Pioneer Natural Resources Company Reports Year-End 2017 Proved Reserves and Finding Costs
Pioneer Natural Resources Company (NYSE:PXD) (“Pioneer” or “the
Company”) today announced that the Company added proved reserves
totaling 314 million barrels oil equivalent (MMBOE) during 2017 from
discoveries, extensions and technical revisions of previous estimates
(excludes positive price revisions of 52 MMBOE, proved reserves divested
of 7 MMBOE and proved reserves acquired of 1 MMBOE). These drillbit
proved reserve additions equate to a drillbit reserve replacement of
309% of Pioneer’s full-year 2017 production of 102 MMBOE, which includes
production used for field fuel of 2.5 MMBOE. The Company’s total costs
incurred during 2017 were $2.8 billion, including $136 million for
acquisitions (principally for undeveloped acreage additions).
The Company’s proved reserve additions in 2017 were primarily due to (i)
the continued successful execution of Pioneer’s horizontal drilling
program in the Permian Basin, (ii) strong well performance from
Pioneer’s 2017 drilling program in the Eagle Ford Shale and (iii)
improved performance from wells placed on production in the Permian
Basin and the Eagle Ford Shale prior to 2017. Eighty-six percent of
these proved reserve additions were attributable to horizontal wells in
the Permian Basin. The Company’s drillbit finding and development (F&D)
cost was $8.46 per barrel oil equivalent (BOE), which primarily reflects
the low F&D costs associated with the Permian Basin horizontal drilling
program and the proved reserves added from the successful 2017 Eagle
Ford Shale drilling program.
In 2017, Pioneer’s drilling activity in the Permian Basin added 266
million barrels of proved developed reserves from (i) discoveries and
extensions placed on production during 2017, (ii) transfers from proved
undeveloped reserves at year-end 2016 and (iii) technical revisions of
previous estimates for proved developed reserves during 2017. The
Company’s proved developed F&D cost for the Permian Basin (including
both horizontal and vertical activity) was $9.51 per BOE, primarily
reflecting the low proved developed F&D cost associated with the Permian
Basin horizontal drilling program of $9.40 per BOE.
The NYMEX prices used for 2017 proved reserves reporting purposes were
$51.34 per barrel for oil and $2.98 per million British thermal units
(MMBTU) for gas. The oil and gas prices for 2017 were 20% above the oil
and gas price used to calculate proved reserves for 2016 of $42.82 per
barrel and $2.48 per MMBTU, respectively. The increases in the 2017 oil
and gas prices, as compared to 2016, led to the Company’s positive price
revisions of 52 MMBOE.
As of December 31, 2017, all of Pioneer’s proved reserves were in the
United States, and 92% were proved developed reserves. Approximately 49%
of the Company’s proved reserves are oil, 21% are NGLs and 30% are gas.
In the Permian Basin, approximately 59% of the Company’s proved reserves
are oil, 22% are NGLs and 19% are gas. Pioneer’s total proved reserves
have a total reserves-to-production ratio of ten years and a proved
developed reserves-to-production ratio of nine years.
The table below shows Pioneer’s year-end 2017 proved reserves by asset
in MMBOE:
Permian Basin
|
|
|
|
|
763
|
Raton
|
|
|
|
|
96
|
Eagle Ford Shale
|
|
|
|
|
80
|
Other
|
|
|
|
|
46
|
Total
|
|
|
|
|
985
|
|
|
|
|
|
|
The commodity prices used to determine proved reserves for 2017 resulted
in an after-tax present value of the future net cash flows discounted at
10% (PV-10) of $8.2 billion. The after-tax present value of the proved
reserves includes the benefit of the lower federal income tax rate
enacted with the Tax Cuts and Jobs Act.
Netherland, Sewell & Associates, Inc., an independent reserve
engineering firm, audited the proved reserves of significant fields. The
audit covered properties representing 77% of Pioneer’s total proved
reserves at year-end 2017.
Year-end proved reserves, costs incurred and a reconciliation of PV-10
to Standardized Measure are detailed in the attached supplemental
schedules.
On Wednesday, February 7, 2018, at 9:00 a.m. Central Time, Pioneer will
discuss its financial and operating results for the quarter ended
December 31, 2017, and its 2018 capital program, 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 (866) 564-2842 and confirmation code 1440973 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 March 4, 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 presentation 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, 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, 2016, 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.
An audit of proved reserves follows the general principles set forth
in the standards pertaining to the estimating and auditing of oil and
gas reserve information promulgated by the Society of Petroleum
Engineers (“SPE”). A reserve audit as defined by the SPE is not
the same as a financial audit. Please see the Company's Annual Report on
Form 10-K for a general description of the concepts included in the
SPE's definition of a reserve audit.
“Drillbit finding and development cost per BOE,” or “drillbit F&D
cost per BOE,” means the summation of exploration and development costs
incurred divided by the summation of annual proved reserves, on a BOE
basis, attributable to discoveries, extensions and revisions of previous
estimates. Revisions of previous estimates exclude price
revisions. Consistent with industry practice, future capital
costs to develop proved undeveloped reserves are not included in costs
incurred.
“Drillbit reserve replacement” is the summation of annual proved
reserves, on a BOE basis, attributable to discoveries, extensions and
revisions of previous estimates divided by annual production of oil,
NGLs and gas, on a BOE basis. Revisions of previous estimates
exclude price revisions.
“Proved developed finding and development cost per BOE,” or “proved
developed F&D cost per BOE,” means the summation of exploration and
development costs incurred (excluding asset retirements obligations)
divided by the summation of annual proved reserves, on a BOE basis,
attributable to proved developed reserve additions, including (i)
discoveries and extensions placed on production during 2017, (ii)
transfers from proved undeveloped reserves at year-end 2016 and (iii)
technical revisions of previous estimates for proved developed reserves
during 2017. Revisions of previous estimates exclude price revisions.
|
|
|
|
|
|
PIONEER NATURAL RESOURCES COMPANY
|
UNAUDITED SUPPLEMENTAL INFORMATION
|
Year Ended December 31, 2017
|
|
|
|
Proved reserves:
|
|
|
Oil (MBbls):
|
|
|
Balance, January 1, 2017
|
|
|
378,196
|
|
Revisions of previous estimates
|
|
|
20,140
|
|
Purchases of minerals-in-place
|
|
|
508
|
|
Discoveries and extensions
|
|
|
146,822
|
|
Improved recovery
|
|
|
-
|
|
Production
|
|
|
(57,878
|
)
|
Sales of minerals-in-place
|
|
|
(4,899
|
)
|
Balance, December 31, 2017
|
|
|
482,889
|
|
Natural Gas Liquids (MBbls):
|
|
|
Balance, January 1, 2017
|
|
|
136,941
|
|
Revisions of previous estimates
|
|
|
44,995
|
|
Purchases of minerals-in-place
|
|
|
179
|
|
Discoveries and extensions
|
|
|
49,378
|
|
Improved recovery
|
|
|
-
|
|
Production
|
|
|
(20,078
|
)
|
Sales of minerals-in-place
|
|
|
(918
|
)
|
Balance, December 31, 2017
|
|
|
210,497
|
|
Natural Gas (MMcf):
|
|
|
Balance, January 1, 2017
|
|
|
1,264,729
|
|
Revisions of previous estimates
|
|
|
365,275
|
|
Purchases of minerals-in-place
|
|
|
3,891
|
|
Discoveries and extensions
|
|
|
266,347
|
|
Improved recovery
|
|
|
-
|
|
Production
|
|
|
(143,464
|
)
|
Sales of minerals-in-place
|
|
|
(4,898
|
)
|
Balance, December 31, 2017
|
|
|
1,751,880
|
|
Equivalent Barrels (MBOE):
|
|
|
Balance, January 1, 2017
|
|
|
725,925
|
|
Revisions of previous estimates (a)
|
|
|
126,015
|
|
Purchases of minerals-in-place
|
|
|
1,335
|
|
Discoveries and extensions
|
|
|
240,591
|
|
Production (b)
|
|
|
(101,867
|
)
|
Sales of minerals-in-place
|
|
|
(6,633
|
)
|
Balance, December 31, 2017
|
|
|
985,366
|
|
|
|
|
Costs incurred for oil and gas producing activities (in millions):
|
|
|
Property acquisition costs:
|
|
|
Proved
|
|
$
|
8
|
|
Unproved
|
|
|
128
|
|
|
|
|
136
|
|
Exploration costs
|
|
|
2,033
|
|
Development costs
|
|
|
628
|
|
Total costs incurred (c)
|
|
$
|
2,797
|
|
|
|
|
|
|
|
Reserve replacement percentage (d)
|
|
|
361
|
%
|
|
|
|
Drillbit reserve replacement percentage (excludes pricing
revisions and purchases of minerals-in-place) (e)
|
|
|
309
|
%
|
|
|
|
F&D costs per BOE of proved reserves added (f)
|
|
$
|
7.60
|
|
|
|
|
Drillbit F&D costs per BOE of proved reserves added (excludes
pricing revisions and purchases of minerals-in-place) (g)
|
|
$
|
8.46
|
|
|
|
|
|
|
(a)
|
|
Revisions of previous estimates includes 52.2 MMBOEs of positive
price revisions and 73.8 MMBOEs of positive technical revisions.
|
(b)
|
|
Production includes 2.5 MMBOE related to field fuel.
|
(c)
|
|
Costs incurred includes $1 million of capitalized interest, $17
million of asset retirement obligation decreases and $66 million of
G&G/G&A.
|
(d)
|
|
The summation of annual proved reserves, on a BOE basis,
attributable to revisions of previous estimates, purchases of
minerals-in-place and discoveries and extensions divided by annual
production of oil, NGLs and gas, on a BOE basis.
|
(e)
|
|
The summation of annual proved reserves, on a BOE basis,
attributable to revisions of previous estimates (excluding price
revisions) and discoveries and extensions divided by annual
production of oil, NGLs and gas, on a BOE basis.
|
(f)
|
|
Total costs incurred divided by the summation of annual proved
reserves, on a BOE basis, attributable to revisions of previous
estimates, purchases of minerals-in-place and discoveries and
extensions. Consistent with industry practice, future capital costs
to develop proved undeveloped reserves are not included in costs
incurred.
|
(g)
|
|
The summation of exploration and development costs incurred divided
by the summation of annual proved reserves, on a BOE basis,
attributable to revisions of previous estimates (excluding price
revisions) and discoveries and extensions. Consistent with industry
practice, future capital costs to develop proved undeveloped
reserves are not included in costs incurred.
|
|
|
|
|
PIONEER NATURAL RESOURCES COMPANY
|
UNAUDITED RECONCILIATION OF PV-10 TO STANDARDIZED MEASURE
|
December 31, 2017
|
|
PV-10 is the estimated future net cash flows from proved reserves
discounted at an annual rate of 10 percent before giving effect to
income taxes. Standardized Measure is the after-tax estimated future
cash flows from proved reserves discounted at an annual rate of 10
percent, determined in accordance with GAAP. Pioneer uses PV-10 as one
measure of the value of the Company's proved reserves and to compare
relative values of proved reserves among exploration and production
companies without regard to income taxes. Pioneer believes that
securities analysts and rating agencies use PV-10 in similar ways.
Pioneer’s management believes PV-10 is a useful measure for comparison
of proved reserve values among companies because, unlike Standardized
Measure, it excludes future income taxes that often depend principally
on the characteristics of the owner of the reserves rather than on the
nature, location and quality of the reserves themselves. Below is a
reconciliation of PV-10 to Standardized Measure using SEC oil and gas
NYMEX pricing (in billions):
|
|
|
$51.34/$2.98
|
|
|
|
SEC Pricing
|
PV-10 at December 31, 2017
|
|
|
$
|
8.9
|
|
|
|
|
|
Discounted Effect of Income Taxes
|
|
|
$
|
(0.7
|
)
|
|
|
|
|
Standardized Measure at December 31, 2017 (a)
|
|
|
$
|
8.2
|
|
_____________
|
(a)
|
|
Standardized Measure includes the benefit of a lower future federal
income tax rate as a result of the Tax Cuts and Jobs Act that was
enacted in December 2017.
|
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