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TheStreet Open House

Pioneer Natural Resources Reports First Quarter 2014 Financial And Operating Results

Stocks in this article: PXD

Pioneer Natural Resources Company (NYSE:PXD) (“Pioneer” or “the Company”) today announced financial and operating results for the quarter ended March 31, 2014.

Pioneer reported first quarter net income attributable to common stockholders of $123 million, or $0.85 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 losses and other unusual items, adjusted income for the first quarter was $183 million after tax, or $1.26 per diluted share.

First quarter and other recent highlights included:

  • producing 172 thousand barrels oil equivalent per day (MBOEPD) from continuing operations in the first quarter (reflects Alaska and Barnett Shale as discontinued operations); first quarter production was up 8 MBOEPD, or 5%, compared to the fourth quarter of 2013; first quarter production growth was primarily driven by the Company’s successful Spraberry/Wolfcamp and Eagle Ford Shale horizontal drilling programs and the full recovery of weather-related production curtailments experienced during the fourth quarter;
  • continuing to forecast annual production growth from continuing operations of 14% to 19% from 2013 to 2014 based on planned drilling capital expenditures of $3.0 billion; as planned, the Company has increased its drilling rig program in the northern Spraberry/Wolfcamp from five horizontal rigs at year-end 2013 to 16 rigs, with these rigs drilling mostly three-well pads; total horizontal wells placed on production in the Spraberry/Wolfcamp and Eagle Ford Shale are expected to increase from 125 wells in the first half of 2014 to 175 wells in the second half of the year; this increase is being driven by the additional drilling activity in the northern Spraberry/Wolfcamp and is expected to result in the Company’s production growth being weighted towards the second-half of the year;
  • continuing to target compound annual production growth from continuing operations of 16% to 21% for 2014 to 2016 and expecting to more than double production by 2018 as compared to 2013;
  • closing the sale of Pioneer’s Alaska subsidiary in April;
  • continuing to pursue the sale of Pioneer’s Barnett Shale assets;
  • ensuring adequate gas processing capacity across the Spraberry/Wolfcamp play as drilling activity grows by extending Pioneer’s agreement with Atlas Pipeline Partners for 10 years through 2032; this agreement includes 400 million cubic feet per day of new processing capacity coming online by the second half of 2015;
  • having derivative coverage for approximately 90% of forecasted 2014 oil production at $93 per barrel or higher;
  • having approximately 80% of the Company’s Spraberry/Wolfcamp oil production protected against volatility in the Midland-Cushing oil price differential;
  • maintaining a strong balance sheet with $257 million of cash on hand at the end of the first quarter and net debt-to-book capitalization of 27%;
  • continuing to observe production data from Pioneer’s horizontal Wolfcamp and Lower Spraberry Shale interval wells on its northern Spraberry/Wolfcamp acreage that supports strong estimated ultimate recoveries (EURs) and internal rates of return (IRRs);
  • increasing the upper end of the EUR range for horizontal Lower Spraberry Shale wells with 7,000-foot lateral lengths on Pioneer’s northern Spraberry/Wolfcamp acreage from 800 thousand barrels oil equivalent (MBOE) to 1 million barrels oil equivalent (MMBOE) based on recent performance data;
  • placing on production a horizontal Jo Mill Shale interval well and Pioneer’s first Middle Spraberry Shale interval well on the Company’s northern Spraberry/Wolfcamp acreage; early production from these wells is tracking Pioneer’s successful Lower Spraberry Shale wells;
  • placing on production 12 Upper Eagle Ford Shale wells through mid-April as part of the continuing downspacing program in this play; results continue to be encouraging; and
  • reducing drilling costs by $750 thousand per well to $1.0 million per well in the Eagle Ford Shale by utilizing a two-string drilling design instead of a three-string drilling design.

Scott D. Sheffield, Chairman and CEO, stated, “The Company delivered another great quarter, with strong earnings, production exceeding expectations and continued impressive horizontal well performance in the Spraberry/Wolfcamp and the Eagle Ford Shale areas. Importantly, oil production grew 9% in the first quarter of 2014 as compared to the fourth quarter of 2013.

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