Pioneer Reduces 1Q11 Production Guidance
Pioneer is reducing its production guidance for the first quarter of 2011 from a range of 114 thousand barrels oil equivalent per day (MBOEPD) to 118 MBOEPD to a range of 111 MBOEPD to 113 MBOEPD. This reduction is consistent with Pioneer's early February advice that the Company's production guidance for the first quarter would be updated once the impacts of severe weather-related downtime in several of Pioneer's key operating areas were known.
During the first quarter, especially the first half of February, Pioneer's operations in Texas, Kansas and Colorado were disrupted by extremely cold temperatures and substantial ice and snow accumulations. The Company experienced extensive pipeline freeze-ups, power outages and limited access to well locations. Drilling and completion operations in the Spraberry field and the Barnett Shale Combo play were also curtailed. It took until early March in some cases for operations to fully recover from this severe weather event.
Total production shut in for the first quarter related to the severe weather was approximately 2 MBOEPD. Of this amount, approximately half was related to the Mid-Continent area. The remainder was split between the Spraberry and Raton fields.
In addition to the weather-related impacts, Pioneer was recently informed that the third-party fractionator for the Company's Mid-Continent natural gas liquids (NGL) production will have a longer-than-anticipated turnaround during March. As a result, the NGL production will be inventoried in March and then fractionated and sold during the second quarter. The impact will be a decrease to Pioneer's forecasted first quarter production of approximately 1 MBOEPD.
Scott Sheffield, Chairman and CEO, stated, "Despite having production curtailed in the first quarter due to weather-related and unscheduled third-party downtime impacts, we continue to expect to deliver full-year 2011 production growth for the Company ranging from 125 MBOEPD to 130 MBOEPD, an increase of 15% to 19% compared to 2010 (reflecting production from Tunisia as discontinued operations). Both the Spraberry and Eagle Ford Shale accelerated drilling programs are on track to deliver most of this growth."
Regarding Pioneer's first quarter financial outlook, the Company provided guidance in early February that production costs in the first quarter of 2011 were expected to range from $11.75 per barrel oil equivalent (BOE) to $13.75 per BOE. As a result of the decreased production and associated repairs in the first quarter from the severe weather and the unplanned third-party downtime, Pioneer now expects production costs for the first quarter to range from $13.00 per BOE to $14.00 per BOE.
Pioneer will also record a one-time gain in discontinued operations ranging from $630 million to $650 million in the Company's first quarter results from the previously announced sale of all of the stock of Pioneer's Tunisia subsidiaries. The cash proceeds from the sale of $866 million, before normal closing adjustments, were received by Pioneer in mid-February.
The remainder of Pioneer's financial guidance for the first quarter of 2011 provided in early February has not changed.
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