Pioneer Natural Resources Company Reports First Quarter 2018 Financial and Operating Results
Pioneer reported first quarter net income attributable to common
stockholders of
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 quarterPermian 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 theGulf Coast under firm pipeline contracts during the first quarter at Brent-related pricing; Pioneer exported 87 MBOPD of the total volumes delivered to theGulf Coast ; approximately 75% of the Company’sPermian Basin gas production of 216 million cubic feet per day (MMCFPD) was tranported under firm pipeline contracts to the southernCalifornia 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 toGulf 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 andLower 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 aPermian 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
“Our cash flow continues to benefit from our strategy to enter into firm
transportation contracts for our increasing volumes of
“Our transition to a
“Looking forward, our deep, low-risk inventory of high-margin
Permian Basin Operations Update and Outlook
Pioneer is the largest acreage holder in the
The Company implemented a completion optimization program during 2015 in
the
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
The Company remains well positioned to move its
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
The average realized price for oil was
Production costs, including taxes and the effects of ASC 606, averaged
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.
Production costs are expected to average
General and administrative expense is expected to be
The Company’s effective income tax rate is expected to range from 21% to
25%. Current income taxes are expected to be less than
The Company’s financial and derivative MTM results and open derivatives positions are outlined on the attached schedules.
Earnings Conference Call
On
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
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
“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
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
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
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 |
||||||||||||||||||
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 |
|||||
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
Investors
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Hopkins, 972-969-4065
or
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or
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or
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or
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