-----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, V9vCONao8hU3XDy6bvRW539pfYjppNf0HxDEDePI2Hcl07OnLZ79PBPJETg2gUyz j/3gKPryCQ+SUxQ9DlKayQ== 0001038357-98-000002.txt : 19980218 0001038357-98-000002.hdr.sgml : 19980218 ACCESSION NUMBER: 0001038357-98-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980210 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980213 SROS: NYSE 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: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13245 FILM NUMBER: 98535880 BUSINESS ADDRESS: STREET 1: 520 N OCONNOR BLVD STREET 2: 1400 WILLIAMS SQUARE WEST CITY: IRVING STATE: TX ZIP: 75039-3746 BUSINESS PHONE: 9724449001 MAIL ADDRESS: STREET 1: 303 W WALL STREET 2: SUITE 101 CITY: MIDLAND STATE: TX ZIP: 79701 8-K 1 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 10, 1998 PIONEER NATURAL RESOURCES COMPANY (Exact name of Registrant as specified in its charter) Delaware 1-13245 75-2702753 (State or other jurisdiction of Commission (I.R.S. Employer incorporation or organization) File Number Identification Number) 1400 Williams Square West, 5205 N. O'Connor Blvd., Irving, Texas 75039 (Address of principal executive offices) (Zip code) Registrant's Telephone Number, including area code : (972) 444-9001 Not applicable (Former name, former address and former fiscal year, if changed since last report) Pioneer Natural Resources Company Item 5. Other Events On February 10, 1998, the Company reported its financial results for the three months and year ended December 31, 1997. The news release is included as Exhibit 20 to this Report. Item 7. Financial Statements and Exhibits c) Exhibits 20. - News Release 2 EX-20 2 EXHIBIT 20 NEWS RELEASE Investor Relations Contacts: James Leahy, Susan Spratlen Media Relations Contact: Marsha Sheffield (972) 444-9001 Pioneer Reports Results and Announces Fourth Quarter Non-Cash Charge of $863 Million; Year-End Reserves of 762 Million Barrel Equivalents; A Divestiture Program for Non-Strategic Assets; a Corporate Restructuring and an Increase in Stock Repurchase Plan Dallas, Texas, February 10, 1998 -- Pioneer Natural Resources Company ("Pioneer") (NYSE:PXD) today announced financial and operating results for the fourth quarter and twelve months ended December 31, 1997. Pioneer also announced a series of initiatives aimed at unlocking the value contained in its long-lived reserve base and acreage position. About 95% of the company's domestic fields generate only 15% of total cash flow. These non-strategic fields will be sold with proceeds expected to be $375 to $550 million. The current eight operating divisions will be reduced to five. The reorganization and divestiture program should reduce total lease operating and administrative expenses by about 12%. "Over the last several months, the pace of acquisitions and financial transactions at Pioneer has been rapid. We are now in a position to begin recognizing the many benefits associated with these transactions," stated Scott Sheffield, President and CEO. Fourth Quarter and Year-to-Date Results Pioneer reported a fourth quarter net loss of $904 million or $11.58 per share. These results include an $863 million non-cash after tax charge related to the Statement of Financial Accounting Standard No. 121, Impairment of Long-Lived Assets. Fourth quarter oil sales averaged 45,570 barrels per day (BPD), and fourth quarter natural gas liquid sales were 33,875 BPD. Natural gas sales in the fourth quarter were 365 million cubic feet per day (MMCFPD). Realized prices for oil and natural gas liquids in the fourth quarter were $18.07 and $12.47 per barrel. Fourth quarter realized price for natural gas was $2.18 per thousand cubic feet. Compared to third quarter production including production from Mesa's properties for the full quarter, fourth quarter production increased 8% to 12.9 million equivalent barrels (140,278 equivalent BPD) from 11.9 million equivalent barrels (129,890 equivalent BPD). On a pro forma basis including the Chauvco acquisition, fourth quarter volumes were 62,980 BPD for oil, 35,259 BPD for natural gas liquids and 458 MMCFPD for natural gas (174,572 equivalent BPD). For the year-ended December 31, 1997, the net loss was $891 million or $17.14 per share. This compares to net income of $140 million or $3.47 per share in 1996. Oil And Gas Reserves Doubled During 1997, proved reserves more than doubled from 302 million barrels oil equivalent (MMBOE) to 762 MMBOE, with the majority of the increase relating to the acquisitions of Mesa and Chauvco. Reserves added through development drilling were 53 MMBOE, including revisions, at a cost of $5.44 per barrel equivalent, producing a replacement ratio of 149%. Year-end 1997 reserves include 2.3 trillion cubic feet of natural gas and 384 million barrels of liquids. Proved developed reserves account for 86% of the company's total proved oil and gas reserves. Non-Strategic Divestiture Program Accelerated Pioneer is accelerating its property portfolio management with a major divestiture program focused on improving operating efficiency and profitability. During 1998, the company intends to pursue the sale of approximately 95% of its 3 its domestic fields, representing 10 to 12% of its total reserve base. The vast majority of these fields were acquired by Parker & Parsley prior to 1995. Scott Sheffield stated, "Most of Pioneer's domestic value is attributable to about 25 of the company's 450 fields. The purpose of this program is to shed non-strategic properties, redeploying the proceeds into higher return assets. Exact timing of the sales will depend on market conditions." 1998 Capital Program Reduced Because of the unsettled pricing environment, Pioneer's 1998 capital program has been reduced to $500 million ($375 million for development and $125 million for exploration) from $600 million. "Internally generated cash flow coupled with divestiture proceeds will fully fund the 1998 capital program and acquisition activity," said Scott Sheffield. Reorganization Announced Pioneer will reorganize and reduce its operating divisions from eight to five. This reorganization will have significant impact on the company's cost structure by the end of 1998, with lease operating costs expected to fall by 8% and administrative expenses expected to fall by 24%. The company has estimated that on a preliminary basis it will incur approximately $20 million of costs related to the reorganization over the course of business in 1998. "For an energy company, value resides in its per unit margin and its volume growth per share. The actions taken today should substantially improve the long-term profitability of Pioneer," said Scott Sheffield. Based on fourth quarter pro forma production and year-end reserves before the impact of divestitures, the new organization breaks down as follows: Year-end 4th Qtr. Reserves Pro forma Volumes -------- ----------------- Mid-Continent 37% 30% Permian Basin 34% 31% Gulf Coast 9% 19% Argentina 12% 10% Canada 8% 10% Stock Repurchase Plan Authorization Increased Pioneer's Board of Directors has approved an increase to the company's recently announced stock repurchase plan from $100 million to $200 million. This increase will give Pioneer further options for the divestiture proceeds, in addition to reinvestment in higher growth assets and debt reduction. Current Operating Activity Drilling activity continued at an aggressive pace in the fourth quarter with 40 rigs in worldwide operation. Recent results have been particularly promising in Argentina and the Gulf of Mexico. During January, oil production increased by 1,800 BPD in Argentina from four new wells being placed on production. Half of the increase was from one well in the Puesto Lopez field in the Neuquen Basin. In the Gulf of Mexico, the Eugene Island Block 208 K-4 well, which logged 90 feet of pay in four zones, has been completed and placed on production at a rate of 3,200 BPD and 7 MMCFPD. This is the first well completed in the program on this offshore block acquired from Greenhill in 1997, with three additional wells to be drilled. Chairman's Comment "The effect of today's action adds value to Pioneer by increasing pre-tax margins by about $3.75 per barrel, and by honing the organization into one that can prosper and grow in a volatile price environment. We will be quick, flexible, efficient, and focused. The concentration of our large reserve base in only 25 fields will produce operating and administrative efficiencies unmatched within the industry. Pioneer's goal is to be the company of choice to investors, merger candidates, employees, and strategic partners. With these strategic initiatives in place, buying back our shares is a no-brainer," stated Jon Brumley. 4 Pioneer Pioneer was created on August 7, 1997, to effect the merger of MESA, Inc. ("Mesa") and Parker & Parsley Petroleum Company ("Parker & Parsley"). The financial history reflects the results of Parker & Parsley through July 31, 1997, and reflects the results of the combined companies beginning in August 1997. On December 18, 1997, Pioneer acquired Chauvco Resources, Ltd. ("Chauvco"). This announcement includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, estimates with respect to production levels, cash flows, capital expenditures and revenue potential. Among other things, such forward-looking statements assume limited changes in oil and gas prices and the accuracy of engineering studies on reserves. Although Pioneer believes that the expectations and assumptions reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations and assumptions will prove to have been correct. Such forward-looking statements and assumptions are qualified as may be provided in Pioneer's annual, quarterly, and current reports, and registration statements filed with the Securities and Exchange Commission. 5 PIONEER NATURAL RESOURCES COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) December 31, December 31, 1997 1996 ------------ ------------ ASSETS Current assets $ 308,188 $ 117,039 Oil and gas properties 4,121,045 1,426,382 Gas processing facilities - 59,276 Accumulated depletion, depreciation and amortization (605,203) (445,238) Other assets, net 122,560 42,406 ----------- ----------- $ 3,946,590 $ 1,199,865 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 261,552 $ 90,970 Long-term debt 1,943,718 320,908 Other noncurrent liabilities 180,275 8,071 Deferred income taxes 12,200 60,800 Preferred stock of subsidiary - 188,820 Stockholders' equity 1,548,845 530,296 ----------- ----------- $ 3,946,590 $ 1,199,865 =========== =========== 6 PIONEER NATURAL RESOURCES COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except for per share data) Three months ended Year ended December 31, December 31, ----------------------- ----------------------- 1997 1996 1997 1996 ----------- --------- ----------- --------- Revenues: Oil and gas $ 187,802 $ 113,604 $ 536,782 $ 396,931 Natural gas processing - 7,004 - 23,814 Interest and other 629 2,462 4,278 17,458 Gain on disposition of assets, net 2,224 253 4,969 97,140 ---------- -------- --------- -------- 190,655 123,323 546,029 535,343 Costs and expenses: Oil and gas production 52,496 28,101 144,170 110,334 Natural gas processing - 3,405 - 12,528 Depletion, depreciation and amortization - oil and gas 83,148 24,347 204,450 105,259 Depletion, depreciation and amortization - other 2,390 1,559 7,985 6,875 Impairment of oil and gas properties 1,356,390 - 1,356,390 - Exploration and abandonments 42,850 8,068 77,160 23,030 General and administrative 16,994 8,943 48,763 28,363 Interest 33,286 10,050 77,550 46,155 Other 4,142 1,533 7,124 2,451 ---------- -------- --------- -------- 1,591,696 86,006 1,923,592 334,995 ---------- -------- --------- -------- Income (loss) before income taxes and extraordinary item (1,401,041) 37,317 (1,377,563) 200,348 Income tax benefit (provision) 508,800 (12,900) 500,300 (60,100) ---------- -------- --------- -------- Income (loss) before extraordinary item (892,241) 24,417 (877,263) 140,248 Extraordinary loss on early extinguishment of debt, net of tax (11,890) - (13,408) - ---------- -------- --------- -------- Net income (loss) $ (904,131) $ 24,417 $ (890,671) $ 140,248 ========== ======== ========== ======== Net income (loss) per share: Basic: Income (loss) before extraordinary item $ (11.43) $ .69 $ (16.88) $ 3.95 Extraordinary item (.15) - (.26) - ---------- ------- --------- -------- Net income (loss) $ (11.58) $ .69 $ (17.14) $ 3.95 ========== ======= ========== ======== Diluted: Income (loss) before extraordinary item $ (11.43) $ .62 $ (16.88) $ 3.47 Extraordinary item (.15) - (.26) - ---------- ------- --------- -------- Net income (loss) $ (11.58) $ .62 $ (17.14) $ 3.47 ========== ======= ========== ======== Dividends declared per share $ .05 $ .05 $ .10 $ .10 ========== ======= ========== ======== Weighted average shares outstanding 78,063 35,522 51,973 35,475 =========== ======== =========== =========
7 PIONEER NATURAL RESOURCES COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Three months ended Year ended December 31, December 31, ----------------------- ----------------------- 1997 1996 1997 1996 ----------- --------- ----------- --------- Cash flows from operations: Net income (loss) $ (904,131) $ 24,417 $ (890,671) $ 140,248 Depletion, depreciation and amortization 85,538 25,906 212,435 112,134 Impairment of oil and gas properties 1,356,390 - 1,356,390 - Exploration expenses, including dry holes 37,707 6,876 63,288 17,262 Deferred income taxes (508,700) 10,500 (501,300) 57,400 Gain on disposition of assets, net (2,224) (253) (4,969) (97,140) Loss on early extinguishment of debt 11,890 - 13,408 - Other noncash items 8,304 956 18,886 (1,360) Net changes in operating assets and liabilities, net of effects from acquisitions and dispositions (35,633) (27,710) (39,258) 1,562 ---------- -------- --------- -------- Net cash provided by operations 49,141 40,692 228,209 230,106 Net cash provided by (used in) investing (97,045) (76,496) (341,178) 13,729 Net cash provided by (used in) financing 78,986 (13,124) 165,971 (245,354) ---------- -------- --------- -------- Effect of exchange rate changes on cash and cash equivalents - - - 290 Net increase (decrease) in cash and cash equivalents 31,082 (48,928) 53,002 (1,519) Cash and cash equivalents, beginning of period 40,631 67,639 18,711 19,940 ---------- -------- --------- -------- Cash and cash equivalents, end of period $ 71,713 $ 18,711 $ 71,713 $ 18,71 ========== ======== ========== ========
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