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$PXD 1Q15 10-Q: At March 31, 2015 (vs. at Dec. 31, 2014): Cash & cash equivalents were $383MM vs. $1,025MM. Inventories were $266MM vs. $241MM. Current portion of PXD’s asset retirement obligations was $31MM vs. $28MM. Net debt to book capitalization was 21% vs. 16%. PXD had no outstanding borrowings under the Credit Facility.
$PXD announced that Neal H. Shah will join the company on June 29, 2017, as VP, Investor Relations. He will report to Frank Hopkins, SVP, Investor Relations. Mr. Shah has previously worked at Thrivent Asset Management and Nuveen Asset Management where he was responsible for energy sector stock selection.
$PXD has spent $300MM on its water distribution system to-date, and will spend $160MM in 2017. The company plans to spend $150MM in 2018 and this will incorporate the construction of the Midland processing facility. This spend will decrease on an annual basis going forward after 2018.
$PXD said automation will help in reducing field visits and similar issues. The company is looking to adopt artificial intelligence capabilities which would help in predictive analysis that can lead to reductions in non-productive time and help generate cost savings.
$PXD has long-term contracts in place for third-party sand at favorable prices and it also produces its own sand at cost. The company delivers water at cheaper costs and looking at other costs such as chemicals, it has not moved materially. The base cost of completing $PXD’s Permian horizontal wells has not moved higher substantially.
$PXD expects 2Q17 production of 254,000-259,000 barrels oil equivalent per day and production costs of $7.75-9.75 per BOE. The company sees 2Q17 general and administrative expense of $80-85MM, and interest expense of $43-48MM. The company's effective income tax rate is expected to be 35-40%.
$PXD's capital budget for 2017 remains at $2.8Bil. The budget includes $2.5Bil for drilling and completion activities, including tank batteries/saltwater disposal facilities and gas processing facilities, and $275MM for water infrastructure, vertical integration and field facilities.
$PXD's production for 1Q17 was 249,000 barrels of oil equivalent per day (Boepd), of which 59% was oil, up 3% from 4Q16. The production growth was driven by the company's Spraberry/Wolfcamp horizontal drilling program. Total Spraberry/Wolfcamp production increased 7% from last quarter.
$PXD signed a purchase and sale agreement with an undisclosed buyer to sell its acreage package in northeastern Martin County, Texas, for $266MM. The sale is effective January 1, 2017. Current net production is approx. 1,500 barrels oil equivalent per day. The sale is expected to close by the end of April 2017.
$PXD currently sources about 350,000 barrels a day of water. This number is going up in the 10-year plan to 1MM barrels a day of water. The spending in 2017 has more to do with mainline construction, frac pond construction, some sub-stations and the Midland project. $PXD expects to spend an identical amount in 2018.
$PXD said in terms of its deployment of four rigs in the Northern section of the JV area, most of the drilling will be in the Northern part of the Southern acreage. The company finds the zones and economics here to be essentially identical to many of the same areas in the North. $PXD is optimistic about this program.
$PXD plans to put approx. 260 gross wells online in the Spraberry/Wolfcamp drilling program in 2017. Approx. 85% of these wells will be in the Northern area with the remaining 15% in the Southern JV. The distribution of zones $PXD plans to develop in 2017 is similar to 2016 between the Lower Spraberry Shale Wolfcamp A and Wolfcamp B.
$PXD's growth continues to be focused on the Permian operations and in 2016, the company saw an increase in production of 36% and in oil production of 42%. The company delivered 232% drillbit reserve replacement in 2016 at a drillbit F&D cost of $9.59 per BOE and a proved developed F&D cost of $9.11 per BOE.
$PXD added reserves totaling 205 million barrels oil equivalent (MMBOE) in 2016. The NYMEX prices for 2016 proved reserves reporting purposes were $42.82 per barrel for oil and $2.48 per million British thermal units (MMBTU) for gas. The oil price for 2016 was 15% below the oil price used to calculate proved reserves for 2015 of $50.11 per barrel.
$PXD's capital budget for 2017 is $2.8Bil, in line with its preliminary forecast of $2.7-2.8Bil. The budget includes $2.5Bil for drilling and completion activities, including tank batteries/saltwater disposal facilities and gas processing facilities, and $275MM for water infrastructure, vertical integration and field facilities.
$PXD expects 1Q17 production to average 243-248 MBOEPD. Production costs are expected to average $7.75 per BOE to $9.75 per BOE. DD&A expense is expected to average $15.50 per BOE to $17.50 per BOE. Total exploration and abandonment expense is predicted to be $20-30MM. General and administrative expense is expected to be $80-85MM.
$PXD's sales volumes for 4Q16 average 242 MBOEPD. Oil sales averaged 143 thousand barrels per day (MBPD), NGL sales averaged 44 MBPD and gas sales averaged 328MM cubic feet per day. The average realized price was $46.13 per barrel for oil, $16.76 per barrel for NGLs and $2.59 per MCF for gas.