Mark-To-Market Derivative Losses and Unusual Items Included in Third Quarter 2012 Earnings
Pioneer’s third quarter earnings included unrealized mark-to-market losses on derivatives of $146 million after tax, or $1.19 per diluted share.
Third quarter earnings also included income of $61 million after tax, or $0.52 per diluted share, related to unusual items. These unusual items included:
- a net gain of $28 million after tax, or $0.23 per diluted share, for 2014 and 2015 gas derivatives and interest rate swaps that were liquidated during the third quarter,
- income of $32 million after tax, or $0.26 per diluted share, associated with the sale of Pioneer’s South Africa properties (recorded in discontinued operations),
- other small items that net to income of $1 million after tax, with a nominal per diluted share impact and
- a $0.03 per diluted share impact of excluding four million incremental dilutive shares in computing adjusted income per share that, in accordance with GAAP, were not included in the net income per diluted share computation because the Company reported a net loss from continuing operations for the third quarter of 2012.
Operations Update and Drilling ProgramPioneer is the largest acreage holder in the horizontal Wolfcamp Shale play where the Company believes it has significant resource potential based on its extensive geologic data covering the Wolfcamp A, B, C and D intervals and its successful drilling results to date as described below. Drilling is currently focused primarily in the southern 200,000 acres of Pioneer’s leasehold in the play (Upton, Reagan and Irion counties) where the Company expects to drill 90 wells by the end of 2013 to hold expiring acreage totaling 50,000 acres. Thirty to thirty-five of these wells are targeted to be drilled in 2012. Twenty-seven wells have been drilled to date, with 17 wells placed on production.