UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 28, 2006
Pioneer Natural Resources Company
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 1-13245 75-2702753
---------------------------- ------------ -------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
5205 N. O'Connor Blvd., Suite 900, Irving, Texas 75039
------------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
(972) 444-9001
----------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
| | Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
| | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
| | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
| | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
PIONEER NATURAL RESOURCES COMPANY
TABLE OF CONTENTS
Page
Item 2.01. Completion of Acquisition or Disposition of Assets......... 3
Item 9.01. Financial Statements and Exhibits.......................... 3
(b) Pro Forma Financial Information
(d) Exhibits............................................. 3
Signature.............................................................. 13
Exhibit Index.......................................................... 14
2
PIONEER NATURAL RESOURCES COMPANY
Item 2.01. Completion of Acquisition or Disposition of Assets
On March 29, 2006, Pioneer Natural Resources Company (the "Company") issued
a news release that is attached hereto as exhibit 99.1. In the news release, the
Company announced that its wholly-owned subsidiary, Pioneer Natural Resources
USA, Inc., had closed the sale of certain deepwater Gulf of Mexico assets to
Marubeni Offshore Production (USA) Inc. ("Marubeni"), a subsidiary of Marubeni
Corporation, for cash proceeds of $1.3 billion before normal closing adjustments
which are currently estimated to be approximately $140 million. Pioneer expects
to record an after-tax gain associated with the sale of approximately $425
million to $475 million. The sale of the assets was completed on March 28, 2006.
See Item 9.01(b) for pro forma financial information regarding the sale of
the aforementioned deepwater Gulf of Mexico assets together with pro forma
financial information of the probable completion of the previously announced
Stock Purchase Agreements and related agreements with Apache Corporation and its
subsidiaries (collectively, "Apache"), as a result of which Apache is expected
to purchase the Company's Argentine operations and assets for cash proceeds of
approximately $675 million, subject to normal closing adjustments.
Item 9.01. Financial Statements and Exhibits
(b) Pro Forma Financial Information
The unaudited pro forma financial statements of the Company are
presented on pages 4 through 12.
(d) Exhibits
2.1 Purchase and Sale Agreement by and between Pioneer as Seller and
Marubeni as Purchaser (incorporated by reference to Exhibit 2.1
to the Company's Current Report on Form 8-K, File No. 1-13245,
filed with the Securities and Exchange Commission on February 28,
2006).
99.1 News Release dated March 28, 2006.
3
PIONEER NATURAL RESOURCES COMPANY
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
On February 22, 2006, Pioneer Natural Resources USA, Inc. ("Pioneer USA"),
a wholly-owned subsidiary of Pioneer Natural Resources Company (the "Company" or
"Pioneer"), entered into a Purchase and Sale Agreement through which Marubeni
Offshore Production (USA) Inc. ("Marubeni"), a subsidiary of Marubeni
Corporation, would acquire certain deepwater Gulf of Mexico assets from Pioneer
USA for $1.3 billion, subject to normal closing adjustments. The effective date
of the agreement is January 1, 2006, and the purchase price will be reduced by
the amount of the interim period cash flow that Pioneer USA received from the
assets between the effective date of the transaction and closing and other
normal adjustments which are estimated to be approximately $140 million. The
closing of the transaction occurred on March 28, 2006.
On January 16, 2006, Pioneer entered into Stock Purchase Agreements and
related agreements with Apache Corporation ("Apache"), by which Apache is
expected to purchase Pioneer's Argentine operations and assets for cash proceeds
of approximately $675 million, subject to normal closing adjustments. The
transaction is expected to close in April 2006.
The accompanying unaudited pro forma financial statements have been
prepared to assist in analyses of the financial effects of the divestitures.
This information is based on the historical financial statements of the Company
and should be read in conjunction with the Company's historical consolidated
financial statements and related notes included in the Company's 2005 Form 10-K
filed with the United States Securities and Exchange Commission on February 17,
2006.
The accompanying unaudited pro forma balance sheet of the Company as of
December 31, 2005 has been prepared to give effect to the divestitures as if
they had each occurred on December 31, 2005. The accompanying unaudited pro
forma statement of operations of the Company for the year ended December 31,
2005 has been prepared to give effect to the divestitures as if they had each
occurred on January 1, 2005.
The unaudited pro forma financial statements included herein are not
necessarily indicative of the results that might have occurred had the
divestitures taken place on December 31, 2005 as it relates to the balance sheet
or January 1, 2005 as it relates to the statement of operations and are not
intended to be a projection of future results. In addition, future results may
vary significantly from the results reflected in the accompanying unaudited pro
forma financial statements because of normal production declines, changes in
commodity prices, future acquisitions and divestitures, future development and
exploration activities and other factors.
4
PIONEER NATURAL RESOURCES COMPANY
UNAUDITED PRO FORMA BALANCE SHEET
December 31, 2005
(in thousands)
Pro Forma
--------------------------------------
Deepwater Other Pro Forma
Pioneer Argentina Properties Adjustments Pioneer
----------- ---------- ---------- ------------- -----------
ASSETS
Current assets:
Cash and cash equivalents.............. $ 18,802 $ (2,516) $ - 1,074,955 (a) $ 915,899
(175,342)(b)
Accounts receivable:
Trade, net........................... 336,062 (21,502) - 314,560
Due from affiliates.................. 1,596 4,324 - 5,920
Inventories............................ 79,659 (12,013) - 67,646
Prepaid expenses....................... 18,091 (1,113) - 16,978
Deferred income taxes.................. 158,878 (2,240) - 156,638
Other current assets:
Derivatives.......................... 1,246 - - 1,246
Other, net........................... 9,470 (34) - 9,436
---------- --------- --------- ----------
Total current assets................ 623,804 (35,094) - 1,488,323
---------- --------- --------- ----------
Property, plant and equipment, at cost:
Oil and gas properties:
Proved properties.................... 8,499,253 (988,722) (873,199) 6,637,332
Unproved properties.................. 313,881 (95,331) (34,811) 183,739
Accumulated depletion, depreciation
and amortization.................... (2,577,946) 412,127 608,651 (1,557,168)
---------- --------- -------- ----------
Total property, plant and equipment. 6,235,188 (671,926) (299,359) 5,263,903
---------- --------- -------- ----------
Goodwill................................. 311,651 - - 311,651
Other property and equipment, net........ 90,010 (2,249) - 87,761
Other assets:
Derivatives............................ 1,048 - - 1,048
Other, net............................. 67,533 (8,295) - 59,238
---------- --------- -------- ----------
$ 7,329,234 $ (717,564) $(299,359) $ 7,211,924
========== ========= ======== ==========
See accompanying notes to unaudited pro forma financial statements.
5
PIONEER NATURAL RESOURCES COMPANY
UNAUDITED PRO FORMA BALANCE SHEET
December 31, 2005
(in thousands)
Pro Forma
--------------------------------------
Deepwater Other Pro Forma
Pioneer Argentina Properties Adjustments Pioneer
----------- ---------- ---------- ------------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable:
Trade................................ $ 330,151 $ (26,024) $ - $ 304,127
Due to affiliates.................... 15,053 (881) - 14,172
Interest payable....................... 40,314 (2,818) - (1,652)(c) 35,844
Income taxes payable................... 22,470 (6,087) - 196,094 (d) 212,477
Other current liabilities:
Derivatives.......................... 320,098 - - (80,059)(b) 240,039
Deferred revenue..................... 190,327 - - 190,327
Other................................ 114,942 (4,716) (12,597) 97,629
---------- ---------- -------- ----------
Total current liabilities.......... 1,033,355 (40,526) (12,597) 1,094,615
---------- ---------- -------- ----------
Long-term debt........................... 2,058,412 - - (900,000)(a) 1,158,412
Derivatives.............................. 431,543 - - (95,283)(b) 336,260
Deferred income taxes.................... 767,329 (14,596) - 603 (c) 948,912
195,576 (d)
Deferred revenue......................... 664,511 - - 664,511
Other liabilities and minority interests. 156,982 (18,378) (18,095) 120,509
Stockholders' equity:
Common stock........................... 1,470 - - 1,470
Additional paid-in capital............. 3,775,794 - - 3,775,794
Treasury stock, at cost................ (882,382) - - (882,382)
Deferred compensation.................. (45,827) 3,736 - (42,091)
Retained earnings (accumulated
deficit)............................. (184,320) (641,412) (400,496) 1,974,955 (a) 358,106
1,049 (c)
(391,670)(d)
Accumulated other comprehensive
income (loss):
Net deferred hedge losses,
net of tax........................ (506,636) - 131,829 (374,807)
Cumulative translation adjustment... 59,003 (6,388) - 52,615
---------- --------- -------- ----------
Total stockholders' equity........ 2,217,102 (644,064) (268,667) 2,888,705
---------- --------- -------- ----------
Commitments and contingencies
$ 7,329,234 $ (717,564) $(299,359) $ 7,211,924
========== ========= ======== ==========
See accompanying notes to unaudited pro forma financial statements.
6
PIONEER NATURAL RESOURCES COMPANY
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the year ended December 31, 2005
(in thousands, except per share data)
Pro Forma
--------------------------------------
Deepwater Other Pro Forma
Pioneer Argentina Properties Adjustments Pioneer
----------- ---------- ---------- ------------- -----------
Revenues:
Oil and gas............................ $ 2,215,677 $ (172,187) $ (593,077) $ 1,450,413
Interest and other..................... 97,050 (6,039) (59,437) 31,574
Gain on disposition of assets, net..... 60,496 (669) - 59,827
---------- --------- --------- ----------
2,373,223 (178,895) (652,514) 1,541,814
---------- --------- --------- ----------
Costs and expenses:
Oil and gas production................. 449,320 (38,756) (64,125) 346,439
Depletion, depreciation and
amortization......................... 568,018 (85,800) (182,275) 299,943
Impairment of long-lived assets........ 644 - - 644
Exploration and abandonments........... 266,751 (24,527) (39,087) 203,137
General and administrative............. 124,556 (9,030) - 115,526
Accretion of discount on asset
retirement obligations............... 7,876 (444) (2,121) 5,311
Interest............................... 127,787 (1,700) - (23,097) (e) 102,990
Other.................................. 112,812 (3,910) (8,212) 100,690
---------- --------- --------- ----------
1,657,764 (164,167) (295,820) 1,174,680
---------- --------- --------- ----------
Income from continuing operations before
income taxes........................... 715,459 (14,728) (356,694) 367,134
Income tax provision..................... (291,728) 6,863 - 138,623 (f) (146,242)
---------- --------- --------- ----------
Income from continuing operations ....... $ 423,731 $ (7,865) $ (356,694) $ 220,892
========== ========= ========= ==========
Income per share from continuing
operations:
Basic.................................. $ 3.09 $ 1.61
========== ==========
Diluted................................ $ 3.02 $ 1.58
========== ==========
Weighted average shares outstanding:
Basic.................................. 137,110 137,110
========== ==========
Diluted................................ 141,417 141,417
========== ==========
See accompanying notes to unaudited pro forma financial statements.
7
PIONEER NATURAL RESOURCES COMPANY
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
December 31, 2005
Note 1. Basis of Presentation
The accompanying unaudited pro forma balance sheet of Pioneer Natural
Resources Company (the "Company" or "Pioneer") as of December 31, 2005 has been
prepared to give effect to the divestitures, discussed below, as if they had
each occurred on December 31, 2005.
The accompanying unaudited pro forma statement of operations of the Company
for the year ended December 31, 2005 has been prepared to give effect to the
divestitures, discussed below, as if they had each occurred on January 1, 2005.
In accordance with the United States Securities and Exchange Commission
presentation rules, the Company's unaudited pro forma statement of operations
for the year ended December 31, 2005 does not include income from discontinued
operations, net of tax, recognized during 2005 of $110.8 million. This amount
was recorded as a result of the Company's disposition of the Martin Creek,
Conroy Black and Lookout Butte areas in Canada and certain assets on the shelf
of the Gulf of Mexico.
On February 22, 2006, Pioneer Natural Resources USA, Inc. ("Pioneer USA"),
a wholly-owned subsidiary of Pioneer, entered into a Purchase and Sale Agreement
through which Marubeni Offshore Production (USA) Inc. ("Marubeni"), a subsidiary
of Marubeni Corporation, would acquire certain deepwater Gulf of Mexico assets
from Pioneer USA for $1.3 billion, subject to normal closing adjustments. The
effective date of the agreement is January 1, 2006, and the purchase price will
be reduced by the amount of the interim period cash flow that Pioneer USA
received from the assets between the effective date of the transaction and
closing and other normal adjustments. The closing of the transaction occurred on
March 28, 2006.
On January 16, 2006, the Company entered into Stock Purchase Agreements and
related agreements with Apache Corporation ("Apache"), by which Apache is
expected to purchase Pioneer's Argentine operations and assets for cash proceeds
of approximately $675 million, subject to normal closing adjustments. The
transaction is expected to close in April 2006.
Following are descriptions of the individual columns included in the
accompanying unaudited pro forma financial statements and notes to unaudited pro
forma financial statements:
Pioneer - Represents the historical consolidated balance sheet of
the Company as of December 31, 2005 and the historical consolidated
statement of operations from continuing operations of the Company for the
year ended December 31, 2005.
Argentina - Represents the historical balance sheet (excluding
certain retained assets and liabilities, primarily working capital items)
as of December 31, 2005 and the historical statement of operations for the
year ended December 31, 2005 of the Company's Argentine operations being
divested.
Deepwater Properties - Represents the historical assets,
liabilities and accumulated other comprehensive loss (net deferred hedge
losses, net of tax) as of December 31, 2005 and the historical revenues
and expenses (including associated business interruption insurance
recoveries and associated net hedge losses) for the year ended December
31, 2005 of the Company's deepwater Gulf of Mexico assets being divested.
8
PIONEER NATURAL RESOURCES COMPANY
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
December 31, 2005
Note 2. Pioneer Pro Forma Adjustments
(a) To adjust for the proceeds and related costs associated with the
divestitures. The Company utilized a portion of the proceeds to pay off the
outstanding debt associated with the Company's line of credit. The following is
a table of the estimated proceeds, transaction costs and application of
proceeds:
Deepwater
Argentina Properties Total
--------- ---------- -----------
(in thousands)
Gross proceeds............................................. $ 675,000 $1,300,000 $ 1,975,000
Proceeds adjustments....................................... 12,917 5,788 18,705
Less - transaction costs................................... (13,600) (5,150) (18,750)
-------- --------- ----------
Net proceeds............................................... $ 674,317 $1,300,638 1,974,955
======== =========
Repayment of Company's line of credit...................... (900,000)
----------
Increase in cash and cash equivalents...................... $ 1,074,955
==========
The following is a summarization of the gains on the divestitures:
Deepwater
Argentina Properties Total
--------- ---------- -----------
(in thousands)
Net proceeds............................................... $ 674,317 $1,300,638 $ 1,974,955
Net investment in divestitures, excluding cash............. (638,896) (400,496) (1,039,392)
--------- --------- ----------
Gains on disposition of assets............................. $ 35,421 $ 900,142 $ 935,563
========= ========= ==========
(b) To utilize the proceeds from the divestitures to repay the net
derivative obligations associated with the Deepwater Properties.
(c) To adjust accrued interest associated with having no borrowings
outstanding on the line of credit during 2005 as a result of dispositions and
the related income tax effect.
(d) To adjust the balance sheet for income tax effects associated with the
divestitures.
(e) To adjust interest expense associated with the Company's line of credit
as the proceeds from the divestitures resulted in no borrowings being
outstanding during 2005. The adjustment is comprised of:
o elimination of the 2005 historical interest recognized by the
Company associated with the line of credit and
o recognition of interest costs associated with undrawn amounts
under the Company's line of credit.
(f) To adjust income tax expense utilizing a 36.5 percent effective tax
rate for:
o the historical statement of operations activities associated with
the Deepwater Properties and
o the adjustment to interest expense, see (e) above.
9
PIONEER NATURAL RESOURCES COMPANY
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
December 31, 2005
Note 3. Supplementary Pro Forma Information on Oil and Gas Producing
Activities
The following supplementary pro forma information for oil and gas producing
activities is presented pursuant to the disclosure requirements of Statement of
Financial Accounting Standards No. 69, "Disclosures About Oil and Gas Producing
Activities" assuming that the divestment of the Argentine assets and deepwater
Gulf of Mexico assets occurred on January 1, 2005.
10
PIONEER NATURAL RESOURCES COMPANY
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
December 31, 2005
Pro Forma Reserve Quantity Information
The following table sets forth the changes in net reserve quantities of oil
and natural gas liquids ("NGL") combined in thousands of barrels ("MBbls"), gas
in millions of cubic feet ("MMcf") and total in thousands of barrels of oil
equivalents ("MBOE") associated with proved reserves on a pro forma basis for
the year ended December 31, 2005:
Oil &
NGLs Gas
(MBbls) (MMcf) MBOE
---------- ---------- ----------
Total Proved Reserves:
UNITED STATES
Balance at January 1, 2005.................. 354,279 2,874,143 833,303
Revisions of previous estimates............. (5.225) (176,919) (34,712)
Purchases of minerals-in-place.............. 65,800 83,179 79,663
New discoveries and extensions.............. 225 103,616 17,494
Production.................................. (14,851) (114,888) (33,999)
Sales of mineral-in-place................... (21,727) (97,410) (37,964)
---------- ---------- ----------
Balance at December 31, 2005................ 378,499 2,671,721 823,785
========== ========== ==========
CANADA
Balance at January 1, 2005.................. 4,095 119,869 24,073
Revisions of previous estimates............. 434 15,887 3,082
Purchases of minerals-in-place.............. - 292 49
New discoveries and extensions.............. 652 55,130 9,840
Production.................................. (311) (15,665) (2,922)
Sales of mineral-in-place................... (2,447) (44,999) (9,947)
---------- ---------- ----------
Balance at December 31, 2005................ 2,423 130,514 24,175
========== ========== ==========
AFRICA
Balance at January 1, 2005.................. 8,271 - 8,271
Revisions of previous estimates............. 184 - 184
New discoveries and extensions.............. 2,043 60,395 12,109
Production.................................. (3,674) - (3,674)
---------- ---------- ----------
Balance at December 31, 2005................ 6,824 60,395 16,890
========== ========== ==========
TOTAL
Balance at January 1, 2005.................. 366,645 2,944,012 865,647
Revisions of previous estimates............. (4,607) (161,032) (31,446)
Purchases of minerals-in-place.............. 65,800 83,471 79,712
New discoveries and extensions.............. 2,920 219,141 39,443
Production.................................. (18,836) (130,553) (40,595)
Sales of mineral-in-place................... (24,176) (142,409) (47,911)
---------- ---------- ----------
Balance at December 31, 2005................ 387,746 2,862,630 864,850
========== ========== ==========
Proved Developed Reserves:
United States............................... 220,018 1,950,330 545,073
Canada...................................... 3,849 107,547 21,773
Africa...................................... 8,271 - 8,271
---------- ---------- ----------
Balance at January 1, 2005............... 232,138 2,057,877 575,117
========== ========== ==========
United States............................... 204,190 1,802,889 504,671
Canada...................................... 2,202 99,025 18,706
Africa...................................... 5,477 - 5,477
---------- ---------- ----------
Balance at December 31, 2005............. 211,869 1,901,914 528,854
========== ========== ==========
11
PIONEER NATURAL RESOURCES COMPANY
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
December 31, 2005
Pro Forma Standardized Measure of Discounted Future Net Cash Flows
The following tables set forth the pro forma standardized measure of
discounted future net cash flows ("SMOG") relating to proved oil, NGL and gas
reserves of the Company as of December 31, 2005, as well as changes therein for
the year then ended (in thousands):
SMOG:
UNITED STATES
Oil and gas producing activities:
Future cash inflows.......................................... $ 36,093,210
Future production costs...................................... (10,751,619)
Future development costs..................................... (2,674,228)
Future income tax expense.................................... (7,350,220)
-----------
15,317,143
10% annual discount factor...................................... (9,827,320)
-----------
Standardized measure of discounted future cash flows............ $ 5,489,823
===========
CANADA
Oil and gas producing activities:
Future cash inflows.......................................... $ 1,062,258
Future production costs...................................... (404,891)
Future development costs..................................... (46,312)
Future income tax expense.................................... (166,333)
-----------
444,722
10% annual discount factor...................................... (190,655)
-----------
Standardized measure of discounted future cash flows............ $ 254,067
===========
AFRICA
Oil and gas producing activities:
Future cash inflows.......................................... $ 718,481
Future production costs...................................... (66,151)
Future development costs..................................... (250,705)
Future income tax expense.................................... (140,185)
-----------
261,440
10% annual discount factor...................................... (105,271)
-----------
Standardized measure of discounted future cash flows............ $ 156,169
===========
TOTAL
Oil and gas producing activities:
Future cash inflows.......................................... $ 37,873,949
Future production costs...................................... (11,222,661)
Future development costs..................................... (2,971,245)
Future income tax expense.................................... (7,656,738)
-----------
16,023,305
10% annual discount factor...................................... (10,123,246)
-----------
Standardized measure of discounted future cash flows............ $ 5,900,059
===========
Changes in SMOG:
Oil and gas sales, net of production costs...................... $ (1,432,118)
Net changes in prices and production costs...................... 3,037,917
Extensions and discoveries...................................... 417,346
Development costs incurred during the period.................... 343,094
Sales of minerals-in-place...................................... (1,492,864)
Purchases of minerals-in-place.................................. 645,315
Revisions of estimated future development costs................. (680,110)
Revisions of previous quantity estimates........................ (388,379)
Accretion of discount........................................... 755,456
Changes in production rates, timing and other................... (204,986)
-----------
Change in present value of future net revenues.................. 1,000,671
Net change in present value of future income taxes.............. (511,862)
-----------
488,809
Balance, beginning of year...................................... 5,411,249
-----------
Balance, end of year............................................ $ 5,900,059
===========
12
PIONEER NATURAL RESOURCES COMPANY
S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PIONEER NATURAL RESOURCES COMPANY
Date: April 3, 2006 By: /s/ Darin G. Holderness
-------------------------------------------
Darin G. Holderness
Vice President and Chief Accounting Officer
13
PIONEER NATURAL RESOURCES COMPANY
EXHIBIT INDEX
Exhibit No. Desription
----------- ----------
2.1 Purchase and Sale Agreement by and between Pioneer as Seller
and Marubeni as Purchaser (incorporated by reference to
Exhibit 2.1 to the Company's Current Report on Form 8-K, File
No. 1-13245, filed with the Securities and Exchange
Commission on February 28, 2006).
99.1(a) News Release dated March 28, 2006.
-------------
(a) Filed herewith.
14