Pioneer Natural Resources Tuesday reported a vast improvement in first quarter 2003 earnings over last year and a 45% growth in daily production over the last 12 months. Company officials predicted production would continue to grow at a 12% compounded annual rate over the next five years.
Pioneer reported net income of $84.2 million, or $0.71 per diluted share, for the first quarter of 2003. Results included a $15.4 million, or $0.13 per share, benefit from the cumulative effect of change in accounting principle related to the adoption of Statement of Financial Accounting Standards No. 143. For the same period last year, Pioneer reported a net loss of $2.0 million, or $0.02 per share, which included a noncash charge of $5.4 million, or $0.05 per share, for the remeasurement of Argentine peso-denominated net monetary assets. Cash flow from operations for the 2003 first quarter was $136.8 million compared to $50.0 million for the same period in 2002.
Talking about the company’s three new Gulf of Mexico deepwater projects, CEO Scott D. Sheffield said “We’ve had a strong start for 2003. Our Canyon Express gas project has reached full production rates; we initiated production from our operated Falcon field ahead of schedule and under budget and announced a successful exploration well and development plan at Harrier, our first Falcon satellite discovery.” (see Daily GPI, April 7)
Pioneer also announced a discovery in Alaska and is “encouraged by the early evaluation work we’ve done to establish commerciality. Our current daily production is up approximately 45% from 12 months ago with just two of our five large projects on stream, and we look forward to first production from the other three projects over the next 12 months. We are evaluating several discoveries and have an active exploration program underway to keep the pipeline of projects flowing at capacity,” Sheffield said.
The company said total first quarter 2003 oil and gas sales increased 16% from the prior year quarter to average 128,444 boe/d. About 58% of Pioneer’s production is natural gas. First quarter oil sales averaged 31,894 b/dand natural gas liquids sales averaged 22,033 b/d.
Gas sales in the first quarter averaged 447 MMcf/d, compared to 328 MMcf/d in the same quarter last year. Realized prices for oil and natural gas liquids for the first quarter were $25.82 and $22.00 per barrel, respectively, compared to $23.17 for oil and $10.73 for liquids in 1Q 2002. The realized price for gas was $4.06/Mcf, compared to $2.47/Mcf last year. North American gas prices averaged $4.68/Mcf in first quarter 2003.
First quarter production costs of $5.54/boe were higher than anticipated primarily due to start-up costs associated with the Canyon Express project. Exploration and abandonment costs of $35.9 million for the quarter included $10.4 million of geologic and geophysical expenses including seismic costs, $2.0 million of noncash leasehold abandonments including expired leases and $23.5 million of exploration costs.
The company said second quarter 2003 production is expected to average 150,000 to 165,000/boe/d. It has expanded estimates of 2003 production to 55 to 60 million/boe to reflect the Falcon royalty and the heightened variability related to high volume wells. The Falcon field is performing better than expected, and the Harrier discovery has the potential for early start-up, while first sales from the Sable field are now expected in the third quarter. With a full year of production from new fields brought on in 2003 and the addition of at least two large fields in late 2003 or early 2004, the Company expects 2004 production to range from 63 to 75 million boe.
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