February 14, 2019 / 6:54 PM / 4 months ago

Pioneer Natural to cut spending, slow output growth in 2019

(Reuters) - Pioneer Natural Resources Co, one of the largest U.S. shale producers, plans to slow its production growth and spending in 2019, Chief Executive Timothy Dove said on Thursday, even as U.S. output has hit all-time highs.

The Irving, Texas-based company provided the outlook after reporting earnings that fell short of expectations due to losses related to hedging, as oil prices unexpectedly crashed in the fourth quarter of 2018.

U.S. output is nearing 12 million barrels per day (bpd), driven by shale companies operating largely in Texas that have cut costs in recent years through improved technology and hydraulic fracturing techniques, widely known as fracking.

Pioneer’s oil and gas production is set to rise 15 percent this year, less than the increase of about 20 percent in the prior two years. The company produces roughly 181,000 bpd in the Permian, or about 5 percent of the region’s roughly 3.8 million bpd. The Permian is the nation’s largest shale field.

The company expects drilling and completion costs to increase by 4 percent to 5 percent by the end of this year, when new pipelines coming online spur oil field activity, Dove said on a conference call. Capital expenditure is expected to fall by 11 percent, or about $350 million, in the coming year.

Pioneer’s shares were down $4.52, or 3.1 percent, at $141.43. The stock has lost 34 percent of its value since its 12-month closing high of $212.31 in May 2018.

The company reported an adjusted fourth-quarter profit of $1.18 per share that missed analysts estimates by 36 cents, according to IBES data from Refinitiv, on hedging that reduced the value realized from its oil and gas sales.

The company had about an $85 million loss for removing hedges on 2019 production, analysts at Jefferies Group LLC said in a note on Thursday.

Pioneer’s fourth-quarter capital expenditures of $1.03 billion were higher than Wall Street estimates of about $850 million, analysts at Houston investment bank Tudor, Pickering, Holt, & Co said in a note to clients.

Reporting by Collin Eaton; Editing by Bill Berkrot

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