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Growth in Pioneer’s Reserves Doesn’t Match Surging Production

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Jun. 19 2015, Published 2:21 p.m. ET

Reserves growth

Pioneer Natural Resources (PXD), an independent US crude oil and natural gas producer, witnessed a moderate decline in its proved reserves over the past three years. According to the latest data available, its total reserves decreased 5% to 799 million barrels of oil equivalent (or MMBoe) in 2014, from 845 MMBoe in 2013. Reserves in 2013 fell 22% from the previous year.

In comparison, Concho Resources’ (CXO) reserves increased 27% in 2014 over the previous year. Cenovus Energy’s (CVE) reserves increased 4% during the same period. Pioneer Natural Resources is 3.3% of the Energy Select Sector SPDR ETF (XLE). It’s also 1.3% of the iShares U.S. Energy ETF (IYE).

Approximately 69% of Pioneer Natural Resources’ 2014 reserves was crude oil, 18% was natural gas liquids (or NGLs), and 13% was natural gas.

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Reserves-to-production ratio

Pioneer Natural Resources’ 2014 total crude oil and natural gas production increased 12% over 2013, higher than the 10% growth it achieved in 2013 over 2012. So its production growth rate was stronger than its reserves growth. This led to its reserve life, or reserves-to-production ratio, falling to 11.2x in 2014, from 18.8x in 2012.

In other words, it would take Pioneer Natural Resources around 11 years to deplete its proved reserves under the 2014 production rate, all other things remaining constant. Read the previous part of this series to know more about Pioneer Natural Resources’ production trend.

What led to Pioneer Natural Resources’ decline in reserves?

Pioneer Natural Resources has been reducing reserves primarily through sales. In September 2014, it sold its Barnett Shale field assets. In April 2014, it sold its Pioneer Alaska field assets. In total, it reduced 124 MMBOE in reserves through sales and dispositions in 2014.

Next in the series is Marathon Oil’s (MRO) production trend.

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