Pioneer Natural Resources Company (PXD) (“Pioneer” or “the Company”) today announced that it has converted approximately 85% of its 2015 oil derivative contracts from three-way collars to fixed-price swaps. Pioneer’s 2015 fixed-price oil swaps cover 82,000 barrels of oil production per day at an average NYMEX price of $71.18 per barrel. These fixed-price derivative swaps and Pioneer’s remaining three-way collar contracts for 2015 (13,767 barrels of oil production per day) currently cover approximately 85% of the Company’s forecasted oil production in 2015. The Company continues to maintain its three-way collar contracts for 2016 ($96.46 per barrel call price, $85.47 per barrel put price and $74.35 per barrel short put price), which currently account for 73,000 barrels of oil production per day.
The Company also has derivatives in-place covering approximately 85% of forecasted gas production in 2015 through a combination of three-way collar contracts that cover 285,000 million British thermal units (MMBTU) per day at a NYMEX Henry Hub call price of $5.07 per MMBTU, a put price of $4.00 per MMBTU and a short put price of $3.00 per MMBTU, and derivative swap contracts that cover 20,000 MMBTU per day at an average NYMEX Henry Hub price of $4.31 per MMBTU.
Scott D. Sheffield, Chairman and CEO, stated, “Over the past five years, our derivative strategy has successfully protected our cash flow and allowed us to execute a highly productive drilling program. In light of the weak oil price environment forecasted for 2015, we elected to convert most of our 2015 oil derivatives from three-way collars to fixed-price swaps to establish a firm oil price floor and lock in the corresponding cash flow. Pioneer’s adjusted derivative portfolio, combined with our exceptional assets and strong balance sheet, positions the Company to manage through the current price downturn and emerge as an even stronger company when oil prices recover.”
The Company plans to release its 2015 business plan and capital budget as part of its fourth quarter 2014 earnings release on February 10, 2015.
The Company’s open derivatives positions are outlined on the attached schedule below.
Production Disruptions
Pioneer Natural Resources Company (PXD)(“Pioneer” or “the Company”) today announced that severe winter weather in West Texas has significantly impacted production and drilling operations in the Spraberry/Wolfcamp area. At the beginning of January, the Spraberry/Wolfcamp area experienced heavy icing and freezing temperatures that has resulted in extensive power outages, facility freeze-ups, trucking curtailments and limited access to production and drilling facilities. An extensive recovery period is expected, and it is likely to be several weeks before the full impact of this event can be determined.
The Company expects to provide an update on the impacts of this severe weather event on production and costs for the first quarter of 2015 as part of its fourth quarter 2014 earnings release on February 10, 2015. Spraberry/Wolfcamp production during the fourth quarter of 2014 was not impacted.
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 Pioneer’s website at www.pxd.com.
The following table presents the Company’s open commodity oil, NGL and gas derivative positions as of January 5, 2015:
| Year Ending December 31, | |||||||||||||||
| 2015 | 2016 | 2017 | |||||||||||||
| Average Daily Oil Production Associated with Derivatives (Bbl): | |||||||||||||||
| Collar contracts with short puts: | |||||||||||||||
| Volume (a) | 13,767 | 73,000 | — | ||||||||||||
| NYMEX price: | |||||||||||||||
| Ceiling | $ | 101.36 | $ | 96.46 | $ | — | |||||||||
| Floor | $ | 86.82 | $ | 85.47 | $ | — | |||||||||
| Short put | $ | 75.73 | $ | 74.35 | $ | — | |||||||||
| Swap contracts: | |||||||||||||||
| Volume | 82,000 | — | — | ||||||||||||
| NYMEX Price | $ | 71.18 | $ | — | $ | — | |||||||||
| Rollfactor swap contracts: | |||||||||||||||
| Volume | 36,575 | — | — | ||||||||||||
| NYMEX roll price (b) | $ | 0.06 | $ | — | $ | — | |||||||||
| Average Daily NGL Production Associated with Derivatives (Bbl): | |||||||||||||||
| Ethane swap contracts (c): | |||||||||||||||
| Volume | — | 4,000 | — | ||||||||||||
| Price | $ | — | $ | 12.29 | $ | — | |||||||||
| Average Daily Gas Production Associated with Derivatives (MMBtu): | |||||||||||||||
| Collar contracts with short puts: | |||||||||||||||
| Volume | 285,000 | 20,000 | — | ||||||||||||
| NYMEX price: | |||||||||||||||
| Ceiling | $ | 5.07 | $ | 5.36 | $ | — | |||||||||
| Floor | $ | 4.00 | $ | 4.00 | $ | — | |||||||||
| Short put | $ | 3.00 | $ | 3.00 | $ | — | |||||||||
| Swap contracts: | |||||||||||||||
| Volume | 20,000 | 70,000 | — | ||||||||||||
| NYMEX price | $ | 4.31 | $ | 4.06 | $ | — | |||||||||
| Basis swap contracts: | |||||||||||||||
| Mid-Continent index swap volume (d) | 95,000 | 15,000 | 30,000 | ||||||||||||
| Price differential ($/MMBtu) | $ | (0.24 | ) | $ | (0.32 | ) | $ | (0.34 | ) | ||||||
| Gulf Coast index swap volume (d) | 20,000 | — | — | ||||||||||||
| Price differential ($/MMBtu) | $ | — | $ | — | $ | — | |||||||||
| Permian Basin index swap volume (d) | 10,000 | — | — | ||||||||||||
| Price differential ($/MMBtu) | $ | (0.13 | ) | $ | — | $ | — | ||||||||
|
__________ |
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| (a) | Counterparties have the option to extend 5,000 BBLs per day of 2015 collar contracts with short puts for an additional year with a ceiling price of $100.08 per BBL, a floor price of $90.00 per BBL and a short put price of $80.00 per BBL. The option to extend is exercisable by the counterparties on December 31, 2015. | |
| (b) | Represent swaps that fix the difference between (i) each day’s price per Bbl of West Texas Intermediate oil “WTI” for the first nearby month less (ii) the price per Bbl of WTI for the second nearby NYMEX month, multiplied by .6667; plus (iii) each day’s price per Bbl of WTI for the first nearby month less (iv) the price per Bbl of WTI for the third nearby NYMEX month, multiplied by .3333. | |
| (c) | Represent derivative contracts that reduce the price volatility of forecasted ethane sales by the Company at Mont Belvieu, Texas-posted prices. | |
| (d) | Represent swaps that fix the basis differentials between the index prices at which the Company sells its Permian Basin, Gulf Coast and Mid-Continent gas, respectively, and the NYMEX Henry Hub index price used in gas swap and collar contracts. | |
Marketing and basis transfer derivatives. Periodically, the Company enters into buy and sell marketing arrangements to fulfill firm pipeline transportation commitments. Associated with these marketing arrangements, the Company may enter into index swaps to mitigate price risk. The following table presents the Company’s open marketing derivative positions as of January 5, 2015:
|
Year Ending |
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| 2015 | ||||
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Average Daily Volume Associated with Marketing Derivatives: |
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| Oil basis swap contracts (Bbl): | ||||
| Volume (a) | 10,000 | |||
| Price differential ($/Bbl) | $ | 2.99 | ||
| __________ | ||
| (a) | Represent swaps that fix the basis differential between WTI oil prices and Louisiana Light Sweet oil prices. | |
