DALLAS--(BUSINESS WIRE)--Pioneer Natural Resources Company (NYSE:PXD) (“Pioneer” or “the Company”) today announced that the Company added proved reserves totaling 141 million barrels oil equivalent (MMBOE) during 2013 from discoveries, extensions, improved recovery and technical revisions of previous estimates (excludes revisions of previous estimates of 319 MMBOE of proved undeveloped (PUD) reserves that are no longer expected to be drilled and 30 MMBOE of positive pricing revisions). These drillbit proved reserve additions equate to replacing 211% of Pioneer’s full-year 2013 production of 67 MMBOE, which includes 5 MMBOE of production associated with assets held for sale (Alaska and Barnett Shale) and production used for field fuel of 3 MMBOE. The Company’s substantial reserve additions in 2013 are primarily due to the continued successful execution of Pioneer’s horizontal drilling programs in the Spraberry/Wolfcamp and Eagle Ford Shale plays. The drillbit finding and development (F&D) cost was $19.70 per barrel oil equivalent (BOE).
The Company continues to shift its drilling activity in the Spraberry/Wolfcamp play in the Midland Basin of West Texas from vertical drilling to horizontal drilling. The Company believes that replacing vertical drilling with horizontal drilling will enhance ultimate resource recoveries and improve rates of return per dollar invested. As a result, Pioneer no longer expects to drill a significant number of its previously recorded vertical PUD locations. Consequently, a total of 231 MMBOE of PUD reserves associated with vertical drilling locations in the Spraberry/Wolfcamp field have been removed. This reduction in proved reserves is reflected in revisions of previous estimates. Based on the limited horizontal drilling that Pioneer has completed in six Wolfcamp and Spraberry shale intervals across Pioneer’s extensive acreage position in the Spraberry/Wolfcamp field, sufficient production and well control data is not yet available to support the replacement of the vertical PUD reserves that were removed in 2013 with horizontal PUD reserve additions. Horizontal drilling in the Spraberry/Wolfcamp play contributed 72 MMBOE of proved reserve additions during 2013, or 50% of the Company’s total proved reserve additions during the year. Based on current horizontal drilling plans, the Company expects to collect additional production and well control data during the next few years as it increases drilling activity to support the addition of more than 600 MMBOE of incremental horizontal proved developed (PD) and PUD reserves by the end of 2016.
Pioneer also removed an additional 88 MMBOE of PUD reserves that are primarily attributable to the announced divestitures of Pioneer’s Alaska and Barnett Shale Combo assets (45 MMBOE) and previously recorded gas wells that are no longer expected to be drilled due to the reallocation of drilling capital to higher rate of return oil wells.
The NYMEX prices used for 2013 proved reserves reporting purposes were $96.82 per barrel for oil and $3.67 per million British thermal units (MMBTU) for gas. The oil price for 2013 was approximately $2 per barrel above the oil price used to calculate proved reserves for 2012 ($94.84 per barrel). The gas price for 2013 was approximately $1.00 per MMBTU above the gas price used to calculate proved reserves for 2012 ($2.76 per MMBTU). The significant increase in gas prices resulted in 30 MMBOE of positive price revisions, principally related to extending the economic life of the Company’s producing gas wells.
Pioneer’s year-end 2013 proved reserves also reflected the sale of 26 MMBOE due to the joint venture transaction with Sinochem in the horizontal Wolfcamp Shale play in the southern portion of the Spraberry/Wolfcamp field and the divestiture of certain legacy Barnett Shale properties during 2013.
As of December 31, 2013, all of Pioneer’s proved reserves were in the United States and 81% were PD reserves. Approximately 40% of the Company’s proved reserves are oil, 22% are NGLs and 38% are gas. Pioneer’s proved reserves are long-lived with a total reserves-to-production ratio of 13 years and a PD reserves-to-production ratio of 10 years.
The table below shows Pioneer’s year-end 2013 proved reserves by asset in MMBOE:
| Spraberry/Wolfcamp | 432 | ||
| Eagle Ford Shale | 131 | ||
| Raton | 119 | ||
| Mid-Continent | 93 | ||
| Other (including assets held for sale) | 70 | ||
| Total | 845 |
Total costs incurred during 2013 were $2.8 billion, which included exploration and development spending, acquisitions, asset retirement obligations, capitalized interest and geological and geophysical G&A.
The commodity prices used for 2013 resulted in a pre-tax present value of future net cash flows discounted at 10% (PV-10) of $9.2 billion for Pioneer’s proved reserves.
Netherland, Sewell & Associates, Inc., an independent reserve engineering firm, audited the proved reserves of significant fields. The audit covered properties representing 94% of Pioneer’s total proved reserves at year-end 2013.
In addition to the proved reserves added in 2013 from the horizontal drilling program in the Spraberry/Wolfcamp play, the appraisal and delineation across Pioneer’s extensive northern acreage position and in the southern horizontal Wolfcamp joint venture area increased Pioneer’s resource base from 9 billion barrels oil equivalent (BBOE) to 11 BBOE. This resource base includes proved reserves and additional net recoverable resource potential. It also takes into account the shift from vertical drilling to horizontal drilling in the Spraberry/Wolfcamp play and the expected divestment of Pioneer’s Alaska and Barnett Shale Combo assets.
Year-end proved reserves, costs incurred and a reconciliation of PV-10 to Standardized Measure are detailed in the attached supplemental schedules.
Further information regarding 2013 proved reserves, resource potential and finding costs will be discussed during Pioneer’s quarterly conference call scheduled for Tuesday, February 11, 2014 at 9:00 a.m. Central Time, when Pioneer will also discuss its fourth quarter and full year 2013 financial and operating results and 2014 Capital Budget with an accompanying presentation. Instructions for listening to the call and viewing the 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 (877) 419-6603 and confirmation code: 1922288 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 8, 2014 by dialing (888) 203-1112 and confirmation code: 1922288.
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, litigation, costs and results of drilling and operations, availability of equipment, services, resources and personnel required to complete the Company’s 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, uncertainties about estimates of reserves and resource potential and the ability to add proved reserves in the future, the assumptions underlying production forecasts, quality of technical data, and environmental and weather risks, including the possible impacts of climate change, 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 revisions of previous estimates (excluding PUDs removed and price revisions), discoveries and extensions and improved recovery. 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 revisions of previous estimates (excluding PUDs removed and price revisions), discoveries and extensions and improved recovery divided by annual production of oil, NGLs and gas, on a BOE basis.
Cautionary Note to U.S. Investors --The SEC prohibits oil and gas companies, in their filings with the SEC, from disclosing estimates of oil or gas resources other than “reserves,” as that term is defined by the SEC. In this news release, Pioneer includes estimates of quantities of oil and gas using certain terms, such as “resource potential,” “net recoverable resource potential,” “resource base,” “estimated ultimate recovery,” “EUR” or other descriptions of volumes of reserves, which terms include quantities of oil and gas that may not meet the SEC’s definitions of proved, probable and possible reserves, and which the SEC's guidelines strictly prohibit Pioneer from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of being recovered by Pioneer. U.S. investors are urged to consider closely the disclosures in the Company’s periodic filings with the SEC. Such filings are available from the Company at 5205 N. O'Connor Blvd., Suite 200, Irving, Texas 75039, Attention: Investor Relations, and the Company’s website at www.pxd.com. These filings also can be obtained from the SEC by calling 1-800-SEC-0330.
| PIONEER NATURAL RESOURCES COMPANY | ||||
| UNAUDITED SUPPLEMENTAL INFORMATION | ||||
| Year Ended December 31, 2013 | ||||
| Proved reserves: | ||||
| Oil (MBbls): | ||||
| Balance, January 1, 2013 | 486,838 | |||
| Revisions of previous estimates | (184,359 | ) | ||
| Purchases of minerals-in-place | 96 | |||
| Discoveries and extensions | 78,922 | |||
| Production | (27,455 | ) | ||
| Sales of minerals-in-place | (11,937 | ) | ||
| Balance, December 31, 2013 | 342,105 | |||
| Natural Gas Liquids (MBbls): | ||||
| Balance, January 1, 2013 | 232,576 | |||
| Revisions of previous estimates | (64,986 | ) | ||
| Purchases of minerals-in-place | 123 | |||
| Discoveries and extensions | 38,639 | |||
| Production | (12,999 | ) | ||
| Sales of minerals-in-place | (7,931 | ) | ||
| Balance, December 31, 2013 | 185,422 | |||
| Natural Gas (MMcf): | ||||
| Balance, January 1, 2013 | 2,197,480 | |||
| Revisions of previous estimates | (304,531 | ) | ||
| Purchases of minerals-in-place | 509 | |||
| Discoveries and extensions | 205,899 | |||
| Production | (157,690 | ) | ||
| Sales of minerals-in-place | (35,326 | ) | ||
| Balance, December 31, 2013 | 1,906,341 | |||
| Equivalent Barrels (MBOE): | ||||
| Balance, January 1, 2013 | 1,085,661 | |||
| Revisions of previous estimates (a) | (300,101 | ) | ||
| Purchases of minerals-in-place | 304 | |||
| Discoveries and extensions | 151,878 | |||
| Production (b) | (66,736 | ) | ||
| Sales of minerals-in-place | (25,756 | ) | ||
| Balance, December 31, 2013 | 845,250 | |||
| Costs incurred for oil and gas producing activities ($000): | ||||
| Property acquisition costs: | ||||
| Proved | $ | 12,861 | ||
| Unproved | 63,162 | |||
| 76,023 | ||||
| Exploration costs | 1,290,472 | |||
| Development costs | 1,481,318 | |||
| Total costs incurred (c) | $ | 2,847,813 | ||
| Reserve replacement percentage (d) | NM | |||
| Drillbit reserve replacement percentage (e) | 211 | % | ||
| F&D costs per BOE of proved reserves added (f) | NM | |||
| Drillbit F&D costs per BOE of proved reserves added (g) | $ | 19.70 | ||
|
_____________ |
|||
| NM | No Measure | ||
| (a) | Revisions of previous estimates includes 29.9 MMBOEs of positive price revisions and 330.0 MMBOEs of negative technical revisions, including 318.8 MMBOE of PUDS removed from proved reserves since they are no longer expected to be drilled within 5 years of when they were originally recorded, if at all. | ||
| (b) | Production includes 3.1 MMBOE related to field fuel and 4.7 MMBOE of production associated with discontinued operations in Alaska and the Barnett Shale. | ||
| (c) | Costs incurred includes $7.5 million of capitalized interest, $12.5 million of asset retirement obligation increases and $65.6 million of G&G/G&A. | ||
| (d) | The summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates, purchases of minerals-in-place, improved recovery and discoveries and extensions, if any, divided by annual production of oil, NGLs and gas, on a BOE basis. | ||
| (e) | The summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates (excluding PUDs removed and price revisions), improved recovery and discoveries and extensions, if any, divided by annual production of oil, NGLs and gas, on a BOE basis. | ||
| (f) | Total costs incurred divided by the summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates, purchases of minerals-in-place, improved recovery and discoveries and extensions, if any. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred. | ||
| (g) | The summation of exploration and development costs incurred divided by the summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates (excluding PUDs removed and price revisions), improved recovery and discoveries and extensions, if any. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred. | ||
PIONEER NATURAL RESOURCES COMPANY
UNAUDITED
RECONCILIATION OF PV-10 TO STANDARDIZED MEASURE
December 31,
2013
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 for SEC oil and gas NYMEX pricing (in billions):
| $ | 96.82/$3.67 | |||
| SEC Pricing | ||||
| PV-10 at December 31, 2013 | $ | 9.2 | ||
| Discounted Effect of Income Taxes | (1.9 | ) | ||
| Standardized Measure at December 31, 2013 | $ | 7.3 | ||