EXHIBIT 99.1
NEWS RELEASE
Investor Relations Contact: Susan Spratlen (972) 444-9001
Pioneer Reports Record Earnings and Cash Flow for the Year
and Reports Fourth Quarter 2003 Results
Dallas, Texas, February 2, 2004 -- Pioneer Natural Resources Company ("Pioneer")
(NYSE:PXD) today announced financial and operating results for the quarter and
year ended December 31, 2003.
Pioneer reported net income of $57.4 million, or $0.48 per diluted share, for
the fourth quarter of 2003. For the same period last year, Pioneer reported net
income of $18.4 million, or $0.16 per diluted share.
Cash flow from operations for the fourth quarter was $217.0 million compared to
$104.0 million for the same period in 2002. The Company reduced long-term debt
by $65.9 million during the fourth quarter of 2003 to $1.56 billion, improving
the ratio of long-term debt to total book capitalization to 46.9% from 54.8% at
the end of 2002.
With a 36% increase in oil and gas production for the twelve months ended
December 31, 2003, Pioneer reported record net income of $410.6 million, or
$3.46 per diluted share. This compares to net income of $26.7 million, or $0.23
per diluted share, for the same period in 2002. Cash flow from operations for
2003 was a record $763.7 million as compared to $332.2 million for 2002.
Scott D. Sheffield, Chairman and CEO, stated, "We are pleased to end 2003 with
record earnings and expectations for 15% to 25% production growth yet to come in
2004. We have set a high standard of performance, and all Pioneer employees
should be proud of the Company's success."
Fourth quarter oil and gas sales averaged 167,690 barrels per day (BPD) on a
barrel oil equivalent (BOE) basis. Fourth quarter oil sales averaged 43,574 BPD
and natural gas liquids sales averaged 22,889 BPD. Gas sales in the fourth
quarter averaged 607 million cubic feet per day (MMcfpd). Realized prices for
oil and natural gas liquids for the quarter were $26.60 and $19.46 per barrel,
respectively. The realized price for gas was $3.54 per thousand cubic feet
(Mcf), while North American gas prices averaged $4.06 per Mcf.
Fourth quarter production costs averaged $4.81 per BOE. Exploration and
abandonment costs of $25.3 million for the quarter included $18.4 million of
geologic and geophysical expenses including seismic costs and $6.9 million of
noncash leasehold abandonments.
For the same quarter last year, Pioneer reported oil sales of 31,248 BPD,
natural gas liquids sales of 22,591 BPD and gas sales of 380 MMcfpd. Realized
prices for the 2002 fourth quarter were $22.96 per barrel for oil, $16.08 per
barrel for natural gas liquids and $2.75 per Mcf for gas.
Operations Update
In January, Pioneer achieved first production from the Harrier gas field in the
deepwater Gulf of Mexico and from the Hawa oil field onshore Tunisia. The
deepwater development projects ongoing on the Devils Tower, Tomahawk and Raptor
fields are proceeding as expected with first production from these fields
expected mid-year.
The Company has begun its 2004 onshore development program, running eight
onshore rigs in the U.S., seven rigs in Argentina and two development rigs in
Canada. During the fourth quarter, Pioneer acquired additional interests in the
Spraberry field in West Texas expanding its inventory of drilling locations. The
Company is participating in three exploration wells currently drilling in the
deepwater Gulf of Mexico and expects to participate in one additional well later
during the first quarter. Pioneer is running one rig to drill exploration wells
in Canada and one rig in Gabon to test potential extensions of its Olowi field
in an effort to refine its development plans there. The Company also plans to
drill a wildcat well offshore Gabon later this quarter.
On the Gulf of Mexico shelf, Pioneer's Midway well in the Brazos area (block
A-39) was drilled to a total measured depth of 20,496 feet and will be
temporarily abandoned following the installation of a production liner. The well
encountered 30 feet of net gas pay and is expected to be tied back to the
existing production platform on Brazos A-39 with first production anticipated
during the second half of 2004. Three other intervals with an additional 60 feet
of gas bearing sands were also encountered and will require additional analysis
to determine future commercial potential. Pioneer is the operator of the well
with a 37.5% working interest. Woodside Energy (USA) Inc. holds 37.5% and Noble
Energy Inc. holds a 25% working interest.
Commercialization studies are progressing on potential development options for
existing field discoveries in Alaska, the deepwater Gulf of Mexico, Argentina
and on the potential to commercialize the significant gas reserves contained on
Pioneer's leases in South Africa.
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.
First quarter 2004 production is expected to average 168,000 to 183,000 BOEs per
day, reflecting the incremental production from Harrier which began producing in
January, the variability of oil cargo shipments in Tunisia and South Africa and
the seasonal decline in gas demand during Argentina's summer season. First
quarter lease operating expenses (including production and ad valorem taxes) are
expected to average $5.00 to $5.50 per BOE based on today's NYMEX strip prices
for oil and gas. Depreciation, depletion and amortization expense is expected to
average $7.75 to $8.25 per BOE as a greater proportion of the Company's
production is being produced from higher-cost basis deepwater Gulf of Mexico and
South Africa properties. Total exploration and abandonment expense is expected
to be $25 million to $85 million. The first quarter range includes a number of
high-impact deepwater Gulf of Mexico wells that are in progress, up to five
wells expected in Gabon to further refine development plans and test a new
exploration target, increased exploration drilling in Argentina and the winter
drilling campaign in Canada. Due to the width of the range, the Company plans to
update guidance when the majority of the wells are drilled. General and
administrative expense is expected to be $17 million to $20 million, $2 million
to $3 million of which relates to estimated performance-based compensation
costs. Interest expense is expected to be $21 million to $23 million and
accretion of discount on asset retirement obligations is expected to be
approximately $2 million.
The Company recognizes deferred income taxes reflecting its tax position in each
of its areas of operation. However, cash income taxes are expected to be only $3
million to $5 million, principally related to Argentine income taxes and nominal
alternative minimum tax in the U.S. Other than in Argentina, the Company
continues to benefit from the carryforward of net operating losses and other
positive tax attributes.
The Company's financial results and oil and gas hedges are outlined on the
attached schedules.
Earnings Conference Call
This morning at 10:00 a.m. Eastern, Pioneer will discuss its fourth quarter
financial and operating results with an accompanying presentation. The call will
be webcast on Pioneer's website, www.pioneernrc.com. At the website, select
'INVESTOR' at the top of the page. For those who cannot listen to the live
broadcast, a replay will be available shortly after the call. Alternately, you
may dial (800) 500-0311 (confirmation code: 501635) to listen to the call via
the telephone and view the accompanying visual presentation at the website
above. A telephone replay will be available by dialing (888) 203-1112:
confirmation code: 501635.
Pioneer is a large independent oil and gas exploration and production company
with operations in the United States, Argentina, Canada, South Africa, Gabon and
Tunisia. Pioneer's headquarters are in Dallas. For more information, visit
Pioneer's website at www.pioneernrc.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 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, acts of war or
terrorism. 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)
December 31, December 31,
2003 2002
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 19,299 $ 8,490
Accounts receivable, net 111,480 98,222
Inventories 17,509 10,648
Prepaid expenses 11,083 5,485
Deferred income taxes 40,514 13,900
Other current assets, net 5,230 10,348
---------- ----------
Total current assets 205,115 147,093
---------- ----------
Property, plant and equipment, at cost:
Oil and gas properties, using the successful efforts
method of accounting 5,163,383 4,471,970
Accumulated depletion, depreciation and amortization (1,676,136) (1,303,541)
---------- ----------
Total property, plant and equipment 3,487,247 3,168,429
---------- ----------
Deferred income taxes 192,344 76,840
Other assets, net 66,866 62,754
---------- ----------
$ 3,951,572 $ 3,455,116
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 186,418 $ 124,774
Interest payable 37,034 37,458
Income taxes payable 5,928 -
Other current liabilities 200,372 112,360
---------- ----------
Total current liabilities 429,752 274,592
---------- ----------
Long-term debt 1,555,461 1,668,536
Deferred income taxes 12,121 8,760
Other liabilities 194,466 128,331
Stockholders' equity 1,759,772 1,374,897
---------- ----------
$ 3,951,572 $ 3,455,116
========== ==========
PIONEER NATURAL RESOURCES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
Three months ended Year ended
December 31, December 31,
------------------------- ------------------------
2003 2002 2003 2002
---------- ---------- ----------- ---------
(Unaudited) (Unaudited) (Unaudited)
Revenues and other income:
Oil and gas $ 345,022 $ 195,494 $1,298,647 $ 701,780
Interest and other 7,971 2,133 12,292 11,222
Gain (loss) on disposition of assets, net (320) 58 1,256 4,432
-------- -------- --------- --------
352,673 197,685 1,312,195 717,434
-------- -------- --------- --------
Costs and expenses:
Oil and gas production 74,139 48,865 279,526 199,570
Depletion, depreciation and amortization 116,698 60,294 390,840 216,375
Exploration and abandonments 25,330 28,590 132,760 85,894
General and administrative 16,213 13,260 60,545 48,402
Accretion of discount on asset retirement
obligations 1,384 - 5,040 -
Interest 21,862 24,410 91,388 95,815
Other 9,115 1,999 21,320 39,602
-------- -------- --------- --------
264,741 177,418 981,419 685,658
-------- -------- --------- --------
Income before income taxes and cumulative
effect of change in accounting principle 87,932 20,267 330,776 31,776
Income tax benefit (provision) (30,558) (1,847) 64,403 (5,063)
-------- -------- --------- --------
Income before cumulative effect of
change in accounting principle 57,374 18,420 395,179 26,713
Cumulative effect of change in accounting
principle, net of tax - - 15,413 -
-------- -------- --------- --------
Net income $ 57,374 $ 18,420 $ 410,592 $ 26,713
======== ======== ========= ========
Net income per share:
Basic:
Income before cumulative effect
of change in accounting principle $ .49 $ .16 $ 3.37 $ .24
Cumulative effect of change in accounting
principle, net of tax - - .13 -
--------- -------- --------- ---------
Net income $ .49 $ .16 $ 3.50 $ .24
========= ======== ========= =========
Diluted:
Income before cumulative effect
of change in accounting principle $ .48 $ .16 $ 3.33 $ .23
Cumulative effect of change in accounting
principle, net of tax - - .13 -
--------- -------- --------- ---------
Net income $ .48 $ .16 $ 3.46 $ .23
========= ======== ========= =========
Weighted average shares outstanding:
Basic 117,763 116,445 117,185 112,542
========= ======== ========= =========
Diluted 119,199 118,440 118,513 114,288
========= ======== ========= =========
PIONEER NATURAL RESOURCES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three months ended Year ended
December 31, December 31,
-------------------------- -------------------------
2003 2002 2003 2002
----------- ----------- ----------- ----------
(Unaudited) (Unaudited) (Unaudited)
Cash flows from operations:
Net income $ 57,374 $ 18,420 $ 410,592 $ 26,713
Depletion, depreciation and amortization 116,698 60,294 390,840 216,375
Exploration expenses, including dry holes 14,486 21,180 97,690 64,617
Deferred income taxes 28,350 1,171 (75,588) 2,788
Loss (gain) on disposition of assets, net 320 (58) (1,256) (4,432)
Accretion of discount on asset retirement
obligations 1,384 - 5,040 -
Interest related amortization (6,650) (4,149) (20,610) (5,809)
Commodity hedge related amortization (17,697) 6,183 (71,816) 26,490
Cumulative effect of change in accounting
principle, net of tax - - (15,413) -
Other noncash items 1,815 3,310 10,395 31,647
Changes in operating assets and liabilities:
Accounts receivable, net (14,270) (19,207) (10,983) (23,922)
Inventories 1,161 (1,029) (7,734) 3,023
Prepaid expenses 2,806 1,319 (5,598) 2,330
Other current assets, net 2,674 (2,227) (602) (4,166)
Accounts payable 29,652 17,714 58,603 (342)
Interest payable (1,005) (135) (424) 48
Income taxes payable 2,012 (10) 5,928 (530)
Other current liabilities (2,107) 1,215 (5,385) (2,585)
--------- --------- --------- ---------
Net cash provided by operating activities 217,003 103,991 763,679 332,245
Net cash used in investing activities (167,151) (128,694) (662,300) (508,131)
Net cash provided by (used in) financing activities (43,079) 7,029 (91,720) 170,873
--------- --------- --------- ---------
Net increase (decrease) in cash and cash equivalents 6,773 (17,674) 9,659 (5,013)
Effect of exchange rate changes on cash
and cash equivalents (125) 662 1,150 (831)
Cash and cash equivalents, beginning
of period 12,651 25,502 8,490 14,334
--------- --------- --------- ---------
Cash and cash equivalents, end of period $ 19,299 $ 8,490 $ 19,299 $ 8,490
========= ========= ========= =========
PIONEER NATURAL RESOURCES COMPANY
SUMMARY PRODUCTION AND PRICE DATA
(Unaudited)
Three months ended Year ended
December 31, December 31,
----------------------- -----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Average Daily Production:
Oil (Bbls) - U.S. 25,704 23,009 24,525 23,437
Argentina 10,132 8,156 8,687 7,984
Canada 90 83 111 124
Africa 7,648 - 1,981 -
--------- --------- --------- ---------
Total 43,574 31,248 35,304 31,545
Natural gas liquids (Bbls) - U.S. 20,871 20,915 20,338 20,512
Argentina 1,115 818 1,318 696
Canada 903 858 906 946
--------- --------- --------- ---------
Total 22,889 22,591 22,562 22,154
Gas (Mcf) - U.S. 476,272 273,049 445,609 232,360
Argentina 91,791 62,074 94,128 78,220
Canada 39,299 44,763 41,669 48,365
--------- --------- --------- ---------
Total 607,362 379,886 581,406 358,945
Total Production:
Oil (MBbls) 4,009 2,875 12,886 11,514
Natural gas liquids (MBbls) 2,106 2,078 8,235 8,086
Gas (MMcf) 55,877 34,949 212,213 131,015
Total equivalent barrels (MBOE) 15,428 10,778 56,490 41,436
Average Reported Prices (a):
Oil (per Bbl) - U.S. $ 25.78 $ 23.41 $ 25.25 $ 23.66
Argentina $ 26.37 $ 21.66 $ 25.62 $ 20.63
Canada $ 30.74 $ 26.89 $ 29.10 $ 22.26
Africa $ 29.59 $ - $ 29.52 $ -
Worldwide $ 26.60 $ 22.96 $ 25.59 $ 22.89
Natural gas liquids (per Bbl) - U.S. $ 19.21 $ 15.85 $ 19.04 $ 13.77
Argentina $ 22.81 $ 17.98 $ 22.85 $ 14.56
Canada $ 20.94 $ 19.89 $ 24.80 $ 16.77
Worldwide $ 19.46 $ 16.08 $ 19.50 $ 13.92
Gas (per Mcf) - U.S. $ 4.11 $ 3.27 $ 4.49 $ 3.16
Argentina $ .56 $ .45 $ .56 $ .48
Canada $ 3.57 $ 2.77 $ 3.90 $ 2.50
Worldwide $ 3.54 $ 2.75 $ 3.81 $ 2.49
<FN>
- ---------------
(a) Average prices include the results of hedging activities.
</FN>
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(in thousands)
(Unaudited)
EBITDAX and discretionary cash flow ("DCF") (as defined below) are
presented herein, and reconciled to the generally accepted accounting principle
("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 Year ended
December 31, December 31,
----------------------- ------------------------
2003 2002 2003 2002
---------- --------- ---------- ----------
Net income $ 57,374 $ 18,420 $ 410,592 $ 26,713
Depletion, depreciation and amortization 116,698 60,294 390,840 216,375
Exploration and abandonments 25,330 28,590 132,760 85,894
Accretion of discount on asset
retirement obligations 1,384 - 5,040 -
Interest expense 21,862 24,410 91,388 95,815
Income taxes 30,558 1,847 (64,403) 5,063
Loss (gain) on disposition of assets, net 320 (58) (1,256) (4,432)
Commodity hedge related amortization (17,697) 6,183 (71,816) 26,490
Cumulative effect of change in accounting
principle, net of tax - - (15,413) -
Other noncash items 1,815 3,310 10,395 31,647
--------- -------- --------- ---------
EBITDAX (a) 237,644 142,996 888,127 483,565
Less: Cash interest expense (28,512) (28,559) (111,998) (101,624)
Current income taxes (2,208) (676) (11,185) (2,275)
-------- -------- --------- ---------
Discretionary cash flow (b) 206,924 113,761 764,944 379,666
Less: Cash operating exploration expense (10,844) (7,410) (35,070) (21,277)
Changes in operating assets and liabilities 20,923 (2,360) 33,805 (26,144)
-------- -------- --------- ---------
Net cash provided by operating activities $ 217,003 $ 103,991 $ 763,679 $ 332,245
======== ======== ========= =========
<FN>
- -------------
(a) "EBITDAX" represents earnings before depletion, depreciation and
amortization expense; impairment of oil and gas properties; exploration and
abandonments; accretion of discount on asset retirement obligations;
interest expense; income taxes; net gain or loss on the disposition of
assets; commodity hedge related amortization; cumulative effect of change
in accounting principle, net of tax; and other noncash items.
(b) Discretionary cash flow equals cash flows from operations before working
capital changes and before cash exploration costs.
</FN>
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL HEDGE INFORMATION
As of January 30, 2004
Open Oil Hedge Positions
------------------------
2004
------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Year 2005 2006 2007 2008
------- ------- ------- ------- -------- -------- -------- -------- --------
Average Daily Oil Production:
Swap Contracts:
Volume (Bbl) 24,000 24,000 14,000 14,000 18,973 17,000 5,000 1,000 5,000
NYMEX price (Bbl) $ 26.59 $ 26.51 $ 24.65 $ 24.65 $ 25.84 $ 24.93 $ 26.19 $ 26.00 $ 26.09
Open Gas Hedge Positions
------------------------
2004
------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Year 2005 2006 2007
------- ------- ------- ------- -------- -------- -------- --------
Average Daily Gas Production:
Swap Contracts:
Volume (Mcf) 328,901 280,000 280,000 280,000 292,158 60,000 70,000 20,000
NYMEX price (MMBtu) (a) $ 4.60 $ 4.20 $ 4.20 $ 4.20 $ 4.35 $ 4.30 $ 4.25 $ 3.75
<FN>
- --------------
(a) Approximate, based on historical differentials to index prices.
</FN>
Net Deferred Gains (Losses) on Terminated Hedges (in thousands)
---------------------------------------------------------------
2004
------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Year 2005 Thereafter Total
------- ------- ------- ------- -------- -------- ---------- --------
Net commodity hedge gains (a) $13,391 $10,932 $11,001 $10,954 $ 46,278 $ 1,249 $ - $ 47,527
Net debt hedge gains
(losses) (b) 7,308 6,116 5,489 4,555 23,468 10,968 (7,062) 27,374
------ ------ ------ ------ ------- ------- ------- -------
Total net deferred
gains (losses) $20,699 $17,048 $16,490 $15,509 $ 69,746 $ 12,217 $ (7,062) $ 74,901
====== ====== ====== ====== ======= ======= ======= =======
<FN>
- --------------
(a) Includes the following deferred commodity hedge gains and losses for which
cash settlements have been deferred until the indicated future periods: (i)
$1.2 million of net deferred losses due during 2004 and (ii) $209 thousand
of net deferred gains to be received during 2005. Deferred commodity hedge
gains will be amortized as increases to oil and gas revenues and deferred
commodity hedge losses will be amortized as decreases to oil and gas
revenues during the indicated future periods.
(b) Deferred debt hedge gains will be amortized as decreases to interest
expense and deferred debt hedge losses will be amortized as increases to
interest expense during the indicated future periods.
</FN>