Pioneer Natural Resources Company has completed a preliminary assessment of the impact of hurricanes Gustav and Ike on its operations. The following areas of Louisiana and Texas were adversely impacted:
Spraberry – Pioneer’s Spraberry facilities in West Texas were not directly impacted by either hurricane. This field produces oil and associated liquid-rich gas. The gas includes natural gas liquids (NGLs) which are separated at various Permian Basin plants. These NGLs are then transported to a third-party facility in Mont Belvieu, Texas for fractionation. This facility sustained power interruptions and physical damage from Hurricane Ike. As a result, at least 10% to 15% of Pioneer’s Spraberry and other Permian area total net production of approximately 34,000 barrels of oil equivalent per day (BOEPD) has been curtailed or shut in since September 12.
Barnett Shale – Pioneer’s Barnett Shale facilities were not directly impacted by the recent hurricanes. However, as in the Spraberry field, Pioneer’s Barnett Shale gas includes NGLs that are processed at the damaged Mont Belvieu fractionation facilities. Therefore, most of Pioneer’s net Barnett Shale production of approximately 15 million cubic feet equivalent per day (MMCFEPD) has been shut in since September 12.
Edwards Trend – No significant damage was incurred by Pioneer’s facilities in the Edwards Trend area of South Texas. However, power interruptions to third-party pipelines which transport natural gas production from the field have resulted in the curtailment of 10% to 15% of Pioneer’s total Edwards Trend net production of approximately 80 MMCFEPD since September 12.
Gulf of Mexico Shelf – Pioneer’s remaining shallow-water offshore platforms did not experience any significant damage as a result of the hurricanes. However, production of approximately 2,000 BOEPD has been shut in since August 31 due to the significant damage that has been incurred by the third-party pipeline facilities utilized to transport production to shore. No estimates are currently available as to when these facilities will be operational.
In addition to the aforementioned hurricane impacts, Pioneer’s third quarter production has also been impacted by the following third-party maintenance activities:
Scheduled maintenance at the third-party onshore production facilities on the North Slope of Alaska where Pioneer’s Oooguruk oil production is processed has taken longer than expected. Assuming that the production facilities are back on line by the end of this week, estimated net production of 2,000 barrels of oil per day will have been delayed by approximately 20 days.
Compression facilities on the third-party pipeline serving the Raton gas field in southeastern Colorado required unexpected maintenance. Pioneer expected net production in the third quarter of 2008 to average approximately 200 MMCFPD, but the expectation is now for production to be closer to 195 MMCFPD.
As a result of the curtailed production from the hurricanes and third-party maintenance activities, Pioneer is reducing its estimated third quarter 2008 production guidance from 114,000 to 119,000 BOEPD to a range of 112,000 to 114,000 BOEPD.
Due to the reduced third quarter guidance, Pioneer expects full-year 2008 production growth to be at the lower end of its target range of 18% to 20% compared to 2007, assuming the production curtailed as a result of the hurricanes is restored by the end of the third quarter.
Pioneer also reported that the Company has no counterparty exposure with Lehman Brothers.
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