Pioneer Natural Resources' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Pioneer Natural Resources (PXD)

Q1 2012 Earnings Call

May 03, 2012 10:00 am ET

Executives

Frank E. Hopkins - Senior Vice President of Investor Relations

Scott D. Sheffield - Chairman and Chief Executive Officer

Timothy L. Dove - President and Chief Operating Officer

Richard P. Dealy - Chief Financial Officer and Executive Vice President

Analysts

David W. Kistler - Simmons & Company International, Research Division

Michael A. Hall - Robert W. Baird & Co. Incorporated, Research Division

Will Green - Stephens Inc., Research Division

Jessica Chipman - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division

Leo P. Mariani - RBC Capital Markets, LLC, Research Division

Brian M. Corales - Howard Weil Incorporated, Research Division

Amir Arif - Stifel, Nicolaus & Co., Inc., Research Division

Sven Del Pozzo - IHS Herold, Inc

Daniel J. Morrison - Global Hunter Securities, LLC, Research Division

Charles A. Meade - Johnson Rice & Company, L.L.C.

Rehan Rashid - FBR Capital Markets & Co., Research Division

Brian Singer - Goldman Sachs Group Inc., Research Division

Presentation

Operator

Welcome to Pioneer Natural Resources First Quarter Conference Call. Joining us today will be Scott Sheffield, Chairman and Chief Executive Officer; Tim Dove, President and Chief Operating Officer; Rich Dealy, Executive Vice President and Chief Financial Officer; and Frank Hopkins, Senior Vice President of Investor Relations.

Pioneer has prepared PowerPoint slides to supplement their comments today. These slides can be accessed over the Internet at www.pxd.com. Again, the Internet site to access the slides related to today's call is www.pxd.com. At the website, select Investors, then select Investor Presentations. This call is being recorded. A replay of the call will be archived on the Internet site through May 25.

The company's comments today will include forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements and the business prospects of Pioneer are subject to a number risks and uncertainties that may cause actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties are described in Pioneer's new release on Page 2 of the slide presentation and in Pioneer's public filings made with the Securities and Exchange Commission.

At this time, for opening remarks, I would like to turn the call over to Pioneer's Senior Vice President of Investor Relations, Frank Hopkins. Please go ahead, sir.

Frank E. Hopkins

Good day, everyone, and thank you for joining us. I'm going to briefly go through the agenda for today's call. Scott will be the first speaker. He'll provide the financial and operating highlights for the first quarter of 2012, another solid quarter for Pioneer. We'll then update you on the company's outlook for production growth, capital spending and cash flow growth.

After Scott concludes his remarks, Tim will discuss our drilling results and plans for the horizontal Wolfcamp Shale, Spraberry vertical program, the Eagle Ford Shale and the Barnett Shale Combo. He will also update you on our recent drilling success in Alaska. Rich will then cover the first quarter financials in more detail, and he'll provide earnings guidance for the second quarter. After that, we will open up the call for your questions.

And with that, I'll turn the call over to Scott.

Scott D. Sheffield

Thanks, Frank. Good morning. On Slide #3, on our highlights. As Frank said we had another great quarter. We had adjusted income of $153 million or $1.23 adjusted per share. On production, we rover [ph] our range on the production side first quarter at 147,000 barrels of oil equivalent per day. That's a pickup of about 10,000 barrels a day for the quarter versus the previous quarter, at a 7% increase, primarily related to our production growth in Spraberry, Eagle Ford and the Barnett Shale Combo play.

Oil represented 74% of that quarterly production increase. We're still highly encouraged by the entire play that we're seeing in the horizontal Wolfcamp play. We still feel like it will be probably the biggest oil play in the U.S. over the next several years. We're up to 4 rigs in that play. Most of our activity now is focused on the southern portion where we have university lands that's expiring over the next 18 months to 20 months.

We just brought on 2 recent wells on artificial lift: one is on jet pump and one is on gas lift. They're making mostly water at this point in time. We are still continuing to have great success by going deeper to the strong Atoka and Mississippian intervals in the Spraberry field, one of the primary reasons that we're seeing continued great success this past quarter in the Permian basin.

In the Eagle Ford, we added our ninth CGP, expect 2 additional CGPs online by mid-year. In Alaska, we had recent success with a couple key wells, one was onshore, the Torok, where we've drilled several wells on the island. We did a plug and perf technique onshore and got a 2,000 barrel a day IP rate. That well has been suspended, and we'll look at testing it longer next winter and most likely, drilling another appraisal well next winter up there in the Torok, since it still can give us about 50 million barrel a day discovery.

And secondly, what's maybe even more important is that we did a plug and perf for the first time on the Nuiqsut. Nuiqsut is our main producing formation reserve-wise. We got a 4,000 barrel a day rate there. Tim will talk more about this later on.

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