By February 11, 2016 Read More →

Pioneer Natural Resources reports $623 million Q4 loss

Pioneer Natural Resources expects to place approximately 230 horizontal wells producing in Spraberry/Wolfcamp during 2016


Scott D. Sheffield, Chairman and CEO

Pioneer Natural Resources Company today reported financial and operating results for the quarter ended December 31, 2015, and announced the Company’s capital program for 2016.

“The performance from our Spraberry/Wolfcamp horizontal drilling program continues to be outstanding,” said Scott D. Sheffield, chairman and CEO.

“Our strong balance sheet, derivatives position and improving capital efficiency are allowing us to continue to grow and bring forward the inherent net asset value associated with this world class asset during a period of low commodity prices.”

Pioneer reported a fourth quarter net loss attributable to common stockholders of $623 million, or $4.17 per diluted share. Without the effect of noncash mark-to-market derivative losses and other unusual items, adjusted results for the fourth quarter were a net loss of $27 million after tax, or $0.18 per diluted share.

“We have the financial flexibility to prudently manage through the current commodity price downturn or quickly ramp up drilling activity when prices improve,” said Sheffield.

Q4 highlights:

  • Producing 215,000 barrels oil equivalent per day (MBOEPD) in the fourth quarter, of which 53 per cent was oil; production grew by 4 MBOEPD, or 2 per cent, compared to the third quarter of 2015 and was at the top end of Pioneer’s revised fourth quarter production guidance range of 213 MBOEPD to 215 MBOEPD
  • Producing 204 MBOEPD in 2015, an increase of 22 MBOEPD, or 12 per cent, from 2014 (reflects Alaska, Barnett Shale and Hugoton divestitures in 2014 as discontinued operations); oil production grew by 18,000 barrels oil per day (MBOPD), or 21 per cent, on a comparable basis; oil production represented 52 per cent of Pioneer’s total 2015 production, up from 48 per cent in 2014; Q4 and full-year 2015 production growth were primarily driven by the company’s Spraberry/Wolfcamp horizontal drilling program
  • Delivering 273 per cent drillbit reserve replacement by adding proved reserves of 210 million barrels oil equivalent (MMBOE) from discoveries, extensions and technical revisions of previous estimates at a drillbit finding and development cost of $10.18 per barrel oil equivalent
  • Placing 44 horizontal wells on production in the Spraberry/Wolfcamp during Q4 as expected; early production results from 35 wells in the northern area and nine wells in the southern Wolfcamp joint venture area are exceeding expectations as a result of the company’s completion optimization program
  • realizing significant capital efficiency gains in the Spraberry/Wolfcamp; cost per lateral foot and well productivity improved significantly from the fourth quarter of 2014 to the fourth quarter of 2015 as a result of service cost reductions, efficiency gains and the completion optimization program
  • issuing $500 million of Senior Notes due 2021 at an interest rate of 3.45 per cent and $500 million of Senior Notes due 2026 at an interest rate of 4.45 per cent in December to fund the repayment of 2016 and 2017 maturities
  • working with midstream partners to have oil export facilities along the Gulf Coast operational by the middle of 2016 to take advantage of future export opportunities now that the oil export ban has been lifted

Pioneer’s plans for 2016:

  • Reducing horizontal drilling activity by 50 per cent from 24 rigs at year-end 2015 to 12 rigs by the middle of 2016, while still growing 2016 production by 10 per cent-plus;
  • Eagle Ford Shale rig count is being reduced from six rigs at year-end 2015 to zero rigs during the first quarter, with two rigs released in January as previously announced
  • Rig count in the southern Wolfcamp joint venture area is being reduced from four rigs at year-end 2015 to zero rigs by the middle of the year
  • Rig count in the northern Spraberry/Wolfcamp is being reduced from 14 rigs at year-end 2015 to 12 rigs during the first quarter, with one rig already released
  • Relocating Pioneer’s two Eagle Ford Shale pressure pumping fleets to the Spraberry/Wolfcamp
  • Planning capital expenditures for 2016 of $2.0 billion as a result of the reduction in drilling activity and vertical integration spending, down from Pioneer’s preliminary forecast of $2.4 billion to $2.6 billion and 2015 actual spending of $2.2 billion
  • Of the $2 billion, $1.85 billion is for drilling and completions (includes tank batteries, saltwater disposal facilities and gas processing facilities) and $150 million is for vertical integration, systems upgrades and field facilities
  • Protecting company’s cash flow through strong commodity derivative positions, with (i) oil derivative coverage of approximately 85 per cent for 2016 and 20 per cent for 2017 and (ii) gas derivative coverage of approximately 70 per cent for 2016
  • Maintaining a strong investment grade balance sheet, with financial resources in place that are expected to enable the company to grow production and fund its expected capital program through 2017 without increasing debt; resources include forecasted cash flow, cash on hand at the end of 2015 of $0.4 billion (excludes proceeds from the December notes offering), proceeds from the company’s Jan. equity offering of $1.6 billion (includes exercise by underwriters of over allotment option) and an additional $0.5 billion to be received in July 2016 from the sale of Eagle Ford Shale midstream business; results in year-end 2015 pro forma net debt-to-2016 operating cash flow of 0.2 times.


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