Attached files

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10-K - FORM 10-K - Pioneer Southwest Energy Partners L.P.d283770d10k.htm
EX-31.1 - CEO CERTIFICATION UNDER SECTION 302 - Pioneer Southwest Energy Partners L.P.d283770dex311.htm
EX-23.2 - CONSENT OF NETHERLAND, SEWELL & ASSOCIATES, INC. - Pioneer Southwest Energy Partners L.P.d283770dex232.htm
EX-32.1 - CEO CERTIFICATION UNDER SECTION 906 - Pioneer Southwest Energy Partners L.P.d283770dex321.htm
EX-32.2 - CFO CERTIFICATION UNDER SECTION 906 - Pioneer Southwest Energy Partners L.P.d283770dex322.htm
EX-31.2 - CFO CERTIFICATION UNDER SECTION 302 - Pioneer Southwest Energy Partners L.P.d283770dex312.htm
EX-23.1 - CONSENT OF ERNST & YOUNG LLP - Pioneer Southwest Energy Partners L.P.d283770dex231.htm
EX-21.1 - SUBSIDIARIES OF THE REGISTRANT - Pioneer Southwest Energy Partners L.P.d283770dex211.htm
EXCEL - IDEA: XBRL DOCUMENT - Pioneer Southwest Energy Partners L.P.Financial_Report.xls

Exhibit 99.1

February 9, 2012

Mr. Kerry D. Scott

Pioneer Natural Resources Company

5205 North O’Connor Boulevard, Suite 200

Irving, Texas 75039-3746

Dear Mr. Scott:

In accordance with your request, we have audited the estimates prepared by Pioneer Natural Resources Company (Pioneer), as of December 31, 2011, of the proved reserves and future revenue to the Pioneer Southwest Energy Partners (PSE) interest in certain oil and gas properties located in the Spraberry (Trend) Field, Texas. It is our understanding that the proved reserves estimates shown herein constitute all of the proved reserves owned by PSE. We have examined the estimates with respect to reserves quantities, reserves categorization, future producing rates, future net revenue, and the present value of such future net revenue, using the definitions set forth in U.S. Securities and Exchange Commission (SEC) Regulation S-X Rule 4-10(a). The estimates of reserves and future revenue have been prepared in accordance with the definitions and regulations of the SEC and, with the exception of the exclusion of future income taxes, conform to the FASB Accounting Standards Codification Topic 932, Extractive Activities—Oil and Gas. We completed our audit on or about the date of this letter. This report has been prepared for PSE’s use in filing with the SEC; in our opinion the assumptions, data, methods, and procedures used in the preparation of this report are appropriate for such purpose.

The following table sets forth Pioneer’s estimates of the net reserves and future net revenue, as of December 31, 2011, for the audited properties:

 

     Net Reserves      Future Net Revenue (M$)  
     Oil      NGL      Gas             Present Worth  

Category

   (MBBL)      (MBBL)      (MMCF)      Total      at 10%  

Proved Developed Producing

     23,694         9,710         37,698         1,400,858         662,157   

Proved Developed Non-Producing

     1,239         371         1,241         100,515         47,768   

Proved Undeveloped

     6,092         1,909         7,370         334,208         92,975   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Proved

     31,025         11,989         46,309         1,835,581         802,900   

Totals may not add because of rounding.

The oil reserves shown include crude oil only. Oil and natural gas liquids (NGL) volumes are expressed in thousands of barrels (MBBL); a barrel is equivalent to 42 United States gallons. Gas volumes are expressed in millions of cubic feet (MMCF) at standard temperature and pressure bases.

When compared on a lease-by-lease basis, some of the estimates of Pioneer are greater and some are less than the estimates of Netherland, Sewell & Associates, Inc. (NSAI). However, in our opinion the estimates of PSE’s proved reserves and present worth discounted at 10 percent shown herein are, in the aggregate, reasonable and have been prepared in accordance with the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers (SPE Standards). Additionally, these estimates are within the recommended 10 percent tolerance threshold set forth in the SPE Standards. We are satisfied with the methods and procedures used by Pioneer in preparing the December 31, 2011, estimates of reserves and future revenue, and we saw nothing of an unusual nature that would cause us to take exception with the estimates, in the aggregate, as prepared by Pioneer.


The estimates shown herein are for proved reserves. Pioneer’s estimates do not include probable or possible reserves that may exist for these properties, nor do they include any value for undeveloped acreage beyond those tracts for which undeveloped reserves have been estimated. Reserves categorization conveys the relative degree of certainty; reserves subcategorization is based on development and production status. The estimates of reserves and future revenue included herein have not been adjusted for risk.

Prices used by Pioneer are based on the 12-month unweighted arithmetic average of the first-day-of-the-month price for each month in the period January through December 2011. For oil and NGL volumes, the average of Platts Oil Daily West Texas Intermediate (Cushing) spot price of $96.132 per barrel is adjusted by lease for quality, transportation fees, and regional price differentials. For gas volumes, the average Platts Gas Daily Henry Hub spot price of $4.119 per MMBTU is adjusted by lease for energy content, transportation fees, and regional price differentials. All prices are held constant throughout the lives of the properties. The average adjusted product prices weighted by production over the remaining lives of the properties are $95.08 per barrel of oil, $43.77 per barrel of NGL, and $3.46 per MCF of gas.

Operating costs used by Pioneer are based on historical operating expense records. These costs include those incurred at and below the district and field levels. Additionally, the estimated per-well COPAS overhead fees paid by PSE have been included. Since all properties are non-operated, headquarters general and administrative overhead expenses of PSE are not included. Capital costs used by Pioneer are based on authorizations for expenditure and actual costs from recent activity. Capital costs are included as required for workovers, new development wells, and production equipment. Abandonment costs used are Pioneer’s estimates of the costs to abandon the wells, and production facilities, net of any salvage value. Operating costs are held constant throughout the lives of the properties, and capital costs and abandonment costs are held constant to the date of expenditure.

The reserves shown in this report are estimates only and should not be construed as exact quantities. Proved reserves are those quantities of oil and gas which, by analysis of engineering and geoscience data, can be estimated with reasonable certainty to be economically producible; probable and possible reserves are those additional reserves which are sequentially less certain to be recovered than proved reserves. Estimates of reserves may increase or decrease as a result of market conditions, future operations, changes in regulations, or actual reservoir performance. In addition to the primary economic assumptions discussed herein, estimates of Pioneer and NSAI are based on certain assumptions including, but not limited to, that the properties will be developed consistent with current development plans, that the properties will be operated in a prudent manner, that no governmental regulations or controls will be put in place that would impact the ability of the interest owner to recover the reserves, and that projections of future production will prove consistent with actual performance. If the reserves are recovered, the revenues therefrom and the costs related thereto could be more or less than the estimated amounts. Because of governmental policies and uncertainties of supply and demand, the sales rates, prices received for the reserves, and costs incurred in recovering such reserves may vary from assumptions made while preparing these estimates.

It should be understood that our audit does not constitute a complete reserves study of the audited oil and gas properties. Our audit consisted primarily of substantive testing, wherein we conducted a detailed review of all properties. In the conduct of our audit, we have not independently verified the accuracy and completeness of information and data furnished by Pioneer with respect to ownership interests, oil and gas production, well test data, historical costs of operation and development, product prices, or any agreements relating to current and future operations of the properties and sales of production. However, if in the course of our examination something came to our attention that brought into question the validity or sufficiency of any such information or data, we did not rely on such information or data until we had satisfactorily resolved our questions relating thereto or had independently verified such information or data. Our audit did not include a review of PSE’s overall reserves management processes and practices.

We used standard engineering and geoscience methods, or a combination of methods, including performance analysis, volumetric analysis, and analogy, that we considered to be appropriate and necessary to establish the


conclusions set forth herein. As in all aspects of oil and gas evaluation, there are uncertainties inherent in the interpretation of engineering and geoscience data; therefore, our conclusions necessarily represent only informed professional judgment.

Supporting data documenting this audit, along with data provided by Pioneer, are on file in our office. The technical persons responsible for conducting this audit meet the requirements regarding qualifications, independence, objectivity, and confidentiality set forth in the SPE Standards. We are independent petroleum engineers, geologists, geophysicists, and petrophysicists; we do not own an interest in these properties nor are we employed on a contingent basis.

 

Sincerely,

NETHERLAND, SEWELL & ASSOCIATES, INC.

Texas Registered Engineering Firm F-2699

By:

 

/s/ C.H. (Scott) Rees III

 

C.H. (Scott) Rees III, P.E.

 

Chairman and Chief Executive Officer

By:

 

/s/ G. Lance Binder

 

G. Lance Binder, P.E., 61794

 

Executive Vice President

Date Signed: February 9, 2012

GLB:JLW

 

Please be advised that the digital document you are viewing is provided by Netherland, Sewell & Associates, Inc. (NSAI) as a convenience to our clients. The digital document is intended to be substantively the same as the original signed document maintained by NSAI. The digital document is subject to the parameters, limitations, and conditions stated in the original document. In the event of any differences between the digital document and the original document, the original document shall control and supersede the digital document.