Pioneer Barnett Sale Plans Dropped
Texas-based Pioneer Natural Resources Company (PXD) has abandoned its plan to divest its Barnett shale properties. The assets were put up for sale in Sept 2012.
In spite of receiving an unidentified number of bids in Dec 2012, the company believes that not a single one valued the properties correctly. In view of this, Pioneer dropped its efforts to divest the properties in the Barnett shale and has retained the operatorship of these assets.
The Texas-based explorer holds a gross acreage of about 155,000 in the play, the majority of which is located in the field's wetter portions. Production in the fourth quarter of 2012 was 9,000 barrels of oil equivalent per day, of which around 55% was liquids, while the balance accounted for dry gas. Currently, Pioneer has only one rig functional in the play and intends to continue its drilling activities in the region.
Pioneer’s Barnett Shale properties were put under discontinued operations in the third quarter of 2012 due to the divestiture plans. However, with the cancellation of those plans, the financial and operating results for these properties has been reclassified as continuing operations since the fourth quarter of 2012.
Earlier, Pioneer had stated that the amount raised from the sale of the properties in the Combo play would be utilized to reduce its debt. Pioneer’s plan to call off the sale of its Barnett shale properties was revealed soon after it inked a farm out agreement with Sinochem Group for 40% of the company’s acreage in the highly prospective horizontal Wolfcamp Shale play. This goes to show that the seller is apparently under pressure to reduce its debt burden.
Pioneer holds a Zacks Rank #3, which is equivalent to a short-term Hold rating. However, there are other stocks in the oil and gas sector – Cabot Oil & Gas Corp (COG), Breitburn Energy Partners LP (BBEP) and Memorial Production Partners LP (MEMP) – which hold a Zacks Rank #1 (Strong Buy) and are expected to perform better.
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