Current PXD Stock Info

$79 million for 84 MMcf/d

Pioneer Natural Resources (ticker: PXD) continued its move toward a Permian pure-play, divesting another non-core asset today.

Pioneer will sell its Raton basin assets, located in southeastern Colorado, to privately-held Evergreen Natural Resources. The assets sold include all producing wells and infrastructure in the basin. Pioneer’s properties are currently producing about 84 MMcf/d, all production from the area is gas. The acreage has 96 MMBOE of associated reserves, making it the company’s largest non-Permian position by reserves. PLS reports that Pioneer holds 165,000 net acres in the basin.

Pioneer will receive $79 million in cash for the sale, which values production at $940 per flowing Mcf/d. This is a modest price, so Pioneer will take an impairment on the sale of around $70 million in its Q2 results. The sale is expected to close in July.

Pioneer CEO and President Timothy L. Dove said, “I want to personally thank all of our Raton employees for their strong efforts, dedication and the value they have created for our shareholders. I am pleased that Evergreen plans to build on this success.”

This sale is part of Pioneer’s overall move to become a pure-play Permian operator, it is selling all non-core assets. Pioneer already has made progress on this goal, selling a JV it operated with Reliance and Newpek in March. Sundance Energy (ticker: SNDE) paid the group $221.5 million for the assets, Pioneer received $102 million.

Remaining Eagle Ford position valued at $1.3 billion based on Sundance deal

Pioneer still holds several major positions that it will monetize. After the Sundance deal closes, Pioneer will hold 59,000 net acres in the Eagle Ford, a position that produced 25.3 MBOEPD in Q1. If these assets are valued at the unadjusted $10,100 per acre Sundance paid in March, Pioneer would receive nearly $600 million for the position.

Pioneer’s remaining Eagle Ford position has significant levels of production, though, far more than the assets that were sold in March, meaning accounting for production significantly increases the estimated value. If production is valued at $35,000 and acreage is valued at the production-adjusted $7,240 seen in the Sundance transaction, Pioneer’s remaining Eagle Ford holdings are worth $1.3 billion.

The company’s Eagle Ford position will likely receive the largest price, but Pioneer also holds assets in the West Panhandle and South Texas. These properties are currently producing a combined 12.4 MBOEPD.

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