Pioneer Natural Resources Reports Year-End 2012 Proved Reserves and Finding Costs
DALLAS--(BUSINESS WIRE)-- Pioneer Natural Resources Company (PXD) (Pioneer or the Company) today announced that the Company added proved reserves totaling 161 million barrels oil equivalent (MMBOE) during 2012 from discoveries, extensions, improved recovery and technical revisions of previous reserve estimates. These drillbit proved reserve additions equate to replacing 264% of Pioneers full-year 2012 production of 61 MMBOE (includes proved reserves used for field fuel of 3 MMBOE and production of 1 MMBOE from South Africa prior to its sale). The drillbit finding and development (F&D) cost related to proved reserve additions was $17.72 per barrel oil equivalent (BOE).
The NYMEX prices used for 2012 proved reserves reporting purposes were $94.84 per barrel for oil and $2.76 per million British thermal units (MMBtu) for gas. The oil price for 2012 was slightly below the oil price used to calculate proved reserves for 2011 ($96.13 per barrel), while the gas price for 2012 was significantly lower than the gas price used to calculate proved reserves for 2011 ($4.12 per MMBtu). The significant decline in gas prices resulted in moving proved undeveloped (PUD) gas reserves to probable reserves in the Raton field in southeastern Colorado, the Edwards Trend in South Texas and the Barnett Shale play in North Texas. As a result, the Company recognized negative price revisions of 82 MMBOE during 2012.
The Companys successful horizontal Wolfcamp Shale drilling results in 2012 has led the Company to shift more of its future drilling activity in the Spraberry field from vertical drilling to horizontal drilling. As a result, Pioneer no longer expects to drill a significant number of its previously recorded vertical PUD locations within the next five years. Consequently, in compliance with Securities and Exchange Commission guidelines, 80 MMBOE of PUD reserves associated with vertical drilling locations in the Spraberry field have been moved to probable reserves. This reduction in proved reserves is reflected in technical revisions. Based on the horizontal drilling conducted by Pioneer to date in the Spraberry field, sufficient production data is not yet available to support the entire replacement of the vertical PUD reserves that were removed in 2012 with horizontal PUD reserve additions. Reserve additions during 2012 include 37 MMBOE of proved reserves added as a result of horizontal Wolfcamp Shale drilling in the Spraberry field. The Company expects to gain additional production data during 2013 from its expanding horizontal drilling program which is expected to support the addition of incremental horizontal proved developed (PD) and PUD reserves during 2013 and beyond.
Scott D. Sheffield, Chairman and CEO, stated, "In 2012, we again delivered drillbit reserve replacement well in excess of production and achieved our targeted drillbit F&D cost of $14 to $18 per BOE for the year, despite deferring the drilling of a substantial number of vertical Spraberry locations beyond five years. This strong performance is due to the continued successful execution of our drilling programs in the Spraberry field, the horizontal Wolfcamp Shale, the Eagle Ford Shale, the Barnett Shale Combo and Alaska.
As mentioned above, technical revisions of previous reserve estimates for 2012 included the movement of 80 MMBOE of vertical PUD reserves to the probable category. This negative impact was partially offset by performance improvements totaling 53 MMBOE across Pioneers asset portfolio, resulting in net negative technical revisions of 27 MMBOE for the year. Technical revisions are included in the calculation of the drillbit F&D cost.
Pioneers proved reserve additions from the drillbit and acquisitions totaled 170 MMBOE for 2012. After taking into account the Companys production for 2012 of 61 MMBOE, negative pricing revisions of 82 MMBOE and proved reserves of 4 MMBOE that were removed due to the divestitures of South Africa and certain Barnett Shale properties during 2012, proved oil and gas reserves totaled 1,086 MMBOE as of year-end 2012. Including negative pricing revisions, the Company replaced 144% of production at an all-in F&D cost of $34.46 per BOE.
As of December 31, 2012, all of Pioneers proved reserves are in the United States and 58% are classified as PD. Approximately 45% of the Companys proved reserves are oil, 21% are NGLs and 34% are gas. Pioneers proved reserves are long-lived with a total reserves-to-production ratio of 18 years and a PD reserves-to-production ratio of 10 years.
The table below shows Pioneers year-end 2012 proved reserves by asset in MMBOE:
|Eagle Ford Shale||116|
Total costs incurred during 2012 were $3.0 billion, which included exploration and development spending, acquisitions, asset retirement obligations, capitalized interest and geological and geophysical G&A. Of this amount, $2.8 billion was attributable to development and exploration activities.
The commodity prices used for 2012 resulted in a pre-tax present value of future net cash flows discounted at 10% (PV-10) of $8.3 billion for Pioneers proved reserves.
Netherland, Sewell & Associates, Inc. and Ryder Scott Company, L.P., independent reserve engineering firms, audited the proved reserves of significant fields. These audits covered properties representing 95% of Pioneers total proved reserves at year-end 2012.
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 2012 reserves and finding costs will be discussed during Pioneers quarterly conference call scheduled for Thursday, February 14, 2013 at 9:00 a.m. Central Time, when Pioneer will also discuss its fourth quarter and full year 2012 financial and operating results and 2013 Capital Budget with an accompanying presentation. Instructions for listening to the call and viewing the presentation are shown below.
Select Investors, then Earnings & Webcasts, to listen to the discussion, view the presentation and see other related material.
Telephone: Dial (877) 718-5108, confirmation code: 7431932 five minutes before the call. View the presentation via Pioneers internet address above.
A replay of the webcast will be archived on Pioneers website. A telephone replay will be available through March 11, 2013 by dialing (888) 203-1112, confirmation code: 7431932.
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 Pioneers website at www.pxd.com.
Except for historical information contained herein, the statements, charts and graphs 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, the receipt of approvals required to consummate the Companys Southern Wolfcamp joint interest transaction, litigation, the 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 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 and derivative contracts and the purchasers of Pioneer's oil, NGL and gas production, 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, environmental and weather risks, including the possible impacts of climate change, the risks associated with the ownership and operation of an industrial sand mining business 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 Securities and Exchange Commission. 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.
"Finding and development cost per BOE," or all-in F&D cost per BOE, means 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, 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 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 technical revisions of previous estimates, discoveries and extensions and improved recovery. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred.
Reserve replacement is the summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates, purchases of minerals-in-place, discoveries and extensions and improved recovery divided by annual production of oil, NGLs and gas, on a BOE basis.
Drillbit reserve replacement is the summation of annual proved reserves, on a BOE basis, attributable to technical revisions of previous estimates, discoveries and extensions and improved recovery divided by annual production of oil, NGLs and gas, on a BOE basis.
PIONEER NATURAL RESOURCES COMPANY
UNAUDITED SUPPLEMENTAL INFORMATION
Year Ended December 31, 2012
|Balance, January 1, 2012||430,005|
|Revisions of previous estimates||(11,158||)|
|Purchases of minerals-in-place||5,383|
|Discoveries and extensions||78,375|
|Sales of minerals-in-place||(275||)|
|Balance, December 31, 2012||486,838|
|Natural Gas Liquids (MBbls):|
|Balance, January 1, 2012||211,035|
|Revisions of previous estimates||(17,417||)|
|Purchases of minerals-in-place||2,037|
|Discoveries and extensions||48,422|
|Sales of minerals-in-place||(588||)|
|Balance, December 31, 2012||232,576|
|Natural Gas (MMcf):|
|Balance, January 1, 2012||2,531,038|
|Revisions of previous estimates||(485,216||)|
|Purchases of minerals-in-place||9,457|
|Discoveries and extensions||320,243|
|Sales of minerals-in-place||(16,845||)|
|Balance, December 31, 2012||2,197,480|
|Equivalent Barrels (MBOE):|
|Balance, January 1, 2012||1,062,881|
|Revisions of previous estimates (a)||(109,444||)|
|Purchases of minerals-in-place||8,996|
|Discoveries and extensions||180,170|
|Sales of minerals-in-place||(3,671||)|
|Balance, December 31, 2012||1,085,661|
|Costs incurred for oil and gas producing activities ($000):|
|Property acquisition costs:|
|Total costs incurred (c)||$||3,005,764|
|Reserve replacement percentage (d)||144||%|
|Reserve replacement percentage, excluding price revisions (d)||279||%|
|Drillbit reserve replacement percentage (e)||264||%|
|F&D costs per BOE of proved reserves added (f)||$||34.46|
|F&D costs per BOE of proved reserves added, excluding price revisions (f)||$||17.71|
|Drillbit F&D costs per BOE of proved reserves added (g)||$||17.72|
|(a)||Revisions of previous estimates includes 82.5 MMBOEs of negative price revisions and 27.0 MMBOEs of negative technical revisions.|
|(b)||Production includes 3,061 MBOE related to field fuel and 787 MBOE of production associated with discontinued operations in South Africa.|
|(c)||Costs incurred includes $8.5 million of capitalized interest, $58.9 million of asset retirement obligation increases and $52.4 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 technical revisions of previous estimates, 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 technical revisions of previous estimates, 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, 2012|
|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. Pioneers 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):|
|PV-10 at December 31, 2012||$||8.3|
|Discounted Effect of Income Taxes||
|Standardized Measure at December 31, 2012||$||
Pioneer Natural Resources
Frank Hopkins, 972-969-4065
Eric Pregler, 972-969-5756
Josh Jones, 972-969-5822
Media and Public Affairs
Susan Spratlen, 972-969-4018
Suzanne Hicks, 972-969-4020
Source: Pioneer Natural Resources CompanyCopyright Business Wire 2013