-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Fuy0/JT21sSSTuBfQNJQcEXFo6EeYTAuEEBiy3z4Sr5gCac7ba35wed0cWQ6aRGN x4f27AiBMq3uhgIxI1APrQ== 0001038357-07-000008.txt : 20070207 0001038357-07-000008.hdr.sgml : 20070207 20070206204615 ACCESSION NUMBER: 0001038357-07-000008 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070206 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070207 DATE AS OF CHANGE: 20070206 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIONEER NATURAL RESOURCES CO CENTRAL INDEX KEY: 0001038357 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 752702753 STATE OF INCORPORATION: DE FISCAL YEAR END: 1206 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13245 FILM NUMBER: 07586041 BUSINESS ADDRESS: STREET 1: 200 WILLIAMS SQUARE WEST STREET 2: 5205 N OCONNOR BLVD CITY: IRVING STATE: TX ZIP: 75039 BUSINESS PHONE: 9724449001 MAIL ADDRESS: STREET 1: 200 WILLIAMS SQUARE WEST STREET 2: 5205 N OCONNOR BLVD CITY: IRVING STATE: TX ZIP: 75039 8-K 1 feber8k.txt PXD ER 2/6/07 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): February 6, 2007 ------------------------ PIONEER NATURAL RESOURCES COMPANY (Exact name of registrant as specified in its charter) Delaware 1-13245 75-2702753 (State or other (Commission (I.R.S. Employer jurisdiction of incorporation) File Number) Identification Number) 5205 N. O'Connor Blvd 75039 Suite 200 (Zip code) Irving, Texas (Address of principal executive offices) Registrant's telephone number, including area code: (972) 444-9001 Not applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) PIONEER NATURAL RESOURCES COMPANY TABLE OF CONTENTS Page Item 2.02. Results of Operations and Financial Condition........... 3 Item 9.01. Financial Statements and Exhibits. (d) Exhibits.......................................... 3 Signature............................................................. 4 Exhibit Index......................................................... 5 2 Item 2.02. Results of Operations and Financial Condition. The information in this document includes 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 Natural Resources Company (the "Company") are subject to a number of risks and uncertainties that may cause the Company's actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties include, among other things, volatility of oil and gas prices, product supply and demand, competition, the ability to obtain environmental and other permits and the timing thereof, other government regulation or action, third party approvals, international operations and associated international political and economic instability, litigation, the costs and results of drilling and operations, availability of drilling equipment, the Company's ability to replace reserves, implement its business plans, or complete its development projects as scheduled, access to and cost of capital, uncertainties about estimates of reserves, the assumptions underlying production forecasts, quality of technical data, environmental and weather risks, acts of war or terrorism. These and other risks are described in the Company's 2005 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q that are available from the Company or the United States Securities and Exchange Commission. The Company undertakes no duty to publicly update these statements except as required by law. On February 6, 2007, the Company issued the news release, with financial statements and schedules, that is attached hereto as exhibit 99.1. In the news release, the Company announced financial and operating results for the quarter and year ended December 31, 2006, provided an operations update and provided the Company's financial and operational outlook for future periods based on current expectations. On February 6, 2007, the Company also issued the news release, with supplemental schedule, that is attached hereto as exhibit 99.2. In the news release, the Company announced its proved reserves as of December 31, 2006, and related costs incurred for oil and gas producing activities ("Costs Incurred"). The Company also announced reserve additions, reserve replacement percentages and finding and development costs ("F&D Costs") for the one -, three- and five-year periods ended December 31, 2006. The supplemental schedule attached to the news release provides unaudited supplemental information regarding the Company's proved reserves as of and for the year ended December 31, 2006, and the Company's Costs Incurred, reserve replacement percentage and F&D Costs for the year ended December 31, 2006. It also provides explanations of the terms "reserve replacement percentage" and "F&D Costs" as used by the Company in the news release and supplemental schedule. Item 9.01. Financial Statements and Exhibits. (d) Exhibits. 99.1 -- News release, dated February 6, 2007, titled "Pioneer Reports Fourth Quarter and Full Year 2006 Results" and financial statements and schedules attached to news release. 99.2 -- News release, dated February 6, 2007, titled "Pioneer Reports Year-End 2006 Reserves and Finding Costs" and supplemental schedule attached to news release. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PIONEER NATURAL RESOURCES COMPANY /s/ Darin G. Holderness ------------------------------------------- Darin G. Holderness Vice President and Chief Accounting Officer Dated: February 6, 2007 4 EXHIBIT INDEX Exhibit Number Exhibit Title ------- ------------- 99.1(a) News release, dated February 6, 2007, titled "Pioneer Reports Fourth Quarter and Full Year 2006 Results" and financial statements and schedules attached to news release. 99.2(a) News release, dated February 6, 2007, titled "Pioneer Reports Year-End 2006 Reserves and Finding Costs" and supplemental schedule attached to news release. ----------- (a) Furnished herewith. 5 EX-99 2 feber8kx991.txt PXD ER 2/6/07 FORM 8-K EXH. 99.1 EXHIBIT 99.1 NEWS RELEASE Company Contacts: (972) 444-9001 Investors: Frank Hopkins or Scott Rice Media and Public Affairs: Susan Spratlen Pioneer Reports Fourth Quarter and Full Year 2006 Results Dallas, Texas, February 6, 2007 -- Pioneer Natural Resources Company (NYSE:PXD) today announced financial and operating results for the quarter and year ended December 31, 2006. o Net income for the fourth quarter was $28 million, or $.22 per diluted share. o Fourth quarter oil and gas sales from continuing operations averaged 100,799 barrels oil equivalent per day (BOEPD). o North American production for the year rose 12% from equivalent volumetric production payment (VPP) adjusted 2005 levels. o Total production rose 7% to 35.9 million barrels oil equivalent (MMBOE) from equivalent VPP adjusted 2005 levels. On a per share basis, total production was up 19%. o During 2006, 8.8 million shares were repurchased at $39.16 per share, essentially completing the $1 billion share repurchase program authorized by the board of directors in September 2005. o Net debt-to-book capitalization ended the year at 33%, reflecting the Company's strong balance sheet. o Net proved reserves of 91 MMBOE were added in 2006 at a finding and development cost of $18.36 per barrel oil equivalent (BOE), resulting in reserve replacement of 200% of production. Income from continuing operations for the fourth quarter of 2006 was $27 million, or $.22 per diluted share, as compared to $83 million, or $.64 per diluted share, for the fourth quarter of 2005. Income from continuing operations for the fourth quarter of 2006 included the following unusual items: o incremental reclamation charge of $33 million ($21 million or $.17 per diluted share after taxes) resulting from the denial of the Company's application to "reef-in-place" the debris from East Cameron 322 which was destroyed in Hurricane Rita, o estimated insurance recoveries for debris removal associated with East Cameron 322 of $43 million ($27 million or $.22 per diluted share after taxes) and o a charge of $18 million ($13 million or $.11 per diluted share after taxes) related to previously drilled discoveries that had been suspended pending additional commercialization, appraisal and/or technical work. Scott D. Sheffield, Pioneer's Chairman and CEO, stated, "Throughout 2006, we demonstrated that we can deliver strong, consistent production growth in North America. We expanded our resource base and made significant progress on two multi-year development projects. Our low-risk onshore development programs continue to deliver high returns, and with the contributions from our resource plays, especially in the Edwards Trend, and the initiation of production from the South Coast Gas project during the second half of 2007, we've laid a strong foundation for achieving our 10+% production growth target for 2007." For the twelve months ended December 31, 2006, net income was $740 million, or $5.81 per diluted share, compared to $535 million, or $3.80 per diluted share for the prior year. Income from continuing operations was $172 million, or $1.36 per diluted share, compared to income from continuing operations of $195 million, or $1.40 per diluted share, for the same period in 2005. Operations Review For 2006, Pioneer posted outstanding operating results, drilling approximately 1,100 wells with 96% success. In the Permian Basin, Pioneer drilled over 300 wells in 2006, up from 190 wells during 2005, and increased Spraberry production by 21%. Successful drilling in the deeper Wolfcamp formation contributed to these strong results. The Company completed several attractive bolt-on acquisitions which added approximately 230,000 gross leasehold acres in the Spraberry field with estimated resource potential of more than 50 MMBOE. In the Raton field, Pioneer drilled approximately 300 wells in 2006 and increased annual production by 10%, supported by pipeline expansion and improved compression. In South Texas, Pioneer focused on testing prospects with potential to further expand the Edwards Trend play, drilling six new discoveries with total program success of 88%. In Canada, annual production rose 18% during 2006, supported by a 150-well Horseshoe Canyon CBM drilling program. In Tunisia, drilling success continued in the Adam Concession during 2006 and was extended to two adjacent blocks in early 2007. Recent discoveries in each of the three areas have tested approximately 13,000 BOPD on a combined gross basis. New 3-D seismic was acquired during 2006 to further optimize the drilling program going forward. On the North Slope of Alaska, Pioneer completed the construction, contouring and armoring of the gravel drill site for its Oooguruk development project during 2006. Currently, winter-access construction activities are underway with development drilling anticipated to begin in late 2007 and first oil production in 2008. Offshore South Africa, significant progress was made on the South Coast Gas project during 2006. Development wells were drilled and subsea equipment was fabricated in anticipation of first production during the second half of 2007. Tim Dove, Pioneer's President and Chief Operating Officer, stated, "I congratulate our operations teams for their success in executing the shift in our focus to lower-risk opportunities, primarily in North America. The strong results delivered in 2006 support our confidence in our people and our expanding portfolio of growth opportunities in achieving continued success in 2007." Financial Review Fourth quarter oil sales averaged 25,004 barrels per day (BPD) and natural gas liquids sales averaged 18,708 BPD. Gas sales in the fourth quarter averaged 343 MMcfpd. The reported price for oil was $61.67 per barrel and included $12.58 per barrel related to deferred revenue from VPPs for which production was not recorded. The price for natural gas liquids was $32.78 per barrel. The reported price for gas was $5.67 per Mcf, including $.58 per Mcf related to deferred revenue from VPPs for which production was not recorded. Fourth quarter production costs averaged $10.52 per BOE and were less than expected due to lower than anticipated 2006 ad valorem taxes. Exploration and abandonment costs were $96 million for the quarter and included $44 million of unsuccessful drilling costs, $18 million of costs associated with previously drilled discoveries that will not be developed (included with unusual items noted above), $32 million of geologic and geophysical expenses, including seismic and personnel costs, and $2 million of acreage and other costs. Net activity related to the abandonment of East Cameron 322 resulted in an increase to earnings of $10 million (included with unusual items noted above and representing incremental abandonment charges of $33 million more than offset by $43 million of estimated insurance recoveries). Comparable sales for the fourth quarter 2005, adjusted to exclude discontinued operations from asset divestitures and assuming that the 2006 VPP volumes were in place for all of the 2005 quarter, averaged 95,166 BOEPD. Adjusted to exclude only discontinued operations, sales averaged 103,906 BOEPD and included oil sales of 32,357 BPD, natural gas liquids sales of 19,568 BPD and gas sales of 312 MMcfpd. Reported prices for fourth quarter 2005 were $40.33 per barrel for oil, $37.22 per barrel for natural gas liquids and $8.10 per Mcf for gas, including $.76 per Mcf related to deferred revenue from VPPs for which production was not recorded. Full-year 2006 oil and gas sales averaged 98,382 BOEPD, including oil sales of 24,540 BPD, natural gas liquids sales of 18,951 BPD and gas sales of 329 MMcfpd. Reported prices for 2006 were $65.51 per barrel for oil and included $12.96 per barrel related to deferred revenue from VPPs for which production was not recorded, $35.64 per barrel for natural gas liquids and $6.23 per Mcf for gas, including $.62 per Mcf related to deferred revenue from VPPs for which production was not recorded. Comparable oil and gas sales for full-year 2005 (excluding discontinued operations and assuming the 2005 and 2006 VPP volumes were in place for all of 2005) averaged 91,640 BOEPD. Adjusted to exclude only discontinued operations from asset divestitures, full-year 2005 oil and gas sales averaged 101,366 BOEPD, including oil sales of 32,217 BPD, natural gas liquids sales of 17,906 BPD and gas sales of 307 MMcfpd. Reported prices for 2005 were $38.70 per barrel for oil, $32.12 per barrel for natural gas liquids and $7.02 per Mcf for gas, including $.68 per Mcf related to deferred revenue from VPPs for which production was not recorded. Financial Outlook First quarter 2007 production is forecasted to average 97,000 to 102,000 BOEPD, approximately 3,000 BOEPD lower than anticipated due to significant winter weather downtime in the Raton, Hugoton and West Panhandle fields during January. First quarter production costs (including production and ad valorem taxes and transportation costs) are expected to average $11.25 to $12.25 per BOE based on current NYMEX strip prices for oil and gas. Production costs per BOE are forecasted to be approximately $.25 per BOE higher in the first quarter as a result of the weather downtime and related repairs. Depreciation, depletion and amortization expense is expected to average $10.00 to $11.00 per BOE. Total exploration and abandonment expense during the first quarter is expected to be $50 million to $90 million and could include up to $25 million of costs associated with high-impact drilling in the NPR-A on Alaska's North Slope. It could also include up to $30 million associated with lower-risk resource plays in the Edwards Trend in South Texas, Uinta/Piceance basins in the Rockies, Canada and Tunisia and up to $5 million for acreage and other expenses. In addition, exploration expense is expected to include up to $30 million for seismic investments and personnel, primarily related to the onshore resource plays Pioneer is currently progressing. General and administrative expense is expected to be $30 million to $35 million, including performance-related compensation. Interest expense is expected to be $25 million to $28 million. Accretion of discount on asset retirement obligations is expected to be $1 million to $2 million. The Company's first quarter effective income tax rate is expected to range from 37% to 45% based on current capital spending plans. Cash income taxes are expected to range from $5 million to $15 million, principally related to Tunisian income taxes. The Company's financial results and oil and gas hedges are outlined on the attached schedules. First quarter 2007 amortization of deferred losses on terminated oil and gas hedges is expected to be $33 million. Earnings Conference Call On Wednesday, February 7 at 10:00 a.m. Eastern Time, Pioneer will discuss its quarterly financial and operating results with an accompanying presentation. The call will be webcast on Pioneer's website, www.pxd.com. At the website, select `INVESTOR' at the top of the page. For those who cannot listen to the live broadcast, a replay will be available shortly after the call. Or you may choose to dial (800) 310-1961 (confirmation code: 6881455) to listen to the call by telephone and view the accompanying visual presentation at the website above. A telephone replay will be available by dialing (888) 203-1112 (confirmation code: 6881455). Pioneer is a large independent oil and gas exploration and production company, headquartered in Dallas, with operations in the United States, Canada, South Africa and Tunisia. 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 oil and gas prices, product supply and demand, competition, the ability to obtain environmental and other permits and the timing thereof, other government regulation or action, third party approvals, international operations and associated international political and economic instability, litigation, the costs and results of drilling and operations, availability of drilling equipment, Pioneer's ability to replace reserves, implement its business plans, or complete its development projects as scheduled, access to and cost of capital, uncertainties about estimates of reserves, the assumptions underlying production forecasts, quality of technical data, environmental and weather risks, 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. Pioneer undertakes no duty to publicly update these statements except as required by law. PIONEER NATURAL RESOURCES COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
December 31, December 31, 2006 2005 ----------- ----------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 7,033 $ 18,802 Accounts receivable, net 199,371 337,658 Income taxes receivable 24,693 1,198 Inventories 95,131 79,659 Prepaid expenses 11,509 18,091 Deferred income taxes 82,927 158,878 Other current assets, net 115,894 9,518 ----------- ----------- Total current assets 536,558 623,804 ----------- ----------- Property, plant and equipment, at cost: Oil and gas properties, using the successful efforts method of accounting 8,178,052 8,813,134 Accumulated depletion, depreciation and amortization (1,895,408) (2,577,946) ------------ ----------- Total property, plant and equipment 6,282,644 6,235,188 ----------- ----------- Deferred income taxes 345 - Goodwill 309,908 311,651 Other assets, net 225,944 158,591 ----------- ----------- $ 7,355,399 $ 7,329,234 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 349,820 $ 345,204 Interest payable 31,008 40,314 Income taxes payable 12,865 22,470 Deferred revenue 181,232 190,327 Other current liabilities 312,054 435,040 ----------- ----------- Total current liabilities 886,979 1,033,355 ----------- ----------- Long-term debt 1,497,162 2,058,412 Deferred income taxes 1,172,507 767,329 Deferred revenue 483,279 664,511 Other liabilities and minority interests 330,801 588,525 Stockholders' equity 2,984,671 2,217,102 ----------- ----------- $ 7,355,399 $ 7,329,234 =========== ===========
PIONEER NATURAL RESOURCES COMPANY UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except for per share data)
Three months ended Year ended December 31, December 31, ------------------------- --------------------------- 2006 2005 2006 2005 ---------- ---------- ----------- ----------- Revenues and other income: Oil and gas $ 376,905 $ 419,398 $ 1,582,049 $ 1,453,240 Interest and other 16,642 9,595 58,723 31,531 Gain (loss) on disposition of assets, net (3,707) 57,202 (7,891) 59,827 ---------- ---------- ----------- ----------- 389,840 486,195 1,632,881 1,544,598 ---------- ---------- ----------- ----------- Costs and expenses: Oil and gas production 97,539 93,046 398,257 346,439 Depletion, depreciation and amortization 93,845 84,801 359,523 299,944 Impairment of long-lived assets - - - 644 Exploration and abandonments 96,065 48,445 264,145 163,323 General and administrative 29,694 30,336 121,830 114,237 Accretion of discount on asset retirement obligations 1,356 1,026 4,826 4,209 Interest 24,104 35,075 107,032 126,086 Hurricane activity, net (10,000) 7,000 32,000 39,813 Other 4,688 40,698 36,280 99,437 ---------- ---------- ----------- ----------- 337,291 340,427 1,323,893 1,194,132 ---------- ---------- ----------- ----------- Income from continuing operations before income taxes 52,549 145,768 308,988 350,466 Income tax provision (25,472) (62,598) (136,666) (155,832) ---------- ---------- ----------- ----------- Income from continuing operations 27,077 83,170 172,322 194,634 Income from discontinued operations, net of tax 609 57,609 567,409 339,934 ---------- ---------- ----------- ----------- Net income $ 27,686 $ 140,779 $ 739,731 $ 534,568 ========== ========== =========== =========== Basic earnings per share: Income from continuing operations $ .22 $ .66 $ 1.39 $ 1.42 Income from discontinued operations net of tax .01 .45 4.56 2.48 ---------- ---------- ----------- ----------- Net income $ .23 $ 1.11 $ 5.95 $ 3.90 ========== ========== =========== =========== Diluted earnings per share: Income from continuing operations $ .22 $ .64 $ 1.36 $ 1.40 Income from discontinued operations, net of tax - .44 4.45 2.40 ---------- ---------- ----------- ----------- Net income $ .22 $ 1.08 $ 5.81 $ 3.80 ========== ========== =========== =========== Weighted average shares outstanding: Basic 120,914 127,243 124,359 137,110 ========== ========== =========== =========== Diluted 123,067 131,465 127,608 141,417 ========== ========== =========== ===========
PIONEER NATURAL RESOURCES COMPANY UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Three months ended Year ended December 31, December 31, ------------------------- -------------------------- 2006 2005 2006 2005 ---------- ---------- ---------- ----------- Cash flows from operating activities: Net income $ 27,686 $ 140,779 $ 739,731 $ 534,568 Adjustments to reconcile net income to net cash provided by operating activities: Depletion, depreciation and amortization 93,845 84,801 359,523 299,944 Impairment of long-lived assets - - - 644 Exploration expenses, including dry holes 62,160 18,731 148,077 53,489 Hurricane activity 33,000 7,000 75,000 39,813 Deferred income taxes 44,391 44,228 154,911 104,987 Loss (gain) on disposition of assets, net 3,707 (57,202) 7,891 (59,827) Loss on extinguishment of debt - - 8,076 25,975 Accretion of discount on asset retirement obligations 1,356 1,026 4,826 4,209 Discontinued operations 6,830 114,076 (537,073) 376,952 Interest expense 3,520 1,844 11,042 4,399 Commodity hedge related activity (2,078) 30,306 (11,498) 21,237 Amortization of stock-based compensation 6,708 7,238 32,065 26,857 Amortization of deferred revenue (47,096) (21,817) (190,327) (75,773) Other noncash items 1,571 10,182 15,589 19,940 Changes in operating assets and liabilities, net of effects from acquisitions and dispositions: Accounts receivable, net (40,454) (82,760) 121,360 (128,015) Income taxes receivable (23,426) 382 (23,495) (1,198) Inventories 4,053 (15,281) (48,060) (36,948) Prepaid expenses 4,517 201 4,808 (7,504) Other current assets, net (44,531) (484) (42,484) 972 Accounts payable (14,832) 60,335 (36,085) 83,960 Interest payable 4,976 18,842 (6,500) (7,115) Income taxes payable (21,515) 3,345 (3,695) 8,950 Other current liabilities (6,230) 1,677 (28,854) (13,362) ----------- ---------- ---------- ----------- Net cash provided by operating activities 98,158 367,449 754,828 1,277,154 Net cash provided by (used in) investing activitites (452,597) (217,514) 145,515 84,734 Net cash provided by (used in) financing activities 261,683 (195,552) (913,543) (1,353,634) Net increase (decrease) in cash and cash equivalents (92,756) (45,617) (13,200) 8,254 Effect of exchange rate changes on cash and cash equivalents (283) (89) 1,431 3,291 Cash and cash equivalents, beginning of period 100,072 64,508 18,802 7,257 ---------- ---------- ---------- ----------- Cash and cash equivalents, end of period $ 7,033 $ 18,802 $ 7,033 $ 18,802 ========== ========== ========== ===========
PIONEER NATURAL RESOURCES COMPANY SUMMARY PRODUCTION AND PRICE DATA (Unaudited)
Three months ended Year ended December 31, December 31, ------------------- ------------------- 2006 2005 2006 2005 ------- ------- ------- ------- Average Daily Sales Volumes from Continuing Operations: Oil (Bbls) - U.S. 18,639 23,877 17,716 21,942 Canada 347 258 311 210 Africa 6,018 8,222 6,513 10,065 ------- ------- ------- ------- Worldwide 25,004 32,357 24,540 32,217 ======= ======= ======= ======= Natural gas liquids (Bbls) - U.S. 18,156 19,087 18,488 17,403 Canada 552 481 463 503 ------- ------- ------- ------- Worldwide 18,708 19,568 18,951 17,906 ======= ======= ======= ======= Gas (Mcf) - U.S. 291,509 274,671 284,732 271,033 Canada 46,280 37,220 43,420 36,427 Africa 4,740 - 1,195 - ------- ------- ------- ------- Worldwide 342,529 311,891 329,347 307,460 ======= ======= ======= ======= Average Daily Sales Volumes from Discontinued Operations: Oil (Bbls) - U.S. - 4,688 2,400 5,280 Argentina - 7,564 2,515 7,869 Canada - - - 28 ------- ------- ------- ------- Worldwide - 12,252 4,915 13,177 ======= ======= ======= ======= Natural gas liquids (Bbls) - U.S. - - - 65 Argentina - 1,854 421 1,824 Canada - - - 112 ------- ------- -------- ------- Worldwide - 1,854 421 2,001 ======= ======= ======= ======= Gas (Mcf) - U.S. (36) 175,615 36,038 230,171 Argentina - 140,025 43,905 137,032 Canada (114) - 14 6,489 ------- ------- ------- ------- Worldwide (150) 315,640 79,957 373,692 ======= ======= ======= ======= Average Reported Prices (a): Oil (per Bbl) - U.S. $ 62.45 $ 33.71 $ 65.73 $ 32.01 Canada $ 54.02 $ 52.99 $ 65.57 $ 52.12 Africa $ 59.72 $ 59.16 $ 64.91 $ 53.00 Worldwide $ 61.67 $ 40.33 $ 65.51 $ 38.70 Natural gas liquids (per Bbl) - U.S. $ 32.47 $ 36.80 $ 35.24 $ 31.72 Canada $ 43.23 $ 53.88 $ 51.47 $ 45.79 Worldwide $ 32.78 $ 37.22 $ 35.64 $ 32.12 Gas (per Mcf) - U.S. $ 5.72 $ 7.73 $ 6.15 $ 6.94 Canada $ 5.33 $ 10.83 $ 6.75 $ 7.67 Africa $ 5.97 $ - $ 5.97 $ - Worldwide $ 5.67 $ 8.10 $ 6.23 $ 7.02 - ----------- (a) Average prices are attributable to continuing operations and include the results of hedging activities and amortization of VPP deferred revenue.
PIONEER NATURAL RESOURCES COMPANY SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (in thousands) (Unaudited) EBITDAX and discretionary cash flow ("DCF") (as defined below) are presented herein, and reconciled to the generally accepted accounting principle ("GAAP") measures of net income and net cash provided by operating activities because of their wide acceptance by the investment community as financial indicators of a company's ability to internally fund exploration and development activities and to service or incur debt. The Company also views the non-GAAP measures of EBITDAX and DCF as useful tools for comparisons of the Company's financial indicators with those of peer companies that follow the full cost method of accounting. EBITDAX and DCF should not be considered as alternatives to net income or net cash provided by operating activities, as defined by GAAP.
Three months ended Year ended December 31, December 31, ------------------------- ------------------------- 2006 2005 2006 2005 ---------- ---------- ---------- ---------- Net income $ 27,686 $ 140,779 $ 739,731 $ 534,568 Depletion, depreciation and amortization 93,845 84,801 359,523 299,944 Impairment of long-lived assets - - - 644 Exploration and abandonments 96,065 48,445 264,145 163,323 Hurricane activity 33,000 7,000 75,000 39,813 Loss on extinguishment of debt - - 8,076 25,975 Accretion of discount on asset retirement obligations 1,356 1,026 4,826 4,209 Interest expense 24,104 35,075 107,032 126,086 Income tax provision 25,472 62,598 136,666 155,832 Loss (gain) on disposition of assets, net 3,707 (57,202) 7,891 (59,827) Discontinued operations 3,023 115,353 (385,737) 392,854 Commodity hedge related activity (2,078) 30,306 (11,498) 21,237 Amortization of stock-based compensation 6,708 7,238 32,065 26,857 Amortization of deferred revenue (47,096) (21,817) (190,327) (75,773) Other noncash items 1,571 10,182 15,589 19,940 ---------- ---------- --------- --------- EBITDAX (a) 267,363 463,784 1,162,982 1,675,682 Less: Cash interest expense (20,584) (33,231) (95,990) (121,687) Current income taxes 22,726 (18,375) (130,936) (57,683) ---------- ---------- --------- --------- Discretionary cash flow (b) 269,505 412,178 936,056 1,496,312 Less: Cash exploration expense (33,905) (30,986) (118,223) (118,898) Changes in operating assets and liabilities (137,442) (13,743) (63,005) (100,260) ---------- ---------- --------- ---------- Net cash provided by operating activities $ 98,158 $ 367,449 $ 754,828 $1,277,154 ========== ========== ========= ========== - ------------ (a) "EBITDAX" represents earnings before depletion, depreciation and amortization expense; impairment of long-lived assets; exploration and abandonments; hurricane activity; accretion of discount on asset retirement obligations; interest expense; income taxes; gain or loss on the disposition of assets; loss on extinguishment of debt; effects from discontinued operations; commodity hedge related activity; stock-based compensation; amortization of deferred revenue; and other noncash items. (b) Discretionary cash flow equals cash flows from operating activities before changes in operating assets and liabilities and before cash exploration expense.
PIONEER NATURAL RESOURCES COMPANY SUPPLEMENTAL INFORMATION As of February 5, 2007 Open Commodity Hedge Positions
2007 ----------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter Year 2008 -------- -------- -------- -------- -------- ------- Average Daily Oil Production Hedged: Swap Contracts: Volume (Bbl) 689 - - - 170 4,000 NYMEX price (Bbl) $ 30.58 $ - $ - $ - $ 30.58 $ 32.00 Average Daily Gas Production Hedged: Swap Contracts: Volume (MMBtu) 107,063 185,000 185,000 185,000 165,783 15,000 NYMEX price (MMBtu) (a) $ 8.69 $ 8.54 $ 8.54 $ 8.54 $ 8.56 $ 9.10 Collar Contracts: Volume (MMBtu) 25,000 - - - 6,164 - NYMEX price (MMBtu) (a) Ceiling $ 12.82 $ - $ - $ - $ 12.82 $ - Floor $ 10.00 $ - $ - $ - $ 10.00 $ - - --------------- (a) Approximate, based on historical differentials to index prices.
Amortization of Volumetric Production Payment Proceeds and Derivative Gains and (Losses) (in thousands)
2007 ---------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter 2008 Thereafter Total --------- --------- --------- --------- -------- ---------- --------- Unamortized VPP proceeds, net of transaction costs $ 43,564 $ 43,828 $ 44,058 $ 43,766 $152,304 $ 308,018 $ 635,538 Net hedge obligations assigned 1,470 1,495 1,520 1,531 5,834 17,123 28,973 --------- --------- --------- --------- -------- --------- --------- Total deferred revenue (a) 45,034 45,323 45,578 45,297 158,138 325,141 664,511 Less derivative gains and (losses) to be recognized in pretax earnings (b) (3,765) 148 424 (347) (4,373) (12,744) (20,657) --------- --------- --------- --------- -------- --------- --------- Total VPP impact to pretax earnings $ 41,269 $ 45,471 $ 46,002 $ 44,950 $153,765 $ 312,397 $ 643,854 ========= ========= ========= ========= ======== ========= ========= - -------------- (a) Deferred revenue will be amortized as increases to oil and gas revenues during the indicated future periods. (b) Represents the remaining pretax earnings impact of the derivatives assigned in the VPPs, which will be reflected in oil and gas revenues.
PIONEER NATURAL RESOURCES COMPANY SUPPLEMENTAL INFORMATION As of February 5, 2007 (continued) Deferred Losses on Terminated Hedges (a) (in thousands)
2007 ---------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter 2008 Thereafter Total --------- --------- -------- --------- -------- ---------- --------- Commodity hedge losses (b) $ (33,388) $ (38,849) $ (38,410) $ (36,220) $ (94,653) $ - $(241,520) Debt hedge losses (c) (58) (87) (89) (91) (371) (4,413) (5,109) --------- --------- --------- --------- --------- --------- --------- Total deferred losses $ (33,446) $ (38,936) $ (38,499) $ (36,311) $ (95,024) $ (4,413) $(246,629) ========= ========= ========= ========= ========= ========= ========= - -------------- (a) Excludes deferred hedge gains and losses on terminated VPPs. (b) Deferred commodity hedge losses will be amortized as decreases to oil and gas revenues during the indicated future periods. (c) Deferred debt hedge losses will be amortized as increases to interest expense during the indicated future periods.
EX-99 3 feber8kx992.txt PXD ER 2/6/07 FORM 8-K EXH. 99.2 EXHIBIT 99.2 NEWS RELEASE Company Contacts: (972) 444-9001 Investors: Frank Hopkins or Scott Rice Media and Public Affairs: Susan Spratlen Pioneer Reports Year-End 2006 Reserves and Finding Costs Dallas, Texas, February 6, 2007 -- Pioneer Natural Resources Company (NYSE:PXD) today announced that as of December 31, 2006, its total proved oil and gas reserves were 905 million barrels oil equivalent (MMBOE). During 2006, Pioneer replaced 200% of production at a finding and development cost of $18.36 per barrel oil equivalent (BOE). Pioneer invested total capital for its continuing operations in 2006 of approximately $1.5 billion, excluding asset retirement obligations, capitalized interest, and geological and geophysical G&A. These expenditures exceeded Pioneer's prior projection by approximately $100 million, primarily due to acreage acquisitions in several core areas which were closed during the fourth quarter. The Company estimates that the acreage acquired during 2006 has resource potential of approximately 150 MMBOE. Of the $1.5 billion of total capital invested during 2006, approximately $1.2 billion generated Pioneer's 12% production growth in North America and total reserve additions of 91 MMBOE. Another $225 million was allocated to two multi-year development projects -- South Coast Gas offshore South Africa and Oooguruk on the North Slope of Alaska. Production from these projects is expected to commence in 2007 and 2008, respectively. Pioneer did not record any proved reserves related to these projects during 2006. Additionally, $82 million was allocated to high-impact exploration for which no proved reserves were recorded. Scott D. Sheffield, Pioneer's Chairman and CEO, stated, "Our finding and development cost for 2006 of $18.36 per BOE was within our target range of $15 to $20 per BOE, despite the upward pressure on drilling and development costs throughout the year. In the lower 48 states and Canada, which was our primary focus area for reserve growth in 2006, our finding and development cost was approximately $15 per BOE. We also met our reserve replacement target of 200% for 2006, reflecting the success of our lower-risk North America focus, continued opportunity for expansion in our core areas and new resource plays, and the expertise and diligence of our asset teams." Pioneer's proved reserves were determined using year-end NYMEX equivalent prices of $60.82 per barrel of oil and $5.64 per thousand cubic feet (Mcf) of gas, compared to $61.04 per barrel of oil and $10.08 per Mcf of gas at the end of 2005. This resulted in negative reserve revisions of 14 MMBOE that were related to the decline in year-end gas prices, the majority of which would be recovered at a NYMEX equivalent gas price of $7.50 per Mcf. Netherland, Sewell and Associates, Inc. (NSA), an independent reserve engineering firm, audited the proved reserves of significant fields. NSA's audit covered properties representing approximately 89% of Pioneer's total proved reserves at year-end 2006. For the three years ending in 2006, Pioneer's finding and development cost averaged $12.92 per BOE. Over the three-year period, Pioneer added 474 MMBOE of proved reserves for total costs incurred of $6.1 billion. Three-year average reserve replacement was 261%. For the five years ending in 2006, Pioneer's finding and development cost averaged $10.97 per BOE. Over the five-year period, Pioneer added 690 MMBOE of proved reserves for total costs incurred of $7.6 billion. Five-year average reserve replacement was 246%. Year-end proved reserves and costs incurred are detailed in the attached supplemental schedule. Pioneer is a large independent oil and gas exploration and production company, headquartered in Dallas, Texas, with operations in the United States, Canada, South Africa and Tunisia. 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 which 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 oil and gas prices, the ability to obtain environmental and other permits and the timing thereof, other government regulation or action, third party approvals, international operations and associated international political and economic instability, the costs and results of drilling and operations, Pioneer's ability to replace reserves, implement its business plans or complete its development projects as scheduled, access to and cost of capital, uncertainties about estimates of reserves and quality of technical data. These and other risks are described in Pioneer's 10-K and 10-Q Reports and other filings with the Securities and Exchange Commission. Pioneer undertakes no duty to publicly update these statements except as required by law. Cautionary Note to U.S. Investors -- The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. Pioneer uses certain terms in this release, such as "resource potential" or other descriptions of volumes of reserves potentially recoverable through additional drilling or recovery techniques that the SEC's guidelines 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. PIONEER NATURAL RESOURCES COMPANY PROVED RESERVES & COSTS INCURRED SUPPLEMENTAL INFORMATION Year Ended December 31, 2006
United States Argentina Canada Africa Total ---------- --------- -------- ------- ---------- Proved reserves: Oil (MBbls): Balance, January 1, 2006 232,513 27,087 2,051 6,824 268,475 Revisions of previous estimates 4,072 (247) (259) 3,100 6,666 Purchases of minerals-in-place 31,304 - - - 31,304 Discoveries and extensions 8,910 111 182 500 9,703 Production (7,343) (918) (113) (2,377) (10,751) Sales of minerals-in-place (11,261) (26,033) - - (37,294) ---------- --------- -------- -------- ---------- Balance, December 31, 2006 258,195 - 1,861 8,047 268,103 Natural Gas Liquids (MBbls): Balance, January 1, 2006 153,258 6,937 372 - 160,567 Revisions of previous estimates (11,539) (59) 100 - (11,498) Purchases of minerals-in-place 10,521 - - - 10,521 Discoveries and extensions 3,038 24 35 - 3,097 Production (6,748) (154) (169) - (7,071) Sales of minerals-in-place - (6,748) - - (6,748) ---------- --------- -------- -------- ----------- Balance, December 31, 2006 148,530 - 338 - 148,868 Natural Gas (MMcf): Balance, January 1, 2006 2,750,856 404,323 130,514 60,395 3,346,088 Revisions of previous estimates (10,664) (2,043) (7,953) 175 (20,485) Purchases of minerals-in-place 52,308 - - - 52,308 Discoveries and extensions 136,712 4,576 66,801 8,223 216,312 Production (134,445) (16,025) (15,853) (436) (166,759) Sales of minerals-in-place (108,806) (390,831) - - (499,637) ---------- --------- -------- -------- ----------- Balance, December 31, 2006 2,685,961 - 173,509 68,357 2,927,827 Equivalent Barrels (MBOE): Balance, January 1, 2006 844,247 101,411 24,175 16,890 986,723 Revisions of previous estimates (9,244) (646) (1,485) 3,129 (8,246) Purchases of minerals-in-place 50,543 - - - 50,543 Discoveries and extensions 34,733 898 11,351 1,870 48,852 Production (a) (36,499) (3,743) (2,924) (2,449) (45,615) Sales of minerals-in-place (29,395) (97,920) - - (127,315) ---------- --------- -------- -------- ----------- Balance, December 31, 2006 854,385 - 31,117 19,440 904,942 ========== ========= ======== ======== ========== Costs incurred for oil and gas producing activities ($000): Property acquisition costs: Proved $ 77,338 $ - $ - $ - $ 77,338 Unproved 109,320 - 19,931 15,584 144,835 ---------- --------- -------- -------- ----------- 186,658 - 19,931 15,584 222,173 Exploration costs: Resource plays 204,792 - 100,799 40,970 346,561 High impact 57,666 - - 24,352 82,018 Development costs: Development drilling 560,214 - 97,188 (719) 656,683 Development projects 111,615 - - 112,897 224,512 ---------- --------- -------- -------- ----------- 1,120,945 - 217,918 193,084 1,531,947 Asset retirement obligations 22,868 - 8,299 14,299 45,466 Discontinued operations 6,976 35,768 - - 42,744 G&G G&A 26,659 - 2,446 11,951 41,056 Capitalized interest 6,833 - - 5,333 12,166 ---------- --------- -------- -------- ----------- Total costs incurred $1,184,281 $ 35,768 $228,663 $224,667 $1,673,379 ========== ========= ======== ======== ========== Reserve replacement percentage (b) 200% ========== Finding and development costs per BOE of proved reserves added (c) $ 18.36 ========== - ------------ (a) Production includes 6,811 MBOE related to discontinued operations and 2,894 MBOE related to field fuel. (b) The summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates, purchases of minerals-in-place and discoveries and extensions divided by annual production of oil, NGLs and natural gas, on a BOE basis. (c) 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 and discoveries and extensions. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred.
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