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Pioneer Natural Resources Beats 1Q16 Earnings—What's Its Secret?

PART:
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Part 2
Pioneer Natural Resources Beats 1Q16 Earnings—What's Its Secret? PART 2 OF 4

Pioneer Natural Resources in 1Q16: Operational Performance

Pioneer Natural Resources’ 1Q16 operational performance

In 1Q16, Pioneer Natural Resources (PXD) reported a total production of 222 MBoe (thousand barrels of oil equivalent) per day, which is above its 1Q16 production guidance range of 211–216 MBoe per day.

Pioneer Natural Resources in 1Q16: Operational Performance

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Pioneer Natural Resources’ 1Q16 production is ~15% higher than its 1Q15 production of ~194 MBoe per day. Sequentially, PXD’s 1Q16 production is ~3% higher than it was in 4Q15. In 1Q16, PXD reported a ~9% growth in crude oil (SCO) (UWTI) production, resulting in ~55% crude oil in its 1Q16 production mix.

PXD’s updated production growth guidance

For 2Q16, Pioneer Natural Resources expects a total production in the range of 224–229 MBoe per day. For 2016, Pioneer Natural Resources now expects a production growth of ~12%, higher than the previous production growth guidance of ~10%. PXD increased its production growth guidance due to the improving Spraberry and Wolfcamp well productivity.

Unlike PXD, upstream companies EOG Resources (EOG), ConocoPhillips (COP), Southwestern Energy (SWN), and Energen (EGN) are expecting lower year-over-year production volumes for 2016.

Pioneer Natural Resources’ production costs

In 1Q16, PXD reported production cash costs of $9.17 per boe (barrel of oil equivalent). These costs include LOE (lease operating expenses), natural gas processing expenses, third-party transportation expenses, production and ad valorem taxes, and workovers. PXD’s 1Q16 production cash costs are lower than its guidance range of $10.50–$12.50 per boe and ~17% lower than they were in 4Q15. In 1Q16, PXD’s LOE were $5.20 per boe, ~20% lower than the expenses in 4Q15.

PXD’s capex

For 2016, PXD has maintained its plan for reduced activity and capital expenditures of $2 billion, of which $1.9 billion is for drilling and completions and $150 million is for vertical integration, systems upgrades, and field facilities.

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