uploads///PXD Q Realized Price Effectiveness

Understanding Pioneer Natural Resources’ Realized Price Effectiveness

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Jul. 13 2016, Updated 8:05 a.m. ET

Realized price effectiveness

Realized price effectiveness tells us that for 1Q16, Pioneer Natural Resources’ (PXD) realized price, without any hedging benefit, was ~39% above its production cash cost and ~39% below its total production cost for the same quarters.

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Realized price effectiveness definition

Realized price effectiveness is defined as an excess or a shortfall of a realized price-to-cost item, scaled by cost item.

In 1Q16, S&P 500 (SPY) upstream companies Murphy Oil (MUR), Southwestern Energy (SWN), and Range Resources (RRC) reported a negative realized price effectiveness in terms of total production costs.

Further definitions

The following calculation breakdowns should help explain the above metrics:

  • Realized price equals oil and gas revenues scaled by total production.
  • Production cash cost equals LOE (lease operating expenses), plus production and ad valorem taxes, plus transportation expenses, plus G&A (general and administration), cash expenses, and interest cash expenses.
  • Total production cost equals cash costs plus DD&A (depletion, depreciation, and amortization).

Now let’s discuss PXD’s lifting costs.

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