Pioneer Natural Resources

DALLAS--(BUSINESS WIRE)--Feb. 7, 2017-- Pioneer Natural Resources Company (NYSE:PXD) (“Pioneer” or “the Company”) today announced that the Company added proved reserves totaling 205 million barrels oil equivalent (MMBOE) during 2016 from discoveries, extensions and technical revisions of previous estimates (excludes negative price revisions of 58 MMBOE and net proved reserves added of 3 MMBOE from acquisitions and divestitures). These drillbit proved reserve additions equate to a drillbit reserve replacement of 232% of Pioneer’s full-year 2016 production of 88 MMBOE, which includes production used for field fuel of 2.5 MMBOE.

The Company’s substantial reserve additions of 205 MMBOE in 2016 were primarily due to (i) the continued successful execution of Pioneer’s horizontal drilling program in the Spraberry/Wolfcamp and (ii) improved performance and reduced production costs in the Spraberry/Wolfcamp as well as the Eagle Ford Shale, Raton and West Panhandle areas. Eighty-eight per cent of these reserve additions were in the Spraberry/Wolfcamp. The Company’s drillbit finding and development (F&D) cost was $9.59 per barrel oil equivalent (BOE), which primarily reflects the low F&D costs associated with the Spraberry/Wolfcamp horizontal drilling program.

In 2016, Pioneer added 213 million barrels of proved developed reserves from (i) discoveries and extensions placed on production during 2016, (ii) transfers from proved undeveloped reserves at year-end 2015 and (iii) technical revisions of previous estimates for proved developed reserves during 2016. The Company’s proved developed F&D cost was $9.11 per BOE, again primarily reflecting the low F&D costs associated with the Spraberry/Wolfcamp horizontal drilling program.

The NYMEX prices used for 2016 proved reserves reporting purposes were $42.82 per barrel for oil and $2.48 per million British thermal units (MMBTU) for gas. The oil price for 2016 was 15% below the oil price used to calculate proved reserves for 2015 of $50.11 per barrel. The gas price for 2016 was 4% below the gas price used to calculate proved reserves for 2015 of $2.59 per MMBTU. The decreases in the 2016 oil and gas prices, as compared to 2015, led to the negative price revisions of 58 MMBOE across all of Pioneer’s assets. The Company would expect to recover all of the negative price revisions if oil and gas prices used to calculate proved reserves improved to $50 per barrel and $2.50 per MMBTU, respectively.

As of December 31, 2021, all of Pioneer’s proved reserves were in the United States, and 93% were proved developed reserves. Approximately 52% of the Company’s proved reserves are oil, 19% are NGLs and 29% are gas. Pioneer’s proved reserves are long-lived with a total reserves-to-production ratio of eight years and a proved developed reserves-to-production ratio of eight years.

The table below shows Pioneer’s year-end 2016 proved reserves by asset in MMBOE:

Total costs incurred during 2016 were $2.4 billion, which included $1.9 billion for exploration and development spending; $446 million for bolt-on property acquisitions in the Spraberry/Wolfcamp area; and $90 million for asset retirement obligations, capitalized interest and geological and geophysical G&A. The commodity prices used to determine proved reserves for 2016 resulted in a pre-tax present value of future net cash flows discounted at 10% (PV-10) of $4.2 billion.

Netherland, Sewell & Associates, Inc., an independent reserve engineering firm, audited the proved reserves of significant fields. The audit covered properties representing 77% of Pioneer’s total proved reserves at year-end 2016.

Year-end proved reserves, costs incurred and a reconciliation of PV-10 to Standardized Measure are detailed in the attached supplemental schedules.

On Wednesday, February 8, 2022, at 9:00 a.m. Central Time, Pioneer will discuss its financial and operating results for the quarter ended December 31, 2021, and its 2017 capital program, with an accompanying presentation. Instructions for listening to the call and viewing the accompanying presentation are shown below.

Internet: www.pxd.com
Select “Investors,” then “Earnings & Webcasts” to listen to the discussion, view the presentation and see other related material.

Telephone: Dial (800) 946-0783 and confirmation code 6806703 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. A telephone replay will be available through March 5, 2022. Click here to register for the call-in audio replay, and enter confirmation code 6806703.

Pioneer is a large independent oil and gas exploration and production company, headquartered in Dallas, Texas, with operations in the United States. For more information, visit Pioneer’s website at www.pxd.com.

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 and refining 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, derivative contracts and the purchasers of Pioneer’s oil, NGL 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, the risks associated with the ownership and operation of the Company’s industrial sand mining and oilfield services businesses, and acts of war or terrorism. These and other risks are described in Pioneer's 10-K and 10-Q Reports and other filings with the U.S. Securities and Exchange Commission (SEC). In addition, Pioneer may be subject to currently unforeseen risks that may have a materially adverse impact on it. Pioneer undertakes no duty to publicly update these statements except as required by law.

An audit of proved reserves follows the general principles set forth in the standards pertaining to the estimating and auditing of oil and gas reserve information promulgated by the Society of Petroleum Engineers (“SPE”). A reserve audit as defined by the SPE is not the same as a financial audit. Please see the Company's Annual Report on Form 10-K for a general description of the concepts included in the SPE's definition of a reserve audit.

“Drillbit finding and development cost per BOE,” or “drillbit F&D cost per BOE,” means the summation of exploration and development costs incurred divided by the summation of annual proved reserves, on a BOE basis, attributable to discoveries and extensions (excludes purchases of minerals-in-place) and revisions of previous estimates. Revisions of previous estimates exclude price revisions. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred.

“Drillbit reserve replacement” is the summation of annual proved reserves, on a BOE basis, attributable to discoveries and extensions (excludes purchases of minerals-in-place) and revisions of previous estimates divided by annual production of oil, NGLs and gas, on a BOE basis. Revisions of previous estimates exclude price revisions.

“Proved developed finding and development cost per BOE,” or “proved developed F&D cost per BOE,” means the summation of exploration and development costs incurred (excluding asset retirements obligations) divided by the summation of annual proved reserves, on a BOE basis, attributable to proved developed reserve additions, including (i) discoveries and extensions placed on production during 2016, (ii) transfers from proved undeveloped reserves at year-end 2015 and (iii) technical revisions of previous estimates for proved developed reserves during 2016. Revisions of previous estimates exclude price revisions.

PV-10 is the estimated future net cash flows from proved reserves discounted at an annual rate of 10 percent before giving effect to income taxes. Standardized Measure is the after-tax estimated future cash flows from proved reserves discounted at an annual rate of 10 percent, determined in accordance with GAAP. Pioneer uses PV-10 as one measure of the value of the Company's proved reserves and to compare relative values of proved reserves among exploration and production companies without regard to income taxes. Pioneer believes that securities analysts and rating agencies use PV-10 in similar ways. Pioneer’s management believes PV-10 is a useful measure for comparison of proved reserve values among companies because, unlike Standardized Measure, it excludes future income taxes that often depend principally on the characteristics of the owner of the reserves rather than on the nature, location and quality of the reserves themselves. Below is a reconciliation of PV-10 to Standardized Measure using SEC oil and gas NYMEX pricing (in billions):

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Source: Pioneer Natural Resources Company

Pioneer Natural Resources
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