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Pioneer Natural Resources Reports Year-End 2012 Proved Reserves And Finding Costs

Stocks in this article: PXD

The commodity prices used for 2012 resulted in a pre-tax present value of future net cash flows discounted at 10% (PV-10) of $8.3 billion for Pioneer’s proved reserves.

Netherland, Sewell & Associates, Inc. and Ryder Scott Company, L.P., independent reserve engineering firms, audited the proved reserves of significant fields. These audits covered properties representing 95% of Pioneer’s total proved reserves at year-end 2012.

Year-end proved reserves, costs incurred and a reconciliation of PV-10 to Standardized Measure are detailed in the attached supplemental schedules.

Further information regarding 2012 reserves and finding costs will be discussed during Pioneer’s quarterly conference call scheduled for Thursday, February 14, 2013 at 9:00 a.m. Central Time, when Pioneer will also discuss its fourth quarter and full year 2012 financial and operating results and 2013 Capital Budget with an accompanying presentation. Instructions for listening to the call and viewing the presentation are shown below.

Internet: www.pxd.comSelect “Investors,” then “Earnings & Webcasts,” to listen to the discussion, view the presentation and see other related material.

Telephone: Dial (877) 718-5108, confirmation code: 7431932 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. A telephone replay will be available through March 11, 2013 by dialing (888) 203-1112, confirmation code: 7431932.

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 Pioneer’s website at www.pxd.com.

Except for historical information contained herein, the statements, charts and graphs 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, the receipt of approvals required to consummate the Company’s Southern Wolfcamp joint interest transaction, litigation, the costs and results of drilling and operations, availability of equipment, services, resources and personnel required to complete the Company's operating activities, access to and availability of transportation, processing and refining 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 and derivative contracts and the purchasers of Pioneer's oil, NGL and gas production, uncertainties about estimates of reserves and resource potential 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, the risks associated with the ownership and operation of an industrial sand mining business and acts of war or terrorism. These and other risks are described in Pioneer's 10-K and 10-Q Reports 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. 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.

"Finding and development cost per BOE," or “all-in F&D cost per BOE,” means 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, discoveries and extensions and improved recovery. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred.

"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 technical revisions of previous estimates, discoveries and extensions and improved recovery. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred.

“Reserve replacement” is the summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates, purchases of minerals-in-place, discoveries and extensions and improved recovery divided by annual production of oil, NGLs and gas, on a BOE basis.

“Drillbit reserve replacement” is the summation of annual proved reserves, on a BOE basis, attributable to technical revisions of previous estimates, discoveries and extensions and improved recovery divided by annual production of oil, NGLs and gas, on a BOE basis.

   

 

PIONEER NATURAL RESOURCES COMPANY

UNAUDITED SUPPLEMENTAL INFORMATION

Year Ended December 31, 2012

 
Proved reserves:
Oil (MBbls):
Balance, January 1, 2012 430,005
Revisions of previous estimates (11,158 )
Purchases of minerals-in-place 5,383
Discoveries and extensions 78,375
Improved recovery 7,498
Production (22,990 )
Sales of minerals-in-place   (275 )
Balance, December 31, 2012 486,838
Natural Gas Liquids (MBbls):
Balance, January 1, 2012 211,035
Revisions of previous estimates (17,417 )
Purchases of minerals-in-place 2,037
Discoveries and extensions 48,422
Improved recovery -
Production (10,913 )
Sales of minerals-in-place   (588 )
Balance, December 31, 2012 232,576
Natural Gas (MMcf):
Balance, January 1, 2012 2,531,038
Revisions of previous estimates (485,216 )
Purchases of minerals-in-place 9,457
Discoveries and extensions 320,243
Improved recovery -
Production (161,197 )
Sales of minerals-in-place   (16,845 )
Balance, December 31, 2012 2,197,480
Equivalent Barrels (MBOE):
Balance, January 1, 2012 1,062,881
Revisions of previous estimates (a) (109,444 )
Purchases of minerals-in-place 8,996
Discoveries and extensions 180,170
Improved recovery 7,498
Production (b) (60,769 )
Sales of minerals-in-place   (3,671 )
Balance, December 31, 2012   1,085,661  
 
Costs incurred for oil and gas producing activities ($000):
Property acquisition costs:
Proved $ 16,962
Unproved   140,515  
157,477
Exploration costs 966,828
Development costs   1,881,459  
Total costs incurred (c) $ 3,005,764  
 
Reserve replacement percentage (d)   144 %
 
Reserve replacement percentage, excluding price revisions (d)   279 %
 
Drillbit reserve replacement percentage (e)   264 %
 
F&D costs per BOE of proved reserves added (f) $ 34.46  
 
F&D costs per BOE of proved reserves added, excluding price revisions (f) $ 17.71  
 
Drillbit F&D costs per BOE of proved reserves added (g) $ 17.72  

_____________

(a)   Revisions of previous estimates includes 82.5 MMBOEs of negative price revisions and 27.0 MMBOEs of negative technical revisions.
(b) Production includes 3,061 MBOE related to field fuel and 787 MBOE of production associated with discontinued operations in South Africa.
(c) Costs incurred includes $8.5 million of capitalized interest, $58.9 million of asset retirement obligation increases and $52.4 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, improved recovery and discoveries and extensions, if any, 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 technical revisions of previous estimates, improved recovery and discoveries and extensions, if any, 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, improved recovery and discoveries and extensions, if any. 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 technical revisions of previous estimates, improved recovery and discoveries and extensions, if any. 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, 2012
 
 
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 for SEC oil and gas NYMEX pricing (in billions):
    $94.84/$2.76
SEC Pricing
PV-10 at December 31, 2012 $ 8.3
 
Discounted Effect of Income Taxes

(1.9

)
 
Standardized Measure at December 31, 2012 $

6.4

 




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