EXHIBIT 99.1
NEWS RELEASE
Company Contacts: (972) 444-9001
Investors: Frank Hopkins or Scott Rice
Media and Public Affairs: Susan Spratlen
Pioneer Reports Fourth Quarter and Full Year 2006 Results
Dallas, Texas, February 6, 2007 -- Pioneer Natural Resources Company (NYSE:PXD)
today announced financial and operating results for the quarter and year ended
December 31, 2006.
o Net income for the fourth quarter was $28 million, or $.22 per diluted
share.
o Fourth quarter oil and gas sales from continuing operations averaged
100,799 barrels oil equivalent per day (BOEPD).
o North American production for the year rose 12% from equivalent
volumetric production payment (VPP) adjusted 2005 levels.
o Total production rose 7% to 35.9 million barrels oil equivalent
(MMBOE) from equivalent VPP adjusted 2005 levels. On a per share
basis, total production was up 19%.
o During 2006, 8.8 million shares were repurchased at $39.16 per share,
essentially completing the $1 billion share repurchase program
authorized by the board of directors in September 2005.
o Net debt-to-book capitalization ended the year at 33%, reflecting the
Company's strong balance sheet.
o Net proved reserves of 91 MMBOE were added in 2006 at a finding and
development cost of $18.36 per barrel oil equivalent (BOE), resulting
in reserve replacement of 200% of production.
Income from continuing operations for the fourth quarter of 2006 was $27
million, or $.22 per diluted share, as compared to $83 million, or $.64 per
diluted share, for the fourth quarter of 2005. Income from continuing operations
for the fourth quarter of 2006 included the following unusual items:
o incremental reclamation charge of $33 million ($21 million or $.17 per
diluted share after taxes) resulting from the denial of the Company's
application to "reef-in-place" the debris from East Cameron 322 which
was destroyed in Hurricane Rita,
o estimated insurance recoveries for debris removal associated with East
Cameron 322 of $43 million ($27 million or $.22 per diluted share
after taxes) and
o a charge of $18 million ($13 million or $.11 per diluted share after
taxes) related to previously drilled discoveries that had been
suspended pending additional commercialization, appraisal and/or
technical work.
Scott D. Sheffield, Pioneer's Chairman and CEO, stated, "Throughout 2006, we
demonstrated that we can deliver strong, consistent production growth in North
America. We expanded our resource base and made significant progress on two
multi-year development projects. Our low-risk onshore development programs
continue to deliver high returns, and with the contributions from our resource
plays, especially in the Edwards Trend, and the initiation of production from
the South Coast Gas project during the second half of 2007, we've laid a strong
foundation for achieving our 10+% production growth target for 2007."
For the twelve months ended December 31, 2006, net income was $740 million, or
$5.81 per diluted share, compared to $535 million, or $3.80 per diluted share
for the prior year. Income from continuing operations was $172 million, or $1.36
per diluted share, compared to income from continuing operations of $195
million, or $1.40 per diluted share, for the same period in 2005.
Operations Review
For 2006, Pioneer posted outstanding operating results, drilling approximately
1,100 wells with 96% success. In the Permian Basin, Pioneer drilled over 300
wells in 2006, up from 190 wells during 2005, and increased Spraberry production
by 21%. Successful drilling in the deeper Wolfcamp formation contributed to
these strong results. The Company completed several attractive bolt-on
acquisitions which added approximately 230,000 gross leasehold acres in the
Spraberry field with estimated resource potential of more than 50 MMBOE.
In the Raton field, Pioneer drilled approximately 300 wells in 2006 and
increased annual production by 10%, supported by pipeline expansion and improved
compression. In South Texas, Pioneer focused on testing prospects with potential
to further expand the Edwards Trend play, drilling six new discoveries with
total program success of 88%.
In Canada, annual production rose 18% during 2006, supported by a 150-well
Horseshoe Canyon CBM drilling program. In Tunisia, drilling success continued in
the Adam Concession during 2006 and was extended to two adjacent blocks in early
2007. Recent discoveries in each of the three areas have tested approximately
13,000 BOPD on a combined gross basis. New 3-D seismic was acquired during 2006
to further optimize the drilling program going forward.
On the North Slope of Alaska, Pioneer completed the construction, contouring and
armoring of the gravel drill site for its Oooguruk development project during
2006. Currently, winter-access construction activities are underway with
development drilling anticipated to begin in late 2007 and first oil production
in 2008.
Offshore South Africa, significant progress was made on the South Coast Gas
project during 2006. Development wells were drilled and subsea equipment was
fabricated in anticipation of first production during the second half of 2007.
Tim Dove, Pioneer's President and Chief Operating Officer, stated, "I
congratulate our operations teams for their success in executing the shift in
our focus to lower-risk opportunities, primarily in North America. The strong
results delivered in 2006 support our confidence in our people and our expanding
portfolio of growth opportunities in achieving continued success in 2007."
Financial Review
Fourth quarter oil sales averaged 25,004 barrels per day (BPD) and natural gas
liquids sales averaged 18,708 BPD. Gas sales in the fourth quarter averaged 343
MMcfpd. The reported price for oil was $61.67 per barrel and included $12.58 per
barrel related to deferred revenue from VPPs for which production was not
recorded. The price for natural gas liquids was $32.78 per barrel. The reported
price for gas was $5.67 per Mcf, including $.58 per Mcf related to deferred
revenue from VPPs for which production was not recorded.
Fourth quarter production costs averaged $10.52 per BOE and were less than
expected due to lower than anticipated 2006 ad valorem taxes.
Exploration and abandonment costs were $96 million for the quarter and included
$44 million of unsuccessful drilling costs, $18 million of costs associated with
previously drilled discoveries that will not be developed (included with unusual
items noted above), $32 million of geologic and geophysical expenses, including
seismic and personnel costs, and $2 million of acreage and other costs. Net
activity related to the abandonment of East Cameron 322 resulted in an increase
to earnings of $10 million (included with unusual items noted above and
representing incremental abandonment charges of $33 million more than offset by
$43 million of estimated insurance recoveries).
Comparable sales for the fourth quarter 2005, adjusted to exclude discontinued
operations from asset divestitures and assuming that the 2006 VPP volumes were
in place for all of the 2005 quarter, averaged 95,166 BOEPD. Adjusted to exclude
only discontinued operations, sales averaged 103,906 BOEPD and included oil
sales of 32,357 BPD, natural gas liquids sales of 19,568 BPD and gas sales of
312 MMcfpd. Reported prices for fourth quarter 2005 were $40.33 per barrel for
oil, $37.22 per barrel for natural gas liquids and $8.10 per Mcf for gas,
including $.76 per Mcf related to deferred revenue from VPPs for which
production was not recorded.
Full-year 2006 oil and gas sales averaged 98,382 BOEPD, including oil sales of
24,540 BPD, natural gas liquids sales of 18,951 BPD and gas sales of 329 MMcfpd.
Reported prices for 2006 were $65.51 per barrel for oil and included $12.96 per
barrel related to deferred revenue from VPPs for which production was not
recorded, $35.64 per barrel for natural gas liquids and $6.23 per Mcf for gas,
including $.62 per Mcf related to deferred revenue from VPPs for which
production was not recorded.
Comparable oil and gas sales for full-year 2005 (excluding discontinued
operations and assuming the 2005 and 2006 VPP volumes were in place for all of
2005) averaged 91,640 BOEPD. Adjusted to exclude only discontinued operations
from asset divestitures, full-year 2005 oil and gas sales averaged 101,366
BOEPD, including oil sales of 32,217 BPD, natural gas liquids sales of 17,906
BPD and gas sales of 307 MMcfpd. Reported prices for 2005 were $38.70 per barrel
for oil, $32.12 per barrel for natural gas liquids and $7.02 per Mcf for gas,
including $.68 per Mcf related to deferred revenue from VPPs for which
production was not recorded.
Financial Outlook
First quarter 2007 production is forecasted to average 97,000 to 102,000 BOEPD,
approximately 3,000 BOEPD lower than anticipated due to significant winter
weather downtime in the Raton, Hugoton and West Panhandle fields during January.
First quarter production costs (including production and ad valorem taxes and
transportation costs) are expected to average $11.25 to $12.25 per BOE based on
current NYMEX strip prices for oil and gas. Production costs per BOE are
forecasted to be approximately $.25 per BOE higher in the first quarter as a
result of the weather downtime and related repairs. Depreciation, depletion and
amortization expense is expected to average $10.00 to $11.00 per BOE.
Total exploration and abandonment expense during the first quarter is expected
to be $50 million to $90 million and could include up to $25 million of costs
associated with high-impact drilling in the NPR-A on Alaska's North Slope. It
could also include up to $30 million associated with lower-risk resource plays
in the Edwards Trend in South Texas, Uinta/Piceance basins in the Rockies,
Canada and Tunisia and up to $5 million for acreage and other expenses. In
addition, exploration expense is expected to include up to $30 million for
seismic investments and personnel, primarily related to the onshore resource
plays Pioneer is currently progressing.
General and administrative expense is expected to be $30 million to $35 million,
including performance-related compensation. Interest expense is expected to be
$25 million to $28 million. Accretion of discount on asset retirement
obligations is expected to be $1 million to $2 million.
The Company's first quarter effective income tax rate is expected to range from
37% to 45% based on current capital spending plans. Cash income taxes are
expected to range from $5 million to $15 million, principally related to
Tunisian income taxes.
The Company's financial results and oil and gas hedges are outlined on the
attached schedules. First quarter 2007 amortization of deferred losses on
terminated oil and gas hedges is expected to be $33 million.
Earnings Conference Call
On Wednesday, February 7 at 10:00 a.m. Eastern Time, Pioneer will discuss its
quarterly financial and operating results with an accompanying presentation. The
call will be webcast on Pioneer's website, www.pxd.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 (800) 310-1961 (confirmation code: 6881455) 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:
6881455).
Pioneer is a large independent oil and gas exploration and production company,
headquartered in Dallas, with operations in the United States, Canada, South
Africa and Tunisia. For more information, visit Pioneer's website at
www.pxd.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, the ability to obtain
environmental and other permits and the timing thereof, other government
regulation or action, third party approvals, international operations and
associated international political and economic instability, litigation, the
costs and results of drilling and operations, availability of drilling
equipment, 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, the assumptions underlying
production forecasts, 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 undertakes no duty to publicly update these
statements except as required by law.
PIONEER NATURAL RESOURCES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
2006 2005
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 7,033 $ 18,802
Accounts receivable, net 199,371 337,658
Income taxes receivable 24,693 1,198
Inventories 95,131 79,659
Prepaid expenses 11,509 18,091
Deferred income taxes 82,927 158,878
Other current assets, net 115,894 9,518
----------- -----------
Total current assets 536,558 623,804
----------- -----------
Property, plant and equipment, at cost:
Oil and gas properties, using the successful efforts
method of accounting 8,178,052 8,813,134
Accumulated depletion, depreciation and amortization (1,895,408) (2,577,946)
------------ -----------
Total property, plant and equipment 6,282,644 6,235,188
----------- -----------
Deferred income taxes 345 -
Goodwill 309,908 311,651
Other assets, net 225,944 158,591
----------- -----------
$ 7,355,399 $ 7,329,234
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 349,820 $ 345,204
Interest payable 31,008 40,314
Income taxes payable 12,865 22,470
Deferred revenue 181,232 190,327
Other current liabilities 312,054 435,040
----------- -----------
Total current liabilities 886,979 1,033,355
----------- -----------
Long-term debt 1,497,162 2,058,412
Deferred income taxes 1,172,507 767,329
Deferred revenue 483,279 664,511
Other liabilities and minority interests 330,801 588,525
Stockholders' equity 2,984,671 2,217,102
----------- -----------
$ 7,355,399 $ 7,329,234
=========== ===========
PIONEER NATURAL RESOURCES COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
Three months ended Year ended
December 31, December 31,
------------------------- ---------------------------
2006 2005 2006 2005
---------- ---------- ----------- -----------
Revenues and other income:
Oil and gas $ 376,905 $ 419,398 $ 1,582,049 $ 1,453,240
Interest and other 16,642 9,595 58,723 31,531
Gain (loss) on disposition of assets, net (3,707) 57,202 (7,891) 59,827
---------- ---------- ----------- -----------
389,840 486,195 1,632,881 1,544,598
---------- ---------- ----------- -----------
Costs and expenses:
Oil and gas production 97,539 93,046 398,257 346,439
Depletion, depreciation and amortization 93,845 84,801 359,523 299,944
Impairment of long-lived assets - - - 644
Exploration and abandonments 96,065 48,445 264,145 163,323
General and administrative 29,694 30,336 121,830 114,237
Accretion of discount on asset retirement
obligations 1,356 1,026 4,826 4,209
Interest 24,104 35,075 107,032 126,086
Hurricane activity, net (10,000) 7,000 32,000 39,813
Other 4,688 40,698 36,280 99,437
---------- ---------- ----------- -----------
337,291 340,427 1,323,893 1,194,132
---------- ---------- ----------- -----------
Income from continuing operations before
income taxes 52,549 145,768 308,988 350,466
Income tax provision (25,472) (62,598) (136,666) (155,832)
---------- ---------- ----------- -----------
Income from continuing operations 27,077 83,170 172,322 194,634
Income from discontinued operations, net of tax 609 57,609 567,409 339,934
---------- ---------- ----------- -----------
Net income $ 27,686 $ 140,779 $ 739,731 $ 534,568
========== ========== =========== ===========
Basic earnings per share:
Income from continuing operations $ .22 $ .66 $ 1.39 $ 1.42
Income from discontinued operations
net of tax .01 .45 4.56 2.48
---------- ---------- ----------- -----------
Net income $ .23 $ 1.11 $ 5.95 $ 3.90
========== ========== =========== ===========
Diluted earnings per share:
Income from continuing operations $ .22 $ .64 $ 1.36 $ 1.40
Income from discontinued operations,
net of tax - .44 4.45 2.40
---------- ---------- ----------- -----------
Net income $ .22 $ 1.08 $ 5.81 $ 3.80
========== ========== =========== ===========
Weighted average shares outstanding:
Basic 120,914 127,243 124,359 137,110
========== ========== =========== ===========
Diluted 123,067 131,465 127,608 141,417
========== ========== =========== ===========
PIONEER NATURAL RESOURCES COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three months ended Year ended
December 31, December 31,
------------------------- --------------------------
2006 2005 2006 2005
---------- ---------- ---------- -----------
Cash flows from operating activities:
Net income $ 27,686 $ 140,779 $ 739,731 $ 534,568
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion, depreciation and amortization 93,845 84,801 359,523 299,944
Impairment of long-lived assets - - - 644
Exploration expenses, including dry holes 62,160 18,731 148,077 53,489
Hurricane activity 33,000 7,000 75,000 39,813
Deferred income taxes 44,391 44,228 154,911 104,987
Loss (gain) on disposition of assets, net 3,707 (57,202) 7,891 (59,827)
Loss on extinguishment of debt - - 8,076 25,975
Accretion of discount on asset retirement
obligations 1,356 1,026 4,826 4,209
Discontinued operations 6,830 114,076 (537,073) 376,952
Interest expense 3,520 1,844 11,042 4,399
Commodity hedge related activity (2,078) 30,306 (11,498) 21,237
Amortization of stock-based compensation 6,708 7,238 32,065 26,857
Amortization of deferred revenue (47,096) (21,817) (190,327) (75,773)
Other noncash items 1,571 10,182 15,589 19,940
Changes in operating assets and liabilities, net
of effects from acquisitions
and dispositions:
Accounts receivable, net (40,454) (82,760) 121,360 (128,015)
Income taxes receivable (23,426) 382 (23,495) (1,198)
Inventories 4,053 (15,281) (48,060) (36,948)
Prepaid expenses 4,517 201 4,808 (7,504)
Other current assets, net (44,531) (484) (42,484) 972
Accounts payable (14,832) 60,335 (36,085) 83,960
Interest payable 4,976 18,842 (6,500) (7,115)
Income taxes payable (21,515) 3,345 (3,695) 8,950
Other current liabilities (6,230) 1,677 (28,854) (13,362)
----------- ---------- ---------- -----------
Net cash provided by operating activities 98,158 367,449 754,828 1,277,154
Net cash provided by (used in) investing
activitites (452,597) (217,514) 145,515 84,734
Net cash provided by (used in) financing
activities 261,683 (195,552) (913,543) (1,353,634)
Net increase (decrease) in cash and cash
equivalents (92,756) (45,617) (13,200) 8,254
Effect of exchange rate changes on cash and
cash equivalents (283) (89) 1,431 3,291
Cash and cash equivalents, beginning of period 100,072 64,508 18,802 7,257
---------- ---------- ---------- -----------
Cash and cash equivalents, end of period $ 7,033 $ 18,802 $ 7,033 $ 18,802
========== ========== ========== ===========
PIONEER NATURAL RESOURCES COMPANY
SUMMARY PRODUCTION AND PRICE DATA
(Unaudited)
Three months ended Year ended
December 31, December 31,
------------------- -------------------
2006 2005 2006 2005
------- ------- ------- -------
Average Daily Sales Volumes
from Continuing Operations:
Oil (Bbls) - U.S. 18,639 23,877 17,716 21,942
Canada 347 258 311 210
Africa 6,018 8,222 6,513 10,065
------- ------- ------- -------
Worldwide 25,004 32,357 24,540 32,217
======= ======= ======= =======
Natural gas liquids (Bbls) - U.S. 18,156 19,087 18,488 17,403
Canada 552 481 463 503
------- ------- ------- -------
Worldwide 18,708 19,568 18,951 17,906
======= ======= ======= =======
Gas (Mcf) - U.S. 291,509 274,671 284,732 271,033
Canada 46,280 37,220 43,420 36,427
Africa 4,740 - 1,195 -
------- ------- ------- -------
Worldwide 342,529 311,891 329,347 307,460
======= ======= ======= =======
Average Daily Sales Volumes
from Discontinued Operations:
Oil (Bbls) - U.S. - 4,688 2,400 5,280
Argentina - 7,564 2,515 7,869
Canada - - - 28
------- ------- ------- -------
Worldwide - 12,252 4,915 13,177
======= ======= ======= =======
Natural gas liquids (Bbls) - U.S. - - - 65
Argentina - 1,854 421 1,824
Canada - - - 112
------- ------- -------- -------
Worldwide - 1,854 421 2,001
======= ======= ======= =======
Gas (Mcf) - U.S. (36) 175,615 36,038 230,171
Argentina - 140,025 43,905 137,032
Canada (114) - 14 6,489
------- ------- ------- -------
Worldwide (150) 315,640 79,957 373,692
======= ======= ======= =======
Average Reported Prices (a):
Oil (per Bbl) - U.S. $ 62.45 $ 33.71 $ 65.73 $ 32.01
Canada $ 54.02 $ 52.99 $ 65.57 $ 52.12
Africa $ 59.72 $ 59.16 $ 64.91 $ 53.00
Worldwide $ 61.67 $ 40.33 $ 65.51 $ 38.70
Natural gas liquids (per Bbl) - U.S. $ 32.47 $ 36.80 $ 35.24 $ 31.72
Canada $ 43.23 $ 53.88 $ 51.47 $ 45.79
Worldwide $ 32.78 $ 37.22 $ 35.64 $ 32.12
Gas (per Mcf) - U.S. $ 5.72 $ 7.73 $ 6.15 $ 6.94
Canada $ 5.33 $ 10.83 $ 6.75 $ 7.67
Africa $ 5.97 $ - $ 5.97 $ -
Worldwide $ 5.67 $ 8.10 $ 6.23 $ 7.02
<FN>
- -----------
(a) Average prices are attributable to continuing operations and include the
results of hedging activities and amortization of VPP deferred revenue.
</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,
------------------------- -------------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Net income $ 27,686 $ 140,779 $ 739,731 $ 534,568
Depletion, depreciation and amortization 93,845 84,801 359,523 299,944
Impairment of long-lived assets - - - 644
Exploration and abandonments 96,065 48,445 264,145 163,323
Hurricane activity 33,000 7,000 75,000 39,813
Loss on extinguishment of debt - - 8,076 25,975
Accretion of discount on asset retirement
obligations 1,356 1,026 4,826 4,209
Interest expense 24,104 35,075 107,032 126,086
Income tax provision 25,472 62,598 136,666 155,832
Loss (gain) on disposition of assets, net 3,707 (57,202) 7,891 (59,827)
Discontinued operations 3,023 115,353 (385,737) 392,854
Commodity hedge related activity (2,078) 30,306 (11,498) 21,237
Amortization of stock-based compensation 6,708 7,238 32,065 26,857
Amortization of deferred revenue (47,096) (21,817) (190,327) (75,773)
Other noncash items 1,571 10,182 15,589 19,940
---------- ---------- --------- ---------
EBITDAX (a) 267,363 463,784 1,162,982 1,675,682
Less: Cash interest expense (20,584) (33,231) (95,990) (121,687)
Current income taxes 22,726 (18,375) (130,936) (57,683)
---------- ---------- --------- ---------
Discretionary cash flow (b) 269,505 412,178 936,056 1,496,312
Less: Cash exploration expense (33,905) (30,986) (118,223) (118,898)
Changes in operating assets and
liabilities (137,442) (13,743) (63,005) (100,260)
---------- ---------- --------- ----------
Net cash provided by operating activities $ 98,158 $ 367,449 $ 754,828 $1,277,154
========== ========== ========= ==========
<FN>
- ------------
(a) "EBITDAX" represents earnings before depletion, depreciation and
amortization expense; impairment of long-lived assets; exploration and
abandonments; hurricane activity; accretion of discount on asset retirement
obligations; interest expense; income taxes; gain or loss on the
disposition of assets; loss on extinguishment of debt; effects from
discontinued operations; commodity hedge related activity; 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 February 5, 2007
Open Commodity Hedge Positions
2007
-----------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Year 2008
-------- -------- -------- -------- -------- -------
Average Daily Oil Production
Hedged:
Swap Contracts:
Volume (Bbl) 689 - - - 170 4,000
NYMEX price (Bbl) $ 30.58 $ - $ - $ - $ 30.58 $ 32.00
Average Daily Gas Production
Hedged:
Swap Contracts:
Volume (MMBtu) 107,063 185,000 185,000 185,000 165,783 15,000
NYMEX price (MMBtu) (a) $ 8.69 $ 8.54 $ 8.54 $ 8.54 $ 8.56 $ 9.10
Collar Contracts:
Volume (MMBtu) 25,000 - - - 6,164 -
NYMEX price (MMBtu) (a)
Ceiling $ 12.82 $ - $ - $ - $ 12.82 $ -
Floor $ 10.00 $ - $ - $ - $ 10.00 $ -
<FN>
- ---------------
(a) Approximate, based on historical differentials to index prices.
</FN>
Amortization of Volumetric Production Payment Proceeds and
Derivative Gains and (Losses)
(in thousands)
2007
----------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter 2008 Thereafter Total
--------- --------- --------- --------- -------- ---------- ---------
Unamortized VPP proceeds, net of
transaction costs $ 43,564 $ 43,828 $ 44,058 $ 43,766 $152,304 $ 308,018 $ 635,538
Net hedge obligations assigned 1,470 1,495 1,520 1,531 5,834 17,123 28,973
--------- --------- --------- --------- -------- --------- ---------
Total deferred revenue (a) 45,034 45,323 45,578 45,297 158,138 325,141 664,511
Less derivative gains and (losses)
to be recognized in pretax
earnings (b) (3,765) 148 424 (347) (4,373) (12,744) (20,657)
--------- --------- --------- --------- -------- --------- ---------
Total VPP impact to pretax earnings $ 41,269 $ 45,471 $ 46,002 $ 44,950 $153,765 $ 312,397 $ 643,854
========= ========= ========= ========= ======== ========= =========
<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, which will be reflected in oil and gas revenues.
</FN>
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL INFORMATION
As of February 5, 2007
(continued)
Deferred Losses on Terminated Hedges (a)
(in thousands)
2007
----------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter 2008 Thereafter Total
--------- --------- -------- --------- -------- ---------- ---------
Commodity hedge losses (b) $ (33,388) $ (38,849) $ (38,410) $ (36,220) $ (94,653) $ - $(241,520)
Debt hedge losses (c) (58) (87) (89) (91) (371) (4,413) (5,109)
--------- --------- --------- --------- --------- --------- ---------
Total deferred losses $ (33,446) $ (38,936) $ (38,499) $ (36,311) $ (95,024) $ (4,413) $(246,629)
========= ========= ========= ========= ========= ========= =========
<FN>
- --------------
(a) Excludes deferred hedge gains and losses on terminated VPPs.
(b) Deferred commodity hedge losses will be amortized as decreases to oil and
gas revenues during the indicated future periods.
(c) Deferred debt hedge losses will be amortized as increases to interest
expense during the indicated future periods.
</FN>