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Pioneer Natural Resources Company Reports First Quarter 2019 Financial and Operating Results
President and CEO
“As a leader in the
“Further strengthening our value proposition for shareholders remains a top priority. We plan to divest our gas processing midstream assets during the year, resulting in capital savings and increased free cash flow. With the Eagle Ford divestiture closed, Pioneer is now a ‘pure-play’ Permian company, with decades of high-margin drilling inventory.
“The actions we are undertaking position us for success now and into the future, delivering strong results and increasing shareholder value. We plan to increase our dividend to approximately a 1% yield1, underscoring our commitment to returning capital and continuing our journey of enhancing shareholder value.”
Ongoing Strategic Initiatives
Pioneer is improving its corporate cost and organizational structure by
reducing the Company’s G&A expense, streamlining roles and
responsibilities and implementing a flatter reporting structure. The
Company is targeting up to
The Company is accelerating free cash flow generation by adjusting to a mid-teens, longer-term production growth profile, allowing for reduced field facilities capital spending that drives greater capital efficiency and a high level of consistent execution. Additionally, the Company is evaluating options to monetize or accelerate drilling inventory that is not slated for near-term development; options include cash market divestitures or the use of DrillCo funding arrangements, among others. Long-dated acreage that is subject to lease expiry is being prioritized, therefore bringing value forward.
Eagle Ford Divestiture
The Company has closed the sale of its Eagle Ford shale and remaining
The sale of Pioneer’s Eagle Ford shale assets represents approximately
59,000 net acres located primarily in
The sale of these assets is expected to result in a pretax noncash loss
Pioneer continues to maintain a strong balance sheet with cash on hand
at the end of the first quarter of
During the first quarter, the Company’s Permian drilling, completion and
facilities capital expenditures totaled
The Company increased its semiannual cash dividend from
For the first quarter, the average realized price for oil was
Production costs, including taxes, averaged
Pioneer placed 71 horizontal wells on production during the first quarter. Well productivity continues to increase annually, with average cumulative production greater in 2018 as compared to the 2017 program. Many factors, such as incorporating data from machine learning into optimized completion designs and a focused approach to appraisal testing have contributed to the Company’s improving well productivity.
The Company’s third multi-zone Spraberry appraisal pad (Stackberry),
A two-well Wolfcamp D pad that was placed on production early in the first quarter of 2019, which had an average 24-hour initial production rate of approximately 4,100 barrels of oil equivalent per day and continues to outperform. This two-well pad has recorded a 90-day cumulative production of approximately 340 thousand barrels of oil equivalent, with a 67% oil mix. The Company plans additional Wolfcamp D appraisals in 2019.
During the first quarter of 2019, the Company’s marketing of Permian oil
yielded premium Brent-related oil pricing, leading to an incremental
Full-Year 2019 Update
The Company maintains its 2019 Permian drilling, completions and
facilities capital budget range of
The Company maintains its plan to operate an average of 21 to 23
horizontal rigs in the
This activity level is projected to deliver 2019 Permian production of 320 to 335 MBOEPD and 203 to 213 MBOPD, representing approximately 12% to 17% growth over 2018 production levels.
Second Quarter 2019 Guidance
Second quarter 2019 Permian production is forecasted to average between
313 to 328 MBOEPD and 198 to 208 MBOPD. Permian production costs are
expected to average
Total exploration and abandonment expense for the Company is forecasted
The Company’s financial and derivative mark-to-market results and open derivatives positions are outlined on the attached schedules.
Environmental, Social & Governance
Pioneer views sustainability as a multidisciplinary focus that balances economic growth, environmental stewardship and social responsibility. The Company emphasizes developing natural resources in a manner that protects surrounding communities and preserves the environment. For access to Pioneer’s sustainability report, please visit http://www.pioneernrc.com/sustainability.
Earnings Conference Call
Select “Investors,” then “Earnings & Webcasts” to listen to the discussion, view the presentation and see other related material.
Telephone: Dial 866-575-6539 and enter confirmation code 9208053 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. This
replay will be available through
Pioneer is a large independent oil and gas exploration and production
company, headquartered in
Except for historical information contained herein, the statements 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, completion of planned divestitures, litigation, the costs and
results of drilling and operations, availability of equipment, services,
resources and personnel required to perform the Company’s drilling and
operating activities, access to and availability of transportation,
processing, fractionation, refining and export 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,
investment instruments and derivative contracts and purchasers of
Pioneer’s oil, natural gas liquids and gas production, uncertainties
about estimates of reserves and resource potential, identification of
drilling locations 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, cybersecurity risks, ability to implement planned stock
repurchases, the risks associated with the ownership and operation of
the Company’s oilfield services businesses and acts of war or terrorism.
These and other risks are described in Pioneer’s Annual Report on Form
10-K for the year ended
Footnote 1: The declaration and payment of any dividend described in this release remains subject to approval by the Board of Directors, and no dividend has been declared or approved.
Footnote 2: Excludes acquisitions, asset retirement obligations, capitalized interest, geological and geophysical G&A and corporate facilities.
Footnote 3: Other expense excludes unusual items totaling
Footnote 4: Represents first quarter cash flow plus April through December forecasted cash flow based on strip pricing.
Cautionary Note to U.S. Investors --The
The Company uses the two-class method of calculating basic and diluted earnings per share. Under the two-class method of calculating earnings per share, generally acceptable accounting principles ("GAAP") provide that share-based awards with guaranteed dividend or distribution participation rights qualify as "participating securities" during their vesting periods. During periods in which the Company realizes net income attributable to common shareholders, the Company's basic net income per share attributable to common shareholders is computed as (i) net income attributable to common stockholders, (ii) less participating share-based basic earnings (iii) divided by weighted average basic shares outstanding and the Company's diluted net income per share attributable to common stockholders is computed as (i) basic net income attributable to common stockholders, (ii) plus the reallocation of participating earnings, if any, (iii) divided by weighted average diluted shares outstanding. During periods in which the Company realizes a net loss attributable to common stockholders, securities or other contracts to issue common stock would be dilutive to loss per share; therefore, conversion into common stock is assumed not to occur.
The Company's net income attributable to common stockholders reconciled to basic and diluted net income attributable to common stockholders is as follows:
Basic weighted average shares outstanding reconciled to diluted weighted average shares outstanding is as follows:
EBITDAX and discretionary cash flow ("DCF") (as defined below) are presented herein, and reconciled to the GAAP measures of net income and net cash provided by operating activities, because of their wide acceptance by the investment community as financial indicators of a company's ability to internally fund exploration and development activities and to service or incur debt. The Company also views the non-GAAP measures of EBITDAX and DCF as useful tools for comparisons of the Company's financial indicators with those of peer companies that follow the full cost method of accounting. EBITDAX and DCF should not be considered as alternatives to net income or net cash provided by operating activities, as defined by GAAP.
Net income attributable to common stockholders excluding noncash mark-to-market ("MTM") adjustments and adjusted income excluding noncash MTM adjustments and unusual items is presented in this earnings release and reconciled to the Company's net income attributable to common stockholders (determined in accordance with GAAP), as the Company believes these non-GAAP financial measures reflect an additional way of viewing aspects of the Company's business that, when viewed together with its GAAP financial results, provide a more complete understanding of factors and trends affecting its historical financial performance and future operating results, greater transparency of underlying trends and greater comparability of results across periods. In addition, management believes that these non-GAAP financial measures may enhance investors' ability to assess the Company's historical and future financial performance. These non-GAAP financial measures are not intended to be a substitute for the comparable GAAP financial measure and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP. Noncash MTM adjustments and unusual items may recur in future periods; however, the amount and frequency can vary significantly from period to period.
The Company's net income attributable to common stockholders as
determined in accordance with GAAP is reconciled to income adjusted for
net noncash MTM derivative (gain) loss, noncash MTM (gain) loss
attributable to the Company's equity investment in
Return on Capital Employed ("ROCE") is a non-GAAP financial measure. As
used by the Company, ROCE is net income adjusted for tax-effected
noncash mark-to-market ("MTM") derivative and fair value accounting
adjustments, unusual items and interest expense divided by the summation
of average total equity (adjusted for net noncash MTM derivative (gain)
loss, noncash MTM (gain) loss attributable to the Company's equity
(b) Average net debt is calculated as follows:
Pioneer Natural Resources Company
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