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Q2 2011 Earnings Call – Pioneer Natural Resources Co.

Pioneer Natural Resources Co. · Aug 4, 2011 · 46 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 1
    Second Quarter 2011 Earnings August 4, 2011
  2. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 2
    Highlights Q2 2011 adjusted income1 of 115 MM, or 0.94 per diluted share Excludes loss from discontinued operations of 2 MM after tax, or 0.01 per diluted share Excludes unrealized mark-to-market derivative gain of 133 MM after tax,…
  3. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 3
    Targeting 18+% Compound Annual Production Growth For 2011 2014 2012 production growth target increased from 18+% to 20+% vs. 2011 Extending compound annual production growth target of 18+% through 2014 Liquids production increases…
  4. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 4
    2011 Capital Budget Changes Increasing 2011 drilling budget from 1.6 B to 1.8 B primarily due to: Spraberry deeper drilling and horizontal R&D programs (50 MM) Increasing from 35 rigs to 45 rigs in Spraberry by year end (50 MM)…
  5. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 5
    2011 Operating Cash Flow Sensitivity to Commodity Prices ( MM) 9.00 8.00 NYMEX Gas Price (/MCF) 7.00 6.00 5.00 4.00 3.00 60.00 70.00 80.00 90.00 100.00 110.00 120.00 130.00 NYMEX Oil Price (/BBL) Early August…
  6. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 6
    Substantial Operating Cash Flow Growth1 Billions 3.1 2.6 2.0 1.5 0.92 2010 2011E 2012E 2013E 2014E 1) Based on early August strip pricing and includes derivative positions as of August 2, 2011 2) Excludes 0.4 B (from…
  7. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 7
    Investment Highlights 20,000 liquids-rich drilling locations in low-risk resource plays Successfully accelerating drilling in the Spraberry and Eagle Ford Shale Redeployment of proceeds from Tunisia sale allows further…
  8. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 8
    PXD Largest Spraberry Acreage Holder, Driller and Producer 20,000+ Future Drilling Locations PERMIAN GAINES DAWSON BORDEN SCURRY BASIN 24 MM acres ANDREWS MARTIN HOWARD MITCHELL PXD Acreage (900,000 Acres; 75% HBP)…
  9. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 9
    Continued Deeper Drilling Success in Spraberry Field 6,000 ft Upper Clear Spraberry Spraberry fork Wells Single-Zone Potential Prospective Incremental Cost Completed Peak Rate Incremental EUR PXD Acreage Strawn 85 60 M 70…
  10. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 10
    Spraberry Horizontal R&D Program 1-rig horizontal Spraberry R&D program Jo Mill Lower Spraberry First Lower Wolfcamp shale horizontal Shale 3,500 foot lateral with 15-stage completion Dean IP of 200 BOPD + 120 MCFD with less than…
  11. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 11
    Spraberry Bringing Wells On Production As Expected 2011 Spraberry Wells Put On Production Per Quarter 300 Adding 7th frac fleet in Q43 Increased frac fleets from 4 to 62 in May 146 wells put on production as expected 150 4…
  12. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 12
    Continuing to Accelerate Spraberry Development Spraberry Net Production1 2011 Avg. Well Cost: 1.5 1.6 MM (MBOEPD) Before Tax IRR: 45% 77 84 Adding incremental oil transportation capacity in Q3 68 74 Oil transport truck shortfall…
  13. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 13
    Eagle Ford Shale Operational Update Running 12 rigs Current gross well cost: 7 MM - 8 MM Before tax IRRs: 100+% for rich condensate and 75% for lean condensate at early August strip prices (excludes carry benefit) Average lateral…
  14. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 14
    Eagle Ford Shale Bringing Wells On Production As Expected 2011 Eagle Ford Shale Wells Put On Production Per Quarter Adding 3rd frac fleet2 40 6th and 7th CGPs online 8th CGP online Initiated 2 frac fleets1 in April 18 wells put…
  15. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 15
    Ramping Up Eagle Ford Shale Development Eagle Ford Net Production (MBOEPD) 54 60 40 45 26 30 14 17 8 5 2 2010 Q1 Q2 Q3E Q4E 2012E 2013E 2014E 2011E (12 - 15 MBOEPD Avg.) Rigs 7 YE 12 currently 14 16 19 16
  16. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 16
    Barnett Shale Combo Current acreage: 72 M net acres 600 drilling locations Barnett Shale Liquids-Rich Area Continuing to grow leasehold position (42% gas, 42% NGLs, 16% oil) Acquired 160 square miles of 3-D Combo Play Activity…
  17. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 17
    Ramping Up Barnett Shale Combo Development Barnett Shale Net Production1 (MBOEPD) 26 31 18 22 Initiated first Company-owned frac fleet 9 12 46 3 2 3 2010 Q1 Q2 Q3E Q4E 2012E 2013E 2014E 2011E (4 - 5 MBOEPD Avg.) Rigs…
  18. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 18
    Pioneers Vertical Integration Improves Returns and Enhances Execution Spraberry Eagle Ford Shale Barnett Shale Combo 4 frac fleets 1 frac fleet 1 frac fleet (adding 5th fleet Q4) (adding 2nd fleet Q4) 1 coiled tubing unit 14…
  19. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 19
    Vertical Integration Significantly Reduces Well Costs Spraberry Eagle Ford Shale Barnett Shale Combo Frac Fleets Current 4 1 1 By Year-End 2011 5 2 1 Fracs/Fleet/Year 115 55 60 Savings Per Frac1 0.35 MM 1.70 MM 0.75 MM Annual…
  20. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 20
    Q2 2011 Earnings Summary Millions Per Diluted (After Tax) Share Net income attributable to common stockholders 246 2.03 Unrealized mark-to-market (MTM) derivative gains (210 MM before tax) (133) (1.10) Adjusted income excluding…
  21. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 21
    Price Realizations1 Realized Prices (excludes VPPs and derivatives) 98.50 89.43 79.93 72.63 70.41 48.16 41.03 42.17 33.36 33.49 4.23 4.14 4.31 4.02 3.76 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q2…
  22. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 22
    Production Costs (per BOE)1 13.27 13.31 12.82 12.17 0.78 1.08 10.94 0.99 Q2 11 vs. Q1 11 Comparison Workovers 0.67 0.73 3.32 Q2 natural gas processing benefited Production & 3.27 3.32 2.59 from increased third-party Ad Valorem…
  23. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 23
    Q3 2011 Guidance1 Guidance Daily Production (MBOEPD) 125 131 Production Costs (/BOE) 12.00 14.00 Exploration & Abandonment ( MM) 25 - 35 Drilling and Acreage 20 Seismic Activity and Personnel 15 DD&A (/BOE) 13.50 15.00 G&A ( MM)…
  24. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 24
    Supplemental Information Supplemental Information Slides Slide Liquidity Position 26 2011 Capital Spending 27 Revised 2011 Capital Budget 28 Oil and Gas Revenue 29 Historic Production 30 Derivative Position 31 - 33 Future…
  25. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 25
    Liquidity Position (06/30/11)1 Net debt (net of cash balance of 352 MM): 2.2 B Unsecured Senior Credit Facility availability: 1.2 B Net Debt-to-Book Capitalization: 31% Maturities and Balances2 2011 2012 2013 2016 2017 2018 2020…
  26. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 26
    2011 Capital Spending For Drilling1 Millions 459 328 Q1 Q2 1) Excludes acquisitions, asset retirement obligations (ARO), capitalized interest, G&G G&A and discontinued operations 27
  27. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 27
    Revised 2011 Capital Budget by Asset1,2 Revised Capital Budget 2.1 B Alaska Barnett 100 MM Other 210 MM 100 MM Eagle Ford Shale 120 MM Vertical Integration & Facilities 0.3 B Spraberry 1.3 B 1) Capital spending…
  28. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 28
    Oil and Gas Revenue1 Millions 584 VPP Deferred 10 Revenue 497 472 437 10 422 22 22 22 574 487 415 450 400 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 1) All periods presented have been restated to exclude discontinued…
  29. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 29
    Production (MBOEPD)1 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Spraberry 32 35 38 40 41 Raton 28 28 28 27 27 Eagle Ford Shale 2 1 2 5 8 South Texas 8 9 9 8 8 2 2 Mid-Continent 21 21 20 18 21 Barnett 3 2 2 2 3 Alaska 7 7 6 5 5 Other U.S. 1 1…
  30. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 30
    PXD Open Commodity Derivative Positions as of 8/2/2011 (includes PSE) Oil Q3 2011 Q4 2011 2012 2013 2014 2015 Swaps WTI (BPD) 750 750 3,000 3,000 - - NYMEX WTI Price (/BBL) 77.25 77.25 79.32 81.02 - - Collars - (BPD) 2,000 2,000…
  31. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 31
    PXD Open Commodity Derivative Positions as of 8/2/2011 (includes PSE) Gas Q3 2011 Q4 2011 2012 2013 2014 2015 Swaps - (MMBTUPD) 117,500 117,500 105,000 67,500 50,000 - NYMEX Price (/MMBTU)1 6.13 6.13 5.82 6.11 6.05 - Collars -…
  32. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 32
    PSE Derivative Position as of 8/2/2011 Oil Q3 2011 Q4 2011 2012 2013 2014 Swaps (BPD) 750 750 3,000 3,000 - NYMEX Price (/BBL) 77.25 77.25 79.32 81.02 - Collars (BPD) 2,000 2,000 - - - NYMEX Call Price (/BBL) 170.00 170.00 - - -…
  33. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 33
    Future Amortization of Deferred Gains - Discontinued Commodity Hedges1 ( Millions) Oil Gas NGL Total (Cash / Noncash) Total (Cash / Noncash) Total (Cash / Noncash) 3rd Qtr 2011 9 [9 / -] - - 4th Qtr 2011 9 [9 / -] - - 1)…
  34. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 34
    VPP Expirations By the end of 2012, the entire VPP commitment will expire and provide a 4 MBOEPD increase in production with no capital requirement MBOEPD 4 4 VPP Oil Obligation 2011 2012 2013 Schedule of Oil VPP Volumes…
  35. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 35
    Impact of Volumetric Production Payments (VPP) Amortization of VPP Deferred Revenue & Other Comprehensive Income1 ( Million) Q1 Q2 Q3 Q4 Total Gas / Oil Gas / Oil Gas / Oil Gas / Oil Gas / Oil 2005 11 / - 19 / - 21 / - 20 / - 71 /…
  36. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 36
    Oil Differentials (per BBL)1 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 NYMEX calendar month average 78.04 76.20 85.18 94.10 102.56 NYMEX differential excluding VPPs and derivatives U.S. (5.51) (5.90) (5.28) (4.93) (4.17) South Africa2 (1.16)…
  37. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 37
    NGL Differentials (per BBL)1 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 NYMEX oil calendar month average 78.04 76.20 85.18 94.10 102.56 NYMEX differential excluding derivatives (44.68) (42.71) (44.15) (51.93) (54.40) Realized prices excluding…
  38. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 38
    Gas Differentials (per MCF)1 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 NYMEX bid week average 4.09 4.38 3.80 4.11 4.32 NYMEX differential excluding derivatives U.S. (0.25) (0.35) (0.23) (0.23) (0.21) South Africa2 2.02 1.96 2.24 3.62 2.78…
  39. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 39
    Other Costs1 General & Administrative Costs Interest Costs Millions Millions 45 45 45 45 45 46 43 43 44 40 Noncash 8 9 8 10 7 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2010 2010 2010 2011 2011 2010 2010 2010 2011 2011 1) All periods…
  40. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 40
    Exploration & Abandonments Millions Drilling & Acreage Acreage and Other 3 Geological & Geophysical U.S. Resource Plays 7 Personnel & Other 10 17 2nd Quarter 2011 Total 20 41
  41. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 41
    Income Taxes Attributable to Continuing Operations Quarter Ended June 30, 2011 ( Millions) U. S. S. Africa Total Current tax provision 2 11 13 Deferred tax provision (benefit) 141 (9) 132 Tax provision 143 2 145 42
  42. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 42
    Supplemental Non-GAAP Financial Measures EBITDAX and discretionary cash flow (DCF) are disclosed by Pioneer, and reconciled to the generally accepted accounting principle (GAAP) measures of net income and net cash provided by operating…
  43. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 43
    Supplemental Non-GAAP Financial Measures Adjusted income excluding unrealized MTM derivative gains and adjusted income excluding unrealized MTM derivative gains and unusual items, as presented in the Highlights slide and as presented in…
  44. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 44
    Supplemental Earnings Per Share Information The Company uses the two-class method of calculating basic and diluted earnings per share. Under the two-class method of calculating earnings per share, GAAP provides that share- and…
  45. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 45
    VPP Adjusted Production Costs1 Pioneer presents VPP-Adjusted Production Costs (per BOE) to assist investors in considering the Companys costs in relation to the total BOEs (reported sales volumes plus VPP delivered volumes) in…
  46. Q2 2011 Earnings Call – Pioneer Natural Resources Co. – slide 46
    Certain Reserve Information Cautionary Note to U.S. Investors --The U.S. Securities and Exchange Commission (the SEC) prohibits oil and gas companies, in their filings with the SEC, from disclosing estimates of oil or gas resources other…

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