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): July 20, 2010
PIONEER SOUTHWEST ENERGY PARTNERS L.P.
(Exact name of registrant as specified in its charter)
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Delaware
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001-34032
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26-0388421
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(State or other jurisdiction of
incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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5205 N. O’Connor Blvd., Suite 200, Irving, Texas
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75039
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (972) 444-9001
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)
[ ] 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))
Item 2.02. Results of Operations and Financial Condition
Explanatory note: Pioneer Southwest Energy Partners L.P. (the "Partnership") presents in this Item 2.02 certain information regarding the impact of changes in the fair values of its derivative instruments on the results of operations for three and six months ended June 30, 2010 and certain other information regarding its derivative instruments.
The following table summarizes non-hedge net derivative gains that the Partnership expects to record in its earnings for the three and six months ended June 30, 2010:
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DERIVATIVE GAINS, NET
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(in thousands)
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|||||||||
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Three Months Ended
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Six Months Ended
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June 30, 2010
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June 30, 2010
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Noncash MTM changes:
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Oil derivative gains
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$
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29,057
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$
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37,1333
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Natural gas liquids derivative gains
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3,768
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7,898
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Gas derivative gains (losses)
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(451
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)
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3,575
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Total noncash derivative gains, net
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32,374
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48,606
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Cash settlements:
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Oil derivative losses
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(3,631
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)
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(7,402
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))
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Natural gas liquids derivative losses
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(793
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)
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(1,962
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)
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Gas derivative gains
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831
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1,063
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Total cash derivative losses, net
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(3,593
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)
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(8,301
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)
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Total derivative gains, net
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$
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28,781
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$
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40,305
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Item 7.01. Regulation FD Disclosure
The following table presents the Partnership’s open commodity derivative positions as of July 20, 2010:
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2010
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Twelve Months Ending December 31,
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Third
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Fourth
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Quarter
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Quarter
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2011
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2012
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2013
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Average Daily Oil Production
Associated with Derivatives:
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Swap Contracts:
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Volume (Bbl)
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2,500 | 2,500 | 750 | 3,000 | 3,000 | ||||||||||||||||
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NYMEX price (Bbl)
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$ | 93.34 | $ | 93.34 | $ | 77.25 | $ | 79.32 | $ | 81.02 | |||||||||||
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Collar Contracts:
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Volume (Bbl)
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- | - | 2,000 | - | - | ||||||||||||||||
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NYMEX price (Bbl):
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Ceiling
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$ | - | $ | - | $ | 170.00 | $ | - | $ | - | |||||||||||
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Floor
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$ | - | $ | - | $ | 115.00 | $ | - | $ | - | |||||||||||
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Collar Contracts with Short Puts:
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Volume (Bbl)
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1,000 | 1,250 | 1,000 | 1,000 | 1,000 | ||||||||||||||||
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NYMEX price (Bbl):
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Ceiling
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$ | 87.18 | $ | 89.06 | $ | 99.60 | $ | 103.50 | $ | 111.50 | |||||||||||
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Floor
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$ | 70.00 | $ | 70.00 | $ | 70.00 | $ | 80.00 | $ | 83.00 | |||||||||||
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Short Put
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$ | 55.00 | $ | 55.00 | $ | 55.00 | $ | 65.00 | $ | 68.00 | |||||||||||
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Percent of total oil production (a)
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~90%
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~90%
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~90%
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~90%
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~85%
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Average Daily Natural Gas Liquid Production
Associated with Derivatives: |
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Swap Contracts:
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Volume (Bbl)
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750 | 750 | 750 | 750 | - | ||||||||||||||||
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Blended index price (Bbl) (b)
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$ | 52.52 | $ | 52.52 | $ | 34.65 | $ | 35.03 | $ | - | |||||||||||
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Percent of total NGL production (a)
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~55%
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~55%
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~50%
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~50%
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N/A | ||||||||||||||||
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Average Daily Gas Production Associated with Derivatives:
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Swap Contracts:
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Volume (MMBtu)
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5,000 | 5,000 | 2,500 | 5,000 | 2,500 | ||||||||||||||||
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NYMEX price (MMBtu) (c)
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$ | 7.44 | $ | 7.44 | $ | 6.65 | $ | 6.43 | $ | 6.89 | |||||||||||
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Percent of total gas production (a)
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~85%
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~85%
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~40%
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~80%
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~40%
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Basis Swap Contracts:
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Permian Basin Index Swaps – (MMBtu) (d)
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2,500 | 2,500 | - | 2,500 | 2,500 | ||||||||||||||||
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Price differential ($/MMBtu)
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$ | (0.87 | ) | $ | (0.87 | ) | $ | - | $ | (0.30 | ) | $ | (0.31 | ) |
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____________
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(a)
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Represents percentage of forecasted production, which may differ from percentage of actual production.
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(b)
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Represents the blended Mont Belvieu index prices per Bbl.
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(c)
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Approximate NYMEX Henry Hub index price based on the differential to the index price on the derivative trade date.
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(d)
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Represents swaps that fix the basis differentials between the index at which the Partnership sells its gas and NYMEX Henry Hub index prices used in gas swap contracts.
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Cautionary Statement Concerning Forward-Looking Statements
Except for historical information contained herein, the statements in this Current Report on Form 8-K are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements and the business prospects of the Partnership are subject to a number of risks and uncertainties that may cause the Partnership's actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties include, among other things, volatility of commodity prices, the effectiveness of the Partnership's commodity price derivative strategy, reliance on Pioneer Natural Resources Company and its subsidiaries to manage the Partnership's business and identify and evaluate acquisitions, product supply and demand, competition, the ability to obtain environmental and other permits and the timing thereof, other government regulation or action, the ability to obtain approvals from third parties and negotiate agreements with third parties on mutually acceptable terms, litigation, the costs and results of drilling and operations, access to and availability of drilling equipment and transportation, processing and refining facilities, the Partnership's ability to replace reserves, including through acquisitions, and implement its business plans or complete its development activities as scheduled, uncertainties associated with acquisitions, access to and cost of capital, the financial strength of counterparties to the Partnership's credit facility and derivative contracts and the purchasers of the Partnership's oil, NGL and gas production, uncertainties about estimates of reserves and the ability to add proved reserves in the future, the assumptions underlying production forecasts, quality of technical data and environmental and weather risks, including the possible impacts of climate change. These and other risks are described in the Partnership's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other filings with the United States Securities and Exchange Commission. In addition, the Partnership may be subject to currently unforeseen risks that may have a materially adverse effect on it. Accordingly, no assurances can be given that the actual events and results will not be materially different than the anticipated results described in the forward-looking statements. The Partnership undertakes no duty to publicly update these statements except as required by law.
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.
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PIONEER SOUTHWEST ENERGY PARTNERS L.P.
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By: Pioneer Natural Resources GP LLC, its general partner
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By:
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/s/ Frank W. Hall
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Frank W. Hall,
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Vice President and Chief
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Accounting Officer
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Dated: July 20, 2010
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