Pioneer Natural Resources Company Reports Third Quarter 2018 Financial and Operating Results
Pioneer Natural Resources Company (NYSE:PXD) (“Pioneer” or “the
Company”) today reported financial and operating results for the quarter
ended September 30, 2018.
Pioneer reported third quarter net income attributable to common
stockholders of $411 million, or $2.39 per diluted share. Without the
effect of noncash mark-to-market (MTM) derivative gains of $38 million
after tax, or $0.22 per diluted share, and asset divestiture related net
benefits of $18 million, or $0.10 per diluted share, adjusted income for
the third quarter was $355 million after tax, or $2.07 per diluted share.
Third quarter financial and operating highlights included:
-
producing 288 thousand barrels oil equivalent per day (MBOEPD) in the
Permian Basin, an increase of 14 MBOEPD1, or 5%, compared
to the second quarter of 2018; third quarter Permian Basin production
was at the top end of Pioneer’s production guidance range of 278
MBOEPD to 288 MBOEPD; Permian Basin oil production increased to 186
thousand barrels of oil per day (MBOPD), an increase of 11 MBOPD, or
7% compared to the second quarter of 2018; third quarter Permian Basin
oil production was above the top end of Pioneer’s oil production
guidance range of 178 MBOPD to 184 MBOPD; 69 horizontal wells were
placed on production;
-
producing 321 MBOEPD companywide, which reflects closing the Raton and
West Panhandle divestitures at the end of July and August 2018,
respectively;
-
continuing to maintain a strong balance sheet with cash on hand at the
end of the third quarter of $1.7 billion (including liquid
investments); net debt to forecasted 2018 operating cash flow was 0.2
times2 and net debt-to-book capitalization was 5% at the
end of the third quarter;
-
benefiting from firm transportation (FT) contracts that led to $200
million of incremental cash flow in the third quarter; delivered
approximately 165 MBOPD of Permian Basin oil to the Gulf Coast under
FT contracts during the third quarter; the Company exported 130 MBOPD
of the total volumes delivered to the Gulf Coast;
-
increasing FT capacity to the Gulf Coast to 185 MBOPD in November
2018; forecasting a cash flow uplift attributable to FT of greater
than $125 million in the fourth quarter of 2018; greater than 90% of
Pioneer’s forecasted Permian Basin oil volumes are covered under FT
contracts through early 2021, with these volumes receiving
Brent-related pricing; receiving West Texas Intermediate (WTI) Cushing
pricing on the Company’s Permian Basin oil production volumes in
excess of Gulf Coast FT commitments; effective September 2018, Pioneer
has no exposure to Midland oil pricing through 2020;
-
delivering approximately 70% of the Company’s Permian Basin gas
production under firm pipeline contracts tied to the Southern
California gas price index; the remainder is sold primarily under term
contracts at Waha pricing; Southern California-priced sales received
an uplift of approximately $1.00 per thousand cubic feet of gas (MCF)
versus Waha sales; and
-
placing the Company’s first multi-zone Spraberry appraisal pad
(Stackberry) on production in western Martin County; the six-well pad
delivered 90-day cumulative production of 545 MBOE3 (81%
oil), representing an improvement of approximately 35% over previous
horizontal Spraberry wells placed on production in this area; placing
two additional multi-zone pads in the Spraberry appraisal program on
production in the fourth quarter of 2018; the objective of this
multi-zone appraisal program is to determine the optimal long-term
development strategy for the Middle Spraberry, Jo Mill and Lower
Spraberry Shale intervals.
Pioneer’s full-year 2018 update includes:
-
operating 22 horizontal rigs in the Permian Basin; planning to add two
rigs in December to support the 2019 plan; expecting to place 250 to
275 wells on production during 2018; drilling wells in the Permian
Basin that deliver strong cash operating margins and high rates of
return;
-
expecting to place approximately 60 Version 3.0+ completions4
on production during the second half of 2018 as planned; Version 3.0+
completions to date continue to demonstrate strong results and
improved economics; during the third quarter, the Company completed 44
Version 3.0+ wells and placed 39 Version 3.0+ wells on production;
-
entering into a long-term West Texas sand supply agreement with U.S.
Silica to reduce well costs; provides delivered sand at approximately
half the cost of the Company’s current sand supply; first volumes to
be delivered during the first quarter of 2019, supplementing existing
sources of sand;
-
expecting noncore asset divestiture process to be completed by year
end, resulting in Pioneer becoming a Permian Basin “pure play;” signed
purchase and sale agreement to sell South Texas Sinor Nest oil assets
for $132 million, with the sale expected to close during the fourth
quarter of 2018; closed sales of West Panhandle field, Raton Basin and
selected Eagle Ford acreage for aggregate proceeds of $383 million;
progressing divestiture of remaining Eagle Ford assets;
-
funding 2018 capital program5 of approximately $3.4 billion
from forecasted operating cash flow of approximately $3.4
billion2 and proceeds from asset divestitures;
-
forecasting Permian Basin production growth in 2018 of 19% to 24%
compared to 2017; production is currently trending toward the upper
half of this range; and
-
expecting 2018 return on capital employed (ROCE)6 to be
greater than 10% as compared to 2017 ROCE of 4%.
President and CEO Timothy L. Dove stated, “The third quarter was another
very strong quarter for Pioneer and resulted in production being above
guidance, healthy earnings and solid execution. The Permian Basin
continues to be the best place to be in the shale oil business,
providing unmatched resource potential and opportunity, and delivers
highly productive wells, strong cash margins and robust returns. We see
this in our financial results as our return on capital employed is
expected to be greater than 10% for 2018, benefiting from a low cost
basis in our Permian Basin acreage.
“The Company realized $200 million of incremental cash flow in the third
quarter as we successfully navigated the wider oil differentials
witnessed in Midland, displaying the benefits of our long-term planning
approach. We also brought online our first successful multi-zone pad in
the Stackberry appraisal program in western Martin County, demonstrating
the impact of combining our extensive subsurface dataset and the
utilization of peer-leading technology and science.
“Pioneer remains firmly committed to our 1,000,000 in 10 plan,
which is underpinned by high-margin Permian wells that are expected to
generate increasing levels of organic cash flow and improve corporate
rates of return. We continue the transition to a Permian Basin ‘pure
play’ and expect to have it completed by year end. We recently signed a
purchase and sale agreement to sell our South Texas Sinor Nest oil
assets for net proceeds of $132 million and continue to progress our
Eagle Ford divestiture. Additionally, as evidenced by our recently
announced West Texas sand agreement, we are focused on reducing our cost
structure and expect this to continue as we move into 2019.”
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 69 horizontal wells on production during the third
quarter of 2018. The Company completed 44 wells during the third quarter
of 2018 that utilized higher intensity completions compared to Version
3.0 wells. These are referred to as Version 3.0+ completions. Of the 44
Version 3.0+ wells completed, 39 wells were placed on production during
the third quarter. Results from the 104 Version 3.0+ wells completed in
2017 and 2018 are demonstrating cumulative outperformance of
approximately 35% compared to Version 3.0 completions in equivalent
areas.
Pioneer placed its first six-well, multi-zone Spraberry appraisal pad
(Stackberry) on production in western Martin County during the third
quarter in order to develop the optimal long-term development strategy
for the Middle Spraberry, Jo Mill, and Lower Spraberry Shale intervals.
Pioneer’s extensive subsurface dataset combined with peer-leading
technology and scientific analysis enabled the Company to develop a
comprehensive technical model of the Spraberry formation. Incorporating
this data into the development plan resulted in cumulative production
outperformance of approximately 35% over previous horizontal Spraberry
wells placed on production in the area. This led to the derisking of
approximately 50,000 acres for the Middle Spraberry, Jo Mill, and Lower
Spraberry Shale intervals in surrounding areas, progressing the
transition of the Spraberry intervals from appraisal to development mode.
During the third quarter of 2018, the Company’s marketing of Permian
Basin oil yielded premium Brent-related oil pricing, leading to an
additional $189 million of cash flow. The Company continues to enhance
margins through its FT contracts by transporting oil to price-advantaged
markets and expects these activities to provide a cash flow uplift of
greater than $125 million during the fourth quarter of 2018.
Third Quarter 2018 Financial Review
Sales volumes for the third quarter of 2018 averaged 321 MBOEPD. Oil
sales averaged 195 thousand barrels per day (MBPD), NGL sales averaged
63 MBPD and gas sales averaged 378 million cubic feet per day (MMCFPD).
The average realized price for oil was $57.54 per barrel. The average
realized price for NGLs was $35.97 per barrel, and the average realized
price for gas was $2.21 per MCF. Adjusting for the cash flow uplift
attributable to the Company’s FT contracts, the average realized oil
price would have increased by $10.79 per barrel to $68.33. These prices
exclude the effects of derivatives.
Production costs averaged $9.51 per barrel oil equivalent (BOE).
Depreciation, depletion and amortization (DD&A) expense averaged $13.37
per BOE. Exploration and abandonment costs were $20 million, including
$3 million for drilling, acreage and other abandonments and $17 million
for geological and geophysical personnel costs. General and
administrative expense totaled $96 million. Interest expense was $30
million. Other expense was $182 million, including $123 million of
charges related to the Company’s asset divestitures and $43 million of
charges associated with excess firm gathering transportation
commitments. Accretion of discount on asset retirement obligations was
$3 million. The Company’s effective income tax rate was 22%.
Drilling and completion capital expenditures5 for the third
quarter totaled $835 million.
The Company’s financial and derivative MTM results and open derivatives
positions are outlined on the attached schedules.
Fourth Quarter 2018 Financial Outlook
The Company’s fourth quarter 2018 outlook for certain operating and
financial items is provided below.
Based on the ongoing asset divestiture process, the Company is only
providing Permian Basin-specific estimates for production, production
costs and DD&A expense for the fourth quarter.
Permian Basin oil production is forecasted to average between 188 MBOPD
to 194 MBOPD. Permian Basin production is forecasted to average between
293 MBOEPD to 303 MBOEPD. Production costs are expected to average $9.00
per BOE to $11.00 per BOE. DD&A expense is expected to average $13.00
per BOE to $15.00 per BOE.
Exploration and abandonment expense is forecasted to be $20 million to
$30 million. General and administrative expense is expected to be $95
million to $100 million. Interest expense is expected to be $30 million
to $35 million. Other expense is forecasted to be $50 million to $60
million and is expected to include $40 million to $45 million of charges
associated with excess firm gathering and transportation commitments
primarily related to the Eagle Ford asset. Accretion of discount on
asset retirement obligations is expected to be $3 million to $6 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.
Earnings Conference Call
On Wednesday, November 7, 2018, at 9:00 a.m. CT, Pioneer will discuss
its financial and operating results for the quarter ended September 30,
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 800-263-0877 and confirmation code 4529659 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 December 2, 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.
1) Excludes 35 MMCFPD of gas production that is attributable
to the first quarter of 2018; such volumes were included in the second
quarter of 2018 as a result of the adoption of ASC 606
2) Based on prices for the remainder of the year of $75.00/BBL
for Brent oil and $3.25/MCF for NYMEX gas
3) Production normalized to a lateral length of 10,000 feet
4) Version 3.0+ completions planned during the second half of
2018 are expected to utilize 2,500 pounds per foot of proppant or greater
5) Excludes acquisitions, asset retirement obligations,
capitalized interest, geological and geophysical G&A and IT system
upgrades
6) Return on Capital Employed (ROCE) equals net income
adjusted for tax-effected interest expense, net noncash MTM derivative
gains and losses and other unusual items divided by the summation of
average equity plus average net debt; unusual items have historically
included noncash property impairments, gain/loss and related charges on
asset divestitures and tax-related items
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2018
|
|
|
December 31, 2017
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
919
|
|
|
|
$
|
896
|
|
Short-term investments
|
|
|
|
557
|
|
|
|
1,213
|
|
Accounts receivable, net
|
|
|
|
876
|
|
|
|
645
|
|
Income taxes receivable
|
|
|
|
7
|
|
|
|
7
|
|
Inventories
|
|
|
|
269
|
|
|
|
212
|
|
Derivatives
|
|
|
|
1
|
|
|
|
11
|
|
Other
|
|
|
|
31
|
|
|
|
23
|
|
Total current assets
|
|
|
|
2,660
|
|
|
|
3,007
|
|
Property, plant and equipment, at cost:
|
|
|
|
|
|
|
|
Oil and gas properties, using the successful efforts method of
accounting
|
|
|
|
20,759
|
|
|
|
20,962
|
|
Accumulated depletion, depreciation and amortization
|
|
|
|
(7,828
|
)
|
|
|
(9,196
|
)
|
Total property, plant and equipment
|
|
|
|
12,931
|
|
|
|
11,766
|
|
Long-term investments
|
|
|
|
193
|
|
|
|
66
|
|
Goodwill
|
|
|
|
267
|
|
|
|
270
|
|
Other property and equipment, net
|
|
|
|
1,864
|
|
|
|
1,762
|
|
Other assets, net
|
|
|
|
109
|
|
|
|
132
|
|
|
|
|
|
$
|
18,024
|
|
|
|
$
|
17,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
|
1,555
|
|
|
|
$
|
1,282
|
|
Interest payable
|
|
|
|
25
|
|
|
|
59
|
|
Income taxes payable
|
|
|
|
2
|
|
|
|
—
|
|
Current portion of long-term debt
|
|
|
|
—
|
|
|
|
449
|
|
Derivatives
|
|
|
|
482
|
|
|
|
232
|
|
Other
|
|
|
|
161
|
|
|
|
106
|
|
Total current liabilities
|
|
|
|
2,225
|
|
|
|
2,128
|
|
Long-term debt
|
|
|
|
2,286
|
|
|
|
2,283
|
|
Derivatives
|
|
|
|
70
|
|
|
|
23
|
|
Deferred income taxes
|
|
|
|
1,064
|
|
|
|
899
|
|
Other liabilities
|
|
|
|
485
|
|
|
|
391
|
|
Equity
|
|
|
|
11,894
|
|
|
|
11,279
|
|
|
|
|
|
$
|
18,024
|
|
|
|
$
|
17,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PIONEER NATURAL RESOURCES COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
Revenues and other income:
|
|
|
|
|
|
|
|
|
|
|
|
Oil and gas
|
|
|
|
$
|
1,317
|
|
|
$
|
855
|
|
|
|
$
|
3,869
|
|
|
$
|
2,433
|
|
Sales of purchased oil and gas
|
|
|
|
1,141
|
|
|
428
|
|
|
|
3,306
|
|
|
1,094
|
|
Interest and other
|
|
|
|
10
|
|
|
17
|
|
|
|
40
|
|
|
44
|
|
Derivative gains (losses), net
|
|
|
|
(135
|
)
|
|
(133
|
)
|
|
|
(701
|
)
|
|
153
|
|
Gain on disposition of assets, net
|
|
|
|
143
|
|
|
—
|
|
|
|
226
|
|
|
205
|
|
|
|
|
|
2,476
|
|
|
1,167
|
|
|
|
6,740
|
|
|
3,929
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Oil and gas production
|
|
|
|
198
|
|
|
152
|
|
|
|
654
|
|
|
440
|
|
Production and ad valorem taxes
|
|
|
|
83
|
|
|
53
|
|
|
|
229
|
|
|
152
|
|
Depletion, depreciation and amortization
|
|
|
|
394
|
|
|
355
|
|
|
|
1,130
|
|
|
1,033
|
|
Purchased oil and gas
|
|
|
|
941
|
|
|
442
|
|
|
|
3,021
|
|
|
1,141
|
|
Impairment of oil and gas properties
|
|
|
|
—
|
|
|
—
|
|
|
|
77
|
|
|
285
|
|
Exploration and abandonments
|
|
|
|
20
|
|
|
18
|
|
|
|
83
|
|
|
78
|
|
General and administrative
|
|
|
|
96
|
|
|
81
|
|
|
|
282
|
|
|
245
|
|
Accretion of discount on asset retirement obligations
|
|
|
|
3
|
|
|
5
|
|
|
|
11
|
|
|
14
|
|
Interest
|
|
|
|
30
|
|
|
37
|
|
|
|
97
|
|
|
118
|
|
Other
|
|
|
|
182
|
|
|
58
|
|
|
|
316
|
|
|
176
|
|
|
|
|
|
1,947
|
|
|
1,201
|
|
|
|
5,900
|
|
|
3,682
|
|
Income (loss) before income taxes
|
|
|
|
529
|
|
|
(34
|
)
|
|
|
840
|
|
|
247
|
|
Income tax benefit (provision)
|
|
|
|
(118
|
)
|
|
11
|
|
|
|
(188
|
)
|
|
(79
|
)
|
Net income (loss)
|
|
|
|
411
|
|
|
(23
|
)
|
|
|
652
|
|
|
168
|
|
Net loss attributable to noncontrolling interests
|
|
|
|
—
|
|
|
—
|
|
|
|
3
|
|
|
—
|
|
Net income (loss) attributable to common stockholders
|
|
|
|
$
|
411
|
|
|
$
|
(23
|
)
|
|
|
$
|
655
|
|
|
$
|
168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
2.40
|
|
|
$
|
(0.13
|
)
|
|
|
$
|
3.82
|
|
|
$
|
0.98
|
|
Diluted
|
|
|
|
$
|
2.39
|
|
|
$
|
(0.13
|
)
|
|
|
$
|
3.82
|
|
|
$
|
0.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding
|
|
|
|
171
|
|
|
170
|
|
|
|
171
|
|
|
170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PIONEER NATURAL RESOURCES COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
$
|
411
|
|
|
$
|
(23
|
)
|
|
|
$
|
652
|
|
|
$
|
168
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Depletion, depreciation and amortization
|
|
|
|
394
|
|
|
355
|
|
|
|
1,130
|
|
|
1,033
|
|
Impairment of oil and gas properties
|
|
|
|
—
|
|
|
—
|
|
|
|
77
|
|
|
285
|
|
Impairment of inventory and other property and equipment
|
|
|
|
3
|
|
|
—
|
|
|
|
9
|
|
|
1
|
|
Exploration expenses, including dry holes
|
|
|
|
3
|
|
|
1
|
|
|
|
12
|
|
|
19
|
|
Deferred income taxes
|
|
|
|
116
|
|
|
(11
|
)
|
|
|
186
|
|
|
79
|
|
Gain on disposition of assets, net
|
|
|
|
(143
|
)
|
|
—
|
|
|
|
(226
|
)
|
|
(205
|
)
|
Accretion of discount on asset retirement obligations
|
|
|
|
3
|
|
|
5
|
|
|
|
11
|
|
|
14
|
|
Interest expense
|
|
|
|
2
|
|
|
1
|
|
|
|
4
|
|
|
4
|
|
Derivative related activity
|
|
|
|
(48
|
)
|
|
161
|
|
|
|
307
|
|
|
(91
|
)
|
Amortization of stock-based compensation
|
|
|
|
22
|
|
|
18
|
|
|
|
63
|
|
|
61
|
|
Other noncash items
|
|
|
|
133
|
|
|
17
|
|
|
|
176
|
|
|
58
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
|
(25
|
)
|
|
(158
|
)
|
|
|
(233
|
)
|
|
(131
|
)
|
Income taxes receivable
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
2
|
|
Inventories
|
|
|
|
(35
|
)
|
|
2
|
|
|
|
(70
|
)
|
|
(9
|
)
|
Investments
|
|
|
|
—
|
|
|
(1
|
)
|
|
|
4
|
|
|
(2
|
)
|
Other current assets
|
|
|
|
6
|
|
|
(5
|
)
|
|
|
(1
|
)
|
|
(4
|
)
|
Accounts payable
|
|
|
|
93
|
|
|
124
|
|
|
|
305
|
|
|
82
|
|
Interest payable
|
|
|
|
(29
|
)
|
|
(21
|
)
|
|
|
(34
|
)
|
|
(30
|
)
|
Income taxes payable
|
|
|
|
2
|
|
|
—
|
|
|
|
2
|
|
|
—
|
|
Other current liabilities
|
|
|
|
(34
|
)
|
|
(9
|
)
|
|
|
(46
|
)
|
|
(33
|
)
|
Net cash provided by operating activities
|
|
|
|
874
|
|
|
456
|
|
|
|
2,328
|
|
|
1,301
|
|
Net cash used in investing activities
|
|
|
|
(753
|
)
|
|
(487
|
)
|
|
|
(1,777
|
)
|
|
(1,262
|
)
|
Net cash provided by (used in) financing activities
|
|
|
|
6
|
|
|
7
|
|
|
|
(528
|
)
|
|
(521
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
127
|
|
|
(24
|
)
|
|
|
23
|
|
|
(482
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
|
792
|
|
|
660
|
|
|
|
896
|
|
|
1,118
|
|
Cash and cash equivalents, end of period
|
|
|
|
$
|
919
|
|
|
$
|
636
|
|
|
|
$
|
919
|
|
|
$
|
636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PIONEER NATURAL RESOURCES COMPANY
UNAUDITED SUMMARY PRODUCTION, PRICE AND MARGIN DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
Average Daily Sales Volumes (a):
|
|
|
|
|
|
|
|
|
|
|
|
Oil (Bbls)
|
|
|
|
195,116
|
|
|
161,634
|
|
|
|
187,756
|
|
|
151,438
|
Natural gas liquids ("NGL") (Bbls)
|
|
|
|
62,611
|
|
|
57,346
|
|
|
|
64,410
|
|
|
52,519
|
Gas (Mcf)
|
|
|
|
377,587
|
|
|
340,384
|
|
|
|
407,617
|
|
|
344,206
|
Total (BOEs)
|
|
|
|
320,659
|
|
|
275,711
|
|
|
|
320,102
|
|
|
261,325
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Prices (a):
|
|
|
|
|
|
|
|
|
|
|
|
Oil (per Bbl)
|
|
|
|
$
|
57.54
|
|
|
$
|
45.35
|
|
|
|
$
|
60.06
|
|
|
$
|
46.41
|
NGL (per Bbl)
|
|
|
|
$
|
35.97
|
|
|
$
|
18.96
|
|
|
|
$
|
30.80
|
|
|
$
|
18.38
|
Gas (per Mcf)
|
|
|
|
$
|
2.21
|
|
|
$
|
2.58
|
|
|
|
$
|
2.24
|
|
|
$
|
2.66
|
Total (per BOE)
|
|
|
|
$
|
44.64
|
|
|
$
|
33.72
|
|
|
|
$
|
44.27
|
|
|
$
|
34.10
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2018
|
|
|
|
|
Permian Horizontals
|
|
|
Permian Verticals
|
|
|
Eagle Ford
|
|
|
Other Assets
|
|
|
Total
|
|
|
|
|
($ per BOE)
|
Margin Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average prices
|
|
|
|
$
|
45.94
|
|
|
|
$
|
46.00
|
|
|
|
$
|
36.41
|
|
|
|
$
|
29.37
|
|
|
|
$
|
44.64
|
|
Production costs
|
|
|
|
(4.20
|
)
|
|
|
(26.05
|
)
|
|
|
(10.28
|
)
|
|
|
(0.95
|
)
|
|
|
(6.71
|
)
|
Production and ad valorem taxes
|
|
|
|
(2.81
|
)
|
|
|
(3.19
|
)
|
|
|
(2.46
|
)
|
|
|
(2.10
|
)
|
|
|
(2.80
|
)
|
|
|
|
|
$
|
38.93
|
|
|
|
$
|
16.76
|
|
|
|
$
|
23.67
|
|
|
|
$
|
26.32
|
|
|
|
$
|
35.13
|
|
Percent Oil
|
|
|
|
65
|
%
|
|
|
65
|
%
|
|
|
36
|
%
|
|
|
18
|
%
|
|
|
61
|
%
|
_____________
|
(a)
|
|
|
On January 1, 2018, the Company adopted ASC 606, "Revenue from
Contracts with Customers." Changes in oil and gas revenue, gas
production volumes 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 and nine months ended September 30,
2018 are presented in accordance with the new rule, while results
for the three and nine months ended September 30, 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 and
nine months ended September 30, 2018 and 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
|
|
(in millions)
|
Net income (loss) attributable to common stockholders
|
|
|
|
$
|
411
|
|
|
$
|
(23
|
)
|
|
|
$
|
655
|
|
|
$
|
168
|
|
Participating share-based earnings
|
|
|
|
(2
|
)
|
|
—
|
|
|
|
(3
|
)
|
|
(1
|
)
|
Basic and diluted net income (loss) attributable to common
stockholders
|
|
|
|
$
|
409
|
|
|
$
|
(23
|
)
|
|
|
$
|
652
|
|
|
$
|
167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares outstanding were
171 million for both the three and nine months ended September 30,
2018 and 170 million for both the three and nine months ended
September 30, 2017.
|
|
|
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
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 or net cash
provided by operating activities, as defined by GAAP.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
Net income (loss)
|
|
|
$
|
411
|
|
|
$
|
(23
|
)
|
|
|
$
|
652
|
|
|
$
|
168
|
|
Depletion, depreciation and amortization
|
|
|
394
|
|
|
355
|
|
|
|
1,130
|
|
|
1,033
|
|
Exploration and abandonments
|
|
|
20
|
|
|
18
|
|
|
|
83
|
|
|
78
|
|
Impairment of oil and gas properties
|
|
|
—
|
|
|
—
|
|
|
|
77
|
|
|
285
|
|
Impairment of inventory and other property and equipment
|
|
|
3
|
|
|
—
|
|
|
|
9
|
|
|
1
|
|
Accretion of discount on asset retirement obligations
|
|
|
3
|
|
|
5
|
|
|
|
11
|
|
|
14
|
|
Interest expense
|
|
|
30
|
|
|
37
|
|
|
|
97
|
|
|
118
|
|
Income tax (benefit) provision
|
|
|
118
|
|
|
(11
|
)
|
|
|
188
|
|
|
79
|
|
Gain on disposition of assets, net
|
|
|
(143
|
)
|
|
—
|
|
|
|
(226
|
)
|
|
(205
|
)
|
Derivative related activity
|
|
|
(48
|
)
|
|
161
|
|
|
|
307
|
|
|
(91
|
)
|
Amortization of stock-based compensation
|
|
|
22
|
|
|
18
|
|
|
|
63
|
|
|
61
|
|
Other
|
|
|
133
|
|
|
17
|
|
|
|
176
|
|
|
58
|
|
EBITDAX (a)
|
|
|
943
|
|
|
577
|
|
|
|
2,567
|
|
|
1,599
|
|
Cash interest expense
|
|
|
(28
|
)
|
|
(36
|
)
|
|
|
(93
|
)
|
|
(114
|
)
|
Current income tax provision
|
|
|
(2
|
)
|
|
—
|
|
|
|
(2
|
)
|
|
—
|
|
Discretionary cash flow (b)
|
|
|
913
|
|
|
541
|
|
|
|
2,472
|
|
|
1,485
|
|
Cash exploration expense
|
|
|
(17
|
)
|
|
(17
|
)
|
|
|
(71
|
)
|
|
(59
|
)
|
Changes in operating assets and liabilities
|
|
|
(22
|
)
|
|
(68
|
)
|
|
|
(73
|
)
|
|
(125
|
)
|
Net cash provided by operating activities
|
|
|
$
|
874
|
|
|
$
|
456
|
|
|
|
$
|
2,328
|
|
|
$
|
1,301
|
|
_____________
|
(a)
|
|
|
“EBITDAX” represents earnings before depletion, depreciation and
amortization expense; exploration and abandonments; impairment of
oil and gas properties; impairment of inventory and other property
and equipment; 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 noncash 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)
|
|
Adjusted income excluding noncash mark-to-market ("MTM") derivative
gains, and adjusted income excluding noncash MTM derivative gains
and unusual items, as presented in this press release, are presented
and reconciled to Pioneer's net income attributable to common
stockholders (determined in accordance with GAAP) because Pioneer
believes that these non-GAAP financial measures reflects an
additional way of viewing aspects of Pioneer's business that, when
viewed together with its financial results computed in accordance
with GAAP, provide 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 these non-GAAP financial measures may
enhance investors' ability to assess Pioneer's historical and future
financial performance. These non-GAAP financial measures are 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 and unusual items 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 September 30, 2018, as determined in accordance with GAAP, to
adjusted income excluding noncash MTM derivative gains and adjusted
income excluding MTM derivative gains and unusual items for the
quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
After-tax
Amounts
|
|
|
Amounts
Per Share
|
Net income attributable to common stockholders
|
|
|
|
$
|
411
|
|
|
|
$
|
2.39
|
|
Noncash MTM derivative gains, net ($48 pretax)
|
|
|
|
(38
|
)
|
|
|
(0.22
|
)
|
Adjusted income excluding noncash MTM derivative gains
|
|
|
|
373
|
|
|
|
2.17
|
|
Unusual items - asset divestiture related charges:
|
|
|
|
|
|
|
|
Gain on sale of West Panhandle ($146 pretax)
|
|
|
|
(114
|
)
|
|
|
(0.66
|
)
|
Other asset divestiture related charges ($123 pretax)
|
|
|
|
96
|
|
|
|
0.56
|
|
Adjusted income excluding noncash MTM derivative gains and unusual
items
|
|
|
|
$
|
355
|
|
|
|
$
|
2.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PIONEER NATURAL RESOURCES COMPANY SUPPLEMENTAL
INFORMATION
Open Commodity Derivative Positions as of November 2,
2018 (Volumes are average daily amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
Year Ending December 31, 2019
|
|
|
|
|
Fourth Quarter
|
|
|
Average Daily Oil Production Associated with Derivatives (Bbl):
|
|
|
|
|
|
|
|
Brent swap contracts:
|
|
|
|
|
|
|
|
Volume
|
|
|
|
—
|
|
|
|
10,000
|
|
Price:
|
|
|
|
$
|
—
|
|
|
|
$
|
70.00
|
|
Brent collar contracts with short puts:
|
|
|
|
|
|
|
|
Volume
|
|
|
|
—
|
|
|
|
15,000
|
|
Price:
|
|
|
|
|
|
|
|
Ceiling
|
|
|
|
$
|
—
|
|
|
|
$
|
89.90
|
|
Floor
|
|
|
|
$
|
—
|
|
|
|
$
|
75.00
|
|
Short put
|
|
|
|
$
|
—
|
|
|
|
$
|
65.00
|
|
NYMEX collar contracts:
|
|
|
|
|
|
|
|
Volume
|
|
|
|
3,000
|
|
|
|
—
|
|
Price:
|
|
|
|
|
|
|
|
Ceiling
|
|
|
|
$
|
58.05
|
|
|
|
$
|
—
|
|
Floor
|
|
|
|
$
|
45.00
|
|
|
|
$
|
—
|
|
NYMEX collar contracts with short puts:
|
|
|
|
|
|
|
|
Volume
|
|
|
|
159,000
|
|
|
|
55,000
|
|
Price:
|
|
|
|
|
|
|
|
Ceiling
|
|
|
|
$
|
57.62
|
|
|
|
$
|
60.13
|
|
Floor
|
|
|
|
$
|
47.26
|
|
|
|
$
|
52.27
|
|
Short put
|
|
|
|
$
|
37.23
|
|
|
|
$
|
42.27
|
|
Average Daily NGL Production Associated with Derivatives:
|
|
|
|
|
|
|
|
Ethane basis swap contracts (a):
|
|
|
|
|
|
|
|
Volume (MMBtu)
|
|
|
|
2,331
|
|
|
|
—
|
|
Price differential ($/MMBtu)
|
|
|
|
$
|
1.60
|
|
|
|
$
|
—
|
|
Average Daily Gas Production Associated with Derivatives (MMBtu):
|
|
|
|
|
|
|
|
Swap contracts:
|
|
|
|
|
|
|
|
Volume
|
|
|
|
101,348
|
|
|
|
647
|
|
NYMEX price
|
|
|
|
$
|
3.00
|
|
|
|
$
|
3.11
|
|
Collar contracts with short puts:
|
|
|
|
|
|
|
|
Volume
|
|
|
|
50,000
|
|
|
|
—
|
|
NYMEX price:
|
|
|
|
|
|
|
|
Ceiling
|
|
|
|
$
|
3.40
|
|
|
|
$
|
—
|
|
Floor
|
|
|
|
$
|
2.75
|
|
|
|
$
|
—
|
|
Short put
|
|
|
|
$
|
2.25
|
|
|
|
$
|
—
|
|
Basis swap contracts:
|
|
|
|
|
|
|
|
Permian Basin index swap volume (b)
|
|
|
|
58,652
|
|
|
|
44,230
|
|
Price differential ($/MMBtu)
|
|
|
|
$
|
(1.46
|
)
|
|
|
$
|
(1.46
|
)
|
Southern California index swap volume (c)
|
|
|
|
66,522
|
|
|
|
84,932
|
|
Price differential ($/MMBtu)
|
|
|
|
$
|
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 2,331 MMBtu per day, which is equivalent to 842 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 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 Arizona and
southern California.
|
|
|
|
|
|
|
|
Other derivatives. Periodically, the Company enters into
gas swap contracts to mitigate gas price risk. As of November 2,
2018, the Company was party to gas swap contracts for 4,500 MMBtu
per day for November 2018 through March 2019 at an average fixed
price of $1.58 per MMBtu. The Company will receive Permian Basin
index prices in exchange for paying the fixed price.
|
|
|
|
|
|
|
|
|
|
|
|
|
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL INFORMATION (continued)
Derivative Losses, Net
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2018
|
|
|
Nine Months Ended September 30, 2018
|
Noncash changes in fair value:
|
|
|
|
|
|
|
|
Oil derivative gains (losses)
|
|
|
|
$
|
58
|
|
|
|
$
|
(271
|
)
|
NGL derivative losses
|
|
|
|
(8
|
)
|
|
|
(8
|
)
|
Gas derivative losses
|
|
|
|
(4
|
)
|
|
|
(32
|
)
|
Marketing derivative gains
|
|
|
|
2
|
|
|
|
4
|
|
Total noncash derivative gains (losses), net
|
|
|
|
48
|
|
|
|
(307
|
)
|
|
|
|
|
|
|
|
|
Net cash payments on settled derivative instruments:
|
|
|
|
|
|
|
|
Oil derivative payments
|
|
|
|
(170
|
)
|
|
|
(383
|
)
|
NGL derivative payments
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
Gas derivative payments
|
|
|
|
(10
|
)
|
|
|
(7
|
)
|
Marketing derivative payments
|
|
|
|
(2
|
)
|
|
|
(3
|
)
|
Total cash derivative payments on settled derivative instruments, net
|
|
|
|
(183
|
)
|
|
|
(394
|
)
|
Total derivative losses, net
|
|
|
|
$
|
(135
|
)
|
|
|
$
|
(701
|
)
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20181106005955/en/
Copyright Business Wire 2018