EXHIBIT 99.1
NEWS RELEASE
Investor Relations Contact: Susan Spratlen (972) 444-9001
Pioneer Reports Second Quarter 2002 Results
Dallas, Texas, July 24, 2002 -- Pioneer Natural Resources Company
("Pioneer")(NYSE:PXD) (TSE:PXD) today announced financial and operating results
for the quarter and six months ended June 30, 2002.
Second Quarter Results
Pioneer reported net income of $11.1 million, or $0.10 per share, for the second
quarter of 2002. Second quarter net income included a $2.8 million extraordinary
charge related to the early extinguishment of debt, a $2.5 million noncash
charge for the remeasurement of the Argentine peso-denominated net monetary
assets and a $1.1 million gain on the sale of seismic data. Earnings as adjusted
for the above items were $15.3 million, or $0.13 per share. For the same period
last year, Pioneer reported net income of $28.3 million, or $0.28 per share.
Second quarter 2001 net income included a $1.5 million gain from the disposition
of assets and a $9.3 million mark-to-market gain primarily related to
derivatives not treated as hedges. Earnings in 2001 as adjusted for the above
items were $17.6 million or $0.18 per share. Cash flow from operations for the
second quarter of 2002 was $90.6 million compared to $135.3 million for the
second quarter of 2001.
Second quarter oil sales averaged 30,840 barrels per day (BPD) and natural gas
liquids sales averaged 21,776 BPD. Gas sales in the second quarter averaged 342
million cubic feet per day (MMcfpd). On a barrel oil equivalent (BOE) basis,
total sales averaged 109,696 BPD. Second quarter oil sales from Argentina were
significantly lower than oil sales for the first quarter. The decline is
partially attributable to Argentine oil inventories having been sold in March
before the export tax became effective, increasing oil sales for the first
quarter. As a result, the Company had less Argentine inventory to sell in the
month of April, reducing the quantity of oil sold in Argentina during the second
quarter. Normal oil inventories were maintained in June. Actual Argentine oil
production and sales averaged approximately 8,100 BPD for the first half of the
year. Realized prices for oil and natural gas liquids for the second quarter
were $23.58 and $14.58 per barrel, respectively. The realized price for gas was
$2.48 per thousand cubic feet (Mcf).
Second quarter production costs averaged $4.98 per BOE. Exploration and
abandonment costs of $17.9 million for the quarter included $9.5 million of
geologic and geophysical expenses including seismic costs, $.7 million of
noncash leasehold abandonments including expired leases and $7.7 million of
exploration costs.
For the same quarter last year, Pioneer reported oil sales of 34,482 BPD,
natural gas liquids sales of 21,546 BPD and gas sales of 366 MMcfpd. Realized
prices for the 2001 second quarter were $24.74 per barrel for oil, $19.29 per
barrel for natural gas liquids and $3.10 per Mcf for gas.
Six Month Results
For the six months ended June 30, 2002, Pioneer reported net income of $9.2
million, or $0.08 per share. Excluding a $2.8 million extraordinary charge
related to the early extinguishment of debt, a $7.9 million noncash charge for
the remeasurement of the Argentine peso-denominated net monetary assets and a
gain of $1.0 million on the disposition of assets, profits as adjusted were
$18.9 million or $0.17 per share. For the same period last year, Pioneer
reported net income of $96.3 million, or $0.97 per share. Excluding a gain of
$8.8 million on the disposition of assets and a $.5 million mark-to-market gain
primarily related to derivatives not treated as hedges, profits in 2001 as
adjusted were $87.0 million or $0.87 per share. Cash flow from operations for
the six-month period was $140.6 million compared to $267.1 million for the same
period in 2001.
Six-month oil sales averaged 32,680 BPD and natural gas liquids sales were
21,658 BPD. Gas sales were 335 MMcfpd. On a BOE basis, total sales averaged
110,196 BPD. Realized prices for the 2002 six-month period were $23.37 per
barrel for oil, $12.68 per barrel for natural gas liquids and $2.48 per Mcf for
gas. For the first half of 2001, Pioneer reported oil sales of 34,809 BPD,
natural gas liquids sales of 20,989 BPD and gas sales of 349 MMcfpd. Realized
prices for the 2001 six-month period were $24.89 per barrel for oil, $20.94 per
barrel for natural gas liquids and $3.80 per Mcf for gas.
Operational Update
Onshore Texas, Pioneer is currently running seven rigs. The Company plans to
accelerate its drilling activity in both the West Panhandle and Spraberry
fields, utilizing nine rigs in these areas by year end. Pioneer has resumed oil
drilling in Argentina, running three rigs currently with plans to add a fourth
in August.
First production from the deepwater Canyon Express project is expected by the
end of the third quarter with peak rates expected to increase Pioneer's daily
production by 15% to 20%. The Canyon Station platform is in place and four of
six wells have been completed. Offshore South Africa, the floating production,
storage and offloading vessel, which is currently in transit to the area, is
expected to be in place for first production from the Sable field in December or
January. Pioneer's expected net peak daily production from the Sable field
represents approximately 13% of the Company's current daily production.
At Devils Tower, development drilling is concluded and fabrication of the
deepwater production spar is 50% complete with first production expected during
the second quarter of 2003. Development of the deepwater Falcon field is
progressing on schedule. Pioneer has contracted for a rig to drill a five well
program in the Falcon area beginning in August with two development and three
exploration wells planned.
Earlier this month, the Company announced a discovery on the deepwater Triton
prospect, a satellite field expected to be tied back to the spar being built for
Devils Tower. Elsewhere in the Gulf of Mexico, the second sidetrack well drilled
on the Ozona Deep discovery was successful but more complex than anticipated.
Options for potential development of the field are being evaluated.
As announced today, Pioneer has drilled its fourth successful well on the Olowi
block in the shallow water offshore Gabon and expects to complete plans for
potential initial development by year end. In southern Tunisia, Pioneer is
currently drilling an exploratory well on the Borj El Khadra (BEK) permit with
results expected by late August.
Scott D. Sheffield, Chairman and CEO stated, "We are pleased with the financial
results and with the operational progress we made in the second quarter. With
four significant projects moving toward first production, new discoveries
announced in Gabon and the deepwater Gulf of Mexico and further exploration
planned for the remainder of the year, we are exposing investors to many
opportunities for production and value growth."
Financial Outlook
The following statements are estimates based on current expectations. These
forward-looking statements are subject to a number of risks and uncertainties
which may cause the Company's actual results to differ materially from the
following statements. The last paragraph of this release addresses certain of
the risks and uncertainties to which the Company is subject.
Third quarter production is expected to average 112 to 118 MBPD on a BOE basis.
Third quarter lease operating expenses (including production and ad valorem
taxes) are expected to average $4.90 to $5.10 per BOE based on today's NYMEX
strip prices for oil and gas. Depreciation, depletion and amortization is
expected to average $5.00 to $5.20 per BOE. Total exploration and abandonment
expense is expected to be $15 million to $30 million. General and administrative
expense is expected to be approximately $11 million. Interest expense is
expected to be $22 million to $24 million and income taxes are expected to be $1
million to $2 million as the Company benefits from the carryforward of prior
years' net operating losses in the U.S. and Canada.
In connection with the acquisition of the West Panhandle field assets that
closed July 1, 2002, Pioneer settled a capital cost obligation related to those
assets that will result in the recognition of an extraordinary charge in the
third quarter of approximately $14 million to $17 million for the early
extinguishment of this obligation. Third quarter interest savings of
approximately $2 million will be realized from settling the capital cost
obligation.
During the second quarter, Pioneer added to its oil and gas hedge position.
Additional volumes of oil were hedged for 2002 through 2004 at oil prices
ranging from approximately $23 per barrel to $25 per barrel and additional
volumes of gas were hedged for 2003 through 2007 at gas prices ranging from
$3.75 per Mcf to $4.00 per Mcf. The Company's oil and gas hedges are outlined in
Item 9 of the Form 8-K filed today with the Securities and Exchange Commission.
Earnings Conference Call
This morning at 10:00 a.m. Eastern, investors will have the opportunity to
listen to the second quarter earnings call and view a presentation over the
Internet via Pioneer's website located at http://www.pioneernrc.com. At the
website, select 'INVESTOR' at the top of the page and then choose
'Webcasts/Earnings Calls'. 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 (888)
855-5428 (confirmation code: 748972) to listen to the conference call and view
the accompanying visual presentation at the Internet address above. A telephone
replay will be available by dialing (888) 203-1112: confirmation code: 748972.
Pioneer is a large independent oil and gas exploration and production company
with operations in the United States, Canada, Argentina, South Africa, Gabon and
Tunisia. Pioneer's headquarters are in Dallas. For more information, visit
Pioneer's website at www.pioneernrc.com.
Financial statements and schedules attached.
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 Natural
Resources Company 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, government regulation or action, foreign currency valuation
changes, foreign government tax and regulation changes, litigation, 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,
quality of technical data, and environmental risks. 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 NATURAL RESOURCES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
June 30, December 31,
2002 2001
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 16,728 $ 14,334
Accounts receivable 83,501 82,211
Inventories 10,079 14,549
Deferred income taxes 10,500 6,400
Other current assets 15,200 138,149
---------- ----------
Total current assets 136,008 255,643
---------- ----------
Property, plant and equipment, at cost:
Oil and gas properties, using the successful efforts
method of accounting 4,169,650 3,879,568
Accumulated depletion, depreciation and amortization (1,196,172) (1,095,310)
---------- ----------
2,973,478 2,784,258
---------- ----------
Deferred income taxes 80,295 84,319
Other assets, net 89,027 146,833
---------- ----------
$ 3,278,808 $ 3,271,053
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 120,407 $ 99,165
Interest payable 37,977 37,410
Other current liabilities 66,332 91,634
---------- ----------
Total current liabilities 224,716 228,209
---------- ----------
Long-term debt 1,461,794 1,577,304
Other noncurrent liabilities 165,504 166,383
Deferred income taxes 4,900 13,768
Stockholders' equity 1,421,894 1,285,389
---------- ----------
$ 3,278,808 $ 3,271,053
========== ==========
PIONEER NATURAL RESOURCES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
--------------------- ---------------------
2002 2001 2002 2001
--------- --------- --------- ---------
Revenues:
Oil and gas $ 172,430 $ 218,611 $ 337,969 $ 476,597
Interest and other 813 10,955 2,006 16,122
Gain on disposition of assets, net 1,095 1,472 1,021 8,765
-------- -------- -------- --------
174,338 231,038 340,996 501,484
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 49,717 51,974 100,735 107,776
Depletion, depreciation and amortization -
oil and gas 48,831 54,025 97,067 102,070
Depletion, depreciation and amortization -
other 2,114 3,371 4,266 7,487
Exploration and abandonments 17,860 46,583 38,980 69,466
General and administrative 10,758 8,005 22,676 18,453
Interest 24,741 34,260 51,058 69,876
Other 4,895 1,874 13,161 27,091
-------- -------- -------- --------
158,916 200,092 327,943 402,219
-------- -------- -------- --------
Income before income taxes and
extraordinary item 15,422 30,946 13,053 99,265
Income tax provision (1,437) (2,608) (1,027) (3,008)
-------- -------- -------- --------
Income before extraordinary item 13,985 28,338 12,026 96,257
Extraordinary item - loss on early extinguishment
of debt, net of tax (2,843) - (2,843) -
-------- -------- -------- --------
Net income $ 11,142 $ 28,338 $ 9,183 $ 96,257
======== ======== ======== ========
Net income per share:
Basic:
Income before extraordinary item $ .13 $ .29 $ .11 $ .98
Extraordinary item (.03) - (.03) -
-------- -------- -------- --------
Net income $ .10 $ .29 $ .08 $ .98
======== ======== ======== ========
Diluted:
Income before extraordinary item $ .12 $ .28 $ .11 $ .97
Extraordinary item (.02) - (.03) -
-------- -------- -------- --------
Net income $ .10 $ .28 $ .08 $ .97
======== ======== ======== ========
Weighted average shares outstanding:
Basic 113,306 98,337 108,702 98,358
======== ======== ======== ========
Diluted 115,239 99,700 110,282 99,709
======== ======== ======== ========
PIONEER NATURAL RESOURCES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
--------------------- ---------------------
2002 2001 2002 2001
--------- --------- --------- ---------
Cash flows from operations:
Net income $ 11,142 $ 28,338 $ 9,183 $ 96,257
Depletion, depreciation and amortization 50,945 57,396 101,333 109,557
Exploration and abandonments 12,182 40,985 30,848 62,832
Deferred income taxes 789 138 105 (4,662)
Gain on disposition of assets, net (1,095) (1,472) (1,021) (8,765)
Interest related amortization (649) 2,889 (1,641) 5,887
Derivative mark-to-market 119 (9,278) 243 (525)
Extraordinary item - loss on early
extinguishment of debt 2,843 - 2,843 -
Other noncash items 10,421 1,947 23,281 3,753
Changes in operating assets and liabilities:
Accounts receivable 2,853 1,605 (10,868) 28,054
Inventories 1,744 (2,036) 3,983 (912)
Other current assets (70) 922 (77) (5,032)
Accounts payable 307 6,750 (14,149) (18,857)
Interest payable 862 194 567 914
Other current liabilities (1,829) 6,953 (4,030) (1,436)
-------- -------- -------- --------
Net cash provided by operating activities 90,564 135,331 140,600 267,065
Net cash used in investing activities (171,445) (138,689) (210,217) (227,490)
Net cash provided by (used in) financing activities 81,506 3,183 73,441 (47,365)
-------- -------- -------- --------
Net increase (decrease) in cash and cash equivalents 625 (175) 3,824 (7,790)
Effect of exchange rate changes on cash
and cash equivalents (654) 97 (1,430) (142)
Cash and cash equivalents, beginning
of period 16,757 18,305 14,334 26,159
-------- -------- -------- --------
Cash and cash equivalents, end of period $ 16,728 $ 18,227 $ 16,728 $ 18,227
======== ======== ======== ========
PIONEER NATURAL RESOURCES COMPANY
SUMMARY PRODUCTION AND PRICE DATA
Three months ended Six months ended
June 30, June 30,
--------------------- ---------------------
2002 2001 2002 2001
--------- --------- --------- ---------
Average Daily Production:
Oil (Bbls) - U.S. 24,684 23,913 24,495 24,279
Argentina 6,024 9,727 8,064 9,687
Canada 132 842 121 843
--------- --------- --------- ---------
Total 30,840 34,482 32,680 34,809
Natural gas liquids (Bbls) - U.S. 20,128 19,968 20,024 19,447
Argentina 640 569 641 543
Canada 1,008 1,009 993 999
--------- --------- --------- ---------
Total 21,776 21,546 21,658 20,989
Gas (Mcf) - U.S. 209,355 214,351 212,578 211,530
Argentina 80,018 98,934 72,610 89,536
Canada 53,105 52,831 49,960 48,427
--------- --------- --------- ---------
Total 342,478 366,116 335,148 349,493
Total Production:
Oil (MBbls) 2,806 3,138 5,915 6,300
Natural gas liquids (MBbls) 1,981 1,961 3,920 3,799
Gas (MMcf) 31,166 33,316 60,662 63,258
Equivalent barrels (MBOE) 9,983 10,651 19,946 20,642
Average Price*:
Oil (per Bbl) - U.S. $ 24.54 $ 24.39 $ 24.40 $ 24.82
Argentina $ 19.74 $ 25.68 $ 20.28 $ 25.14
Canada $ 20.08 $ 23.88 $ 18.94 $ 23.85
Average $ 23.58 $ 24.74 $ 23.37 $ 24.89
Natural gas liquids (per Bbl) - U.S. $ 14.20 $ 18.78 $ 12.47 $ 20.59
Argentina $ 17.64 $ 22.60 $ 13.32 $ 24.70
Canada $ 20.37 $ 27.34 $ 16.47 $ 25.86
Average $ 14.58 $ 19.29 $ 12.68 $ 20.94
Gas (per Mcf) - U.S. $ 3.23 $ 3.93 $ 3.14 $ 4.75
Argentina $ .44 $ 1.34 $ .54 $ 1.30
Canada $ 2.64 $ 3.03 $ 2.47 $ 4.29
Average $ 2.48 $ 3.10 $ 2.48 $ 3.80
* Average prices include the effects of commodity hedges.
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. Discretionary cash flow and EBITDAX should also not be
considered as indicators of the Company's financial performance, as alternatives
to cash flow, as measures of liquidity or as being comparable to other similarly
titled measures of other companies.
Three months ended Six months ended
June 30, June 30,
---------------------- ---------------------
2002 2001 2002 2001
--------- --------- --------- ---------
Discretionary cash flows*:
Net income $ 11,142 $ 28,338 $ 9,183 $ 96,257
Depletion, depreciation and amortization 50,945 57,396 101,333 109,557
Exploration and abandonments 17,860 46,583 38,980 69,466
Deferred income taxes 789 138 105 (4,662)
Gain on disposition of assets, net (1,095) (1,472) (1,021) (8,765)
Interest related amortization (649) 2,889 (1,641) 5,887
Derivative mark-to-market 119 (9,278) 243 (525)
Extraordinary item - loss on early
extinguishment of debt 2,843 - 2,843 -
Other noncash items 10,421 1,947 23,281 3,753
--------- -------- -------- --------
Discretionary cash flow $ 92,375 $ 126,541 $ 173,306 $ 270,968
======== ======== ======== ========
- -------------
* Discretionary cash flows equal cash flows from operations before working
capital changes and exploration and abandonments.
EBITDAX**:
Net income $ 11,142 $ 28,338 $ 9,183 $ 96,257
Depletion, depreciation and amortization 50,945 57,396 101,333 109,557
Exploration and abandonments 17,860 46,583 38,980 69,466
Interest expense 24,741 34,260 51,058 69,876
Income taxes 1,437 2,608 1,027 3,008
Gain on disposition of assets, net (1,095) (1,472) (1,021) (8,765)
Derivative mark-to-market 119 (9,278) 243 (525)
Extraordinary item - loss on early
extinguishment of debt 2,843 - 2,843 -
Other noncash expenses 10,421 652 23,281 1,519
-------- -------- -------- --------
$ 118,413 $ 159,087 $ 226,927 $ 340,393
======== ======== ======== ========
- -------------
** "EBITDAX" represents earnings before depletion, depreciation and
amortization expense; impairment of oil and gas properties; exploration and
abandonments; interest expense; income taxes; gain or loss on the
disposition of assets; extraordinary items; derivative mark-to-market
adjustments; and, other noncash charges and expenses.
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL INFORMATION
Open Oil Hedge Positions
------------------------
2002 2003 2004
---------------------- -------- --------
Third Fourth
Quarter Quarter
--------- ---------
Daily oil production:
Swaps:
Volume (Bbl)..................... 24,000 22,000 25,734 12,000
NYMEX price...................... $ 24.03 $ 23.91 $ 24.40 $ 22.97
Total oil - % Hedged 73% 64% 49% 22%
Open Gas Hedge Positions
------------------------
2006
&
2002 2003 2004 2005 2007
---------------------- -------- -------- -------- --------
Third Fourth
Quarter Quarter
--------- ---------
Daily gas production:
Swaps:
Volume (Mcf)..................... 140,000 140,000 230,000 210,000 90,000 20,000
NYMEX Price* (MMBtu)............. $ 4.10 $ 4.10 $ 3.85 $ 3.85 $ 3.75 $ 3.75
Collars:
Volume (Mcf)..................... 103,152 120,000 - - - -
NYMEX Price* (MMBtu):
Ceiling....................... $ 3.65 $ 3.55
Floor......................... $ 2.80 $ 2.70
North American Gas - % Hedged 87% 69% 46% 39%
Deferred Gains (Losses) on Terminated Commodity Hedges (in thousands)
---------------------------------------------------------------------
2002 2003 2004 2005
---------------------- -------- -------- ---------
Third Fourth
Quarter Quarter
--------- ---------
Gas**.............................. $ (8,645) $ (8,645) $ 72,546 $ 43,230 $ 1,220
======= ======= ======= ======= =======
* Approximate, based on historical differentials to index prices.
** Cash has been paid on deferred hedge losses and received on deferred hedge
gains except for the following: (i) a $4.9 million payable for certain 2002
gas hedge losses and (ii) a $1.3 million receivable for certain of the 2003
gas hedge gains.