Pioneer Southwest Energy Partners L.P. (“Pioneer Southwest” or “the Partnership”) (NYSE:PSE) today announced financial and operating results for the quarter ended March 31, 2012.
Pioneer Southwest reported first quarter net income of $14 million, or $0.38 per common unit. Net income for the first quarter included unrealized mark-to-market derivative losses of $8 million, or $0.24 per common unit. Without the effect of this item, adjusted income for the first quarter was $22 million, or $0.62 per common unit. Cash flow from operations for the first quarter was $29 million.
Oil and gas sales for the first quarter averaged 7,609 barrels oil equivalent per day (BOEPD), an increase of 9% compared to the fourth quarter of 2011. First quarter production benefited from 14 new wells being placed on production during the quarter. At the end of the quarter, the Partnership had five wells waiting on completion and three wells being drilled.
The Partnership increased its drilling program from two rigs to three rigs during the first quarter. The Partnership has a large inventory of remaining oil drilling locations in the Spraberry field, with approximately 90 40-acre locations and 1,200 20-acre locations. The 2012 drilling program is expected to result in 55 wells to 60 wells being drilled during the year. Essentially all of these wells will be deepened to the Strawn formation, and 35% of the planned wells will be deepened to the Atoka formation as well. Production data from current Strawn completions supports the addition of an incremental 30 thousand barrels oil equivalent (MBOE) of estimated ultimate recovery (EUR) for wells completed in this interval. Completions in the Atoka interval are estimated to add an incremental 50 MBOE to 70 MBOE of EUR. Approximately 60% and 40% of the Partnership’s acreage position has Strawn and Atoka potential, respectively.