EARNINGS / Pioneer Reports that a 29 Percent Decline in Oil Prices
Resulted in Second Quarter Loss of $0.33 Per Share
TSE, NYSE SYMBOL: PXD
JULY 29, 1998
DALLAS, TEXAS--Pioneer Natural Resources Company ("Pioneer")
reported a second quarter 1998 net loss of $32.8 million or $0.33
per share. For the same period last year, Pioneer reported net
income of $7.4 million or $0.21 per share. Cash flow from
operations for the second quarter was $91.4 million compared to
$51.1 million for the second quarter of 1997.
Second quarter oil sales averaged 61,762 barrels per day (BPD) and
natural gas liquids sales were 30,110 BPD. Total crude and liquids
production increased 3 percent from the first quarter average.
Natural gas sales in the second quarter averaged 519 million cubic
feet per day (MMCFPD), up 7 percent from the first quarter
average. On an oil equivalent basis, sales averaged 178,376 BPD.
Second quarter realized price for oil declined 29 percent from the
prior year quarter to $13.06 per barrel. Realized price for
natural gas liquids was $8.97 per barrel. Realized price for
natural gas was $1.81 per thousand cubic feet (MCF).
For the same quarter last year, Pioneer reported oil sales of
31,663 BPD and natural gas sales of 222 MMCFPD. Realized prices
for the 1997 second quarter were $18.41 per barrel for oil and
$2.07 per MCF for natural gas. In last year's second quarter,
Pioneer aggregated sales of natural gas and natural gas liquids,
therefore, separate results are not available.
Six Month Results
For the six months ended June 30, 1998, Pioneer reported a net
loss of $59.7 million or $0.60 per share, including a previously
announced after-tax reorganization charge of $13.6 million or
$0.14 per share. For the same period last year, Pioneer reported
net income of $26.0 million or $0.74 per share. Cash flow from
operations for the six-month period was $160.4 million compared to
$124.6 million for the same period in 1997.
Six-month oil sales averaged 61,953 BPD and natural gas liquids
sales were 29,114 BPD. Natural gas sales were 504 MMCFPD. On an
oil equivalent basis, sales averaged 175,101 BPD. Six-month
realized price for oil declined 30 percent from the prior year
period to $13.52 per barrel. Realized price for natural gas
liquids was $10.00 per barrel. Realized price for natural gas was
$1.94 per MCF.
For the first half of 1997, Pioneer reported oil sales of 31,787
BPD and natural gas sales of 215 MMCFPD. Realized prices for the
1997 six-month period were $19.20 per barrel for oil and $2.26 per
MCF for natural gas.
Cost Structure Reduced
Second quarter results reflect Pioneer's continued success in
reducing its total cost structure. Compared to the fourth quarter
of 1997, lease operating expense (including production taxes)
declined by $0.58 to $3.49 per barrel oil equivalent (BOE).
General and administrative expense declined $0.25 to $1.07 per
BOE. Depletion expense declined $1.49 to $4.95 per BOE.
The previously announced divestiture program is on track and
expected to close in the fourth quarter of this year. Proceeds
from the divestiture are expected to be applied to debt reduction,
resulting in a significant decrease in interest costs. Including
the anticipated decline in interest, Pioneer expects to have
reduced its total cost structure by approximately 20 percent by
year end, compared to the fourth quarter of 1997.
Operations Update
During the second quarter, Pioneer completed its development
program on the Eugene Island 208 block in the Gulf of Mexico.
Pioneer operates the property with a 75 percent working interest.
Two new wells and one recompleted well were placed on production
at a combined rate of 3,900 BOE per day. The wells produce from
the existing "J" platform located in 100 feet of water. Pioneer
will continue its Gulf of Mexico drilling program, and is
preparing to drill a development well targeting natural gas
reserves on the Pioneer operated Vermilion 348 block where the
company holds a 100 percent interest.
In the West Panhandle field, Pioneer drilled 41 wells during the
first half of the year with 100 percent success. Fourteen wells
have been connected and are producing at a combined gross rate of
3.4 MMCFPD. Pioneer holds a 77 percent interest and plans to drill
an additional 15 wells this year.
Pioneer's activity in the South Texas Lopeno and Pawnee fields is
expected to increase during the third quarter. The company
anticipates a three-rig development program targeting natural gas
reserves in these operated fields.
In the Neuquen Basin of Argentina, the company has drilled 37
wells of a 60-well drilling program with initial production rates
from 26 completed wells of approximately 4,000 BOE per day. The
Dorsal gas gathering expansion was completed on schedule in June.
Gas sales have increased by 7 MMCFPD, with an additional 4 MMCFPD
anticipated by the end of July.
In the Chinchaga gas field in Northeast British Columbia,
Pioneer's net production is currently averaging 23 MMCFPD, an
increase of 16 MMCFPD from year-end levels. Pioneer drilled 19
development wells and 6 delineation wells and installed a 50
MMCFPD gas processing facility and gathering system during its
winter-access program, more than tripling production from the
field.
President's Comment
"While the decline in second quarter oil and gas price
realizations continued to depress earnings and cash flow, I am
pleased with our success in reducing Pioneer's cost structure.
With the anticipated decrease in interest costs, total cost
structure is expected to have declined by about $3.00 per BOE at
year end.
"Our lower-risk development program is providing steady growth in
natural gas production, and I am very excited about the strong
foundation we've established for our exploration program. We
estimate that our development and exploration programs expose
Pioneer to net new reserve potential of more than one billion BOE,
clearly defining our plans for growth," stated Scott D. Sheffield,
President and CEO.
Headquartered in Dallas, Pioneer is one of the largest independent
(non-integrated) exploration and production oil and gas companies
in North America, with major operations in the United States,
Canada, Argentina and South Africa.
Except for historical information contained herein, the statements
in this Press 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 which may cause the
Company'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, litigation, the costs and results of drilling and
operations, the Company's ability to replace reserves or implement
its business plans, access to and cost of capital, uncertainties
about estimates of reserves, quality of technical data, and
environmental risks. These and other risks are described in the
Company's 10-K and 10-Q Reports and other filings with the
Securities and Exchange Commission.
/T/
PIONEER NATURAL RESOURCES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
1998 1997 1998 1997
--------------- ---------------
Revenues:
---------
Oil and gas $ 183,647 $ 94,847 $ 381,016 $ 198,626
Interest and other 1,145 680 2,323 2,833
Gain on disposition
of assets, net 315 1,862 325 2,637
------- ------ ------- -------
185,107 97,389 383,664 204,096
Costs and expenses:
-------------------
Oil and gas production 56,613 24,958 111,755 49,671
Depletion, depreciation
and amortization --
oil and gas 80,372 29,166 153,526 56,172
Depletion, depreciation
and amortization --
other 3,436 1,713 6,532 3,337
Exploration and
abandonments 26,573 10,800 50,522 18,415
General and admin. 17,387 8,270 37,412 14,990
Reorganization 3,372 -- 20,549 --
Interest 41,017 10,259 80,495 20,154
Other 6,846 410 13,626 831
------- ------ ------ ------
235,616 85,576 474,417 163,570
======= ======= ======= =======
Income (loss) before
income taxes (50,509) 11,813 (90,753) 40,526
Income tax benefit
(provision) 17,700 (4,400) 31,100
(14,500)
------- ------- ------- -------
Net income (loss) $ (32,809) $ 7,413 $ (59,653) $ 26,026
Net income (loss)
per share:
Basic $ (.33) $ .21 $ (.60) $ .74
Diluted $ (.33) $ .21 $ (.60) $ .71
Dividends declared
per share $ -- $ -- $ .05 $ .05
Weighted average shares
outstanding 99,939 35,028 100,003 35,038
====== ====== ======= ======
PIONEER NATURAL RESOURCES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
1998 1997
---------- ---------
ASSETS
Current assets $ 252,971 $ 308,188
Oil and gas properties 4,305,944 4,121,045
Accumulated depletion, depreciation
and amortization (764,414) (605,203)
Deferred income taxes 70,300 --
Other assets, net 133,620 122,560
----------- -----------
$ 3,998,421 $ 3,946,590
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 210,442 $ 261,552
Long-term debt 2,139,084 1,943,718
Other noncurrent liabilities 178,398 180,275
Deferred income taxes -- 12,200
Stockholders' equity 1,470,497 1,548,845
----------- -----------
$ 3,998,421 $ 3,946,590
=========== ===========
/T/ |
