Production costs and margins
Excluding hedges, in 1Q16, Pioneer Natural Resources (PXD) reported a positive cash margin but a negative total margin.
Gains on crude oil (USO) hedges helped Pioneer Natural Resources increase its cash margin and reduced the deficit in its total margin.
Remember, 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 expenses.
Total production cost equals cash costs plus DD&A (depletion, depreciation, and amortization).
Continue to the next and final part for an analysis of PXD’s operating netbacks.