Pioneer Natural Resources Announces Updated Commodity Derivatives Schedule
Pioneer Natural Resources Company (NYSE:PXD) (“Pioneer” or “the Company”) today announced that it has converted approximately 85% of its 2015 oil derivative contracts from three-way collars to fixed-price swaps. Pioneer’s 2015 fixed-price oil swaps cover 82,000 barrels of oil production per day at an average NYMEX price of $71.18 per barrel. These fixed-price derivative swaps and Pioneer's remaining three-way collar contracts for 2015 (13,767 barrels of oil production per day) currently cover approximately 85% of the Company's forecasted oil production in 2015. The Company continues to maintain its three-way collar contracts for 2016 ($96.46 per barrel call price, $85.47 per barrel put price and $74.35 per barrel short put price), which currently account for 73,000 barrels of oil production per day.
The Company also has derivatives in-place covering approximately 85% of forecasted gas production in 2015 through a combination of three-way collar contracts that cover 285,000 million British thermal units (MMBTU) per day at a NYMEX Henry Hub call price of $5.07 per MMBTU, a put price of $4.00 per MMBTU and a short put price of $3.00 per MMBTU, and derivative swap contracts that cover 20,000 MMBTU per day at an average NYMEX Henry Hub price of $4.31 per MMBTU.
Scott D. Sheffield, Chairman and CEO, stated, “Over the past five years, our derivative strategy has successfully protected our cash flow and allowed us to execute a highly productive drilling program. In light of the weak oil price environment forecasted for 2015, we elected to convert most of our 2015 oil derivatives from three-way collars to fixed-price swaps to establish a firm oil price floor and lock in the corresponding cash flow. Pioneer’s adjusted derivative portfolio, combined with our exceptional assets and strong balance sheet, positions the Company to manage through the current price downturn and emerge as an even stronger company when oil prices recover.”
The Company plans to release its 2015 business plan and capital budget as part of its fourth quarter 2014 earnings release on February 10, 2015.
The Company's open derivatives positions are outlined on the attached schedule.
Pioneer Natural Resources Company is a large independent oil and gas exploration and production company, headquartered in Dallas, Texas, with operations in the United States. 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 commodity prices, product supply and demand, competition, the ability to obtain environmental and other permits and the timing thereof, other government regulation or action, the ability to obtain approvals from third parties and negotiate agreements with third parties on mutually acceptable terms, completion of planned divestitures, litigation, the costs and results of drilling and operations, availability of equipment, services, resources and personnel required to perform the Company's drilling and operating activities, access to and availability of transportation, processing, fractionation and refining facilities, Pioneer's ability to replace reserves, implement its business plans or complete its development activities as scheduled, access to and cost of capital, the financial strength of counterparties to Pioneer's credit facility and derivative contracts and the purchasers of Pioneer's oil, NGL and gas production, uncertainties about estimates of reserves and resource potential and the ability to add proved reserves in the future, the assumptions underlying production forecasts, quality of technical data, environmental and weather risks, including the possible impacts of climate change, the risks associated with the ownership and operation of the Company’s industrial sand mining and oilfield services businesses, and 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. In addition, Pioneer may be subject to currently unforeseen risks that may have a materially adverse impact on it. Pioneer undertakes no duty to publicly update these statements except as required by law.
The following table presents the Company’s open commodity oil, NGL and gas derivative positions as of January 5, 2015:
| Year Ending December 31, | |||||||||||||||
| 2015 | 2016 | 2017 | |||||||||||||
| Average Daily Oil Production Associated with Derivatives (Bbl): | |||||||||||||||
| Collar contracts with short puts: | |||||||||||||||
| Volume (a) | 13,767 | 73,000 | — | ||||||||||||
| NYMEX price: | |||||||||||||||
| Ceiling | $ | 101.36 | $ | 96.46 | $ | — | |||||||||
| Floor | $ | 86.82 | $ | 85.47 | $ | — | |||||||||
| Short put | $ | 75.73 | $ | 74.35 | $ | — | |||||||||
| Swap contracts: | |||||||||||||||
| Volume | 82,000 | — | — | ||||||||||||
| NYMEX Price | $ | 71.18 | $ | — | $ | — | |||||||||
| Rollfactor swap contracts: | |||||||||||||||
| Volume | 36,575 | — | — | ||||||||||||
| NYMEX roll price (b) | $ | 0.06 | $ | — | $ | — | |||||||||
| Average Daily NGL Production Associated with Derivatives (Bbl): | |||||||||||||||
| Ethane swap contracts (c): | |||||||||||||||
| Volume | — | 4,000 | — | ||||||||||||
| Price | $ | — | $ | 12.29 | $ | — | |||||||||
| Average Daily Gas Production Associated with Derivatives (MMBtu): | |||||||||||||||
| Collar contracts with short puts: | |||||||||||||||
| Volume | 285,000 | 20,000 | — | ||||||||||||
| NYMEX price: | |||||||||||||||
| Ceiling | $ | 5.07 | $ | 5.36 | $ | — | |||||||||
| Floor | $ | 4.00 | $ | 4.00 | $ | — | |||||||||
| Short put | $ | 3.00 | $ | 3.00 | $ | — | |||||||||
| Swap contracts: | |||||||||||||||
| Volume | 20,000 | 70,000 | — | ||||||||||||
| NYMEX price | $ | 4.31 | $ | 4.06 | $ | — | |||||||||
| Basis swap contracts: | |||||||||||||||
| Mid-Continent index swap volume (d) | 95,000 | 15,000 | 30,000 | ||||||||||||
| Price differential ($/MMBtu) | $ | (0.24 | ) | $ | (0.32 | ) | $ | (0.34 | ) | ||||||
| Gulf Coast index swap volume (d) | 20,000 | — | — | ||||||||||||
| Price differential ($/MMBtu) | $ | — | $ | — | $ | — | |||||||||
| Permian Basin index swap volume (d) | 10,000 | — | — | ||||||||||||
| Price differential ($/MMBtu) | $ | (0.13 | ) | $ | — | $ | — | ||||||||
| __________ |
| |
| (a) | Counterparties have the option to extend 5,000 BBLs per day of 2015 collar contracts with short puts for an additional year with a ceiling price of $100.08 per BBL, a floor price of $90.00 per BBL and a short put price of $80.00 per BBL. The option to extend is exercisable by the counterparties on December 31, 2015. | |
| (b) | Represent swaps that fix the difference between (i) each day's price per Bbl of West Texas Intermediate oil "WTI" for the first nearby month less (ii) the price per Bbl of WTI for the second nearby NYMEX month, multiplied by .6667; plus (iii) each day's price per Bbl of WTI for the first nearby month less (iv) the price per Bbl of WTI for the third nearby NYMEX month, multiplied by .3333. | |
| (c) | Represent derivative contracts that reduce the price volatility of forecasted ethane sales by the Company at Mont Belvieu, Texas-posted prices. | |
| (d) | Represent swaps that fix the basis differentials between the index prices at which the Company sells its Permian Basin, Gulf Coast and Mid-Continent gas, respectively, and the NYMEX Henry Hub index price used in gas swap and collar contracts. | |
Marketing and basis transfer derivatives. Periodically, the Company enters into buy and sell marketing arrangements to fulfill firm pipeline transportation commitments. Associated with these marketing arrangements, the Company may enter into index swaps to mitigate price risk. The following table presents the Company's open marketing derivative positions as of January 5, 2015:
| Year Ending | ||||
| 2015 | ||||
| Average Daily Volume Associated with Marketing Derivatives: | ||||
| Oil basis swap contracts (Bbl): | ||||
| Volume (a) | 10,000 | |||
| Price differential ($/Bbl) | $ | 2.99 | ||
| __________ | ||
| (a) | Represent swaps that fix the basis differential between WTI oil prices and Louisiana Light Sweet oil prices. | |
Contact
Pioneer Natural Resources
Investors
Frank Hopkins, 972-969-4065
or
Michael Bandy, 972-969-4513
or
Steven Cobb, 972-969-5679
or
Media and Public Affairs
Tadd Owens, 972-969-5760
or
Suzanne Hicks, 972-969-4020
