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Inside Pioneer Natural Resources’ Production Costs and Margins in 1Q16

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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.

For 1Q16, other upstream companies like Diamondback Energy (FANG) and EOG Resources (EOG) reported positive cash margins, whereas Southwestern Energy (SWN) had a negative cash margin.

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Definitions

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.

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