Pioneer Natural Resources Company (NYSE:PXD) (“Pioneer” or “the Company”) today announced financial and operating results for the quarter ended December 31, 2012, and announced its 2013 capital budget.
Pioneer reported fourth quarter net income attributable to common stockholders of $29 million, or $0.22 per diluted share (see attached schedule for a description of the net income per diluted share calculation). Without the effect of noncash derivative mark-to-market gains and other unusual items, adjusted income for the fourth quarter was $107 million after tax, or $0.83 per diluted share.
Fourth quarter and other recent highlights included:
- producing 165 thousand barrels oil equivalent per day (MBOEPD) in the fourth quarter, including Barnett Shale production (the Barnett Shale properties were reclassified from discontinued operations to continuing operations after the decision was made to discontinue efforts to divest of these properties),
- producing 156 MBOEPD in the fourth quarter, excluding Barnett Shale production, which was in the middle of the Company’s fourth quarter guidance range of 154 MBOEPD to 158 MBOEPD (fourth quarter guidance excluded Barnett Shale production since it was classified as discontinued operations when the fourth quarter guidance was provided),
- producing 156 MBOEPD from continuing operations in 2012 (includes Barnett Shale production), an increase of 29% compared to 2011 and at the top end of Pioneer’s full-year 2012 guidance; the strong production growth in 2012 was driven by the Company’s drilling programs in the Spraberry vertical, horizontal Wolfcamp Shale, Eagle Ford Shale and Barnett Shale Combo areas,
- delivering 264% drillbit reserve replacement (161 million barrels oil equivalent) at a drillbit finding and development cost, excluding pricing revisions, of $17.72 per barrel oil equivalent (BOE),
- placing on production Pioneer’s first horizontal Wolfcamp Shale well in the B interval in Midland County, Texas, (24-hour peak initial flow rate of 1,693 barrels oil equivalent per day (BOEPD) and peak 20-day average natural flow rate of 1,510 BOEPD with approximately 75% oil content), which demonstrates the prospectivity of Pioneer’s northern Wolfcamp/Spraberry acreage that encompasses more than 600,000 gross acres,
- initiating a two-year $1.0 billion horizontal drilling appraisal program of Pioneer’s northern Wolfcamp/Spraberry acreage, of which $0.4 billion is included in the 2013 drilling budget of $2.75 billion and the remainder is expected to be spent in 2014,
- forecasting annual production growth of 12% to 16% from 2012 to 2013,
- targeting 13% to 18% compound annual production growth for 2013 to 2015,
- signing a $1.74 billion horizontal Wolfcamp Shale joint interest agreement with Sinochem, which equates to $21,000 per acre for approximately 10% of Pioneer’s aggregate Wolfcamp/Spraberry gross acreage position,
- continuing to deliver improving horizontal Wolfcamp Shale results in the joint interest area, including:
- placing on production Pioneer’s first horizontal Wolfcamp Shale well with a 10,000-foot lateral in the Upper B interval in Reagan County (24-hour peak flow rate of 1,203 BOEPD and peak 20-day average flow rate of 1,022 BOEPD with approximately 80% oil content);
- placing on production Pioneer’s first Wolfcamp Shale Lower B interval well and a successful Wolfcamp Shale A interval well in Reagan County (both currently producing above type curve expectations);
- well performance from existing wells continuing to meet type curve expectations; and
- achieving targeted year-end 2012 horizontal Wolfcamp Shale production exit rate of 5 MBOEPD; and
- increasing the Company’s estimated net resource potential from 6.7 billion barrels oil equivalent (BBOE) to greater than 8.0 BBOE, which includes 1.6 BBOE from the southern horizontal Wolfcamp Shale joint interest area and 3.0 BBOE from Pioneer’s northern Wolfcamp/Spraberry acreage.
Scott Sheffield, Chairman and CEO, stated, “Pioneer had another great year in 2012. We delivered strong production and reserve growth, while continuing to be among the top performers in our peer group in total shareholder return. Our extensive Midland Basin geologic analysis has identified multiple prospective horizontal targets throughout Pioneer’s extensive 900,000-acre Wolfcamp/Spraberry leasehold position with an aggregate estimated resource potential of more than 4.6 BBOE. During 2012, we focused on appraising and developing the southern 200,000 acres of the play. This culminated in the signing of the joint interest agreement with Sinochem that will allow horizontal development of the Wolfcamp Shale in this area to be accelerated. We were also able to begin drilling horizontal wells on our northern acreage to appraise the potential of the horizontal Wolfcamp Shale in this area. Early results are extremely encouraging, and we are initiating a $1 billion dollar appraisal program for 2013 and 2014 to confirm the estimated 3.0 BBOE of resource potential we believe exists in our northern acreage, which should add substantial net asset value to the Company.”