EXHIBIT 99.1
NEWS RELEASE
Investor Relations Contact: Susan Spratlen (972) 444-9001
Pioneer Reports Record Net Income in Third Quarter 2000
Dallas, Texas, October 24, 2000 -- Pioneer Natural Resources Company
("Pioneer")(NYSE:PXD) (TSE:PXD) today announced financial and operating results
for the third quarter of 2000.
Third Quarter 2000 Results
Pioneer reported record net income of $69.3 million or $0.70 per share for third
quarter 2000. Third quarter net income included a $24.2 million gain on the
disposition of assets (primarily a gain on sale of common stock in Prize Energy
Corp. of $25.7 million) and a $13.5 million mark-to-market charge (related to
derivatives not treated as hedges). Earnings as adjusted for the above items
were $58.7 million or $0.59 per share. For the same period last year, Pioneer
reported net income of $46.4 million or $0.46 per share.
Scott D. Sheffield, Chairman and CEO stated, "These are exciting times for
Pioneer. Having followed through on our strategy to reposition the Company and
with the help of rising oil and natural gas prices, we ended the quarter with
record earnings, higher production, new assets in our core areas, less debt and
fewer shares outstanding. Over the next two to three years, our production is
expected to grow approximately 30% to 40% as we bring on production from our
exploration successes and continue to aggressively develop our existing core
properties. With growing production, we expect to be able to continue this trend
of strong results."
Cash flow from operations for the third quarter of 2000 was $115.7 million
compared to $89.3 million for the third quarter of 1999. Discretionary cash flow
increased 26% to $137.3 million and EBITDAX rose 21% to $177.2 million compared
to the 1999 third quarter. Discretionary cash flow and EBITDAX calculations are
defined and detailed on an attached schedule.
Long-term debt was reduced by $99.4 million to $1.603 billion. Pioneer
repurchased 0.5 million common shares during the third quarter and 0.4 million
common shares since September 30, 2000. Year-to-date, Pioneer has repurchased
1.6 million common shares at an average price of $11.21 per share.
Daily production grew for the second consecutive quarter. On an oil equivalent
basis, third quarter sales averaged 123,175 barrels per day (BPD), up 2% from
120,505 BPD in the second quarter. Third quarter oil sales averaged 34,307 BPD
and natural gas liquid sales averaged 23,565 BPD. Natural gas sales in the third
quarter averaged 392 million cubic feet per day (MMCFPD). Realized prices for
oil and natural gas liquids for the third quarter were $25.48 and $20.73 per
barrel, respectively. The realized price for natural gas was $2.87 per thousand
cubic feet (MCF).
Third quarter production costs averaged $4.39 per barrel oil equivalent (BOE), a
$0.46 per BOE increase compared to the second quarter. The increase primarily
resulted from a rise in production taxes due to higher oil and natural gas
prices and the higher cost of natural gas utilized to power field compression
equipment. Exploration and abandonment costs of $23.4 million for the quarter
included $11.0 million of geologic and geophysical expenses including seismic
costs, $3.2 million of non-cash leasehold abandonments including expired leases,
and $9.2 million of exploration costs.
For the same quarter last year, Pioneer reported oil sales of 36,576 BPD,
natural gas liquid sales of 24,031 BPD, and natural gas sales of 387 MMCFPD.
Because of asset divestitures during 1999, the quarter-to-quarter volumes are
not comparable. On a proforma basis excluding the effects of asset divestitures,
year-to-year third quarter production grew 4%. Realized prices for the 1999
third quarter were $17.20 per barrel for oil, $14.02 per barrel for natural gas
liquids, and $2.00 per MCF for natural gas.
Nine Month Results
For the nine months ended September 30, 2000, Pioneer reported net income of
$68.0 million, or $0.68 per share. Excluding the $12.3 million extraordinary
loss on early extinguishment of debt, net gains of $27.8 million on the
disposition of assets and $55.5 million of mark-to-market charge related to
derivatives not treated as hedges, profits as adjusted were $108.0 million or
$1.08 per share. For the same period last year, Pioneer reported a net loss of
$30.7 million, or $0.31 per share. Cash flow from operations for the nine-month
period was $285.1 million compared to $186.7 million for the same period in
1999.
Nine-month oil sales averaged 34,157 BPD and natural gas liquids sales were
23,252 BPD. Natural gas sales were 378 MMCFPD. On an oil equivalent basis, sales
averaged 120,335 BPD. Nine-month realized price for oil increased from the prior
year period to $23.52 per barrel. Realized price for natural gas liquids was
$19.37 per barrel. Realized price for natural gas was $2.49 per MCF. For the
first nine months of 1999, Pioneer reported oil sales of 44,863 BPD, natural gas
liquid sales of 25,905 BPD and natural gas sales of 458 MMCFPD. Because of asset
divestitures during 1999, nine-month volumes are not comparable. Realized prices
for the 1999 nine-month period were $14.38 per barrel for oil, $10.38 per barrel
for natural gas liquids and $1.86 per MCF for natural gas.
Operations Update
Pioneer will utilize 23 rigs in its drilling program through the end of the
year. The Company is currently running six rigs in the East Texas/Gulf Coast
area (four in the E. Texas Bossier play), three rigs in the West
Panhandle/Hugoton area, seven rigs in West Texas, three rigs in Argentina and
one rig in South Africa. Three rigs will be added in December when Pioneer
begins its winter access drilling program in Canada. In the fourth quarter
Pioneer plans to drill approximately 75 wells in the U.S. and 15 in Argentina.
In the U.S., development activities continue in the Company's largest fields,
the Spraberry oil field and the Hugoton and West Panhandle natural gas fields,
where nine to ten rigs will be active through the end of the year.
Pioneer continues to have success with the horizontal development of the Edwards
Reef in its Pawnee field in South Texas. Using advanced 3-D seismic modeling,
the Company has drilled 4 wells that are producing, doubling net field
production to 35 MMCFPD. Three wells are yet to be completed and two wells are
currently drilling. Nine additional horizontal wells in the Pawnee field are
scheduled for next year.
In September, another Wolfcamp discovery was successfully completed in the MyWay
Field in Irion County, Texas. The well is the fourth discovery in that program
and is currently flowing at a rate of just under 600 BOE per day. 3-D seismic
has been a critical factor in successfully exploring in the area and seven
additional locations are being evaluated.
In the East Texas Bossier sand play, the Company has drilled four operated wells
that are currently producing, and has three wells awaiting completion. Pioneer
plans to keep four to five rigs running in this play and expects to have ten
wells producing there by year end. The Company has also participated in several
outside-operated Bossier wells on offsetting acreage. Pioneer now has 54,000
gross acres under lease in this emerging play and plans to drill 25 to 30
operated wells in 2001.
Offshore development in the shallow Gulf of Mexico has accelerated with two deep
extension wells currently being drilled off existing platforms. At Eugene Island
208, a well is drilling where multiple oil and gas pays have already been
identified. At Texaco-operated High Island 582, a well is targeting deeper
potential.
During its 2000 program in Argentina, Pioneer has drilled 60 wells and plans to
drill 15 more wells by year end. Argentine production grew 25% during the third
quarter compared to the first quarter of 2000, the first full quarter including
production from properties acquired late in 1999. The growth was the result of
an aggressive drilling program which yielded a 13% increase in oil production.
Natural gas production increased 33% during the same period reflecting an
increase in demand during Argentina's winter months. Plans for 2001 include
building a LPG recovery plant to enhance revenue and a new interconnecting gas
pipeline to improve access to gas markets, in addition to an expanded drilling
program.
Financial Outlook
The following statements are estimates based on current expectations. The
statements are forward-looking, as addressed in the paragraph at the bottom of
this release. Actual results may differ materially from these estimates which do
not reflect the potential impact of acquisitions or divestitures that may be
completed or other unforeseen events that may occur after the date of this
release.
Fourth quarter production is expected to average 117 to 119 MBPD on an oil
equivalent basis. Argentine natural gas production is expected to decline 15% to
20% as a result of reduced demand for natural gas during Argentina's summer
months.
The Company has oil and natural gas hedges that will impact fourth quarter
realizations. There are swap contracts in place for 435 BPD of oil at $15.76 per
barrel. Collars cover 7,977 BPD of oil with floors at $17.50 and ceilings at
$20.74 per barrel and 55.6 MMCFPD of natural gas with floors at $2.15 and
ceilings at $2.80 per MMBTU. All prices are stated on an approximate NYMEX
equivalent basis. The Company also has a contract that does not qualify as a
hedge that requires the Company to sell either 10,000 BPD of oil at $20.00 per
barrel or 100 MMCFPD of gas at $2.60 per MCF in October and $3.20 per MCF in
November and December.
During the fourth quarter, lease operating expenses (including production and ad
valorem taxes) are expected to average $4.40 to $4.50 per BOE, and depreciation,
depletion and amortization is expected to average $4.90 to $5.10 per BOE. Total
exploration and abandonment expense is expected to be $25 to $27 million.
General and administrative expense is expected to be approximately $8 million.
Interest expense is expected to be $38 to $39 million, including approximately
$3 million of non-cash interest. The effective tax rate is expected to be
approximately 0% to 2% of pre-tax income due to the Company's substantial net
operating losses.
Pioneer has targeted production growth of 3 to 6% in 2001 and 20 to 30% by 2002
from current oil equivalent levels of approximately 120 MBPD. Capital budgets
for each year are expected to be $400 to $450 million.
In 2001, Pioneer has 4,764 BPD of oil swapped at $29.87 per barrel and 49.2
MMCFPD of natural gas swapped at $2.50 per MMBTU. The Company has 2001 collars
covering 2,000 BPD of oil with floors of $25.00 and ceilings of $31.43 per
barrel and 5,000 BPD of oil with floors of $17.00 and ceilings of $20.09. The
Company has 2001 collars covering 54.5 MMCFPD of natural gas with floors of
$2.25 and ceilings of $2.90 per MCF. Oil hedges cover 20% of expected liquid
volumes, and natural gas hedges cover 33% of expected North American natural gas
volumes.
Pioneer has liquidated all its natural gas hedge positions beyond 2001 at a net
cost of $46 million as reflected in other assets and other non-current
liabilities at September 30, 2000. The cost will be amortized in 2002 as a
reduction in natural gas realizations with North American differentials to NYMEX
expected to increase by 30 to 35 cents per MCF that year.
Earnings Conference Call
On Tuesday, October 24, 2000, at 10:30 a.m. EDT, investors will have the
opportunity to listen to the third quarter's earnings conference call and view a
presentation over the Internet via Pioneer's website located at
http://www.pioneernrc.com. At the website, select the "Investors" button at the
top of the page; then select "Earnings Calls" from the list across the bottom of
the page. To listen to the live call, please go to the website at least ten
minutes early to register, download and install any necessary audio software.
For those who cannot listen to the live broadcast, a replay will be available on
the website shortly after the call. Alternately, you may dial (800) 314-7867 to
listen to the conference call and view the accompanying visual presentation at
the Internet address above. A telephone replay will be available through
November 9 by dialing (888) 203-1112--confirmation code: 579582.
Pioneer is a large independent oil and gas exploration and production company
with operations in the United States, Canada, Argentina and South Africa.
Pioneer's headquarters are in Dallas.
Financial statements attached.
Except for historical information contained herein, the statements in this Press
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 Natural
Resources Company, are subject to a number of risks and uncertainties which 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, government regulation or action, litigation, the costs and results
of drilling and operations, the Company's ability to replace reserves or
implement its business plans, access to and cost of capital, uncertainties about
estimates of reserves, quality of technical data, and environmental risks. These
and other risks are described in the Company's 10-K and 10-Q Reports and other
filings with the Securities and Exchange Commission.
PIONEER NATURAL RESOURCES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
2000 1999 2000 1999
-------- -------- -------- --------
Revenues:
Oil and gas $228,587 $159,855 $600,909 $481,237
Interest and other 5,200 32,362 14,141 81,139
Gain (loss) on disposition of assets, net 24,158 20,948 27,751 (21,276)
------- ------- ------- -------
257,945 213,165 642,801 541,100
------- ------- ------- -------
Costs and expenses:
Oil and gas production 49,728 34,643 135,990 123,461
Depletion, depreciation and amortization -
oil and gas 52,675 46,642 150,286 171,054
Depletion, depreciation and amortization -
other 3,897 4,339 11,743 13,534
Impairment of oil and gas properties - - - 17,894
Exploration and abandonments 23,431 11,891 64,202 41,592
General and administrative 6,537 8,795 23,259 29,232
Reorganization - 786 - 7,805
Interest 40,794 41,002 122,412 130,426
Other 15,495 18,039 60,394 36,291
------- ------- ------- -------
192,557 166,137 568,286 571,289
------- ------- ------- -------
Income (loss) before income taxes and
extraordinary item 65,388 47,028 74,515 (30,189)
Income tax benefit (provision) 3,900 (600) 5,800 (500)
------- ------- ------- -------
Income (loss) before extraordinary item 69,288 46,428 80,315 (30,689)
Extraordinary item - loss on early extinguishment
of debt, net of tax - - (12,318) -
------- ------- ------- -------
Net income (loss) $ 69,288 $ 46,428 $ 67,997 $(30,689)
======= ======= ======= =======
Net income (loss) per share:
Basic:
Income (loss) before extraordinary item $ .70 $ .46 $ .80 $ (.31)
Extraordinary item - - (.12) -
------- ------- ------- -------
Net income (loss) $ .70 $ .46 $ .68 $ (.31)
======= ======= ======= =======
Diluted:
Income (loss) before extraordinary item $ .69 $ .46 $ .80 $ (.31)
Extraordinary item - - (.12) -
------- ------- ------- -------
Net income (loss) $ .69 $ .46 $ .68 $ (.31)
======= ======= ======= =======
Weighted average basic shares outstanding 99,312 100,305 99,718 100,304
======= ======= ======= =======
PIONEER NATURAL RESOURCES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
September 30, December 31,
2000 1999
------------ -----------
ASSETS
Current assets:
Cash and cash equivalents $ 37,898 $ 34,788
Accounts receivable 129,715 118,575
Inventories 11,983 13,721
Deferred income taxes 6,500 5,800
Other current assets 8,573 10,252
--------- ---------
Total current assets 194,669 183,136
--------- ---------
Property, plant and equipment, at cost:
Oil and gas properties, using the successful
efforts method of accounting 3,342,206 3,254,918
Accumulated depletion, depreciation and
amortization (884,518) (751,956)
--------- ---------
2,457,688 2,502,962
--------- ---------
Deferred income taxes 83,700 83,400
Other assets, net 165,529 159,975
--------- ---------
$2,901,586 $2,929,473
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 163 $ 828
Accounts payable 79,722 86,868
Interest payable 37,827 36,045
Other current liabilities 93,095 73,072
--------- ---------
Total current liabilities 210,807 196,813
--------- ---------
Long-term debt, less current maturities 1,603,213 1,745,108
Other noncurrent liabilities 226,704 169,438
Deferred income taxes 30,600 43,500
Stockholders' equity 830,262 774,614
--------- ---------
$2,901,586 $2,929,473
========= =========
PIONEER NATURAL RESOURCES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
---------------------- ----------------------
2000 1999 2000 1999
--------- --------- --------- ---------
Cash flows from operations:
Net income (loss) $ 69,288 $ 46,428 $ 67,997 $ (30,689)
Depletion, depreciation and amortization 56,572 50,981 162,029 184,588
Impairment of oil and gas properties - - - 17,894
Exploration expenses, including dry holes 16,221 3,630 46,273 28,661
Deferred income taxes (5,700) 600 (9,600) -
(Gain) loss on disposition of assets, net (24,158) (20,948) (27,751) 21,276
Interest 2,791 3,370 9,179 9,072
Derivative mark-to-market 13,539 16,295 55,497 31,314
Extraordinary item, net of tax - - 12,318 -
Other noncash items 1,584 700 3,514 (38,696)
Changes in operating assets and liabilities:
Accounts receivable (12,620) 6,576 (11,713) 6,875
Inventories 2,145 1,043 (175) 2,313
Other current assets (2) (357) 1,993 762
Accounts payable 16,964 (5,586) 2,504 (28,113)
Interest payable (430) (13,205) 1,782 (9,359)
Other current liabilities (20,466) (199) (28,753) (9,191)
-------- -------- -------- --------
Net cash provided by operating activities 115,728 89,328 285,094 186,707
Net cash provided by (used in) investing activities (3,071) 85,069 (85,926) 290,126
Net cash used in financing activities (112,977) (220,485) (195,913) (503,044)
-------- -------- -------- --------
Net increase (decrease) in cash and cash equivalents (320) (46,088) 3,255 (26,211)
Effect of exchange rate changes on cash
and cash equivalents (51) 65 (145) 236
Cash and cash equivalents, beginning
of period 38,269 79,269 34,788 59,221
-------- -------- -------- --------
Cash and cash equivalents, end of period $ 37,898 $ 33,246 $ 37,898 $ 33,246
======== ======== ======== ========
PIONEER NATURAL RESOURCES COMPANY
SUMMARY PRODUCTION AND PRICE DATA
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
2000 1999 2000 1999
-------- -------- -------- --------
Average Daily Production:
Oil (Bbls) - U.S. 24,283 28,092 24,793 33,150
Argentina 9,211 6,064 8,553 5,936
Canada 813 2,420 811 5,777
-------- -------- -------- --------
Total 34,307 36,576 34,157 44,863
Natural gas liquids (Bbls) - U.S. 22,233 22,615 21,888 24,412
Argentina 534 616 513 612
Canada 798 800 851 881
-------- -------- -------- --------
Total 23,565 24,031 23,252 25,905
Gas (Mcf) - U.S. 234,913 239,837 232,844 307,849
Argentina 111,897 103,438 100,486 97,087
Canada 45,009 44,162 44,228 53,196
-------- -------- -------- --------
Total 391,819 387,437 377,558 458,132
Total Production:
Oil (MBbls) 3,156 3,365 9,359 12,248
Natural gas liquids (MBbls) 2,168 2,211 6,371 7,072
Gas (MMcf) 36,047 35,644 103,451 125,070
Equivalent barrels (MBOE) 11,332 11,517 32,972 40,165
Average Price:
Oil (per Bbl) - U.S. $ 23.31 $ 16.37 $ 21.37 $ 14.28
Argentina $ 30.95 $ 21.05 $ 29.32 $ 16.42
Canada $ 28.58 $ 17.10 $ 27.72 $ 12.90
Average $ 25.48 $ 17.20 $ 23.52 $ 14.38
Natural gas liquids (per Bbl) - U.S. $ 20.52 $ 14.12 $ 19.18 $ 10.42
Argentina $ 22.46 $ 11.64 $ 21.98 $ 8.70
Canada $ 25.42 $ 12.77 $ 22.85 $ 10.18
Average $ 20.73 $ 14.02 $ 19.37 $ 10.38
Gas (per Mcf) - U.S. $ 3.65 $ 2.39 $ 3.06 $ 2.11
Argentina $ 1.28 $ 1.11 $ 1.21 $ 1.11
Canada $ 2.71 $ 1.92 $ 2.41 $ 1.74
Average $ 2.87 $ 2.00 $ 2.49 $ 1.86
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL INFORMATION
(in thousands)
(Unaudited)
Discretionary cash flow and EBITDAX (as defined below) are presented
herein because of their wide acceptance as financial indicators of a company's
ability to internally fund exploration and development activities and to service
or incur debt. Discretionary cash flow and EBITDAX should not be considered as
alternatives to net cash provided by operating activities, net income (loss) or
income (loss) from continuing operations, as defined by generally accepted
accounting principles, as an indicator of the Company's financial performance,
as an alternative to cash flow, as a measure of liquidity or as being comparable
to other similarly titled measures of other companies.
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
2000 1999 2000 1999
-------- -------- -------- --------
Discretionary cash flows*:
Net income (loss) $ 69,288 $ 46,428 $ 67,997 $(30,689)
Depletion, depreciation and amortization 56,572 50,981 162,029 184,588
Impairment of oil and gas properties - - - 17,894
Exploration and abandonments 23,431 11,891 64,202 41,592
Deferred income taxes (5,700) 600 (9,600) -
(Gain) loss on disposition of assets, net (24,158) (20,948) (27,751) 21,276
Interest 2,791 3,370 9,179 9,072
Derivative mark-to-market 13,539 16,295 55,497 31,314
Extraordinary item, net of tax - - 12,318 -
Other noncash items 1,584 700 3,514 (38,696)
------- ------- ------- -------
Discretionary cash flow $137,347 $109,317 $337,385 $236,351
======= ======= ======= =======
- ----------
* Discretionary cash flows equal cash flows from operations before working
capital changes and exploration and abandonments.
EBITDAX**:
Net income (loss) $ 69,288 $ 46,428 $ 67,997 $(30,689)
Depletion, depreciation and amortization 56,572 50,981 162,029 184,588
Impairment of oil and gas properties - - - 17,894
Exploration and abandonments 23,431 11,891 64,202 41,592
Consolidated interest expense 40,794 41,002 122,412 130,426
Consolidated income taxes (3,900) 600 (5,800) 500
(Gain) loss on disposition of assets, net (24,158) (20,948) (27,751) 21,276
Extraordinary item, net of tax - - 12,318 -
Derivative mark-to-market 13,539 16,295 55,497 31,314
Other noncash expenses 1,586 204 3,710 8,618
------- ------- ------- -------
$177,152 $146,453 $454,614 $405,519
======= ======= ======= =======
- ---------
** "EBITDAX" represents earnings before depletion, depreciation and
amortization expense; impairment of oil and gas properties; exploration and
abandonments; consolidated interest expense; consolidated income taxes;
gain or loss on the disposition of assets; extraordinary items; and, other
noncash expenses.