UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

 

or

 

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ________

 

Commission File Number: 1-13245

 

PIONEER NATURAL RESOURCES COMPANY  

(Exact name of Registrant as specified in its charter)

 

Delaware

 

75-2702753

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

5205 N. O'Connor Blvd., Suite 200, Irving, Texas

 

75039

(Address of principal executive offices)

 

(Zip Code)

 

(972) 444-9001

(Registrant's telephone number, including area code)

 

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

 

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

x

 

Accelerated filer

o

 

Non-accelerated filer

o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

 

 

Number of shares of Common Stock outstanding as of May 4, 2022

123,443,862

 

 

 


 

PIONEER NATURAL RESOURCES COMPANY

 

TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

Cautionary Statement Concerning Forward-Looking Statements

 

2

 

 

 

Definitions of Certain Terms and Conventions Used Herein

 

3

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

Item 1.     Financial Statements

 

 

 

 

 

Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021

 

4

 

 

 

Consolidated Statements of Operations for the three months ended

March 31, 2022 and 2006

 

 

6

 

 

 

Consolidated Statement of Stockholders' Equity for the three months ended

March 31, 2022

 

 

7

 

 

 

Consolidated Statements of Cash Flows for the three months ended

March 31, 2022 and 2006

 

 

8

 

 

 

Consolidated Statements of Comprehensive Income for the three months

ended March 31, 2022 and 2006

 

 

9

 

 

 

Notes to Consolidated Financial Statements

 

10

 

 

 

Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations

 

30

 

 

 

Item 3.     Quantitative and Qualitative Disclosures About Market Risk

 

44

 

 

 

Item 4.     Controls and Procedures

 

46

 

 

 

PART II. OTHER INFORMATION

 

 

 

Item 1.     Legal Proceedings

 

47

 

 

 

Item 1A.  Risk Factors

 

47

 

 

 

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

 

48

 

 

 

Item 6.     Exhibits

 

49

 

 

 

Signatures

 

50

 

 

 

Exhibit Index

 

51

 

Cautionary Statement Concerning Forward-Looking Statements

 

The information in this Quarterly Report on Form 10-Q (the "Report") contains forward-looking statements that involve risks and uncertainties. When used in this document, the words "believes," "plans," "expects," "anticipates," "intends," "continue," "may," "will," "could," "should," "future," "potential," "estimate," or the negative of such terms and similar expressions as they relate to Pioneer Natural Resources Company ("Pioneer" or the "Company") are intended to identify forward-looking statements. The forward-looking statements are based on the Company's current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates. Although the Company believes that the expectations and assumptions reflected in the forward-looking statements are reasonable, they involve risks and uncertainties that are difficult to predict and, in many cases, beyond the Company's control. Accordingly, no assurances can be given that the actual events and results will not be materially different than the anticipated results described in the forward-looking statements. See "Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk" and "Part II, Item 1A. Risk Factors" in this Report and "Item 1. Business — Competition, Markets and Regulations", "Item 1A. Risk Factors" and "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 for a description of various factors that could materially affect the ability of Pioneer to achieve the anticipated results described in the forward-looking statements. The Company undertakes no duty to publicly update these statements except as required by law

 

2

 


Definitions of Certain Terms and Conventions Used Herein

 

Within this Report, the following terms and conventions have specific meanings:

 

"Bbl" means a standard barrel containing 42 United States gallons.

"Bcf" means one billion cubic feet.

"BOE" means a barrel of oil equivalent and is a standard convention used to express oil and gas volumes on a comparable oil equivalent basis. Gas equivalents are determined under the relative energy content method by using the ratio of 6.0 Mcf of gas to 1.0 Bbl of oil or natural gas liquid.

"BOEPD" means BOE per day.

"Btu" means British thermal unit, which is a measure of the amount of energy required to raise the temperature of one pound of water one degree Fahrenheit.

"CBM" means coal bed methane.

"LIBOR" means London Interbank Offered Rate, which is a market rate of interest.

"MBbl" means one thousand Bbls.

"MBOE" means one thousand BOEs.

"Mcf" means one thousand cubic feet and is a measure of natural gas volume.

"MMBbl" means one million Bbls.

"MMBOE" means one million BOEs.

"MMBtu" means one million Btus.

"MMcfpd" means one million cubic feet per day.

"NGL" means natural gas liquid.

"NYMEX" means the New York Mercantile Exchange.

"Pioneer" or "the Company" means Pioneer Natural Resources Company and its subsidiaries.

"proved reserves" mean the estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, i.e., prices and costs as of the date the estimate is made. Prices include consideration of changes in existing prices provided only by contractual arrangements, but not on escalations based upon future conditions.

i           Reservoirs are considered proved if economic producibility is supported by either actual production or conclusive formation test. The area of a reservoir considered proved includes (A) that portion delineated by drilling and defined by gas-oil and/or oil-water contacts, if any; and (B) the immediately adjoining portions not yet drilled, but which can be reasonably judged as economically productive on the basis of available geological and engineering data. In the absence of information on fluid contacts, the lowest known structural occurrence of hydrocarbons controls the lower proved limit of the reservoir.

ii     Reserves which can be produced economically through application of improved recovery techniques (such as fluid injection) are included in the "proved" classification when successful testing by a pilot project, or the operation of an installed program in the reservoir, provides support for the engineering analysis on which the project or program was based.

iii    Estimates of proved reserves do not include the following: (A) oil that may become available from known reservoirs but is classified separately as "indicated additional reserves"; (B) crude oil, natural gas and natural gas liquids, the recovery of which is subject to reasonable doubt because of uncertainty as to geology, reservoir characteristics or economic factors; (C) crude oil, natural gas and natural gas liquids, that may occur in undrilled prospects; and (D) crude oil, natural gas and natural gas liquids, that may be recovered from oil shales, coal, gilsonite and other such sources.

"SEC" means the United States Securities and Exchange Commission.

"VPP" means volumetric production payment.

"U.S." means United States.

With respect to information on the working interest in wells, drilling locations and acreage, "net" wells, drilling locations and acres are determined by multiplying "gross" wells, drilling locations and acres by the Company's working interest in such wells, drilling locations or acres. Unless otherwise specified, wells, drilling locations and acreage statistics quoted herein represent gross wells, drilling locations or acres.

Unless otherwise indicated, all currency amounts are expressed in U.S. dollars.

 

3

 


PART I. FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements

 

PIONEER NATURAL RESOURCES COMPANY

 

CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

 

2007

 

2006

 

 

 

(Unaudited)

 

 

 

ASSETS

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,350

 

$

7,033

 

Accounts receivable:

 

 

 

 

 

 

 

Trade, net of allowance for doubtful accounts of $7,294 and $6,999 as of
March 31, 2022 and December 31, 2006, respectively

 

 

211,571

 

 

195,534

 

Due from affiliates

 

 

2,813

 

 

3,837

 

Income taxes receivable

 

 

12,135

 

 

24,693

 

Inventories

 

 

95,654

 

 

95,131

 

Prepaid expenses

 

 

10,353

 

 

11,509

 

Deferred income taxes

 

 

93,202

 

 

82,927

 

Other current assets:

 

 

 

 

 

 

 

Derivatives

 

 

22,480

 

 

63,665

 

Other

 

 

52,256

 

 

52,229

 

Total current assets

 

 

513,814

 

 

536,558

 

Property, plant and equipment, at cost:

 

 

 

 

 

 

 

Oil and gas properties, using the successful efforts method of accounting:

 

 

 

 

 

 

 

Proved properties

 

 

8,427,587

 

 

7,967,708

 

Unproved properties

 

 

209,880

 

 

210,344

 

Accumulated depletion, depreciation and amortization

 

 

(1,983,181

)

 

(1,895,408

)

Total property, plant and equipment

 

 

6,654,286

 

 

6,282,644

 

Deferred income taxes

 

 

2,261

 

 

345

 

Goodwill

 

 

309,869

 

 

309,908

 

Other property and equipment, net

 

 

135,444

 

 

131,840

 

Other assets:

 

 

 

 

 

 

 

Derivatives

 

 

935

 

 

4,333

 

Other, net of allowance for doubtful accounts of $4,038 and $4,045 as of
March 31, 2022 and December 31, 2006, respectively

 

 

83,708

 

 

89,771

 

 

 

$

7,700,317

 

$

7,355,399

 

 

 

 

The financial information included as of March 31, 2022 has been prepared by management

without audit by independent registered public accountants.

 

The accompanying notes are an integral part of these consolidated financial statements.

 

4

 


PIONEER NATURAL RESOURCES COMPANY

 

CONSOLIDATED BALANCE SHEETS (Continued)

(in thousands, except share data)

 

 

 

March 31,

 

December 31,

 

 

2007

 

2006

 

 

(Unaudited)

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

 

 

 

Accounts payable:

 

 

 

 

 

 

Trade

$

386,985

 

$

332,795

 

Due to affiliates

 

5,424

 

 

17,025

 

Interest payable

 

27,538

 

 

31,008

 

Income taxes payable

 

19,679

 

 

12,865

 

Other current liabilities:

 

 

 

 

 

 

Derivatives

 

134,299

 

 

141,898

 

Deferred revenue

 

175,676

 

 

181,232

 

Other

 

182,768

 

 

170,156

 

Total current liabilities

 

932,369

 

 

886,979

 

 

 

 

 

 

 

 

Long-term debt

 

1,859,255

 

 

1,497,162

 

Derivatives

 

92,734

 

 

125,459

 

Deferred income taxes

 

1,193,070

 

 

1,172,507

 

Deferred revenue

 

443,801

 

 

483,279

 

Other liabilities and minority interests

 

196,308

 

 

205,342

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $.01 par value; 500,000,000 shares authorized; 123,209,194 and
122,686,073 shares issued at March 31, 2022 and December 31, 2006, respectively

 

1,232

 

 

1,227

 

Additional paid-in capital

 

2,663,290

 

 

2,654,047

 

Treasury stock, at cost: 1,867,328 and 1,183,909 shares at March 31, 2022 and

 

 

 

 

 

 

December 31, 2006, respectively

 

(79,154

)

 

(53,274

)

Retained earnings

 

507,798

 

 

497,488

 

Accumulated other comprehensive income (loss):

 

 

 

 

 

 

Net deferred hedge losses, net of tax

 

(165,950

)

 

(167,220

)

Cumulative translation adjustment

 

55,564

 

 

52,403

 

Total stockholders’ equity

 

2,982,780

 

 

2,984,671

 

Commitments and contingencies

 

 

 

 

 

 

 

$

7,700,317

 

$

7,355,399

 

 

 

 

 

 

 

The financial information included as of March 31, 2022 has been prepared by management

without audit by independent registered public accountants.

 

The accompanying notes are an integral part of these consolidated financial statements.

 

5

 


PIONEER NATURAL RESOURCES COMPANY

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2007

 

2006

 

Revenues and other income:

 

 

 

 

 

 

 

Oil and gas

 

$

391,918

 

$

379,468

 

Interest and other

 

 

13,916

 

 

13,111

 

Gain (loss) on disposition of assets, net

 

 

260

 

 

(73

)

 

 

 

406,094

 

 

392,506

 

Costs and expenses:

 

 

 

 

 

 

 

Oil and gas production

 

 

104,413

 

 

94,683

 

Depletion, depreciation and amortization

 

 

92,138

 

 

82,406

 

Exploration and abandonments

 

 

76,372

 

 

82,642

 

General and administrative

 

 

34,444

 

 

32,247

 

Accretion of discount on asset retirement obligations

 

 

2,058

 

 

1,148

 

Interest

 

 

28,494

 

 

36,576

 

Hurricane activity, net

 

 

13,548

 

 

38,000

 

Other

 

 

8,413

 

 

5,054

 

 

 

 

359,880

 

 

372,756

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

 

46,214

 

 

19,750

 

Income tax provision

 

 

(15,919

)

 

(20,717

)

Income (loss) from continuing operations

 

 

30,295

 

 

(967

)

Income (loss) from discontinued operations, net of tax

 

 

(702

)

 

544,174

 

Net income

 

$

29,593

 

$

543,207

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.25

 

$

(0.01

)

Income (loss) from discontinued operations, net of tax

 

 

(0.01

)

 

4.29

 

Net income

 

$

0.24

 

$

4.28

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.25

 

$

(0.01

)

Income (loss) from discontinued operations, net of tax

 

 

(0.01

)

 

4.29

 

Net income

 

$

0.24

 

$

4.28

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

121,523

 

 

126,944

 

Diluted

 

 

122,794

 

 

126,944

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

$

0.13

 

$

0.12

 

 

The financial information included herein has been prepared by management

without audit by independent registered public accountants.

 

The accompanying notes are an integral part of these consolidated financial statements.

6

 


 

PIONEER NATURAL RESOURCES COMPANY

 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except dividends per share)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated Other
Comprehensive Income (Loss)

 

 

 

 

 

Shares
Outstanding

 

Common
Stock

 

Additional
Paid-in Capital

 

Treasury
Stock

 

Retained
Earnings

 

Net Deferred
Hedge Losses,
Net of Tax

 

Cumulative
Translation
Adjustment

 

Total
Stockholders'
Equity

 

Balance as of January 1, 2022

 

121,502

 

$

1,227

 

$

2,654,047

 

$

(53,274

)

$

497,488

 

$

(167,220

)

$

52,403

 

$

2,984,671

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared ($.13 per share)

 

 

 

 

 

 

 

 

 

(16,095

)

 

 

 

 

 

(16,095

)

Exercise of long-term incentive plan stock options

 

127

 

 

 

 

 

 

5,557

 

 

(3,188

)

 

 

 

 

 

2,369

 

Purchase of treasury stock

 

(811

)

 

 

 

 

 

(31,437

)

 

 

 

 

 

 

 

(31,437

)

Tax benefits related to stock-based compensation

 

 

 

 

 

1,510

 

 

 

 

 

 

 

 

 

 

1,510

 

Compensation costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation awards

 

524

 

 

5

 

 

(5

)

 

 

 

 

 

 

 

 

 

 

Compensation costs included in net
income

 

 

 

 

 

7,738

 

 

 

 

 

 

 

 

 

 

7,738

 

Net income

 

 

 

 

 

 

 

 

 

29,593

 

 

 

 

 

 

29,593

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net hedging activity, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net deferred hedge losses

 

 

 

 

 

 

 

 

 

 

 

(11,075

)

 

 

 

(11,075

)

Net hedge losses included in continuing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operations

 

 

 

 

 

 

 

 

 

 

 

12,345

 

 

 

 

12,345

 

Translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

3,161

 

 

3,161

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of March 31, 2022

 

121,342

 

$

1,232

 

$

2,663,290

 

$

(79,154

)

$

507,798

 

$

(165,950

)

$

55,564

 

$

2,982,780

 

 

 

 

The financial information included herein has been prepared by management without audit by independent registered public accountants.

 

The accompanying notes are an integral part of these consolidated financial statements.

7

 


PIONEER NATURAL RESOURCES COMPANY

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

 

 

Three Months ended

 

 

 

March 31,

 

 

 

2007

 

2006

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

29,593

 

$

543,207

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depletion, depreciation and amortization

 

 

92,138

 

 

82,406

 

Exploration expenses, including dry holes

 

 

46,965

 

 

52,582

 

Hurricane activity

 

 

19,000

 

 

42,000

 

Deferred income taxes

 

 

10,766

 

 

16,961

 

Loss (gain) on disposition of assets, net

 

 

(260

)

 

73

 

Accretion of discount on asset retirement obligations

 

 

2,058

 

 

1,148

 

Discontinued operations

 

 

(2,106

)

 

(539,653

)

Interest expense

 

 

4,726

 

 

3,047

 

Commodity hedge related activity

 

 

5,899

 

 

508

 

Amortization of stock-based compensation

 

 

7,738

 

 

7,486

 

Amortization of deferred revenue

 

 

(45,034

)

 

(47,949

)

Other noncash items

 

 

(6,277

)

 

2,699

 

Change in operating assets and liabilities, net of effects from
acquisitions and dispositions:

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(15,227

)

 

126,028

 

Income taxes receivable

 

 

12,558

 

 

(119

)

Inventories

 

 

1,989

 

 

(20,131

)

Prepaid expenses

 

 

1,156

 

 

(12,264

)

Other current assets, net

 

 

212

 

 

9,548

 

Accounts payable

 

 

(24,590

)

 

(77,655

)

Interest payable

 

 

(3,470

)

 

(19,100

)

Income taxes payable

 

 

6,814

 

 

134,051

 

Other current liabilities

 

 

(14,651

)

 

13,365

 

Net cash provided by operating activities

 

 

129,997

 

 

318,238

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Proceeds from disposition of assets, net of cash sold

 

 

4,765

 

 

963,191

 

Additions to oil and gas properties

 

 

(438,647

)

 

(334,888

)

Additions to other assets and other property and equipment, net

 

 

(13,573

)

 

(6,548

)

Net cash provided by (used in) investing activities

 

 

(447,455

)

 

621,755

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Borrowings under long-term debt

 

 

722,000

 

 

364,271

 

Principal payments on long-term debt

 

 

(361,555

)

 

(1,264,271

)

Payment of other liabilities

 

 

(5,755

)

 

(16,430

)

Exercise of long-term incentive plan stock options

 

 

2,369

 

 

1,922

 

Purchase of treasury stock

 

 

(31,437

)

 

(1,981

)

Excess tax benefits from share-based payment arrangements

 

 

1,540

 

 

1,015

 

Payment of financing fees

 

 

(3,519

)

 

 

Net cash provided by (used in) financing activities

 

 

323,643

 

 

(915,474

)

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

6,185

 

 

24,519

 

Effect of exchange rate changes on cash and cash equivalents

 

 

132

 

 

(339

)

Cash and cash equivalents, beginning of period

 

 

7,033

 

 

18,802

 

Cash and cash equivalents, end of period

 

$

13,350

 

$

42,982

 

 

 

The financial information included herein has been prepared by management

without audit by independent registered public accountants.

 

The accompanying notes are an integral part of these consolidated financial statements.

8

 


PIONEER NATURAL RESOURCES COMPANY

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2007

 

2006

 

 

 

 

 

 

 

Net income

 

$

29,593

 

$

543,207

 

Other comprehensive income:

 

 

 

 

 

 

 

Net hedge activity, net of tax:

 

 

 

 

 

 

 

Net deferred hedge gains (losses)

 

 

(11,075

)

 

41,902

 

Net hedge losses included in continuing operations

 

 

12,345

 

 

36,584

 

Net hedge losses included in discontinued operations

 

 

 

 

126,272

 

Translation adjustment

 

 

3,161

 

 

(2,235

)

Other comprehensive income

 

 

4,431

 

 

202,523

 

Comprehensive income

 

$

34,024

 

$

745,730

 

 

 

The financial information included herein has been prepared by management

without audit by independent registered public accountants.

 

The accompanying notes are an integral part of these consolidated financial statements.

9

 


PIONEER NATURAL RESOURCES COMPANY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

 

NOTE A.

Organization and Nature of Operations

 

Pioneer is a Delaware corporation whose common stock is listed and traded on the New York Stock Exchange. The Company is a large independent oil and gas exploration and production company with operations in the United States, Canada, Equatorial Guinea, Nigeria, South Africa and Tunisia.

 

NOTE B.

Basis of Presentation

 

Presentation. In the opinion of management, the unaudited consolidated financial statements of the Company as of March 31, 2022 and for the three-month periods ended March 31, 2022 and 2006 include all adjustments and accruals, consisting only of normal recurring accrual adjustments, which are necessary for a fair presentation of the results for the interim periods. These interim results are not necessarily indicative of results for a full year.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States ("GAAP") have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the SEC. These consolidated financial statements should be read in connection with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2006.

 

Discontinued operations. During 2006, the Company sold its interests in the following oil and gas asset groups:

 

Country

 

Description of Assets

 

Date Divested

 

 

 

 

 

United States

 

Deepwater Gulf of Mexico fields

 

March 2006

 

 

 

 

 

Argentina

 

Argentine assets

 

April 2006

 

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), the Company has reflected the results of operations of the above divestitures as discontinued operations, rather than as a component of continuing operations. See Note N for additional information regarding discontinued operations.

 

Inventories. Inventories were comprised of $93.3 million and $93.7 million of materials and supplies and $2.4 million and $1.4 million of commodities as of March 31, 2022 and December 31, 2006, respectively. The Company's materials and supplies inventory is primarily comprised of oil and gas drilling or repair items such as tubing, casing, chemicals, operating supplies and ordinary maintenance materials and parts. The materials and supplies inventory is primarily acquired for use in future drilling operations or repair operations and is carried at the lower of cost or market, on a weighted average cost basis. Commodities inventory is carried at the lower of average cost or market, on a first-in, first-out basis. Any valuation reductions to inventory are reflected as a loss on disposition of assets in the Consolidated Statements of Operations. As of March 31, 2022 and December 31, 2006, the Company's materials and supplies inventory was net of $3.2 million and $4.2 million, respectively, of valuation reserve allowances.

 

Goodwill. In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets", goodwill is not amortized to earnings, but is assessed for impairment whenever events or circumstances indicate that impairment of the carrying value of goodwill is likely, but no less often than annually. If the carrying value of goodwill is determined to be impaired, it is reduced for the impaired value with a corresponding charge to pretax earnings in the period in which it is determined to be impaired. During the third quarter of 2006, the Company performed its annual assessment of goodwill impairment and determined that there was no impairment. In accordance with GAAP, certain qualifying income tax benefits derived from stock-based compensation are recorded as reductions in the carrying value of goodwill.

 

10

 


PIONEER NATURAL RESOURCES COMPANY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

 

Minority interests in consolidated subsidiaries. The Company owns the majority interests in certain subsidiaries with operations in the United States and Nigeria. Associated therewith, the Company has recognized minority interests in consolidated subsidiaries of $10.8 million and $14.4 million in other liabilities and minority interests in the Consolidated Balance Sheets as of March 31, 2022 and December 31, 2006, respectively.

 

Minority interests in the net losses of the Company's consolidated Nigerian subsidiary amounting to $2.3 million and $2.9 million for the three-month periods ended March 31, 2022 and 2006, respectively, are included in interest and other income in the Consolidated Statements of Operations. Minority interests in the net income of the Company's consolidated United States subsidiaries amounting to $692 thousand and $885 thousand for the three-month periods ended March 31, 2022 and 2006, respectively, are included in other expense in the Consolidated Statements of Operations.

 

Stock-based compensation. On January 1, 2006, the Company adopted SFAS No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123(R)") to account for stock-based compensation. For equity-based compensation awards granted or modified subsequent to January 1, 2006, compensation expense, based on the fair value on the date of grant, is being recognized in the Company's financial statements over the vesting period. The Company utilizes (a) the Black-Scholes option pricing model to measure the fair value of stock options, (b) stock price on the date of grant for the fair value of restricted stock awards and (c) the Monte Carlo simulation method for the fair value of performance unit awards. Prior to the adoption of SFAS 123(R), the Company followed the intrinsic value method in accordance with the Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") to account for stock options. Prior period financial statements have not been restated. The Company recorded no cumulative effect as a result of adopting SFAS 123(R).

 

For the three months ended March 31, 2022 and 2006, the Company recorded $7.7 million and $7.5 million of stock-based compensation costs for all plans, respectively. The impact to net income of adopting SFAS 123(R) was $634 thousand for the three months ended March 31, 2006, or less than $.01 per diluted share. For the three months ended March 31, 2006, the adoption impact is comprised of $492 thousand of compensation expense associated with stock options and $142 thousand of compensation expense associated with the Company's Employee Stock Purchase Plan.

 

Pursuant to the provisions of SFAS 123(R), the Company's issued shares, as reflected in the Consolidated Balance Sheets at March 31, 2022 and December 31, 2006, do not include 2,049,608 shares and 1,946,211 shares, respectively, related to unvested restricted stock awards. During the three months ended March 31, 2007, the Company issued 566,969 shares of restricted stock awards, net of associated forfeitures.

 

As of March 31, 2007, there was approximately $62.7 million of unrecognized compensation expense related to unvested share-based compensation plan awards, primarily related to restricted stock and performance unit awards. This compensation will be recognized over the remaining vesting periods, which on a weighted average basis, is approximately one year and eight months.

 

Reclassifications. Certain reclassifications have been made to the 2006 amounts in order to conform with the 2007 presentation. Specifically, (a) the Company reduced its exploration and abandonments expense by $42.0 million and interest and other income by $4.0 million for the quarter ended March 31, 2006, which represents reclassification of abandonment costs and insurance recoveries for the Company's East Cameron facility destroyed by Hurricane Rita to hurricane activity, net expense in the Consolidated Statements of Operations, (b) the Company reclassified the aforementioned $42 million of East Cameron abandonment charge from exploration and abandonments to hurricane activity within net cash flows from operating activities in the Consolidated Statements of Cash Flows, (c) $15.9 million of unfunded check issuances were reclassified from changes in accounts payable in net cash flows from operating activities to payment of other liabilities in net cash flows from financing activities within the Consolidated Statements of Cash Flows and (d) $1.0 million of excess tax benefits from share-based payment arrangements were reclassified from other noncash items in net cash flows from operating activities to financing activities within the Consolidated Statements of Cash Flows.

 

11

 


PIONEER NATURAL RESOURCES COMPANY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

 

New accounting pronouncements. In July 2006, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48"). The Interpretation clarifies the accounting for income taxes by prescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on measurement, classification, interim accounting and disclosure. FIN 48 is effective for fiscal years beginning after December 15, 2006. See Note D for additional information regarding the Company’s adoption of FIN 48.

 

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measures" ("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measures required under other accounting pronouncements, but does not change existing guidance as to whether or not an instrument is carried at fair value. SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Company is continuing to assess the impact of SFAS 157.

 

NOTE C.

Exploratory Well Costs

 

The Company capitalizes exploratory well costs until a determination is made that the well has either found proved reserves or that it is impaired. The capitalized exploratory well costs are presented in proved properties in the Consolidated Balance Sheets. If the exploratory well is determined to be impaired, the well costs are charged to exploration and abandonments expense.

 

The following table reflects the Company's capitalized exploratory well activity during the three months ended March 31, 2007:

 

 

 

Three months ended

 

 

 

March 31, 2022

 

 

 

(in thousands)

 

Beginning capitalized exploratory well costs

 

$

265,053

 

Additions to exploratory well costs pending the

 

 

 

 

determination of proved reserves

 

 

112,840

 

Reclassification due to determination of proved reserves

 

 

(38,905

)

Exploratory well costs charged to exploration expense

 

 

(44,111

)

 

 

 

 

 

Ending capitalized exploratory well costs

 

$

294,877

 

 

The following table provides an aging as of March 31, 2022 and December 31, 2021 of capitalized exploratory well costs based on the date the drilling was completed and the number of projects for which exploratory well costs have been capitalized for a period greater than one year since the date the drilling was completed:

 

 

 

March 31,

 

December31,

 

 

 

2007

 

2006

 

 

 

(in thousands, except well counts)

 

 

 

 

 

 

 

 

 

Capitalized exploratory well costs that have been capitalized:

 

 

 

 

 

 

 

One year or less

 

$

109,637

 

$

126,749

 

Greater than one year

 

 

185,240

 

 

138,304

 

 

 

$

294,877

 

$

265,053

 

 

 

 

 

 

 

 

 

Number of projects with exploratory well costs that have been

 

 

 

 

 

 

 

capitalized for a period greater than one year

 

 

10

 

 

14

 

 

 

12

 


PIONEER NATURAL RESOURCES COMPANY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

 

The following table provides the capitalized costs of exploration projects that have been suspended for more than one year as of March 31, 2022 and December 31, 2006:

 

 

 

March 31,

 

December 31,

 

 

 

2007

 

2006

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

United States:

 

 

 

 

 

 

 

Clipper (a)

 

$

75,833

 

$

75,242

 

Lay Creek (a)

 

 

38,699

 

 

 

Oooguruk

 

 

52,205

 

 

52,205

 

Other (a)

 

 

5,891

 

 

4,103

 

 

 

 

 

 

 

 

 

Canada – other (a)

 

 

7,553

 

 

1,695

 

Tunisia – Anaguid (a)

 

 

5,059

 

 

5,059

 

Total

 

$

185,240

 

$

138,304

 

 

_____________

(a)

The March 31, 2022 balances include costs incurred during the last twelve months of $37.0 million, $34.3 million, $2.6 million, $3.3 million and $.3 million related to Clipper, Lay Creek, Other U.S., Canada and Tunisia, respectively.

 

The following discussion describes the history and status of each individually significant suspended exploratory project:

 

Clipper. During 2005, the Company drilled its first exploratory well on the Clipper prospect, which was a discovery. During 2006, the Company drilled additional wells to determine the magnitude of the discovery, which were successful. The Company is currently evaluating the plans for development of the discovery, including options for subsea tie-back to third-party production and handling facilities in the area.

 

Lay Creek. The Company’s Lay Creek project is a coal bed methane pilot program located in northwestern Colorado. The Company has drilled 17 wells in six separate pilot areas and completed workovers and recompletions on 14 wells drilled by a previous operator. The Company expects to complete the new water treatment facilities and plans to initiate sales of production in the second half of 2007. Determination of success of the pilot project is dependent on the ability to dewater the formation and determine if commercial quantities of gas can be produced. The pilot project is currently in the dewatering phase and if the pilot project is successful then full field development could begin in 2008.

 

Oooguruk. During 2003, the Company's Alaskan Oooguruk discovery wells found quantities of oil believed to be commercial. In 2003, the Company began farm-in discussions with the owner of undeveloped discoveries in adjacent acreage given its proximity and the potential cost benefits of a larger scale project. The farm-in was completed during 2004. Along with completing the farm-in agreement, Pioneer obtained access to exploration well and seismic data to improve the Company's understanding of the potential of the discoveries without having to drill additional wells. In late 2004, the Company completed an extensive technical and economic evaluation of the resource potential and a front-end engineering design study ("FEED study") for the area.

 

During the first quarter of 2006, the Company sanctioned the development of the discovery and obtained the necessary regulatory approvals. The Company completed the installation and armoring of the offshore gravel drilling and production site during 2006. The flowline and facilities to carry produced liquids to existing onshore processing facilities at the Kuparuk River Unit have been installed. Operations are underway to connect and commission the flowline and facilities. Pioneer is currently assembling the drilling rig on location and plans to commence drilling approximately 40 horizontal wells to develop the discovery in the second half of 2007. The Company estimates first production will occur in 2008.

 

13

 


PIONEER NATURAL RESOURCES COMPANY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

 

 

Tunisia - Anaguid. During 2003, the Company drilled two exploration wells on its Anaguid Block in Tunisia which found quantities of gas and condensate believed to be commercial. During 2004, the wells were scheduled and approved for extended production tests. However, the project operator delayed the extended production tests due to issues unrelated to the Company or the project. During 2005, the project operator, along with the Company, conducted an extended production test of one of the two existing exploration wells and drilled an offset appraisal well to the other exploration well. Studies on the second discovery are continuing to determine whether development is economical.

 

NOTE D.

Income Taxes

 

The Company accounts for income taxes in accordance with the provisions of SFAS No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109 requires that the Company continually assess both positive and negative evidence to determine whether it is more likely than not that deferred tax assets can be realized prior to their expiration. Pioneer monitors Company-specific, oil and gas industry and worldwide economic factors and assesses the likelihood that the Company's net operating loss carryforwards ("NOLs") and other deferred tax attributes in the United States and state, local and foreign tax jurisdictions will be utilized prior to their expiration. As of March 31, 2022 and December 31, 2006, the Company's valuation allowances (relating primarily to foreign tax jurisdictions) were $98.8 million and $94.7 million, respectively.

 

The Company files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company believes that it is no longer subject to examinations by tax authorities for years before 2002. In the fourth quarter of 2006, the Internal Revenue Service commenced an examination of the Company’s 2004 U.S. income tax return that is anticipated to be completed by the end of 2007. In addition, the Company’s 2003 through 2005 state income tax returns in Colorado and Louisiana are currently under audit, the Tunisian government is concluding an audit of the Company’s 2002 through 2005 income tax returns for the Adam Concession, and the Canada Revenue Agency is currently auditing the Company’s 2003 and 2004 Canadian income tax returns. As of March 31, 2007, no significant adjustments have been proposed in any jurisdiction.

 

The Company adopted the provisions of FIN 48 on January 1, 2007. As a result of the implementation of FIN 48, the Company has analyzed its filing positions for open tax years in all of the foreign, federal and state jurisdictions where it has material tax attributes and is required to file income tax returns. The Company believes that its income tax filing positions and deductions will be substantially sustained on audit and does not anticipate any significant adjustments. Consequently, the Company did not record a cumulative effect adjustment related to the adoption of FIN 48.

 

In February 2007, the Republic of South Africa passed legislation that included significant new tax benefits for oil and gas activities. Effective November 2, 2006, the Company is allowed a deduction from oil and gas income equal to 200 percent of exploration expenditures and 150 percent of development expenditures. Pursuant to the new tax legislation, the Company recorded a $6.3 million tax benefit in the first quarter of 2007 associated with capital expenditures incurred after the effective date, primarily related to the South Coast Gas project.

 

14

 


PIONEER NATURAL RESOURCES COMPANY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

 

            Income tax provision. The Company's income tax provisions attributable to income from continuing operations consisted of the following for the three-month periods ended March 31, 2022 and 2006:

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2007

 

2006

 

 

 

(in thousands)

 

Current:

 

 

 

 

 

 

 

U.S. federal

 

$

(4,777

)

$

(2,513

)

U.S. state and local

 

 

 

 

(9

)

Foreign

 

 

9,930

 

 

6,278

 

 

 

 

5,153

 

 

3,756

 

Deferred:

 

 

 

 

 

 

 

U.S. federal

 

 

12,163

 

 

9,937

 

U.S. state and local

 

 

490

 

 

(198

)

Foreign

 

 

(1,887

)

 

7,222

 

 

 

 

10,766

 

 

16,961

 

 

 

 

 

 

 

 

 

 

 

$

15,919

 

$

20,717

 

 

Discontinued operations. The Company's income tax provisions attributable to income from discontinued operations consisted of the following for the three-month periods ended March 31, 2022 and 2006:

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2007

 

2006

 

 

 

(in thousands)

 

Current:

 

 

 

 

 

 

 

U.S. federal

 

$

 

$

140,725

 

U.S. state and local

 

 

 

 

2,140

 

Foreign

 

 

4,497

 

 

1,165

 

 

 

 

4,497

 

 

144,030

 

Deferred:

 

 

 

 

 

 

 

U.S. federal

 

 

 

 

142,276

 

U.S. state and local

 

 

 

 

6,215

 

Foreign

 

 

(2,255

)

 

(1,004

)

 

 

 

(2,255

)

 

147,487

 

 

 

 

 

 

 

 

 

 

 

$

2,242

 

$

291,517

 

 

 

15

 


PIONEER NATURAL RESOURCES COMPANY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

 

NOTE E.

Long-term Debt

 

Lines of credit. As of March 31, 2007, the Company had an Amended and Restated $1.5 billion 5-Year Revolving Credit Agreement (the "Credit Agreement"), which was to mature in September 2011. As of March 31, 2007, the Company had $190 million of outstanding borrowings under the Credit Agreement and had $153.9 million of undrawn letters of credit, of which $150.4 million were undrawn commitments under the Credit Agreement, leaving the Company with $1.2 billion of unused borrowing capacity under the Credit Agreement.

 

During April 2007, the Company entered into an Amended and Restated 5-Year Revolving Credit Agreement (the "Amended Credit Agreement") that amended the Company’s Credit Agreement. The Amended Credit Agreement matures in April 2012 unless extended in accordance with the terms of the Amended Credit Agreement. The Amended Credit Agreement also provides for initial aggregate loan commitments of $1.5 billion, which may be increased to a maximum aggregate amount of $2.0 billion if the lenders increase their loan commitments or if loan commitments of new financial institutions are added.

 

Borrowings under the Amended Credit Agreement may be in the form of revolving loans or swing line loans. Aggregate outstanding swing line loans may not exceed $150 million. Revolving loans bear interest, at the option of the Company, based on (a) a rate per annum equal to the higher of the prime rate announced from time to time by JPMorgan Chase Bank or the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System during the last preceding business day plus .5 percent or (b) a base Eurodollar rate, substantially equal to LIBOR, plus a margin (the "Applicable Margin") that is determined by a reference grid based on the Company’s debt rating (currently .75 percent). Swing line loans bear interest at a rate per annum equal to the "ASK" rate for Federal funds periodically published by the Dow Jones Market Service plus the Applicable Margin. Letters of credit outstanding under the Amended Credit Agreement are subject to a per annum fee, based on a grid of the Company's debt rating, representing the Company's LIBOR margin (currently .75 percent) plus .125 percent.

 

The Amended Credit Agreement contains certain financial covenants, which include the maintenance of a ratio of total debt to book capitalization less intangible assets, accumulated other comprehensive income and certain noncash asset impairments not to exceed .60 to 1.0. The covenants also include the maintenance of a ratio of the net present value of the Company’s oil and gas properties to total debt of at least 1.75 to 1.0 until the Company achieves an investment grade rating by Moody’s Investors Service, Inc. or Standard & Poors Ratings Group, Inc.

 

Senior notes. During March 2007, the Company issued $500 million of 6.65% senior notes due 2017 (the "6.65% Notes") and received proceeds, net of issuance discount and underwriting costs, of $494.9 million. The Company used the net proceeds from the issuance of the 6.65% Notes to reduce indebtedness under its Credit Agreement.

 

NOTE F.

Derivative Financial Instruments

 

The Company uses financial derivative contracts to manage exposures to commodity price, interest rate and foreign currency fluctuations. The Company generally does not enter into derivative financial instruments for speculative or trading purposes. The Company also may enter physical delivery contracts that effectively provide commodity price hedges. Because these contracts are not expected to be net cash settled, they are considered to be normal sales contracts and not derivatives. Therefore, these contracts are not recorded in the financial statements.

 

All derivatives are recorded on the balance sheet at estimated fair value. Fair value is generally determined based on the difference between the fixed contract price and the underlying market price at the determination date. Changes in the fair value of effective cash flow hedges are recorded as a component of accumulated other comprehensive income (loss), which is later transferred to earnings when the hedged transaction occurs. Changes in the fair value of derivatives that are not designated as hedges, as well as the ineffective portion of the hedge derivatives, are recorded in earnings. The ineffective portion is calculated as the difference between the change in fair value of the derivative and the estimated change in cash flows from the item hedged.

 

16

 


PIONEER NATURAL RESOURCES COMPANY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

 

            Fair value hedges. The Company monitors the debt capital markets and interest rate trends to identify opportunities to enter into and terminate interest rate swap contracts with the objective of reducing its costs of capital. As of March 31, 2022 and December 31, 2006, the Company was not a party to any open fair value hedges.

 

As of March 31, 2007, the carrying value of the Company's long-term debt in the Consolidated Balance Sheets included a $3.4 million reduction attributable to net deferred hedge losses on terminated fair value hedges that are being amortized as net increases to interest expense over the original terms of the terminated agreements. During the three-month periods ended March 31, 2022 and 2006, the Company's amortization of deferred hedge losses and gains on terminated interest rate swaps increased the Company's reported interest expense by $73 thousand and reduced reported interest expense by $105 thousand, respectively.

 

The following table sets forth, as of March 31, 2007, the scheduled amortization of net deferred hedge losses on terminated interest rate hedges (including terminated fair value and cash flow hedges) that will be recognized as increases to the Company's future interest expense:

 

 

 

Net deferred hedge losses

 

 

 

Fair Value

 

Cash Flow

 

Total

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

2007 (remaining nine months)

 

$

195

 

$

155

 

$

350

 

2008

 

$

257

 

$

231

 

$

488

 

2009

 

$

281

 

$

260

 

$

541

 

2010

 

$

307

 

$

293

 

$

600

 

2011

 

$

337

 

$

328

 

$

665

 

Thereafter

 

$

1,978

 

$

1,960

 

$

3,938

 

 

Cash flow hedges. The Company utilizes commodity swap and collar contracts to (i) reduce the effect of price volatility on the commodities the Company produces and sells, (ii) support the Company's annual capital budgeting and expenditure plans and (iii) reduce commodity price risk associated with certain capital projects. As of March 31, 2007, all of the Company's open commodity hedges are designated as hedges of Canadian or United States forecasted sales. The Company also, from time to time, utilizes interest rate contracts to reduce the effect of interest rate volatility on the Company's indebtedness and forward currency exchange agreements to reduce the effect of U.S. dollar to Canadian dollar exchange rate volatility.

 

17

 


PIONEER NATURAL RESOURCES COMPANY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

 

            Oil prices. All material physical sales contracts governing the Company's oil production have been tied directly or indirectly to NYMEX prices. The following table sets forth the volumes hedged in Bbls under outstanding oil hedge contracts and the weighted average NYMEX prices per Bbl for those contracts as of March 31, 2007:

 

 

First

 

Second

 

Third

 

Fourth

 

Outstanding

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Average

 

 

 

 

 

 

 

 

 

 

Average daily oil

 

 

 

 

 

 

 

 

 

 

 

 

 

 

production hedged (a):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2007 – Collar Contracts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (Bbl)

 

 

 

 

2,681

 

 

4,000

 

 

4,000

 

 

3,564

Price per Bbl

 

 

 

$

63.00 - 75.91

 

$

63.00 - 75.91

 

$

63.00 - 75.91

 

$

63.00 - 75.91

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2008 – Swap Contracts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (Bbl)

 

6,000

 

 

6,000

 

 

6,000

 

 

6,000

 

 

6,000

Price per Bbl

$

44.55

 

$

44.55

 

$

44.55

 

$

44.55

 

$

44.55

 

_____________

(a)

Subsequent to March 31, 2007, the Company entered into oil collar contracts of 1,000 Bbls per day for the Company’s May through December 2007 production at an average floor price of $63.00 per Bbl and an average ceiling price of $76.55 per Bbl. The Company also entered into additional oil swap contracts of 5,500 Bbls per day for the Company’s 2008 production at an average price of $70.40 per Bbl and 5,000 Bbls per day for the Company’s 2009 production at an average price of $70.37 per Bbl.

 

The Company reports average oil prices per Bbl including the effects of oil quality adjustments, amortization of deferred volumetric production payment ("VPP") revenue and the net effect of oil hedges. The following table sets forth (i) the Company's oil prices from continuing operations, both reported (including hedge results and amortization of deferred VPP revenue) and realized (excluding hedge results and amortization of deferred VPP revenue), (ii) amortization of deferred VPP revenue to oil revenue from continuing operations and (iii) the net effect of settlements of oil price hedges on oil revenue from continuing operations for the three-month periods ended March 31, 2022 and 2006:

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2007

 

2006

 

 

 

 

 

 

 

Average price reported per Bbl

 

$

54.05

 

$

60.01

 

Average price realized per Bbl

 

$

56.56

 

$

60.10

 

VPP increase to oil revenue (in millions)

 

$

27.3

 

$

28.9

 

Reduction to oil revenue from hedging activity (in millions) (a)

 

$

(33.1

)

$

(29.1

)

 

_____________

(a)

Excludes hedge losses of $12.3 million attributable to discontinued operations for the three-months ended March 31, 2006.

 

Natural gas liquids prices. During the three-month periods ended March 31, 2022 and 2006, the Company did not enter into any NGL hedge contracts. There were no outstanding NGL hedge contracts at March 31, 2007.

 

18

 


PIONEER NATURAL RESOURCES COMPANY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

 

            Gas prices. The Company employs a policy of hedging a portion of its gas production based on the index price upon which the gas is actually sold in order to mitigate the basis risk between NYMEX prices and actual index prices, or based on NYMEX prices if NYMEX prices are highly correlated with the index price. The following table sets forth the volumes hedged in MMBtus under outstanding gas hedge contracts and the weighted average index prices per MMBtu for those contracts as of March 31, 2007:

 

 

 

First

 

Second

 

Third

 

Fourth

 

Outstanding

 

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Average

 

Average daily gas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

production hedged (a):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2007 – Swap Contracts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (MMBtu)

 

 

 

 

 

225,000

 

 

225,000

 

 

225,000

 

 

225,000

 

Price per MMBtu

 

 

 

 

$

7.71

 

$

7.71

 

$

7.71

 

 

7.71

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2008 – Swap Contracts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (MMBtu)

 

 

15,000

 

 

15,000

 

 

15,000

 

 

15,000

 

 

15,000

 

Price per MMBtu

 

$

8.62

 

$

8.62

 

$

8.62

 

$

8.62

 

$

8.62

 

 

_____________

 

(a)

Subsequent to March 31, 2007, the Company entered into additional gas swap contracts of 12,486 MMBtu per day for the Company’s 2008 production at an average price of $8.95 per MMBtu.

 

The Company reports average gas prices per Mcf including the effects of Btu content, gas processing, shrinkage adjustments, amortization of deferred VPP revenue and the net effect of gas hedges. The following table sets forth (i) the Company's gas prices from continuing operations, both reported (including hedge results and amortization of deferred VPP revenue) and realized (excluding hedge results and amortization of deferred VPP revenue), (ii) amortization of deferred VPP revenue to gas revenue from continuing operations and (iii) the net effect of settlements of gas price hedges on gas revenue from continuing operations for the three-month periods ended March 31, 2022 and 2006:

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2007

 

2006

 

 

 

 

 

 

 

 

 

Average price reported per Mcf

 

$

7.32

 

$

6.72

 

Average price realized per Mcf

 

$

6.28

 

$

7.05

 

VPP increase to gas revenue (in millions)

 

$

17.7

 

$

19.0

 

Increase (reduction) to gas revenue from hedging activity (in millions) (a)

 

$

13.0

 

$

(28.3

)

 

_____________

(a)

Excludes hedge losses of $3.4 million attributable to discontinued operations for the three-months ended March 31, 2006.

 

Interest rate. During March 2007, the Company entered into treasury lock contracts and designated the contracts as cash flow hedges of the forecasted interest rate risk associated with the coupon rate on the Company’s 6.65% Notes, which were issued in March 2007. The Company terminated these contracts for a loss of $1.5 million, which was recorded in accumulated other comprehensive income (loss) - net deferred hedge losses, net of tax ("AOCI - Hedging"). The Company did not realize any ineffectiveness in connection with the treasury lock contracts. See Note E for information regarding the 6.65% Notes.

 

Hedge ineffectiveness. During the three months ended March 31, 2022 and 2006, the Company recorded $.9 million and $8.2 million, respectively, of net ineffectiveness charges to other expense from continuing operations.  Hedge ineffectiveness charges represent the ineffective portions of changes in fair values of the Company’s cash flow hedging instruments.  These charges primarily result from changes in correlations and derivative fair values

 

19

 


PIONEER NATURAL RESOURCES COMPANY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

 

associated with commodity price indexes of financial hedge derivatives and the commodity price indexes of the hedged forecasted production for certain fields.

 

AOCI - Hedging. As of March 31, 2022 and December 31, 2006, AOCI - Hedging represented net deferred losses of $166.0 million and $167.2 million, respectively. The AOCI - Hedging balance as of March 31, 2022 was comprised of $33.7 million of net deferred losses on the effective portions of open cash flow hedges, $228.3 million of net deferred losses on terminated cash flow hedges (including $3.2 million of net deferred losses on terminated cash flow interest rate hedges) and $96.0 million of associated net deferred tax benefits. The decrease in AOCI - Hedging during the three months ended March 31, 2022 was primarily attributable to the reclassification of net deferred hedge losses to net income as derivatives matured, partially offset by increases in future commodity prices relative to the commodity prices stipulated in the hedge contracts. The net deferred losses associated with open cash flow hedges remain subject to market price fluctuations until the positions are either settled under the terms of the hedge contracts or terminated prior to settlement. The net deferred losses on terminated cash flow hedges are fixed.

 

During the twelve months ending March 31, 2008, based on current estimates of future commodity prices, the Company expects to reclassify $4.6 million of net deferred gains associated with open commodity hedges and $140.2 million of net deferred losses on terminated commodity hedges from AOCI - Hedging to oil and gas revenues. The Company also expects to reclassify approximately $50.9 million of net deferred income tax benefits associated with commodity hedges during the twelve months ending March 31, 2022 from AOCI - Hedging to income tax benefit.

 

Terminated commodity hedges. At times, the Company terminates open commodity hedge positions when the underlying commodity prices reach a point that the Company believes will be the high or low price of the commodity prior to the scheduled settlement of the open commodity hedge position. This allows the Company to maximize gains or minimize losses associated with the open hedge positions. At the time of termination of the hedges, the amounts recorded in AOCI – Hedging are maintained and amortized to earnings over the periods the production was scheduled to occur.

 

The following table sets forth, as of March 31, 2007, the scheduled amortization of net deferred losses on terminated commodity hedges that will be recognized as decreases to the Company's future oil and gas revenues:

 

 

 

First

 

Second

 

Third

 

Fourth

 

 

 

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Total

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2007 net deferred hedge losses

 

 

 

 

$

38,701

 

$

37,986

 

$

36,567

 

$

113,254

 

2008 net deferred hedge losses

 

$

26,899

 

$

24,069

 

$

23,914

 

$

24,142

 

$

99,024

 

2009 net deferred hedge losses

 

$

2,330

 

$

232

 

$

230

 

$

822

 

$

3,614

 

2010 net deferred hedge losses

 

$

667

 

$

620

 

$

578

 

$

539

 

$

2,404

 

2011 net deferred hedge losses

 

$

873

 

$

889

 

$

902

 

$

906

 

$

3,570

 

2012 net deferred hedge losses

 

$

810

 

$

791

 

$

783

 

$

772

 

$

3,156

 

 

 

20

 


PIONEER NATURAL RESOURCES COMPANY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

 

NOTE G.

Asset Retirement Obligations

 

The Company's asset retirement obligations primarily relate to the future plugging and abandonment of wells and related facilities. The Company does not provide for a market risk premium associated with asset retirement obligations because a reliable estimate cannot be determined. The Company has no assets that are legally restricted for purposes of settling asset retirement obligations. The following table summarizes the Company's asset retirement obligation transactions during the three-month periods ended March 31, 2022 and 2006:

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2007

 

2006

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

Beginning asset retirement obligations

 

$

225,913

 

$

157,035

 

New wells placed on production and changes in estimates (a)

 

 

22,682

 

 

42,000

 

Liabilities reclassed to discontinued operations held for sale

 

 

 

 

(13,585

)

Disposition of wells

 

 

 

 

(30,085

)

Liabilities settled

 

 

(17,803

)

 

(1,068

)

Accretion of discount on continuing operations

 

 

2,058

 

 

1,148

 

Accretion of discount on discontinued operations

 

 

 

 

732

 

Currency translation

 

 

257

 

 

(89

)

 

 

 

 

 

 

 

 

Ending asset retirement obligation

 

$

233,107

 

$

156,088

 

 

_____________

(a)

During the three months ended March 31, 2022 and 2006, the Company recorded an increase of $19.0 million and $42.0 million, respectively, to the abandonment estimates for the East Cameron facilities that were destroyed by Hurricane Rita in 2005, which is reflected in hurricane activity, net in the Consolidated Statements of Operations.

 

The Company records the current and noncurrent portions of asset retirement obligations in other current liabilities and other liabilities and minority interests, respectively, in the Consolidated Balance Sheets.

 

NOTE H.

Postretirement Benefit Obligations

 

As of March 31, 2022 and December 31, 2006, the Company had recorded $20.2 million and $19.8 million, respectively, of unfunded accumulated postretirement benefit obligations, the current and noncurrent portions of which are included in other current liabilities and other liabilities and minority interests, respectively, in the Consolidated Balance Sheets. These obligations are comprised of five plans of which four relate to predecessor entities that the Company acquired in prior years. These plans had no assets as of March 31, 2022 or December 31, 2006. Other than the Company's retirement plan, the participants of these plans are not current employees of the Company.

 

21

 


PIONEER NATURAL RESOURCES COMPANY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

 

            The following table reconciles changes in the Company's unfunded accumulated postretirement benefit obligations during the three-month periods ended March 31, 2022 and 2006:

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2007

 

2006

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

Beginning accumulated postretirement benefit obligations

 

$

19,837

 

$

18,576

 

Net benefit payments

 

 

(225

)

 

(285

)

Service costs

 

 

259

 

 

204

 

Accretion of discounts

 

 

287

 

 

259

 

 

 

 

 

 

 

 

 

Ending accumulated postretirement benefit obligations

 

$

20,158

 

$

18,754

 

 

NOTE I.

Commitments and Contingencies

 

Legal actions. The Company is party to the legal actions that are described below. The Company is also party to other proceedings and claims incidental to its business. While many of these matters involve inherent uncertainty, the Company believes that the amount of the liability, if any, ultimately incurred with respect to such other proceedings and claims will not have a material adverse effect on the Company's consolidated financial position as a whole or on its liquidity, capital resources or future annual results of operations. The Company will continue to evaluate its litigation matters on a quarter-by-quarter basis and will adjust its litigation reserves as appropriate to reflect its assessment of the then current status of litigation.

 

Alford. The Company was party to a 1993 class action lawsuit filed in the 26th Judicial District Court of Stevens County, Kansas by two classes of royalty owners. During the third quarter of 2006, the Company reached an agreement to settle the claims made in the lawsuit. Final approval was received from the court on February 9, 2022 and the settlement became final during April 2007.

 

MOSH Holding. On April 11, 2005, the Company and its principal United States subsidiary, Pioneer Natural Resources USA, Inc., were named as defendants in MOSH Holding, L.P. v Pioneer Natural Resources Company; Pioneer Natural Resources USA, Inc.; Woodside Energy (USA) Inc.; and JPMorgan Chase Bank, NA, as Trustee of the Mesa Offshore Trust, which is before the Judicial District Court of Harris County, Texas (334th Judicial District). On December 8, 2006, Dagger-Spine Hedgehog Corporation ("Dagger-Spine") filed a Petition In Intervention in the lawsuit to assert the same claims as MOSH Holding, L.P. ("MHLP"). MHLP and Dagger-Spine (collectively, "Plaintiffs") are unitholders in the Trust, which was created in 1982 as the sole limited partner in a partnership that holds an overriding royalty interest in certain oil and gas leases offshore Louisiana and Texas. The Company owns the managing general partner interest in the partnership. Plaintiffs allege that the Company, together with Woodside Energy (USA) Inc. ("Woodside"), concealed the value of the royalty interest and worked to terminate the Mesa Offshore Trust ("MOT") prematurely and to capture for itself and Woodside profits that belong to the MOT. Plaintiffs also allege breaches of fiduciary duty, misapplication of trust property, common law fraud, gross negligence, and breach of the conveyance agreement for the overriding royalty interest. The relief sought by the Plaintiffs includes monetary and punitive damages and certain equitable relief, including an accounting of expenses, a setting aside of certain farmouts, and a temporary and permanent injunction.

 

The Trustee and the Company have reached a conditional settlement of all claims in the lawsuit that MOT has or might have against the Company. Plaintiffs are not signatories to the settlement and they have indicated that they intend to object to its approval. Other unitholders of MOT may also comment on or object to the settlement. The settlement is subject to certain conditions and is not final until approved by the court and any appeals are resolved. The court has set the settlement review hearing for May 21, 2007. The conditional settlement, if approved, is not expected to have a material effect on the Company's liquidity, financial position or future results of operations.

 

22

 


PIONEER NATURAL RESOURCES COMPANY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

 

            Dorchester Refining Company Site. A subsidiary of the Company was notified by the Texas Commission on Environmental Quality ("TCEQ") in August 2005 that the TCEQ considers the subsidiary to be a potentially responsible party with respect to the Dorchester Refining Company State Superfund Site located in Mount Pleasant, Texas. In connection with the acquisition of oil and gas assets in 1991, the Company acquired a group of companies, one of which was an entity that had owned a refinery located at the Mount Pleasant site from 1977 until 1984. According to the TCEQ, this refinery was responsible for releases of hazardous substances into the environment. Pursuant to applicable Texas law, the Company's subsidiary, which does not own any material assets or conduct any material operations, may be subject to strict, joint and several liability for the costs of conducting a study to evaluate potential remedial options and for the costs of performing any remediation ultimately required by the TCEQ. The Company does not know the nature and extent of the alleged contamination, the potential costs of remediation or the portion, if any, of such costs that may be allocable to the Company's subsidiary; however, the Company has noted that there appear to be other operators or owners who may share responsibility for these costs and does not expect that any such additional liability will have a material adverse effect on its consolidated financial position as a whole or on its liquidity, financial position or future annual results of operations.

 

Environmental Protection Agency Investigation. On November 4, 2005, the Company learned from the U.S. Environmental Protection Agency that the agency was conducting a criminal investigation into a 2003 spill that occurred at a Company-operated drilling rig located on an ice island offshore Harrison Bay, Alaska. The investigation is being conducted in conjunction with the U.S. Attorney's Office for the District of Alaska. The spill was previously investigated by the Alaska Department of Environmental Conservation ("ADEC") and, following completion of a clean up, the ADEC issued a letter stating its determination that, at that time, the site did not pose a threat to human health, safety or welfare, or the environment. The Company is fully cooperating with the government's investigation. The Company cannot predict whether this investigation will negatively impact the Company's liquid results of operations.

 

Argentine obligations. The Company has provided the purchaser of its Argentine assets certain indemnifications and remains responsible for certain contingent liabilities, subject to defined limitations. The Company does not currently believe that these obligations, which primarily pertain to matters of litigation, environmental contingencies, royalty obligations and income taxes, are probable of having a material impact on its liquidity, financial position or future results of operations.

 

NOTE J.

Income (Loss) Per Share From Continuing Operations

 

Basic income (loss) per share from continuing operations is computed by dividing income (loss) from continuing operations by the weighted average number of common shares outstanding for the period. The computation of diluted income (loss) per share from continuing operations reflects the potential dilution that could occur if securities or other contracts to issue common stock that are dilutive to income (loss) from continuing operations were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the earnings of the Company.

 

23

 


PIONEER NATURAL RESOURCES COMPANY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

 

            The following table is a reconciliation of basic weighted average common shares outstanding to diluted weighted average common shares outstanding for the three-month periods ended March 31, 2022 and 2006:

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2007

 

2006

 

 

 

(in thousands)

 

Weighted average common shares outstanding (a) (b):

 

 

 

 

 

Basic

 

121,523

 

126,944

 

Dilutive common stock options (c) (d)

 

467

 

 

Restricted stock awards (d)

 

804

 

 

 

 

 

 

 

 

Diluted

 

122,794

 

126,944

 

 

_____________

(a)

In February 2007, the Company’s board of directors ("Board") approved a $300 million share repurchase program. In April 2007, the Board approved an increase of $450 million to the existing share repurchase program bringing the aggregate authorized share repurchase program to $750 million. During the first quarter of 2007, the Company purchased $25 million of common stock pursuant to the 2007 program.

(b)

A total of 145,820 performance unit awards, awarded in 2007, were excluded from the computation of diluted income per share from continuing operations for the three months ended March 31, 2022 because the units did not meet the performance criteria for the issuance of shares at March 31, 2007.

(c)

Common stock options to purchase 5,952 shares were outstanding but not included in the computations of diluted income per share from continuing operations for the three months ended March 31, 2022 because the exercise prices of the options were greater than the average market price of the common shares and would be anti-dilutive to the computations.

(d)

Due to the loss from continuing operations during the three months ended March 31, 2006, the potential dilutive effects of stock options and restricted stock would be anti-dilutive.

 

NOTE K.

Geographic Operating Segment Information

 

The Company has operations in only one industry segment, that being the oil and gas exploration and production industry; however, the Company is organizationally structured along geographic operating segments or regions. The Company has reportable operations in the United States, Canada, South Africa, Tunisia and Other. Other is primarily comprised of operations in Equatorial Guinea, Gabon and Nigeria.

 

As previously referred to in Note B, during 2006, the Company sold its Argentine assets and certain United States oil and gas properties having carrying values, including net deferred hedge losses, of $658.7 million and $430.8 million, respectively. The results of operations of those properties have been reclassified as discontinued operations in accordance with SFAS 144 and are excluded from the geographic operating segment information provided below. See Note N for information regarding the Company's discontinued operations.

 

The following tables provide the Company's interim geographic operating segment data for the three-month periods ended March 31, 2022 and 2006. Geographic operating segment income tax benefits (provisions) have been determined based on statutory rates existing in the various tax jurisdictions where the Company has oil and gas producing activities. The "Headquarters" table column includes income and expenses that are not routinely included in the earnings measures internally reported to management on a geographic operating segment basis.

 

24

 


PIONEER NATURAL RESOURCES COMPANY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

 

 

 

United
States

 

Canada

 

South
Africa

 

Tunisia

 

Other

 

Headquarters

 

Consolidated
Total

 

 

 

(in thousands)

 

Three months ended March 31, 2007:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues and other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and gas

 

$

318,470

 

$

38,336

 

$

13,188

 

$

21,924

 

$

 

$

 

$

391,918

 

Interest and other

 

 

 

 

 

 

 

 

 

 

 

 

13,916

 

 

13,916

 

Gain (loss) on disposition of assets, net

 

 

1,083

 

 

 

 

 

 

 

 

 

 

(823

)

 

260

 

 

 

 

319,553

 

 

38,336

 

 

13,188

 

 

21,924

 

 

 

 

13,093

 

 

406,094

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and gas production

 

 

83,513

 

 

14,965

 

 

4,046

 

 

1,889

 

 

 

 

 

 

 

104,413

 

Depletion, depreciation and amortization

 

 

69,384

 

 

13,157

 

 

1,071

 

 

1,555

 

 

 

 

6,971

 

 

92,138

 

Exploration and abandonments

 

 

63,652

 

 

4,602

 

 

44

 

 

2,829

 

 

5,245

 

 

 

 

76,372

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

34,444

 

 

34,444

 

Accretion of discount on asset retirement obligations

 

 

 

 

 

 

 

 

 

 

 

 

2,058

 

 

2,058

 

Interest

 

 

 

 

 

 

 

 

 

 

 

 

28,494

 

 

28,494

 

Hurricane activity, net

 

 

13,548

 

 

 

 

 

 

 

 

 

 

 

 

13,548

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

8,413

 

 

8,413

 

 

 

 

230,097

 

 

32,724

 

 

5,161

 

 

6,273

 

 

5,245

 

 

80,380

 

 

359,880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations
before income taxes

 

 

89,456

 

 

5,612

 

 

8,027

 

 

15,651

 

 

(5,245

)

 

(67,287

)

 

46,214

 

Income tax benefit (provision)

 

 

(33,099

)

 

(1,742

)

 

(2,328

)

 

(9,647

)

 

 

 

30,897

 

 

(15,919

)

Income (loss) from continuing operations

 

$

56,357

 

$

3,870

 

$

5,699

 

$

6,004

 

$

(5,245

)

$

(36,390

)

$

30,295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2006:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues and other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and gas

 

$

309,881

 

$

28,362

 

$

27,796

 

$

13,429

 

$

 

$

 

$

379,468

 

Interest and other

 

 

 

 

 

 

 

 

 

 

 

 

13,111

 

 

13,111

 

Loss on disposition of assets, net

 

 

 

 

 

 

 

 

 

 

 

 

(73

)

 

(73

)

 

 

 

309,881

 

 

28,362

 

 

27,796

 

 

13,429

 

 

 

 

13,038

 

 

392,506

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and gas production

 

 

77,901

 

 

10,914

 

 

5,102

 

 

766

 

 

 

 

 

 

$

94,683

 

Depletion, depreciation and amortization

 

 

63,616

 

 

7,230

 

 

4,550

 

 

1,145

 

 

 

 

5,865

 

 

82,406

 

Exploration and abandonments

 

 

36,281

 

 

3,416

 

 

83