EXHIBIT 99.1
NEWS RELEASE
Company Contacts:
Investors: Frank Hopkins or Chris Paulsen
Media and Public Affairs: Susan Spratlen
(972) 444-9001
Pioneer Reports First Quarter 2005 Results
Dallas, Texas, May 3, 2005 -- Pioneer Natural Resources Company (NYSE:PXD) today
announced financial and operating results for the quarter ended March 31, 2005.
Pioneer reported net income of $84.7 million, or $.58 per diluted share. This
reflects a per share increase of 16% as compared to the same period last year in
which Pioneer reported net income of $60.2 million, or $.50 per diluted share.
Cash flow from operations for the first quarter was $334.9 million, an increase
of 32% compared to $253.6 million for the same period in 2004.
Long-term debt declined by $554.0 million during the quarter, ending the period
at $1.83 billion. During the quarter, Pioneer sold two volumetric production
payments (VPP) for total proceeds of approximately $593 million and repurchased
3.7 million shares for a total investment of $151.9 million. During April, the
Company sold a third VPP for proceeds of approximately $300 million, sold
certain U.S. assets for proceeds of approximately $25 million and announced the
pending sale of non-strategic assets in Canada for expected proceeds of
approximately $207 million.
Scott Sheffield, Chairman and CEO, stated, "To take advantage of high oil and
gas prices, we've sold 38 million barrels of oil equivalent reserves through a
combination of VPP transactions and assets sales in Canada and the U.S. for net
proceeds anticipated to exceed $1.1 billion. Opportunities to change a company's
financial landscape so dramatically, by selling less than 4% of its assets,
don't come along very often. While we're extremely pleased to have improved our
balance sheet and substantially enhanced our financial flexibility, we will be
cautious as we make investments in the current environment of high commodity
prices and rising costs to ensure attractive returns on capital employed."
First quarter oil and gas sales averaged 188,524 barrels oil equivalent per day
(BOEPD). First quarter oil sales averaged 49,111 barrels per day (BPD) and
natural gas liquids sales averaged 19,716 BPD. Gas sales in the first quarter
averaged 718 million cubic feet per day (MMcfpd). First quarter realized prices
for oil and natural gas liquids were $33.27 and $26.88 per barrel, respectively.
The realized price for gas was $5.04 per thousand cubic feet (Mcf), including
$.17 per Mcf associated with VPP deferred revenue amortization, while North
American realized gas prices averaged $5.96 per Mcf, including $.20 per Mcf
associated with VPP deferred revenue amortization. Pioneer also recognized
pretax income of $24.8 million associated with business interruption insurance
for downtime at Devils Tower and Canyon Express as a result of damage caused by
Hurricane Ivan.
First quarter production costs averaged $6.72 per barrel of oil equivalent
(BOE). Production costs increased as compared to the fourth quarter of 2004 due
to an increase in ad valorem taxes, additional workover activities performed
during Canada's winter access only season, higher field operating costs and the
retention of operating costs related to the VPP volumes sold. Exploration and
abandonment costs were $67.4 million for the quarter and included $28.3 million
of dry hole and abandonments associated with unsuccessful wells in the deepwater
Gulf of Mexico, Canada, Nigeria and Tunisia, $37.8 million of geologic and
geophysical expenses including seismic costs and $1.3 million of delay rentals
and unproved acreage abandonments. General and administrative costs for the
quarter were $29.6 million, including annual incentive-based performance
payments.
For the same quarter last year, Pioneer reported total oil and gas sales of
182,050 BOEPD, including oil sales of 47,733 BPD, natural gas liquids sales of
23,406 BPD and gas sales of 665 MMcfpd (excluding field fuel volumes). Realized
prices for the 2004 first quarter were $28.31 per barrel for oil, $22.21 per
barrel for natural gas liquids and $4.38 per Mcf for gas, while North American
gas prices averaged $5.04 per Mcf.
Operations Update
During the quarter, Pioneer accelerated its onshore drilling activities in each
of its core areas to accomplish its more aggressive development plans for 2005.
Currently, Pioneer has 17 onshore rigs running in the U.S. and ten rigs running
in Argentina. In Canada, the Company recently completed its largest-ever winter
drilling campaign, drilling 56 wells. During Canada's summer drilling season,
Pioneer plans to drill up to 100 wells to assess the potential of its extensive
Horseshoe Canyon coalbed acreage position.
In the deepwater Gulf of Mexico, production from the Devils Tower A-5 well was
initiated in mid-April and the seventh of eight Devils Tower development wells
is currently being completed. Production was also initiated from the Adam 3
development well in Tunisia at a gross rate of approximately 3,000 BPD.
The Company continues to expand its offshore exploration program in West Africa.
Pioneer was awarded acreage in Nigeria Block 320 and is awaiting government
approval on Nigeria Block 256 and the potential award of two blocks in the Joint
Development Zone between Nigeria and the Democratic Republic of Sao Tome and
Principe. In the deepwater Gulf of Mexico, Pioneer was the apparent high bidder
on 13 blocks focused principally in the Mississippi Canyon area where the
Company has three producing fields and is currently participating in appraisal
drilling on a fourth discovery.
Pioneer has participated in seven key exploration wells this year and expensed
three dry holes drilled during the quarter in the deepwater Gulf of Mexico,
Nigeria and Tunisia. The Company participated in four wells (two in Alaska, the
Thunder Hawk well in the deepwater Gulf of Mexico and the Nour-1 well in
Tunisia) for which results will be announced after further testing and
evaluation have been completed.
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.
Second quarter 2005 production is expected to average 185,000 to 205,000 BOEPD,
including a full quarter of production from Canyon Express, continued ramp up of
production from Devils Tower, typical variability in the timing of oil cargo
shipments in South Africa and Tunisia and the impact of a full quarter of VPP
volumes sold.
Second quarter production costs (including production and ad valorem taxes) are
expected to average $6.25 to $6.75 per BOE based on current NYMEX strip prices
for oil and gas. Depreciation, depletion and amortization expense is expected to
average $9.10 to $9.60 per BOE.
Total exploration and abandonment expense is expected to be $50 million to $70
million and includes carryover costs associated with unsuccessful wells that
were in progress at the end of the first quarter, plans to drill two deepwater
Gulf of Mexico exploration wells and the acquisition of additional seismic data.
General and administrative expense is expected to be $27 million to $29 million.
Interest expense is expected to be $29 million to $32 million, and accretion of
discount on asset retirement obligations is expected to be $2 million to $3
million.
The Company's second quarter effective income tax rate is expected to range from
36% to 39% based on current capital spending plans, including cash income taxes
of $5 million to $10 million that are principally related to Argentine and
Tunisian income taxes and nominal alternative minimum tax in the U.S. Other than
in Argentina and Tunisia, 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 first 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. Or you may choose
to dial (888) 569-5033 (confirmation code: 6264844) to listen to the call by
telephone and view the accompanying visual presentation at the website above. A
telephone replay will be available by dialing (888) 203-1112 (confirmation code:
6264844).
Pioneer is a large independent oil and gas exploration and production company
with operations in the United States, Argentina, Canada, Equatorial Guinea,
Nigeria, South Africa 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 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,
international operations and associated international political and economic
instability, 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)
March 31, December 31,
2005 2004
----------- ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 16,039 $ 7,257
Accounts receivable, net 224,874 210,279
Inventories 41,256 40,332
Prepaid expenses 8,355 10,822
Deferred income taxes 188,124 115,206
Other current assets, net 9,213 9,529
---------- ----------
Total current assets 487,861 393,425
---------- ----------
Property, plant and equipment, at cost:
Oil and gas properties, using the successful efforts
method of accounting 8,338,605 8,124,616
Accumulated depletion, depreciation and amortization (2,395,972) (2,243,549)
---------- ----------
Total property, plant and equipment 5,942,633 5,881,067
---------- ----------
Deferred income taxes 2,038 2,963
Goodwill 307,951 315,880
Other assets, net 141,854 135,132
---------- ----------
$ 6,882,337 $ 6,728,467
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 282,854 $ 216,051
Interest payable 29,976 45,735
Income taxes payable 16,295 13,520
Deferred revenue 84,469 -
Other current liabilities 509,405 269,153
---------- ----------
Total current liabilities 922,999 544,459
---------- ----------
Long-term debt 1,831,938 2,385,950
Deferred income taxes 518,291 607,415
Deferred revenue 545,811 -
Other liabilities and minority interests 556,358 358,863
Stockholders' equity 2,506,940 2,831,780
---------- ----------
$ 6,882,337 $ 6,728,467
========== ==========
PIONEER NATURAL RESOURCES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
(Unaudited)
Three months ended
March 31,
--------------------------
2005 2004
---------- -----------
Revenues and other income:
Oil and gas $ 520,312 $ 435,527
Interest and other 28,333 1,735
Gain (loss) on disposition of assets, net 2,221 (13)
--------- ---------
550,866 437,249
--------- ---------
Costs and expenses:
Oil and gas production 113,962 78,212
Depletion, depreciation and amortization 156,151 136,499
Impairment of long-lived assets 152 -
Exploration and abandonments 67,385 80,506
General and administrative 29,585 18,329
Accretion of discount on asset retirement obligations 2,140 1,966
Interest 33,251 21,576
Other 11,720 196
--------- ---------
414,346 337,284
--------- ---------
Income before income taxes 136,520 99,965
Income tax provision (51,863) (39,777)
--------- ---------
Net income $ 84,657 $ 60,188
========= =========
Net income per share:
Basic $ .59 $ .51
========= =========
Diluted $ .58 $ .50
========= =========
Weighted average shares outstanding:
Basic 142,898 118,719
========= =========
Diluted 147,345 120,264
========= =========
PIONEER NATURAL RESOURCES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Three months ended
March 31,
--------------------------
2005 2004
---------- -----------
Cash flows from operating activities:
Net income $ 84,657 $ 60,188
Depletion, depreciation and amortization 156,151 136,499
Impairment of long-lived assets 152 -
Exploration expenses, including dry holes 58,445 78,820
Deferred income taxes 42,972 32,720
Loss (gain) on disposition of assets, net (2,221) 13
Accretion of discount on asset retirement obligations 2,140 1,966
Noncash interest expense 696 (6,370)
Commodity hedge related activity (3,061) (11,392)
Amortization of stock-based compensation 5,152 1,979
Amortization of deferred revenue (11,625) -
Other noncash items 4,678 (658)
Changes in operating assets and liabilities, net of
effects from acquisition:
Accounts receivable, net (12,033) (33,737)
Inventories (1,315) (19)
Prepaid expenses 2,449 917
Other current assets, net (198) 757
Accounts payable 17,593 (6,002)
Interest payable (16,259) 693
Income taxes payable 2,775 3,058
Other current liabilities 3,736 (5,802)
--------- ---------
Net cash provided by operating activities 334,884 253,630
Net cash provided by (used in) investing activities 361,899 (172,301)
Net cash used in financing activities (688,202) (91,426)
--------- ---------
Net increase (decrease) in cash and cash equivalents 8,581 (10,097)
Effect of exchange rate changes on cash
and cash equivalents 201 (180)
Cash and cash equivalents, beginning of period 7,257 19,299
--------- ---------
Cash and cash equivalents, end of period $ 16,039 $ 9,022
========= =========
PIONEER NATURAL RESOURCES COMPANY
SUMMARY PRODUCTION AND PRICE DATA
(Unaudited)
Three months ended
March 31,
------------------------
2005 2004
--------- ---------
Average Daily Sales Volumes:
Oil (Bbls) - U.S. 28,723 24,971
Argentina 8,191 8,628
Canada 230 100
Africa 11,967 14,034
--------- ---------
Total 49,111 47,733
Natural gas liquids (Bbls) - U.S. 17,543 20,936
Argentina 1,572 1,424
Canada 601 1,046
--------- ---------
Total 19,716 23,406
Gas (Mcf) - U.S. 538,285 527,630
Argentina 130,351 97,818
Canada 49,546 40,019
--------- ---------
Total 718,182 665,467
Total Production:
Oil (MBbls) 4,420 4,344
Natural gas liquids (MBbls) 1,774 2,130
Gas (MMcf) 64,636 60,558
Equivalent barrels (MBOE) 16,967 16,567
Average Reported Price (a):
Oil (per Bbl) - U.S. $ 28.96 $ 26.67
Argentina $ 31.75 $ 27.93
Canada $ 53.81 $ 35.00
Africa $ 44.28 $ 31.41
Worldwide $ 33.27 $ 28.31
Natural gas liquids (per Bbl) - U.S. $ 26.15 $ 21.52
Argentina $ 30.35 $ 29.16
Canada $ 39.07 $ 26.51
Worldwide $ 26.88 $ 22.21
Gas (per Mcf) - U.S. $ 5.94 $ 5.10
Argentina $ .88 $ .58
Canada $ 6.17 $ 4.22
Worldwide $ 5.04 $ 4.38
<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
March 31,
-----------------------
2005 2004
--------- ---------
Net income $ 84,657 $ 60,188
Depletion, depreciation and amortization 156,151 136,499
Impairment of long-lived assets 152 -
Exploration and abandonments 67,385 80,506
Accretion of discount on asset retirement obligations 2,140 1,966
Interest expense 33,251 21,576
Income tax provision 51,863 39,777
Loss (gain) on disposition of assets, net (2,221) 13
Commodity hedge related activity (3,061) (11,392)
Amortization of stock-based compensation 5,152 1,979
Amortization of deferred revenue (11,625) -
Other noncash items 4,678 (658)
-------- --------
EBITDAX (a) 388,522 330,454
Less: Cash interest expense (32,555) (27,946)
Current income taxes (8,891) (7,057)
-------- --------
Discretionary cash flow (b) 347,076 295,451
Less: Cash exploration expense (8,940) (1,686)
Changes in operating assets and liabilities (3,252) (40,135)
-------- --------
Net cash provided by operating activities $ 334,884 $ 253,630
======== ========
<FN>
- -------------
(a) "EBITDAX" represents earnings before depletion, depreciation and
amortization expense; impairment of long-lived assets; exploration and
abandonments; accretion of discount on asset retirement obligations;
interest expense; income taxes; gain or loss on the disposition of assets;
commodity hedge related activity; amortization of stock-based compensation;
amortization of deferred revenue; and other noncash items.
(b) Discretionary cash flow equals cash flows from operating activities before
changes in operating assets and liabilities and before cash exploration
expense.
</FN>
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL INFORMATION
As of May 2, 2005
Open Commodity Hedge Positions
------------------------------
2005
-----------------------------------------
Second Third Fourth
Quarter Quarter Quarter Year 2006 2007 2008
-------- -------- -------- -------- ------- ------- -------
Average Daily Oil Production Hedged:
Swap Contracts:
Volume (Bbl) 27,000 27,000 27,000 27,000 10,000 13,000 17,000
NYMEX price (Bbl) $ 27.97 $ 27.97 $ 27.97 $ 27.97 $ 31.69 $ 30.89 $ 29.21
Collar Contracts:
Volume (Bbl) - - - - 3,500 - -
NYMEX price (Bbl)
Ceiling $ - $ - $ - $ - $ 41.95 $ - $ -
Floor $ - $ - $ - $ - $ 35.00 $ - $ -
Average Daily Gas Production Hedged:
Swap Contracts:
Volume (Mcf) 282,240 283,422 253,535 273,032 73,842 29,195 5,000
NYMEX price (MMBtu) (a) $ 5.20 $ 5.20 $ 5.20 $ 5.20 $ 4.30 $ 4.30 $ 5.40
Collar Contracts:
Volume (Mcf) - - - - 17,329 - -
NYMEX price (MMBtu)
Ceiling $ - $ - $ - $ - $ 9.15 $ - $ -
Floor $ - $ - $ - $ - $ 6.65 $ - $ -
<FN>
- ---------------
(a) Approximate, based on historical differentials to index prices.
</FN>
Amortization of Volumetric Production Payment Proceeds and Derivative Losses
----------------------------------------------------------------------------
(in thousands)
2005
-------------------------------------
Second Third Fourth
Quarter Quarter Quarter Year 2006 Thereafter Total
------- ------- ------- ------- -------- ---------- --------
VPP proceeds, net of
transaction costs $19,685 $21,126 $21,061 $61,872 $184,103 $635,608 $881,583
Net hedge obligations assigned 765 756 757 2,278 6,248 28,973 37,499
------ ------ ------ ------ ------- ------- -------
Total deferred revenue (a) 20,450 21,882 21,818 64,150 190,351 664,581 919,082
Less net derivative losses to be
recognized in pretax earnings (b) (5,370) (1,043) (2,307) (8,720) (4,860) (19,921) (33,501)
------- ------ ------ ------ ------- ------- -------
Total VPP impact to pretax
earnings $15,080 $20,839 $19,511 $55,430 $185,491 $644,660 $885,581
====== ====== ====== ====== ======= ======= =======
<FN>
- --------------
(a) Deferred revenue will be amortized as increases to oil and gas revenues
during the indicated future periods.
(b) Represents the remaining pretax earnings impact of the derivatives assigned
in the VPPs.
</FN>