Pioneer Natural Resources Co. (NYSE: PXD) said July 31 it knocked out another target in its Permian pure-play strategy with the sale of its legacy West Panhandle position in Texas for $201 million.
The sale with an undisclosed buyer represents a full-field exit for Pioneer and includes all of the Irving, Texas-based company’s interests in the field, producing wells and associated infrastructure.
Pioneer is one of the largest operators in the West Panhandle gas field in Texas with a large contiguous land position of 239,500 net acres, 100% HBP, and 705 operated wells across the field.
Net production from the West Panhandle Field averaged roughly 6,000 barrels of oil equivalent per day during first-quarter 2018. Pioneer also owns the Fain gas processing plant and controls the wells, production equipment and gathering system for its portion of the field.
In addition, Pioneer’s West Panhandle asset includes upside potential from more than 300 gross new drill locations in the Brown Dolomite and Red Cave formations, according to BMO Capital Markets, which was retained by the company to market the assets as its financial adviser.
Pioneer embarked on its strategy earlier this year to sell all of its assets outside of the Permian Basin, where the E&P plans to focus its entire $2.9 billion capex in 2018. Assets earmarked for sale, which in some cases have been part of the company’s portfolio for decades, include positions in the Eagle Ford, South Texas, West Panhandle and Rockies regions.
Pioneer has already made some headway on its strategy including an agreement in June to sell its Raton Basin assets in southeastern Colorado to Evergreen Natural Resources LLC for $79 million.
The company also sold its Eagle Ford joint venture (JV) assets to Sundance Energy Australia Ltd. (NASDAQ: SNDE). The $221.5 million transaction, which closed in April, included assets held by Pioneer’s JV partner Reliance Industries Ltd.
“After all the divestitures are completed, of course, we become a pure-play in the Permian Basin, in fact, a pure Midland Basin player,” Timothy L. Dove, president and CEO, said during a May earnings call. “And that will enhance our reported returns because, of course, our reported cash margins will increase our cash revenue per boe, our operating costs will be reduced per boe and our corporate returns will also be significantly improved.”
Dove said Pioneer’s divestiture process could easily last through the majority of this year, but “suffice it to say it’s on the front burner and we’re making good progress.”
The sale of Pioneer’s West Panhandle assets is expected to result in a pretax gain of $155 million to $170 million, which will be recorded during third-quarter 2018.
Pioneer said it expects to close the transaction during the third quarter, subject to the satisfaction of customary closing conditions and receipt of specified regulatory approvals.
The company will report its second-quarter earnings on Aug. 8.
Emily Patsy can be reached at epatsy@hartenergy.com.
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