEC.In this news release, Pioneer includes estimates of
quantities of oil and gas using certain terms, such as “resource
potential,” “net recoverable resource potential,” “recoverable
resource,” “estimated ultimate recovery,” “EUR,” “oil in place” or other
descriptions of volumes of reserves, which terms include quantities of
oil and gas that may not meet the SEC’s definitions of proved, probable
and possible reserves, and which the SEC's guidelines strictly prohibit
Pioneer from including in filings with the SEC.These estimates
are by their nature more speculative than estimates of proved reserves
and, accordingly, are subject to substantially greater risk of being
recovered by Pioneer.U.S. investors are urged to consider
closely the disclosures in the Company’s periodic filings with the SEC.Such filings are available from the Company at 5205 N. O'Connor
Blvd., Suite 200, Irving, Texas 75039, Attention: Investor Relations,
and the Company’s website at www.pxd.com.These filings also can be obtained from the SEC by calling
1-800-SEC-0330.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PIONEER NATURAL RESOURCES COMPANY |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
(in millions) |
|
|
|
|
|
|
|
|
|
|
March 31, 2018 |
|
|
December 31, 2017 |
ASSETS |
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
1,001
|
|
|
|
$
|
896
|
|
Short-term investments
|
|
|
|
722
|
|
|
|
|
1,213
|
|
Accounts receivable, net
|
|
|
|
826
|
|
|
|
|
645
|
|
Income taxes receivable
|
|
|
|
7
|
|
|
|
|
7
|
|
Inventories
|
|
|
|
218
|
|
|
|
|
212
|
|
Assets held for sale
|
|
|
|
20
|
|
|
|
|
—
|
|
Derivatives
|
|
|
|
7
|
|
|
|
|
11
|
|
Other
|
|
|
|
23
|
|
|
|
|
23
|
|
Total current assets
|
|
|
|
2,824
|
|
|
|
|
3,007
|
|
Property, plant and equipment, at cost:
|
|
|
|
|
|
|
Oil and gas properties, using the successful efforts method of
accounting
|
|
|
|
21,460
|
|
|
|
|
20,962
|
|
Accumulated depletion, depreciation and amortization
|
|
|
|
(9,230
|
)
|
|
|
|
(9,196
|
)
|
Total property, plant and equipment
|
|
|
|
12,230
|
|
|
|
|
11,766
|
|
Long-term investments
|
|
|
|
93
|
|
|
|
|
66
|
|
Goodwill
|
|
|
|
269
|
|
|
|
|
270
|
|
Other property and equipment, net
|
|
|
|
1,799
|
|
|
|
|
1,762
|
|
Other assets, net
|
|
|
|
108
|
|
|
|
|
132
|
|
|
|
|
$
|
17,323
|
|
|
|
$
|
17,003
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
1,270
|
|
|
|
$
|
1,282
|
|
Interest payable
|
|
|
|
38
|
|
|
|
|
59
|
|
Income taxes payable
|
|
|
|
1
|
|
|
|
|
—
|
|
Current portion of long-term debt
|
|
|
|
449
|
|
|
|
|
449
|
|
Liabilities held for sale
|
|
|
|
6
|
|
|
|
|
—
|
|
Derivatives
|
|
|
|
333
|
|
|
|
|
232
|
|
Other
|
|
|
|
153
|
|
|
|
|
106
|
|
Total current liabilities
|
|
|
|
2,250
|
|
|
|
|
2,128
|
|
Long-term debt
|
|
|
|
2,284
|
|
|
|
|
2,283
|
|
Derivatives
|
|
|
|
54
|
|
|
|
|
23
|
|
Deferred income taxes
|
|
|
|
928
|
|
|
|
|
899
|
|
Other liabilities
|
|
|
|
405
|
|
|
|
|
391
|
|
Equity
|
|
|
|
11,402
|
|
|
|
|
11,279
|
|
|
|
|
$
|
17,323
|
|
|
|
$
|
17,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PIONEER NATURAL RESOURCES COMPANY |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(in millions, except per share data) |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2018 |
|
|
2017 |
Revenues and other income:
|
|
|
|
|
|
|
Oil and gas
|
|
|
$
|
1,266
|
|
|
|
$
|
809
|
|
Sales of purchased oil and gas
|
|
|
|
1,070
|
|
|
|
|
316
|
|
Interest and other
|
|
|
|
18
|
|
|
|
|
13
|
|
Derivative gains (losses), net
|
|
|
|
(208
|
)
|
|
|
|
151
|
|
Gain on disposition of assets, net
|
|
|
|
4
|
|
|
|
|
11
|
|
|
|
|
|
2,150
|
|
|
|
|
1,300
|
|
Costs and expenses:
|
|
|
|
|
|
|
Oil and gas production
|
|
|
|
213
|
|
|
|
|
141
|
|
Production and ad valorem taxes
|
|
|
|
76
|
|
|
|
|
47
|
|
Depletion, depreciation and amortization
|
|
|
|
357
|
|
|
|
|
337
|
|
Purchased oil and gas
|
|
|
|
1,054
|
|
|
|
|
335
|
|
Impairment of oil and gas properties
|
|
|
|
—
|
|
|
|
|
285
|
|
Exploration and abandonments
|
|
|
|
35
|
|
|
|
|
33
|
|
General and administrative
|
|
|
|
90
|
|
|
|
|
84
|
|
Accretion of discount on asset retirement obligations
|
|
|
|
4
|
|
|
|
|
5
|
|
Interest
|
|
|
|
36
|
|
|
|
|
46
|
|
Other
|
|
|
|
57
|
|
|
|
|
60
|
|
|
|
|
|
1,922
|
|
|
|
|
1,373
|
|
Income (loss) before income taxes
|
|
|
|
228
|
|
|
|
|
(73
|
)
|
Income tax benefit (provision)
|
|
|
|
(50
|
)
|
|
|
|
31
|
|
Net income (loss) attributable to common stockholders
|
|
|
$
|
178
|
|
|
|
$
|
(42
|
)
|
|
|
|
|
|
|
|
Basic and diluted net income (loss) per share attributable to common
stockholders
|
|
|
$
|
1.04
|
|
|
|
$
|
(0.25
|
)
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
|
170
|
|
|
|
|
170
|
|
Diluted
|
|
|
|
171
|
|
|
|
|
170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PIONEER NATURAL RESOURCES COMPANY |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(in millions) |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2018 |
|
|
2017 |
Cash flows from operating activities:
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
178
|
|
|
|
$
|
(42
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
|
Depletion, depreciation and amortization
|
|
|
|
357
|
|
|
|
|
337
|
|
Impairment of oil and gas properties
|
|
|
|
—
|
|
|
|
|
285
|
|
Exploration expenses, including dry holes
|
|
|
|
7
|
|
|
|
|
10
|
|
Deferred income taxes
|
|
|
|
50
|
|
|
|
|
(31
|
)
|
Gain on disposition of assets, net
|
|
|
|
(4
|
)
|
|
|
|
(11
|
)
|
Accretion of discount on asset retirement obligations
|
|
|
|
4
|
|
|
|
|
5
|
|
Interest expense
|
|
|
|
1
|
|
|
|
|
1
|
|
Derivative related activity
|
|
|
|
136
|
|
|
|
|
(141
|
)
|
Amortization of stock-based compensation
|
|
|
|
17
|
|
|
|
|
22
|
|
Other noncash items
|
|
|
|
20
|
|
|
|
|
25
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
|
(181
|
)
|
|
|
|
92
|
|
Inventories
|
|
|
|
(6
|
)
|
|
|
|
(19
|
)
|
Investments
|
|
|
|
4
|
|
|
|
|
4
|
|
Other current assets
|
|
|
|
(3
|
)
|
|
|
|
(6
|
)
|
Accounts payable
|
|
|
|
(9
|
)
|
|
|
|
(153
|
)
|
Interest payable
|
|
|
|
(21
|
)
|
|
|
|
(29
|
)
|
Income taxes payable
|
|
|
|
1
|
|
|
|
|
—
|
|
Other current liabilities
|
|
|
|
3
|
|
|
|
|
15
|
|
Net cash provided by operating activities
|
|
|
|
554
|
|
|
|
|
364
|
|
Net cash used in investing activities
|
|
|
|
(404
|
)
|
|
|
|
(298
|
)
|
Net cash used in financing activities
|
|
|
|
(45
|
)
|
|
|
|
(521
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
105
|
|
|
|
|
(455
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
|
896
|
|
|
|
|
1,118
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
1,001
|
|
|
|
$
|
663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PIONEER NATURAL RESOURCES COMPANY |
UNAUDITED SUMMARY PRODUCTION, PRICE AND MARGIN DATA |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2018 |
|
|
2017 |
Average Daily Sales Volumes:
|
|
|
|
|
|
|
Oil (Bbls)
|
|
|
|
182,519
|
|
|
|
145,619
|
Natural gas liquids ("NGL") (Bbls)
|
|
|
|
66,181
|
|
|
|
46,828
|
Gas (Mcfs)
|
|
|
|
378,869
|
|
|
|
338,602
|
Total (BOEs)
|
|
|
|
311,845
|
|
|
|
248,881
|
|
|
|
|
|
|
|
Average Prices (a):
|
|
|
|
|
|
|
Oil (per Bbl)
|
|
|
$
|
61.64
|
|
|
$
|
49.05
|
NGL (per Bbl)
|
|
|
$
|
27.74
|
|
|
$
|
19.33
|
Gas (per Mcf)
|
|
|
$
|
2.59
|
|
|
$
|
2.79
|
Total (per BOE)
|
|
|
$
|
45.11
|
|
|
$
|
36.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2018 |
|
|
|
Permian Horizontals |
|
|
Permian Verticals |
|
|
Eagle Ford |
|
|
Other Assets |
|
|
Total |
|
|
|
($ per BOE) |
Margin Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average prices
|
|
|
$
|
48.53
|
|
|
|
$
|
47.32
|
|
|
|
$
|
33.86
|
|
|
|
$
|
23.98
|
|
|
|
$
|
45.11
|
|
Production costs
|
|
|
|
(4.18
|
)
|
|
|
|
(19.93
|
)
|
|
|
|
(12.18
|
)
|
|
|
|
(13.05
|
)
|
|
|
|
(7.60
|
)
|
Production and ad valorem taxes
|
|
|
|
(2.95
|
)
|
|
|
|
(2.97
|
)
|
|
|
|
(1.63
|
)
|
|
|
|
(1.27
|
)
|
|
|
|
(2.70
|
)
|
|
|
|
$
|
41.40
|
|
|
|
$
|
24.42
|
|
|
|
$
|
20.05
|
|
|
|
$
|
9.66
|
|
|
|
$
|
34.81
|
|
Percent Oil
|
|
|
|
66
|
%
|
|
|
|
63
|
%
|
|
|
|
36
|
%
|
|
|
|
14
|
%
|
|
|
|
59
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________
|
(a)
|
|
On January 1, 2018, the Company adopted ASC 606, "Revenue from
Contracts with Customers." Changes in oil and gas revenue and oil
and gas production costs are due to the conclusion under the
control model in the new revenue rule that the third-party
processor or transporter is only providing gas processing or
transportation services, and that the Company remains the
principal owner of the commodity until sold to the ultimate
purchaser. Results for the three months ended March 31, 2018, are
presented in accordance with the new rule, while results for the
three months ended March 31, 2017, continue to be reported in
accordance with historical accounting rules.
|
|
|
|
|
PIONEER NATURAL RESOURCES COMPANY
|
UNAUDITED SUPPLEMENTARY EARNINGS PER SHARE INFORMATION
|
|
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 the periods in which the Company realizes net
income attributable to common shareholders, the Company's basic net
income per share attributable to common stockholders 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 and 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 following table is a reconciliation of the Company's net income
(loss) attributable to common stockholders to basic and diluted net
income (loss) attributable to common stockholders for the three months
ended March 31, 2018 and 2017:
|
|
|
Three Months Ended March 31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
(in millions) |
Net income (loss) attributable to common stockholders
|
|
|
$
|
178
|
|
|
|
$
|
(42
|
)
|
Participating basic earnings
|
|
|
|
(1
|
)
|
|
|
|
—
|
|
Basic and diluted net income (loss) attributable to common
stockholders
|
|
|
$
|
177
|
|
|
|
$
|
(42
|
)
|
|
|
|
|
|
|
|
|
|
|
|
The following table is a reconciliation of basic weighted average shares
outstanding to diluted weighted average shares outstanding for the three
months ended March 31, 2018 and 2017:
|
|
|
Three Months Ended March 31, |
|
|
|
2018
|
|
|
2017
|
|
|
|
(in millions)
|
Basic weighted average shares outstanding
|
|
|
170
|
|
|
170
|
Dilution attributable to stock-based compensation awards
|
|
|
1
|
|
|
-
|
Diluted weighted average shares outstanding
|
|
|
171
|
|
|
170
|
|
PIONEER NATURAL RESOURCES COMPANY
|
UNAUDITED SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
|
(in millions)
|
|
EBITDAX and discretionary cash flow ("DCF") (as defined below) are
presented herein, and reconciled to the GAAP measures of net income
(loss) 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 (loss) or net cash provided by
operating activities, as defined by GAAP.
|
|
|
Three Months Ended March 31, |
|
|
|
2018 |
|
|
2017 |
Net income (loss)
|
|
|
$
|
178
|
|
|
|
$
|
(42
|
)
|
Depletion, depreciation and amortization
|
|
|
|
357
|
|
|
|
|
337
|
|
Exploration and abandonments
|
|
|
|
35
|
|
|
|
|
33
|
|
Impairment of oil and gas properties
|
|
|
|
—
|
|
|
|
|
285
|
|
Accretion of discount on asset retirement obligations
|
|
|
|
4
|
|
|
|
|
5
|
|
Interest expense
|
|
|
|
36
|
|
|
|
|
46
|
|
Income tax (benefit) provision
|
|
|
|
50
|
|
|
|
|
(31
|
)
|
Gain on disposition of assets, net
|
|
|
|
(4
|
)
|
|
|
|
(11
|
)
|
Derivative related activity
|
|
|
|
136
|
|
|
|
|
(141
|
)
|
Amortization of stock-based compensation
|
|
|
|
17
|
|
|
|
|
22
|
|
Other
|
|
|
|
20
|
|
|
|
|
25
|
|
EBITDAX (a)
|
|
|
|
829
|
|
|
|
|
528
|
|
Cash interest expense
|
|
|
|
(35
|
)
|
|
|
|
(45
|
)
|
Discretionary cash flow (b)
|
|
|
|
794
|
|
|
|
|
483
|
|
Cash exploration expense
|
|
|
|
(28
|
)
|
|
|
|
(23
|
)
|
Changes in operating assets and liabilities
|
|
|
|
(212
|
)
|
|
|
|
(96
|
)
|
Net cash provided by operating activities
|
|
|
$
|
554
|
|
|
|
$
|
364
|
|
_____________
|
(a)
|
|
“EBITDAX” represents earnings before depletion, depreciation and
amortization expense; exploration and abandonments; impairment of
oil and gas properties; accretion of discount on asset retirement
obligations; interest expense; income taxes; net gain on the
disposition of assets; noncash derivative related activity;
amortization of stock-based compensation and other items.
|
(b)
|
|
Discretionary cash flow equals cash flows from operating activities
before changes in operating assets and liabilities and cash
exploration expense.
|
|
|
|
|
PIONEER NATURAL RESOURCES COMPANY
|
UNAUDITED SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (continued)
|
(in millions, except per share data)
|
|
Income adjusted for noncash mark-to-market ("MTM") derivative losses, as
presented in this press release, is presented and reconciled to
Pioneer's net income attributable to common stockholders (determined in
accordance with GAAP) because Pioneer believes that this non-GAAP
financial measure reflects an additional way of viewing aspects of
Pioneer's business that, when viewed together with its financial results
computed in accordance with GAAP, provides 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 this non-GAAP financial measure may enhance investors'
ability to assess Pioneer's historical and future financial performance.
This non-GAAP financial measure is not intended to be a substitute for
the comparable GAAP measure and should be read only in conjunction with
Pioneer's consolidated financial statements prepared in accordance with
GAAP. Noncash MTM derivative gains or losses will recur in future
periods; however, the amount and frequency can vary significantly from
period to period. The table below reconciles Pioneer's net income
attributable to common stockholders for the three months ended March 31,
2018, as determined in accordance with GAAP, to adjusted income
excluding noncash MTM derivative losses.
|
|
|
After-tax Amounts |
|
|
Amounts Per Share
|
Net income attributable to common stockholders
|
|
|
$
|
178
|
|
|
$
|
1.04
|
Noncash MTM derivative losses, net ($136 pretax)
|
|
|
|
106
|
|
|
|
0.62
|
Income adjusted for noncash MTM derivative losses
|
|
|
$
|
284
|
|
|
$
|
1.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PIONEER NATURAL RESOURCES COMPANY |
SUPPLEMENTAL INFORMATION |
|
Open Commodity Derivative Positions as of May 1, 2018 |
(Volumes are average daily amounts) |
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
Year Ending December 31, 2019
|
|
|
|
Second Quarter |
|
|
Third Quarter |
|
|
Fourth Quarter |
|
|
Average Daily Oil Production Associated with Derivatives (Bbl): |
|
|
|
|
|
|
|
|
|
|
|
|
Collar contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
Volume
|
|
|
|
3,000
|
|
|
|
3,000
|
|
|
|
|
3,000
|
|
|
|
|
—
|
|
NYMEX price:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ceiling
|
|
|
$
|
58.05
|
|
|
$
|
58.05
|
|
|
|
$
|
58.05
|
|
|
|
$
|
—
|
|
Floor
|
|
|
$
|
45.00
|
|
|
$
|
45.00
|
|
|
|
$
|
45.00
|
|
|
|
$
|
—
|
|
Collar contracts with short puts: |
|
|
|
|
|
|
|
|
|
|
|
|
Volume
|
|
|
|
149,000
|
|
|
|
154,000
|
|
|
|
|
159,000
|
|
|
|
|
65,000
|
|
NYMEX price:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ceiling
|
|
|
$
|
57.79
|
|
|
$
|
57.70
|
|
|
|
$
|
57.62
|
|
|
|
$
|
60.74
|
|
Floor
|
|
|
$
|
47.42
|
|
|
$
|
47.34
|
|
|
|
$
|
47.26
|
|
|
|
$
|
52.69
|
|
Short put
|
|
|
$
|
37.38
|
|
|
$
|
37.31
|
|
|
|
$
|
37.23
|
|
|
|
$
|
42.69
|
|
Average Daily NGL Production Associated with Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
Ethane basis swap contracts (a): |
|
|
|
|
|
|
|
|
|
|
|
|
Volume (MMBtu)
|
|
|
|
6,920
|
|
|
|
6,920
|
|
|
|
|
6,920
|
|
|
|
|
6,920
|
|
Price differential ($/MMBtu)
|
|
|
$
|
1.60
|
|
|
$
|
1.60
|
|
|
|
$
|
1.60
|
|
|
|
$
|
1.60
|
|
Average Daily Gas Production Associated with Derivatives (MMBtu): |
|
|
|
|
|
|
|
|
|
|
|
|
Swap contracts |
|
|
|
|
|
|
|
|
|
|
|
|
Volume
|
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
|
100,000
|
|
|
|
|
—
|
|
NYMEX price
|
|
|
$
|
3.00
|
|
|
$
|
3.00
|
|
|
|
$
|
3.00
|
|
|
|
$
|
—
|
|
Collar contracts with short puts: |
|
|
|
|
|
|
|
|
|
|
|
|
Volume
|
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
|
50,000
|
|
|
|
|
—
|
|
NYMEX price:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ceiling
|
|
|
$
|
3.40
|
|
|
$
|
3.40
|
|
|
|
$
|
3.40
|
|
|
|
$
|
—
|
|
Floor
|
|
|
$
|
2.75
|
|
|
$
|
2.75
|
|
|
|
$
|
2.75
|
|
|
|
$
|
—
|
|
Short put
|
|
|
$
|
2.25
|
|
|
$
|
2.25
|
|
|
|
$
|
2.25
|
|
|
|
$
|
—
|
|
Basis swap contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
Permian Basin index swap volume (b)
|
|
|
|
—
|
|
|
|
50,000
|
|
|
|
|
50,000
|
|
|
|
|
37,397
|
|
Price differential ($/MMBtu)
|
|
|
$
|
—
|
|
|
$
|
(1.50
|
)
|
|
|
$
|
(1.50
|
)
|
|
|
$
|
(1.50
|
)
|
Southern California index swap volume (c)
|
|
|
|
40,000
|
|
|
|
80,000
|
|
|
|
|
66,522
|
|
|
|
|
84,932
|
|
Price differential ($/MMBtu)
|
|
|
$
|
0.30
|
|
|
$
|
0.30
|
|
|
|
$
|
0.50
|
|
|
|
$
|
0.33
|
|
_____________
|
(a)
|
|
The ethane basis swap contracts reduce the price volatility of
ethane forecasted for sale by the Company at Mont Belvieu,
Texas-posted prices. The ethane basis swap contracts fix the basis
differential on a NYMEX Henry Hub ("HH") MMBtu equivalent basis. The
Company will receive the NYMEX HH price plus the price differential
on 6,920 MMBtu per day, which is equivalent to 2,500 Bbls per day of
ethane.
|
(b)
|
|
The referenced basis swap contracts fix the basis differentials
between the index price at which the Company sells its Permian Basin
gas and the NYMEX HH index price used in swap contracts and collar
contracts with short puts.
|
(c)
|
|
The referenced basis swap contracts fix the basis differentials
between Permian Basin index prices and southern California index
prices for Permian Basin gas forecasted for sale in southern
California.
|
|
|
|
|
|
|
Marketing derivatives. Periodically, the Company enters into buy
and sell marketing arrangements to fulfill firm pipeline transportation
commitments. Associated with these marketing arrangements, the Company
may enter into index swap contracts to mitigate price risk.
The following table presents the Company's open marketing derivative
positions as of May 1, 2018:
|
|
|
2018 |
|
|
|
Second Quarter |
|
|
Third Quarter |
Average Daily Oil Transportation Commitments Associated with
Derivatives (Bbl): |
|
|
|
|
|
|
Basis swap contracts: |
|
|
|
|
|
|
Louisiana Light Sweet index swap volume (a)
|
|
|
|
6,703
|
|
|
|
—
|
Price differential ($/Bbl)
|
|
|
$
|
3.18
|
|
|
$
|
—
|
Magellan East Houston index swap volume (a)
|
|
|
|
8,659
|
|
|
|
2,022
|
Price differential ($/Bbl)
|
|
|
$
|
3.29
|
|
|
$
|
3.30
|
_____________
|
(a)
|
|
The referenced basis swap contracts fix the basis differentials
between NYMEX WTI and Louisiana Light Sweet or Magellan East Houston
oil prices for Permian Basin oil forecasted for sale in the Gulf
Coast region.
|
|
|
|
|
|
|
|
PIONEER NATURAL RESOURCES COMPANY |
SUPPLEMENTAL INFORMATION (continued) |
|
Derivative Losses, Net |
(in millions) |
|
|
|
|
|
|
|
Three Months Ended March 31, 2018
|
Noncash changes in fair value:
|
|
|
|
Oil derivative losses
|
|
|
$
|
(126
|
)
|
NGL derivative gains
|
|
|
|
1
|
|
Gas derivative losses
|
|
|
|
(16
|
)
|
Marketing derivative gains
|
|
|
|
5
|
|
Total noncash derivative losses, net
|
|
|
|
(136
|
)
|
|
|
|
|
Net cash payments on settled derivative instruments:
|
|
|
|
Oil derivative payments
|
|
|
|
(74
|
)
|
Gas derivative receipts
|
|
|
|
2
|
|
Total cash derivative payments on settled derivative instruments, net
|
|
|
|
(72
|
)
|
Total derivative losses, net
|
|
|
$
|
(208
|
)
|
|
|
|
|
|
|

View source version on businesswire.com: https://www.businesswire.com/news/home/20180502006690/en/
Source: Pioneer Natural Resources Company
Pioneer Natural Resources Company
Investors
Frank
Hopkins, 972-969-4065
or
Neal Shah, 972-969-3900
or
Tom
Fitter, 972-969-1821
or
Media and Public Affairs
Tadd
Owens, 972-969-5760
or
Robert Bobo, 972-969-4020