EXHIBIT 99.1
NEWS RELEASE
Investor Relations Contact: Susan Spratlen (972) 444-9001
Pioneer Reports Third Quarter 2002 Results
Dallas, Texas, October 24, 2002 -- Pioneer Natural Resources Company
("Pioneer")(NYSE:PXD) (TSE:PXD) today announced financial and operating results
for the quarter and nine months ended September 30, 2002.
Third Quarter Results
Pioneer reported a net loss of $.9 million, or $0.01 per diluted share, for the
third quarter of 2002. Income as adjusted for several unusual items was $15.0
million, or $0.13 per share. As previously disclosed, third quarter results
included an extraordinary charge consisting of $15.6 million associated with the
repayment of a 20% interest-bearing capital obligation associated with the West
Panhandle acquisition and $3.9 million related to the extinguishment of 9.625%
bonds. Third quarter results also included a $3.4 million gain on disposition of
assets and a $.2 million noncash gain on the remeasurement of the Company's
Argentine peso-denominated net monetary assets. For the same period last year,
Pioneer reported net income of $24.6 million, or $0.25 per share. Income for the
2001 third quarter as adjusted for a $1.4 million extraordinary gain related to
the early extinguishment of debt was $23.2 million, or $0.24 per share. Cash
flow from operations for the 2002 third quarter was $87.7 million compared to
$122.9 million for the same period of 2001.
Third quarter oil sales averaged 29,611 barrels per day (BPD) and natural gas
liquids sales averaged 22,693 BPD. Gas sales in the third quarter averaged 385
million cubic feet per day (MMcfpd). On a barrel oil equivalent (BOE) basis,
total sales averaged 116,441 BPD. Realized prices for oil and natural gas
liquids for the third quarter were $21.77 and $14.10 per barrel, respectively.
The realized price for gas was $2.25 per thousand cubic feet (Mcf), with North
American gas prices averaging $2.94 per Mcf.
Third quarter production costs were reduced to $4.66 per BOE partially due to
cost savings on properties associated with the West Panhandle acquisition.
Exploration and abandonment costs of $18.3 million for the quarter included $8.5
million of geologic and geophysical expenses including seismic costs, $2.4
million of noncash leasehold abandonments including expired leases and $7.4
million of exploration costs.
For the same quarter last year, Pioneer reported oil sales of 32,920 BPD,
natural gas liquids sales of 22,158 BPD and gas sales of 374 MMcfpd. Realized
prices for the 2001 third quarter were $25.06 per barrel for oil, $15.01 per
barrel for natural gas liquids and $2.66 per Mcf for gas.
Nine Month Results
For the nine months ended September 30, 2002, Pioneer reported net income of
$8.3 million, or $0.07 per diluted share. Excluding a $22.3 million
extraordinary charge related to the early extinguishment of debt, a $7.7 million
noncash charge for the remeasurement of the Argentine peso-denominated net
monetary assets and a gain of $4.4 million on the disposition of assets, income
as adjusted was $33.9 million or $0.30 per share. For the same period last year,
Pioneer reported net income of $120.9 million, or $1.21 per share. Excluding a
gain of $8.7 million on the disposition of assets and a $1.4 million
extraordinary gain related to the early extinguishment of debt, income as
adjusted was $110.8 million or $1.11 per share. Cash flow from operations for
the nine-month period was $228.3 million compared to $390.0 million for the same
period in 2001.
Nine-month oil sales averaged 31,646 BPD and natural gas liquids sales were
22,007 BPD. Gas sales were 352 MMcfpd. On a BOE basis, total sales averaged
112,301 BPD. Realized liquids prices for the 2002 nine-month period were $22.86
per barrel for oil and $13.17 per barrel for natural gas liquids. The realized
price for gas was $2.39 per Mcf, with North American gas prices averaging $2.98
per Mcf. For the first nine months of 2001, Pioneer reported oil sales of 34,172
BPD, natural gas liquids sales of 21,383 BPD and gas sales of 358 MMcfpd.
Realized prices for the 2001 nine-month period were $24.95 per barrel for oil,
$18.87 per barrel for natural gas liquids and $3.40 per Mcf for gas.
Operational Update
In southern Tunisia, Pioneer has successfully tested two additional intervals in
the Adam exploration well on the Borj El Khadra permit. As previously announced,
the Adam 1 well encountered four oil and gas productive zones in the Silurian
Acacus sand at a depth of approximately 3,000 meters. The primary zone tested at
approximately 3,500 BPD of 41 degree API oil, while a secondary zone tested at
250 BPD. In two recent tests, a lower Acacus interval flowed up to 13.6 Mmcfpd
of gas with 1,320 BPD of condensate, and an upper Acacus interval flowed 899 BPD
of oil with 430 Mcfpd of gas. The four intervals tested at a combined total rate
of approximately 6,000 BPD of oil and condensate and 16 MMcfpd of gas.
Pioneer, through a wholly owned subsidiary, has a 40% interest in the well. AGIP
Tunisia BV, a wholly owned subsidiary of Eni, is operator with a 50% interest,
and Paladin Expro Limited has the remaining 10% interest. The Tunisian state oil
company, ETAP, is carried through the exploration phase of activity and has a
right to back in for up to a 50% interest in any development by reimbursing its
share of past expenditures from production revenues. The field development plan
contemplates connecting production from the Adam 1 well to Eni's existing
facilities 12 kilometers southwest of the location, pending partner and
government approval. Pioneer is the third largest acreage holder onshore Tunisia
with permits covering approximately five million acres.
Pioneer today announced that it has signed an agreement with Armstrong Resources
to acquire a 70% working interest and operatorship in ten state leases on
Alaska's North Slope. The leases cover approximately 14,000 acres between the
Kuparuk River unit and Thetis Island where Pioneer expects to drill up to three
wells this winter.
Pioneer announced first production through the deepwater Canyon Express
gathering system on September 20, 2002. As a result of hurricanes in the Gulf of
Mexico, the ramp-up of production from the project has been delayed and full
production is now expected in November. The system is designed to handle up to
500 Mmcfpd. Wells from Aconcagua and Camden Hills are now producing via the
multiple-field gas gathering system. The project is expected to increase
Pioneer's worldwide daily production by 15% to 20% compared to third quarter
2002 levels when it reaches full production rates.
The Company now expects initial production from its Devils Tower field in the
deepwater Gulf of Mexico to begin no earlier than late third quarter 2003 as a
result of delays in the construction of the truss spar production facilities.
First production from the Sable field is now expected in mid-to-late first
quarter 2003 as a result of delays in the upgrade of the floating production,
storage and offloading (FPSO) facilities.
As a result of the delays, Pioneer now expects 2003 production from its core
producing areas in the U.S., Canada, and Argentina, including the Big 4
projects, to be nearer to the lower end of its previously announced range of
165,000 to 180,000 BOE per day. The Company is currently evaluating several
projects for inclusion in its 2003 capital budget that are expected to
supplement its 2003 production forecast. Pioneer's recent Adam 1 discovery in
Tunisia is expected to impact 2003 production, and the Company plans to drill up
to six additional exploration wells on nearby blocks, of which three are
scheduled for early 2003. Pioneer plans to expand its North America exploration
program in Canada during the coming winter drilling season and plans to begin a
multi-well program on the Gulf of Mexico shelf later this year. Pioneer's
production forecast does not include the potential for future core area property
acquisitions that the Company considers complementary to its development and
exploration growth strategy.
Development of the Pioneer-operated deepwater Falcon field is progressing on
schedule with minimal impact from hurricane evacuations. Pioneer has
successfully drilled and is completing the two future production wells in the
Falcon development plan. Within 30 days, Pioneer expects to spud its first
Falcon Corridor exploration prospect for potential tie-in to the Falcon
facilities currently under development. At least one additional prospect is
expected to be spud in the area before year end.
Onshore, Pioneer is currently running five rigs in the Spraberry field, one in
the Pawnee field in South Texas and three in the West Panhandle field. There are
two rigs active in the Gulf of Mexico and four rigs running in Argentina.
Pioneer will begin its winter-access development drilling program in Canada
during the fourth quarter and hopes to spud its first exploration test within 30
days.
Scott D. Sheffield, Chairman and CEO stated, "With the start-up of Canyon
Express, we have entered a new phase in Pioneer's growth plan. With our other
three high-impact projects expected to come on production next year, 2003 should
be a great year for Pioneer. When the last of our Big 4 projects is fully
producing, we expect our daily production to be up 50% to 60% from mid-2002
levels. Projects in Gabon, Tunisia and now Alaska give us the running room to
meet our 10% to 15% annual production growth targets in 2004 through 2006."
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.
Fourth quarter production is expected to average 118 to 124 MBPD on a BOE basis.
Included in the mid-point of the estimate is 70 Mmcfpd net to Pioneer from
Canyon Express as the project ramps up during the quarter to full production.
Fourth quarter lease operating expenses (including production and ad valorem
taxes) are expected to average $4.75 to $5.00 per BOE based on today's NYMEX
strip prices for oil and gas. Depreciation, depletion and amortization is
expected to average $5.50 to $5.75 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 $13 million. Interest expense is
expected to be $23 million to $25 million and income taxes are expected to be $2
million as the Company benefits from the carryforward of prior years' net
operating losses in the U.S. and Canada.
During the third quarter, Pioneer added to its oil hedge position. Additional
volumes of oil were hedged for 2003 and 2004 at oil prices ranging from
approximately $24 per barrel to $25 per barrel. 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 third 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 (800)
262-1292 (confirmation code: 124788) 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: 124788.
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, environmental and weather 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)
September 30, December 31,
2002 2001
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 25,502 $ 14,334
Accounts receivable 77,473 82,211
Inventories 10,151 14,549
Deferred income taxes 12,700 6,400
Other current assets 10,076 138,149
----------- -----------
Total current assets 135,902 255,643
----------- -----------
Property, plant and equipment, at cost:
Oil and gas properties, using the successful efforts
method of accounting 4,355,100 3,879,568
Accumulated depletion, depreciation and amortization (1,245,139) (1,095,310)
----------- -----------
3,109,961 2,784,258
----------- -----------
Deferred income taxes 78,033 84,319
Other assets, net 65,582 146,833
----------- -----------
$ 3,389,478 $ 3,271,053
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 93,426 $ 99,165
Interest payable 37,592 37,410
Other current liabilities 73,076 91,634
----------- -----------
Total current liabilities 204,094 228,209
----------- -----------
Long-term debt 1,650,756 1,577,304
Other noncurrent liabilities 133,134 166,383
Deferred income taxes 6,394 13,768
Stockholders' equity 1,395,100 1,285,389
----------- -----------
$ 3,389,478 $ 3,271,053
=========== ===========
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,
------------------------ ------------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Revenues:
Oil and gas $ 168,317 $ 198,088 $ 506,286 $ 674,685
Interest and other 7,083 6,471 9,089 22,593
Gain (loss) on disposition of assets, net 3,353 (88) 4,374 8,677
--------- --------- --------- ---------
178,753 204,471 519,749 705,955
--------- --------- --------- ---------
Costs and expenses:
Oil and gas production 49,970 51,713 150,705 159,489
Depletion, depreciation and amortization -
oil and gas 52,547 56,857 149,615 158,927
Depletion, depreciation and amortization -
other 2,201 3,208 6,466 10,695
Exploration and abandonments 18,324 24,666 57,304 94,132
General and administrative 12,466 8,153 35,142 26,606
Interest 20,347 32,261 71,405 102,137
Other 2,098 2,006 15,259 29,097
--------- --------- --------- ---------
157,953 178,864 485,896 581,083
--------- --------- --------- ---------
Income before income taxes and
extraordinary items 20,800 25,607 33,853 124,872
Income tax provision (2,189) (2,379) (3,216) (5,387)
--------- --------- --------- ---------
Income before extraordinary items 18,611 23,228 30,637 119,485
Extraordinary items - gain (loss) on early
extinguishment of debt, net of tax (19,501) 1,374 (22,344) 1,374
--------- --------- --------- ---------
Net income (loss) $ (890) $ 24,602 $ 8,293 $ 120,859
========= ========= ========= =========
Net income (loss) per share:
Basic:
Income before extraordinary items $ .16 $ .24 $ .27 $ 1.22
Extraordinary items (.17) .01 (.20) .01
--------- --------- --------- ---------
Net income (loss) $ (.01) $ .25 $ .07 $ 1.23
========= ========= ========= =========
Diluted:
Income before extraordinary items $ .16 $ .24 $ .27 $ 1.20
Extraordinary items (.17) .01 (.20) .01
--------- --------- --------- ---------
Net income (loss) $ (.01) $ .25 $ .07 $ 1.21
========= ========= ========= =========
Weighted average shares outstanding:
Basic 116,193 98,468 111,227 98,395
========= ========= ========= =========
Diluted 118,021 99,523 112,889 99,646
========= ========= ========= =========
PIONEER NATURAL RESOURCES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
---------------------- ---------------------
2002 2001 2002 2001
--------- --------- --------- ---------
Cash flows from operations:
Net income (loss) $ (890) $ 24,602 $ 8,293 $ 120,859
Depletion, depreciation and amortization 54,748 60,065 156,081 169,622
Exploration and abandonments 12,589 17,250 43,437 80,082
Deferred income taxes 1,512 567 1,617 (4,095)
(Gain) loss on disposition of assets, net (3,353) 88 (4,374) (8,677)
Interest related amortization (19) 2,559 (1,660) 8,446
Commodity hedge related amortization 6,184 3,076 20,307 5,484
Extraordinary items - (gain) loss on early
extinguishment of debt 19,501 (1,374) 22,344 (1,374)
Other noncash items (3,408) (551) 5,993 268
Changes in operating assets and liabilities:
Accounts receivable 6,153 8,862 (4,715) 36,916
Inventories 69 (3,489) 4,052 (4,401)
Other current assets (851) (763) (928) (5,795)
Accounts payable (3,907) 11,431 (18,056) (7,426)
Interest payable (384) (626) 183 288
Other current liabilities (290) 1,203 (4,320) (233)
-------- -------- -------- --------
Net cash provided by operating activities 87,654 122,900 228,254 389,964
Net cash used in investing activities (169,220) (74,422) (379,437) (301,912)
Net cash provided by (used in) financing activities 90,403 (45,823) 163,844 (93,187)
-------- -------- -------- --------
Net increase (decrease) in cash and cash equivalents 8,837 2,655 12,661 (5,135)
Effect of exchange rate changes on cash
and cash equivalents (63) (145) (1,493) (287)
Cash and cash equivalents, beginning
of period 16,728 18,227 14,334 26,159
-------- -------- -------- --------
Cash and cash equivalents, end of period $ 25,502 $ 20,737 $ 25,502 $ 20,737
======== ======== ======== ========
PIONEER NATURAL RESOURCES COMPANY
SUMMARY PRODUCTION AND PRICE DATA
Three months ended Nine months ended
September 30, September 30,
---------------------- -----------------------
2002 2001 2002 2001
--------- --------- --------- ----------
Average Daily Production:
Oil (Bbls) - U.S. 21,787 22,442 23,583 23,659
Argentina 7,655 9,689 7,926 9,688
Canada 169 789 137 825
--------- --------- --------- ---------
Total 29,611 32,920 31,646 34,172
--------- --------- --------- ---------
Natural gas liquids (Bbls) - U.S. 21,070 20,493 20,377 19,800
Argentina 680 591 654 559
Canada 943 1,074 976 1,024
--------- --------- --------- ---------
Total 22,693 22,158 22,007 21,383
--------- --------- --------- ---------
Gas (Mcf) - U.S. 230,589 213,778 218,648 212,287
Argentina 105,406 107,087 83,662 95,451
Canada 48,827 53,611 49,578 50,174
--------- --------- --------- ---------
Total 384,822 374,476 351,888 357,912
--------- --------- --------- ---------
Total Production:
Oil (MBbls) 2,724 3,029 8,639 9,329
Natural gas liquids (MBbls) 2,088 2,039 6,008 5,838
Gas (MMcf) 35,404 34,452 96,065 97,710
Equivalent barrels (MBOE) 10,713 10,809 30,658 31,452
Average Prices*:
Oil (per Bbl) - U.S. $ 22.28 $ 25.15 $ 23.74 $ 24.93
Argentina $ 20.25 $ 24.99 $ 20.27 $ 25.09
Canada $ 24.67 $ 23.70 $ 21.32 $ 23.80
Average $ 21.77 $ 25.06 $ 22.86 $ 24.95
Natural gas liquids (per Bbl) - U.S. $ 14.12 $ 14.77 $ 13.05 $ 18.56
Argentina $ 12.73 $ 16.93 $ 13.12 $ 21.93
Canada $ 14.57 $ 18.66 $ 15.85 $ 23.31
Average $ 14.10 $ 15.01 $ 13.17 $ 18.87
Gas (per Mcf) - U.S. $ 3.08 $ 3.54 $ 3.12 $ 4.34
Argentina $ .42 $ 1.39 $ .49 $ 1.33
Canada $ 2.31 $ 1.69 $ 2.41 $ 3.35
Average $ 2.25 $ 2.66 $ 2.39 $ 3.40
* 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 Nine months ended
September 30, September 30,
---------------------- ----------------------
2002 2001 2002 2001
--------- --------- --------- ---------
Discretionary cash flows*:
Net income (loss) $ (890) $ 24,602 $ 8,293 $ 120,859
Depletion, depreciation and amortization 54,748 60,065 156,081 169,622
Exploration and abandonments 18,324 24,666 57,304 94,132
Deferred income taxes 1,512 567 1,617 (4,095)
(Gain) loss on disposition of assets, net (3,353) 88 (4,374) (8,677)
Interest related amortization (19) 2,559 (1,660) 8,446
Commodity hedge related amortization 6,184 3,076 20,307 5,484
Extraordinary items, (gain) loss on early
extinguishment of debt 19,501 (1,374) 22,344 (1,374)
Other noncash items (3,408) (551) 5,993 268
-------- -------- -------- --------
Discretionary cash flow $ 92,599 $ 113,698 $ 265,905 $ 384,665
======== ======== ======== ========
- -------------
* Discretionary cash flows equal cash flows from operations before working
capital changes and before exploration and abandonments.
EBITDAX**:
Net income (loss) $ (890) $ 24,602 $ 8,293 $ 120,859
Depletion, depreciation and amortization 54,748 60,065 156,081 169,622
Exploration and abandonments 18,324 24,666 57,304 94,132
Interest expense 20,347 32,261 71,405 102,137
Income taxes 2,189 2,379 3,216 5,387
(Gain) loss on disposition of assets, net (3,353) 88 (4,374) (8,677)
Commodity hedge related amortization 6,184 3,076 20,307 5,484
Extraordinary items, (gain) loss on early
extinguishment of debt 19,501 (1,374) 22,344 (1,374)
Other noncash charges and expenses 2,168 116 11,569 1,110
-------- -------- -------- --------
$ 119,218 $ 145,879 $ 346,145 $ 488,680
======== ======== ======== ========
- -------------
** "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; commodity hedge related amortization; extraordinary
items; and, other noncash charges and expenses.
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL INFORMATION
Open Oil Hedge Positions
------------------------
2002 2003 2004
-------- -------- --------
Fourth
Quarter
--------
Daily oil production:
Swaps:
Volume (Bbl).................. 22,000 28,000 14,000
NYMEX price per Bbl........... $ 23.91 $ 24.44 $ 23.11
Worldwide Oil - % Hedged........ 71% 60% 23%
Open Gas Hedge Positions
------------------------
2006 &
2002 2003 2004 2005 2007
-------- -------- -------- -------- --------
Fourth
Quarter
--------
Daily gas production:
Swaps:
Volume (Mcf).................. 140,000 230,000 210,000 90,000 20,000
NYMEX price per MMBtu*........ $ 4.10 $ 3.85 $ 3.85 $ 3.75 $ 3.75
Collars:
Volume (Mcf).................. 120,000 - - - -
NYMEX price per MMBtu*:
Ceiling.................... $ 3.55
Floor...................... $ 2.70
North American Gas - % Hedged... 76% 47% 36%
Deferred Gains (Losses) on Terminated Commodity Hedges (in thousands)
---------------------------------------------------------------------
2002 2003 2004 2005
-------- -------- -------- --------
Fourth
Quarter
--------
Deferred gains (losses)** $ (8,645) $ 72,546 $ 45,102 $ 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 $2.5 million payable for certain 2002
hedge losses and (ii) a $1.3 million receivable for certain of the 2004
hedge gains.