U.S. shale producer Pioneer Natural Resources Co. (NYSE: PXD) on Jan. 29 said it anticipated a non-cash gain of $576 million on oil and gas hedging contracts for the fourth quarter, according to a filing with the U.S. Securities and Exchange Commission.
The gain on hedges, which act as insurance contracts to lock in prices, follows a hit to earnings on the derivatives in the previous quarter. Many shale producers last year reported losses on hedges after oil prices climbed above anticipated levels.
Rival producer EOG Resources Inc. (NYSE: EOG) this week also said it expected to report a fourth-quarter, non-cash gain from hedges after reporting losses in the prior quarter.
Pioneer will release its fourth-quarter earnings later this month. Wall Street analysts are anticipating the company to report an adjusted profit of $1.92 per share, down from $2.07 per share last quarter, according to data from Refinitiv. Last year, it reported a fourth-quarter profit of $1.22 per share.
The company boasts the largest Midland Basin acreage position with roughly 750,000 gross acres and more than 20,000 drilling locations in the prolific Permian Basin, according to Pioneer's December investor presentation.
The parties must now renegotiate a deal that would transfer Breitburn's Permian reserves to investors including Elliott and WL Ross through their participation in a $775 million rights offering.
Oil major Exxon Mobil said Jan. 31 it would create three new separate E&P companies, effective April 1, in an effort to double its profit by 2025.
Oil and gas operating costs in the U.S. shale basins have come down recently following a drop in crude prices, BP’s head of upstream Bernard Looney said on Feb. 5.