Pioneer Natural Resources Company (NYSE:PXD) ("Pioneer"
or "the Company") today reported financial and operating results
for the quarter and year ended December 31, 2019. Pioneer reported
fourth quarter net income attributable to common stockholders of
$344 million, or $2.06 per diluted share. These results include the
effects of noncash mark-to-market adjustments and certain other
unusual items. Excluding these items, non-GAAP adjusted income for
the fourth quarter was $395 million, or $2.36 per diluted share.
Cash flow from operating activities for the fourth quarter was $828
million. For the full year 2019, the Company reported net income
attributable to common stockholders of $756 million, or $4.50 per
diluted share. Cash flow from operating activities for the full
year 2019 was $3.1 billion.
Highlights
- Achieved corporate return on capital employed (ROCE)1 of 11%
during 2019
- Delivered strong fourth-quarter and full-year 2019 free cash
flow2 of $384 million and $540 million, respectively
- Returned $780 million of capital to shareholders through
dividends and share repurchases during 2019
- Averaged fourth quarter oil production of 220 thousand
barrels of oil per day (MBOPD), at the top end of guidance
- Averaged fourth quarter total production of 363 thousand
barrels of oil equivalent per day (MBOEPD), above the top end of
guidance
- Announced 2020 Capital Budget3 of $3.15 billion to $3.45
billion, with cash flow4 expected to be $3.9 billion
- Increased quarterly dividend to $0.55 per share, or $2.20
per share on an annual basis
President and CEO Scott D. Sheffield stated, "2019 was an
excellent year for Pioneer, where we delivered strong cash flow,
robust free cash flow generation and top tier corporate returns.
This was driven by an intense focus on execution that resulted in
significant well cost reductions while maintaining peer-leading oil
production per well in the Permian Basin. We remain committed to
returning capital to shareholders, and in 2019 we delivered $780
million to shareholders through share repurchases and
dividends.
Our 2020 plan builds on our strong 2019 performance and is
structured to deliver a capitally efficient program that
prioritizes free cash flow. Our dividend increase announced today
solidifies our commitment to returning capital to shareholders and
represents a greater than 185% increase, on an annualized basis,
when compared to the dividends paid in 2019. Pioneer continues to
offer a compelling value proposition, underpinned by our premier
acreage position in the Permian Basin that drives best-in-class
margins, increasing corporate returns and is forecasted to generate
significant free cash flow."
Financial Highlights
Pioneer maintains a strong balance sheet, with unrestricted cash
on hand as of December 31, 2019 of $631 million and net debt of
$1.7 billion. The Company had a $2.1 billion liquidity position at
year end 2019, reflecting $631 million of unrestricted cash and a
$1.5 billion unsecured credit facility (undrawn as of December 31,
2019).
During the fourth quarter, the Company’s Permian drilling,
completion and facilities capital expenditures totaled $569
million. The Company’s total Permian capital expenditures3 during
the fourth quarter, including gas processing and water
infrastructure expenditures, totaled $627 million, resulting in
$384 million of free cash flow2 before working capital changes. For
the full year 2019, the Company's Permian drilling, completion and
facilities capital expenditures totaled $2.7 billion. The Company's
total Permian capital expenditures3 for the full year, including
gas processing and water infrastructure expenditures, totaled $3.0
billion, resulting in $540 million of free cash flow2 before
working capital changes.
The Company announced today that its Board of Directors has
approved an increase in the Company's quarterly cash dividend to
$0.55 per share, representing a current yield of approximately 1.6%
(based on the Company’s closing stock price as of February 14,
2020). This annualized dividend represents a greater than 185%
increase when compared to the dividends paid in 2019. The decision
to grow Pioneer's cash dividend, from $0.08 per share on an
annualized basis in February 2018 to an annualized rate of $2.20
per share currently, is consistent with the Company’s objective of
increasing its return of capital to shareholders.
In December 2018, the Board of Directors authorized a $2 billion
common stock repurchase program. During the fourth quarter, the
Company repurchased $22 million of common stock under this program.
To-date, the Company has repurchased a total of 5.5 million shares
for $749 million under this authorization. The Company evaluates
many factors, including market conditions and corporate
considerations, such as asset divestitures, liquidity and capital
needs, in assessing the Company's ability to repurchase shares.
Fourth Quarter Financial
Results
For the fourth quarter, the Company’s average realized price for
oil was $56.01 per barrel. The Company’s average realized price for
natural gas liquids (NGLs) was $18.60 per barrel, and the average
realized price for gas was $2.21 per thousand cubic feet (MCF).
These prices exclude the effects of derivatives.
Production costs, including taxes, averaged $8.48 per barrel of
oil equivalent (BOE). Depreciation, depletion and amortization
(DD&A) expense averaged $13.15 per BOE. Exploration and
abandonment costs were $11 million. General and administrative
(G&A) expense was $78 million. Interest expense was $34
million. Other expense was $58 million, or $17 million excluding an
unusual item5.
Operations Update
Pioneer continued to see strong efficiency gains in both
drilling and completions during the fourth quarter, enabling the
Company to place 77 horizontal wells on production. During 2019,
both drilling and completions efficiencies increased by greater
than 30% when compared to 2017, averaging approximately 1,000
drilled feet per day and 1,600 completed feet per day in 2019,
respectively. These increased efficiencies, coupled with
approximately 30% lower well costs and strong production, continue
to drive increasing corporate returns and free cash flow
generation.
During 2020, the Company plans to operate an average of 23 to 24
horizontal rigs in the Permian Basin, including approximately five
rigs in the southern joint venture area. The 2020 program is
expected to place 345 to 375 wells on production, compared to 306
wells placed on production during 2019. Wells placed on production
in 2020 are expected to be approximately 40% Wolfcamp B, 40%
Wolfcamp A, 15% Spraberry and 5% other formations, with an average
lateral length of approximately 9,800 feet.
The Company continues to transport oil, NGLs and gas from the
Permian Basin to premium-priced markets. This led to an incremental
benefit of $4 million during the fourth quarter of 2019 and a total
benefit in 2019 of $283 million. During the fourth quarter of 2019,
the Company's gas price realizations benefited from firm
transportation to the higher-priced West Coast and Gulf Coast
markets, compared to selling gas into the oversupplied Waha gas
market. Pioneer realized $2.21 per MCF during the fourth quarter
compared to the average Gas Daily Waha Index price of $1.11 per
MCF. The Company expects to have minimal exposure to the Waha gas
market going forward.
2020 Outlook
The Company expects its 2020 drilling, completions and
facilities capital budget to range between $3.0 billion to $3.3
billion, with an additional $125 million budgeted for Pioneer's
differentiated water infrastructure. The Company expects its
capital program to be fully funded within forecasted cash flow4 of
approximately $3.9 billion.
Pioneer expects 2020 oil production of 235 to 245 MBOPD and
total production of 383 to 403 MBOEPD. Pioneer's efficient,
high-margin growth is driven by the Company's top-tier acreage
position in the Permian Basin that continues to deliver the most
productive oil wells in the Permian Basin, combined with low well
costs. Further benefiting margins and cash flow, NGL volumes
experienced strong growth during the second half of 2019 due to
improved gas processing yields from the start-up of the Hopson and
Pembrook gas processing plants. The Company expects this benefit to
continue throughout 2020, along with the forecasted addition of the
Gateway gas processing plant in the second half of 2020.
Pioneer increased its oil derivative positions to approximately
149 MBOPD for the first quarter of 2020 and 129 MBOPD for full-year
2020 at approximately $62 Brent pricing. The Company’s financial
and derivative mark-to-market results and open derivatives
positions are outlined in the attached schedules.
First Quarter 2020
Guidance
First quarter 2020 oil production is forecasted to average
between 217 to 227 MBOPD and total production to average between
361 to 376 MBOEPD. Production costs are expected to average $8.25
per BOE to $10.25 per BOE. DD&A expense is expected to average
$12.50 per BOE to $14.50 per BOE. Total exploration and abandonment
expense is forecasted to be $10 million to $20 million. G&A
expense is expected to be $72 million to $82 million. Interest
expense is expected to be $30 million to $35 million. Other expense
is forecasted to be $20 million to $30 million. Accretion of
discount on asset retirement obligations is expected to be $2
million to $5 million. The cash flow impact related to purchases
and sales of oil and gas, including firm transportation, is
expected to be zero to a loss of $50 million. The Company’s
effective income tax rate is expected to range from 21% to 25%.
Current income taxes are expected to be less than $5 million.
Proved Reserves
The Company added proved reserves totaling 302 million barrels
of oil equivalent (MMBOE) during 2019. These proved reserve
additions equate to a drillbit reserve replacement ratio of 235%
when compared to Pioneer's full-year 2019 production of 128 MMBOE,
including field fuel. The drillbit finding and development
(F&D) cost was $9.76 per BOE in 2019, with a drillbit proved
developed F&D costs of $9.49 per BOE.
As of December 31, 2019, the Company's total proved reserves
were estimated at 1,136 MMBOE, of which 95% are proved
developed.
Environmental, Social &
Governance
Pioneer views sustainability as a multidisciplinary focus that
balances economic growth, environmental stewardship and social
responsibility. The Company emphasizes developing natural resources
in a manner that respects surrounding communities and preserves the
environment.
Pioneer is focused on reducing emissions and emission
intensities. Between 2016 and 2018, the Company's greenhouse gas
(GHG) emissions have been reduced by 24%, total GHG emission
intensity has decreased by 38% and methane intensity has declined
by 41%. Additionally, between January 2018 and July 2019, the
Company was able to limit Permian Basin flaring to less than 2% of
its produced gas, one of the lowest flaring percentages in the
Permian Basin. The Company's proactive measures, including
monitoring 100% of its Permian Basin facilities aerially for leak
detection and repair and only producing a well once it is fully
connected to a gas line, help to make Pioneer a leader in
environmental stewardship.
Socially, Pioneer maintains a proactive safety culture, supports
a diverse workforce and inspires teamwork to drive innovation. The
Board of Directors has a Health, Safety and Environment Committee
and a Nominating and Corporate Governance Committee to provide
director-level oversight of these activities. These committees help
to promote a culture of continuous improvement in safety and
environmental practices.
For more details, see Pioneer’s 2019 Sustainability Report at
pxd.com/sustainability.
Earnings Conference Call
On Thursday, February 20, 2020, at 9:00 a.m. Central Time,
Pioneer will discuss its financial and operating results for the
quarter and full-year ended December 31, 2019, with an accompanying
presentation. Instructions for listening to the call and viewing
the accompanying 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 888-394-8218 and enter
confirmation code 6718938 five minutes before the call.
A replay of the webcast will be archived on Pioneer’s website.
This replay will be available through March 20, 2020. Click here to
register for the call-in audio replay and you will receive the
dial-in information.
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 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, the costs and results of drilling and
operations, availability of equipment, services, resources and
personnel required to perform the Company’s drilling and operating
activities, access to and availability of transportation,
processing, fractionation, refining, storage and export 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, investment instruments and derivative
contracts and purchasers of Pioneer’s oil, natural gas liquids and
gas production, uncertainties about estimates of reserves and
resource potential, identification of drilling locations 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, cybersecurity risks, ability to implement planned
stock repurchases, the risks associated with the ownership and
operation of the Company’s oilfield services businesses and acts of
war or terrorism. These and other risks are described in Pioneer’s
Annual Report on Form 10-K for the year ended December 31, 2018,
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. Accordingly, no
assurances can be given that the actual events and results will not
be materially different than the anticipated results described in
the forward-looking statements. Pioneer undertakes no duty to
publicly update these statements except as required by law.
Future dividends are at the discretion of the Company's Board of
Directors, and, if declared, the Board of Directors may change the
dividend amount based on the Company's liquidity and capital
resources at that time.
“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 discoveries,
extensions and revisions of previous estimates. Revisions of
previous estimates exclude price revisions. 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 discoveries, extensions
and revisions of previous estimates divided by annual production of
oil, NGLs and gas, on a BOE basis. Revisions of previous estimates
exclude price revisions.
“Proved developed finding and development cost per BOE,” or
“proved developed F&D cost per BOE,” means the summation of
exploration and development costs incurred (excluding asset
retirement obligations) divided by the summation of annual proved
reserves, on a BOE basis, attributable to proved developed reserve
additions, including (i) discoveries and extensions placed on
production during 2019, (ii) transfers from proved undeveloped
reserves at year-end 2018 and (iii) technical revisions of previous
estimates for proved developed reserves during 2019. Revisions of
previous estimates exclude price revisions.
Footnote 1: "Return on Capital Employed (ROCE)" is a non-GAAP
financial measure. As used by the Company, ROCE is net income
adjusted for tax-effected noncash mark-to-market (MTM) adjustments,
unusual items and interest expense divided by the summation of
average total equity (adjusted for tax-effected noncash MTM
adjustments, unusual items and interest expense) and average net
debt. See reconciliation to comparable GAAP number in supplemental
schedules.
Footnote 2: Free cash flow is a non-GAAP measure, see
reconciliation to comparable GAAP number in supplemental
schedules.
Footnote 3: Excludes acquisitions, asset retirement obligations,
capitalized interest, geological and geophysical G&A,
information technology and corporate facilities.
Footnote 4: The 2020 estimated cash flow number is a non-GAAP
financial measure, representing January through December forecasted
cash flow (before working capital changes) assuming a Nymex oil
price of $55 (assuming a $5 differential to the Brent oil price)
and Henry Hub gas of $2.50 per MCF; represents the midpoint of
production guidance. Due to its forward-looking nature, management
cannot reliably predict certain of the necessary components of the
most directly comparable forward-looking GAAP measure, such as
working capital changes. Accordingly, Pioneer is unable to present
a quantitative reconciliation of such forward-looking non-GAAP
financial measure to its most directly comparable forward-looking
GAAP financial measure. Amounts excluded from this non-GAAP measure
in future periods could be significant.
Footnote 5: The unusual item represents $41 million of charges
during the fourth quarter of 2019 associated with moving the
Company’s corporate headquarters.
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in millions)
December 31, 2019
December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
631
$
825
Restricted cash
74
—
Short-term investments
—
443
Accounts receivable, net
1,035
814
Income taxes receivable
7
7
Inventories
205
242
Derivatives
32
52
Investment in affiliate
187
172
Other
20
25
Total current assets
2,191
2,580
Oil and gas properties, using the
successful efforts method of accounting
23,028
21,766
Accumulated depletion, depreciation and
amortization
(8,583
)
(8,218
)
Total oil and gas properties, net
14,445
13,548
Other property and equipment, net
1,632
1,291
Operating lease right-of-use assets
280
—
Long-term investments
—
125
Goodwill
261
264
Other assets
258
95
$
19,067
$
17,903
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
1,411
$
1,624
Interest payable
53
53
Income taxes payable
3
2
Current portion of long-term debt
450
—
Derivatives
12
27
Operating leases
136
—
Other
431
112
Total current liabilities
2,496
1,818
Long-term debt
1,839
2,284
Derivatives
8
—
Deferred income taxes
1,389
1,152
Operating leases
170
—
Other liabilities
1,046
538
Equity
12,119
12,111
$
19,067
$
17,903
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share
data)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Revenues and other income:
Oil and gas
$
1,349
$
1,122
$
4,916
$
4,991
Sales of purchased oil and gas
1,292
1,082
4,755
4,388
Interest and other
118
—
76
38
Derivative gain (loss), net
(116
)
409
34
(292
)
Gain (loss) on disposition of assets,
net
—
64
(477
)
290
2,643
2,677
9,304
9,415
Costs and expenses:
Oil and gas production
207
201
874
855
Production and ad valorem taxes
76
55
299
284
Depletion, depreciation and
amortization
440
404
1,711
1,534
Purchased oil and gas
1,288
909
4,472
3,930
Impairment of oil and gas properties
—
—
—
77
Exploration and abandonments
11
32
58
114
General and administrative
78
99
324
381
Accretion of discount on asset retirement
obligations
3
3
10
14
Interest
34
29
121
126
Other
58
533
448
849
2,195
2,265
8,317
8,164
Income before income taxes
448
412
987
1,251
Income tax provision
(104
)
(88
)
(231
)
(276
)
Net income
344
324
756
975
Net loss attributable to noncontrolling
interests
—
—
—
3
Net income attributable to common
stockholders
$
344
$
324
$
756
$
978
Net income per share attributable to
common stockholders:
Basic
$
2.06
$
1.89
$
4.50
$
5.71
Diluted
$
2.06
$
1.89
$
4.50
$
5.70
Basic and diluted weighted average shares
outstanding
166
171
167
171
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Cash flows from operating activities:
Net income
$
344
$
324
$
756
$
975
Adjustments to reconcile net income to net
cash
provided by operating activities:
Depletion, depreciation and
amortization
440
404
1,711
1,534
Impairment of oil and gas properties
—
—
—
77
Impairment of inventory and other property
and equipment
3
2
38
11
Exploration expenses, including dry
holes
3
15
8
27
Deferred income taxes
109
88
236
274
(Gain) loss on disposition of assets,
net
—
(64
)
477
(290
)
Accretion of discount on asset retirement
obligations
3
3
10
14
Interest expense
5
1
9
5
Derivative-related activity
129
(576
)
13
(270
)
Amortization of stock-based
compensation
19
22
100
85
Investment in affiliate mark-to-market
adjustment
(37
)
—
(15
)
—
Contingent consideration valuation
adjustment
(16
)
—
45
—
Other
9
482
105
658
Change in operating assets and
liabilities:
Accounts receivable
(180
)
181
(227
)
(52
)
Inventories
35
—
(20
)
(70
)
Other assets
(18
)
—
(33
)
3
Accounts payable
(8
)
15
(7
)
321
Interest payable
29
29
—
(5
)
Other liabilities
(41
)
(11
)
(91
)
(55
)
Net cash provided by operating
activities
828
915
3,115
3,242
Net cash used in investing activities
(533
)
(834
)
(2,447
)
(2,610
)
Net cash used in financing activities
(103
)
(175
)
(788
)
(703
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
192
(94
)
(120
)
(71
)
Cash, cash equivalents and restricted
cash, beginning of period
513
919
825
896
Cash, cash equivalents and restricted
cash, end of period
$
705
$
825
$
705
$
825
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUMMARY PRODUCTION,
PRICE AND MARGIN DATA
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Average Daily Sales Volume:
Oil (Bbls)
220,326
199,193
212,353
190,639
Natural gas liquids ("NGLs") (Bbls)
80,159
61,911
72,323
63,780
Gas (Mcf)
377,268
351,176
365,055
393,391
Total (BOE)
363,364
319,633
345,518
319,984
Average Price:
Oil per Bbl
$
56.01
$
49.80
$
53.77
$
57.36
NGL per Bbl
$
18.60
$
26.88
$
19.33
$
29.84
Gas per Mcf
$
2.21
$
1.75
$
1.79
$
2.13
Total per BOE
$
40.36
$
38.16
$
38.98
$
42.73
Three Months Ended December
31, 2019
(in $ per BOE)
Margin Data:
Average price
$
40.36
Production costs
(6.20
)
Production and ad valorem taxes
(2.28
)
$
31.88
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUPPLEMENTARY
EARNINGS PER SHARE INFORMATION
(in millions)
The Company uses the two-class method of
calculating basic and diluted earnings per share. Under the
two-class method of calculating earnings per share, generally
acceptable accounting principles ("GAAP") provide that share-based
awards with guaranteed dividend or distribution participation
rights qualify as "participating securities" during their vesting
periods. During periods in which the Company realizes net income
attributable to common shareholders, the Company's basic net income
per share attributable to common shareholders is computed as (i)
net income attributable to common stockholders, (ii) less
participating share-based basic earnings (iii) divided by weighted
average basic shares outstanding. The Company's diluted net income
per share attributable to common stockholders is computed as (i)
basic net income attributable to common stockholders, (ii) plus the
reallocation of participating earnings, if any, (iii) divided by
weighted average diluted shares outstanding. During periods in
which the Company realizes a net loss attributable to common
stockholders, securities or other contracts to issue common stock
would be dilutive to loss per share; therefore, conversion into
common stock is assumed not to occur.
The Company's net income attributable to common stockholders is
reconciled to basic and diluted net income attributable to common
stockholders as follows:
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Net income attributable to common
stockholders
$
344
$
324
$
756
$
978
Participating share-based basic
earnings
(2
)
(2
)
(3
)
(5
)
Basic and diluted net income attributable
to common stockholders
$
342
$
322
$
753
$
973
Basic and diluted weighted average shares
outstanding
166
171
167
171
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUPPLEMENTAL
NON-GAAP FINANCIAL MEASURES
(in millions)
EBITDAX and discretionary cash flow
("DCF") (as defined below) are presented herein, and reconciled to
the 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 December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Net income
$
344
$
324
$
756
$
975
Depletion, depreciation and
amortization
440
404
1,711
1,534
Exploration and abandonments
11
32
58
114
Impairment of oil and gas properties
—
—
—
77
Impairment of inventory and other property
and equipment
3
2
38
11
Accretion of discount on asset retirement
obligations
3
3
10
14
Interest expense
34
29
121
126
Income tax provision
104
88
231
276
(Gain) loss on disposition of assets,
net
—
(64
)
477
(290
)
Derivative-related activity
129
(576
)
13
(270
)
Amortization of stock-based
compensation
19
22
74
85
Investment in affiliate fair value
adjustment
(37
)
—
(15
)
—
Contingent consideration valuation
adjustment
(16
)
—
45
—
Restructuring charge (including
stock-based compensation)
—
—
167
—
Other
9
482
105
658
EBITDAX before restructuring
charge
1,043
746
3,791
3,310
Restructuring charge (excluding
stock-based compensation)
—
—
(141
)
—
EBITDAX (a)
1,043
746
3,650
3,310
Cash interest expense
(29
)
(28
)
(112
)
(121
)
Current income tax (provision) benefit
5
—
5
(2
)
Discretionary cash flow (b)
1,019
718
3,543
3,187
Cash exploration expense
(8
)
(17
)
(50
)
(87
)
Changes in operating assets and
liabilities
(183
)
214
(378
)
142
Net cash provided by operating
activities
$
828
$
915
$
3,115
$
3,242
________________________________
(a)
“EBITDAX” represents earnings before depletion, depreciation and
amortization expense; exploration and abandonments; impairment of
oil and gas properties; impairment of inventory and other property
and equipment; accretion of discount on asset retirement
obligations; interest expense; income taxes; net loss (gain) on the
disposition of assets; noncash derivative related activity;
amortization of stock-based compensation; fair value adjustments on
investments and contingent consideration; restructuring charges and
other noncash items.
(b)
Discretionary cash flow equals cash flows
from operating activities before changes in operating assets and
liabilities and cash exploration expense.
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUPPLEMENTAL
NON-GAAP FINANCIAL MEASURES
(in millions, except per share
data)
Adjusted income attributable to common
stockholders excluding noncash mark-to-market ("MTM") adjustments
and income attributable to common stockholders excluding noncash
MTM adjustments and unusual items are presented in this earnings
release and reconciled to the Company's net income attributable to
common stockholders (determined in accordance with GAAP), as the
Company believes these non-GAAP financial measures reflect an
additional way of viewing aspects of the Company's business that,
when viewed together with its GAAP financial results, provide a
more complete understanding of factors and trends affecting its
historical financial performance and future operating results,
greater transparency of underlying trends and greater comparability
of results across periods. In addition, management believes that
these non-GAAP financial measures may enhance investors' ability to
assess the Company's historical and future financial performance.
These non-GAAP financial measures are not intended to be a
substitute for the comparable GAAP financial measure and should be
read only in conjunction with the Company's consolidated financial
statements prepared in accordance with GAAP. Noncash MTM
adjustments and unusual items may recur in future periods; however,
the amount and frequency can vary significantly from period to
period.
The Company's net income attributable to
common stockholders as determined in accordance with GAAP is
reconciled to income adjusted for noncash MTM adjustments,
including (i) the Company's derivative positions, (ii) contingent
consideration attributable to the South Texas divestiture and (iii)
the Company's equity investment in ProPetro Holding Corp.
("ProPetro"), and unusual items is as follows:
Three Months Ended December
31, 2019
After-tax
Amounts
Per Diluted
Share
Net income attributable to common
stockholders
$
344
$
2.06
Noncash MTM adjustments:
Derivative loss, net ($129 pretax)
101
0.60
South Texas contingent consideration gain
($16 pretax)
(12
)
(0.07
)
ProPetro stock gain ($36 pretax)
(28
)
(0.17
)
Adjusted income excluding noncash MTM
adjustments
405
2.42
Unusual items:
Corporate headquarters move-related costs
($41 pretax)
32
0.19
Net gain on asset divestitures ($54
pretax)
(42
)
.
(0.25
)
Adjusted income excluding noncash MTM
adjustments and unusual items
$
395
$
2.36
Twelve Months Ended December
31, 2019
After-tax
Amounts
Per Diluted
Share
Net income attributable to common
stockholders
$
756
$
4.50
Noncash MTM adjustments:
South Texas contingent consideration loss
($45 pretax)
35
0.21
Derivative loss, net ($13 pretax)
10
0.06
ProPetro stock gain ($15 pretax)
(11
)
(0.07
)
Total noncash MTM adjustments
34
0.20
Adjusted income excluding noncash MTM
adjustments
790
4.70
Unusual items:
Net loss on asset divestitures ($423
pretax)
330
1.96
Corporate restructuring charges ($167
pretax)
130
0.77
Asset divestiture-related charges ($74
pretax)
57
0.34
Sand mine decommissioning-related charges
($47 pretax)
37
0.22
Corporate headquarters move-related costs
($41 pretax)
32
0.19
Total unusual items
586
3.48
Adjusted income excluding noncash MTM
adjustments and unusual items
$
1,376
$
8.18
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUPPLEMENTAL
NON-GAAP FINANCIAL MEASURES
(in millions)
Return on Capital Employed ("ROCE") is a
non-GAAP financial measure. As used by the Company, ROCE is net
income adjusted for tax-effected noncash mark-to-market ("MTM")
adjustments, unusual items and interest expense divided by the
summation of average total equity (adjusted for net noncash MTM
adjustments, unusual items and interest expense) and average net
debt. The Company believes ROCE is a good indicator of long-term
performance, both absolute and relative to the Company's peers.
ROCE is a measure of the profitability of the Company’s capital
employed in its business compared with that of its peers.
Twelve Months Ended
2019
2018
2017
Net income
$
756
$
975
$
833
After-tax noncash MTM adjustments:
South Texas contingent consideration
loss
35
N/A
N/A
Derivative (gain) loss, net
10
(211
)
112
ProPetro stock gain
(11
)
N/A
N/A
After-tax unusual items:
Net (gain) loss on asset divestitures
330
(226
)
(124
)
Corporate restructuring charges
130
N/A
N/A
Asset divestiture-related charges
57
189
182
Sand mine decommissioning-related
charges
37
351
N/A
Corporate headquarters move-related
costs
32
N/A
N/A
Excess tax benefits and reduction in
deferred tax liability
N/A
N/A
(633
)
After-tax adjusted income excluding
noncash MTM adjustments and unusual items.
1,376
1,078
370
After-tax interest expense
94
98
98
ROCE earnings
$
1,470
$
1,176
$
468
As of December 31,
2019
2018
2017
Average total equity (a)
$
12,472
$
11,796
$
10,663
Average net debt (b)
1,275
724
396
Capital employed
$
13,747
$
12,520
$
11,059
ROCE percentage
11
%
9
%
4
%
_________________________________
(a)
Average total equity is calculated as the average of current year
adjusted total equity and prior year total equity as follows:
As of December 31,
2019
2018
Total equity
$
12,119
$
12,111
Less: Net income
756
Plus: ROCE earnings
1,470
Adjusted total equity
$
12,833
Average total equity
$
12,472
As of December 31,
2018
2017
Total equity
$
12,111
$
11,279
Less: Net income
975
Plus: ROCE earnings
1,176
Adjusted total equity
$
12,312
Average total equity
$
11,796
As of December 31,
2017
2016
Total equity
$
11,279
$
10,411
Less: Net income
833
Plus: ROCE earnings
468
Adjusted total equity
$
10,914
Average total equity
$
10,663
_________________________________
(b)
Average net debt is calculated as
follows:
As of December 31,
2019
2018
2017
2016
Current portion of long-term debt
$
450
$
—
$
449
$
485
Long-term debt
1,839
2,284
2,283
2,728
Less:
Cash and cash equivalents
631
825
896
1,118
Short-term investments
—
443
1,213
1,441
Long-term investments
—
125
66
420
Net debt
$
1,658
$
891
$
557
$
234
Average net debt
$
1,275
$
724
$
396
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUPPLEMENTAL
NON-GAAP FINANCIAL MEASURES
(in millions)
Free cash flow ("FCF") is a non-GAAP
financial measure. As used by the Company, FCF is defined as net
cash provided by operating activities, adjusted for changes in
operating assets and liabilities, less capital expenditures. The
Company believes this non-GAAP measure is a financial indicator of
the Company’s ability to internally fund acquisitions, debt
maturities, dividends and share repurchases after capital
expenditures.
Three Months Ended December
31, 2019
Twelve Months Ended December
31, 2019
Net cash provided by operating
activities
$
828
$
3,115
Changes in operating assets and
liabilities
183
378
Less: Capital expenditures (a)
627
2,953
Free cash flow
$
384
$
540
_________________________________
(a)
Capital expenditures are calculated as
follows:
Three Months Ended December
31, 2019
Twelve Months Ended December
31, 2019
Costs incurred
$
655
$
2,970
Less: Excluded items (a)
61
164
Plus: Other property, plant and equipment
capital (b)
33
147
Capital expenditures
$
627
$
2,953
_________________________________
(a)
Includes acquisition costs, asset retirement obligations,
geological and geophysical general and administrative costs,
capitalized interest and capital expenditures on non-Permian Basin
divested assets.
(b)
Includes other property plant and
equipment additions related to water infrastructure, well services
and vehicles.
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUPPLEMENTAL
INFORMATION
Open Commodity Derivative
Positions as of February 18, 2020
(Volumes are average daily
amounts)
2020
Year Ending December 31,
2021
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Average daily oil production associated
with derivatives (Bbl):
Brent swap contracts:
Volume
3,407
—
—
—
—
Price
$
60.86
$
—
$
—
$
—
$
—
Brent collar contracts with short
puts:
Volume
145,500
135,500
115,500
115,500
7,000
Price:
Ceiling
$
68.46
$
68.84
$
69.78
$
69.78
$
65.37
Floor
$
61.64
$
61.76
$
62.06
$
62.06
$
60.00
Short put
$
53.45
$
53.48
$
53.56
$
53.56
$
52.00
Brent call contracts sold:
Volume per day (Bbl) (a)
—
—
—
—
13,000
Price per Bbl
$
—
$
—
$
—
$
—
$
72.10
Average daily gas production associated
with derivatives (MMBtu):
Swap contracts:
Volume
—
30,000
30,000
16,739
2,466
NYMEX price
$
—
$
2.41
$
2.41
$
2.43
$
2.46
Basis swap contracts:
Permian Basin index swap volume (b)
—
30,000
30,000
16,739
2,466
Price differential ($/MMBtu)
$
—
$
(1.68
)
$
(1.68
)
$
(1.59
)
$
(1.46
)
_________________________________
(a)
The referenced call contracts were sold in exchange for higher
ceiling prices on certain 2020 collar contracts with short puts.
(b)
The referenced basis swap contracts fix the basis differentials
between the index price at which the Company sells its Permian
Basin gas and the NYMEX index price used in swap contracts.
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUPPLEMENTAL
INFORMATION
Derivative Gain (Loss),
Net
(in millions)
Three Months Ended December
31, 2019
Twelve Months Ended December
31, 2019
Noncash changes in fair value:
Oil derivative loss, net
$
(134
)
$
(34
)
Gas derivative gain, net
5
21
Total noncash derivative loss, net
(129
)
(13
)
Net cash receipts on settled derivative
instruments:
Oil derivative receipts
20
75
Gas derivative payments
(7
)
(28
)
Total cash receipts on settled derivative
instruments, net
13
47
Total derivative gain (loss),
net
$
(116
)
$
34
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUPPLEMENTAL
INFORMATION
PROVED RESERVES
Total Company
Oil (MBbls):
Balance as of December 31, 2018
565,010
Revisions of previous estimates
(30,216
)
Purchases of minerals-in-place
46
Discoveries and extensions
167,022
Production
(77,509
)
Sales of minerals-in-place
(20,603
)
Balance as of December 31, 2019
603,750
Natural Gas Liquids (MBbls):
Balance as of December 31, 2018
240,914
Revisions of previous estimates
29,415
Purchases of minerals-in-place
15
Discoveries and extensions
60,069
Production
(26,398
)
Sales of minerals-in-place
(22,032
)
Balance as of December 31, 2019
281,983
Natural Gas (MMcf):
Balance as of December 31, 2018
1,458,574
Revisions of previous estimates
94,767
Purchases of minerals-in-place
92
Discoveries and extensions
293,507
Production
(145,026
)
Sales of minerals-in-place
(202,401
)
Balance as of December 31, 2019
1,499,513
Equivalent Barrels (MBOE):
Balance as of December 31, 2018
1,049,020
Revisions of previous estimates (a)
14,994
Purchases of minerals-in-place
76
Discoveries and extensions
276,009
Production (b)
(128,078
)
Sales of minerals-in-place
(76,369
)
Balance as of December 31, 2019
1,135,652
_________________________________
(a)
Revisions of previous estimates includes 11 MMBOEs of negative
price revisions and 26 MMBOEs of positive technical revisions.
(b)
Production includes 2.0 MMBOE related to field fuel.
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUPPLEMENTAL
INFORMATION
PROVED RESERVES
(continued)
Twelve Months Ended December
31, 2019
(in millions)
Costs incurred for oil and gas
producing activities:
Property acquisition costs:
Proved
$
2
Unproved
26
28
Exploration costs
2,199
Development costs
743
Total costs incurred (a)
$
2,970
Reserve replacement percentage
(b)
227
%
Drillbit reserve replacement percentage
(c)
235
%
Finding and development costs per BOE
of proved reserves added (d)
$
10.20
Drillbit finding and development costs
per BOE of proved reserves added (e)
$
9.76
_________________________________
(a)
Costs incurred includes $2 million of
capitalized interest, $85 million of asset retirement obligation
increases and $44 million of G&G/G&A.
(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 gas, on a BOE
basis.
(c)
The summation of annual proved reserves, on a BOE basis,
attributable to revisions of previous estimates (excluding price
revisions) and discoveries and extensions divided by annual
production of oil, NGLs and gas, on a BOE basis.
(d)
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.
(e)
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 price
revisions) and discoveries and extensions. Consistent with industry
practice, future capital costs to develop proved undeveloped
reserves are not included in costs incurred.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200219005926/en/
Pioneer Natural Resources Company Investors Neal
Shah - 972-969-3900 Tom Fitter - 972-969-1821 Michael McNamara -
972-969-3592
Media and Public Affairs Tadd Owens - 972-969-5760
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