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» Pioneer Southwest Energy CEO Discusses Q3 2010 Results - Earnings Call Transcript
These risks and uncertainties are described in Pioneer Southwest’s news release on page two of the slide presentation. And in the Pioneer Southwest pubic filings made with the Securities Exchange Commission.At this time, for opening remarks introductions, I would like to turn the call over to Pioneer Southwest’s Senior Vice President of Investor Relations, Frank Hopkins, please go ahead sir. Frank Hopkins Thank you Lisa [ph]. Good day everyone, and thank you for joining us. I’ll briefly go through the agenda for today’s call. Scott’s going to be up first, he’ll review the financial and operating highlights for the third quarter, and he’ll update you on PSE’s drilling program in the Spraberry field. Rich will then cover the third quarter financials in more detail, and he will give you earnings guidance for the fourth quarter. After that, we’ll open up the call for your questions. With that, I’ll turn the call over to Scott. Scott Sheffield Thanks, Frank and good afternoon. If you have access to our slides, start off in slide number three, the highlights. Our third quarter, a great quarter, adjusted income at 27 million, $0.81 per unit. It excludes unrealized mark-to-market gains, 62 million. Third quarter production had a great quarter regard to production over 7400 barrels of oil equivalent per day, up 11% versus the second quarter of ’11 primarily due to the success of the 2-rig drilling program also going deeper and strong. The addition of incremental oil transport trucks in third quarter which covered a tracking shortfall during the second quarter. 13 wells are placed on production on the third quarter, 33 wells year-to-date from a 2-rig program. Additional wells were waiting completion at the end of the quarter. As I mentioned earlier, we benefit from the drilling deeper, the Lower Wolfcamp and Strawn intervals, and also completing throughout the entire pay zone and the organic-rich shale/silt intervals.
Cash flow at 32 million from operations, distribution at $0.51 per outstanding unit for third quarter. On November 11th the unitholders of record date October 31st equates to a 2.04 for common unit on annualized basis.Our drilling update on slide number four, expect to drill approximately 40 wells with 2-rigs, capital expenditures about 65 to 75 million including facilities. Again, all the wells are going down to the Lower Wolfcamp and completing in the organic rich shale/silt intervals. In addition, majority of the wells are being drilled to the deeper Strawn interval. 60% of the partnership acreage position has Strawn potential, that’s primarily in the middle of the Martin County, the northern part of the field. We continue to evaluate the Atoka interval in certain areas, we expect to have three Atoka wells down by year-end. And if you look on PXD’s website, PDX has had three Atoka wells, their first three wells all came in around 150 barrels a day equivalent. A very exciting – that would be added on top of anything coming from the Spraberry Wolfcamp or the Strawn. Forecasting production growth of 5% in ’11 compared in ’10. And as we always mention, tremendous inventory inside the partnership with over 100 acre locations, that’s about two and half years with the drilling, and over 1200 in 20-acre locations. And again, our 20-acre locations at the BHD level on our website continue to exhibit tremendous success, are getting closer and closer to the original 40-acre type well. Let me now turn over to Rich over our earnings for the quarter. Rich Dealy Thanks, Scott. Let’s turn to slide five. As Scott mentioned, net income of $89 million or $2.69 per common unit for the quarter include $62 million or 1.88 per unit related to unrealized mark-to-market derivative gains, primarily due to the decline in oil prices at the end of the quarter.
So adjusting for those non-cash unrealized mark-to-market gains $27 million or $0.81 per common unit. At the bottom of page five, we show our results relative to our Q3 guidance. You can see that production was above our guidance range, the 7400 was a great result for the quarter.Read the rest of this transcript for free on seekingalpha.com