Pioneer Southwest Energy Partners L.P.
Pioneer Southwest Energy Partners L.P — Investor Presentation (July 2008)
21 slides from Pioneer Southwest Energy Partners L.P's investor presentation, Jul 16, 2008
Slide 1: Investor Presentation July 2008
Investor Presentation July 2008
Slide 2: Forward Looking Statements
Forward Looking Statements Except for historical information contained herein, the statements, charts and graphs in this presentation are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward- looking statemen
Slide 3: PSE - Overview
MLP formed by PXD to own and acquire oil and gas properties in Texas and 8 counties in southeastern New Mexico Primary focus will be PXD's core operating areas Initial assets include: Proved reserves of ~34 MMBOE (year-end 2007) in the West Texas Spraberry field 84% liquids / 16% gas Reserve-to-prod
Slide 4: PSE - Investment Highlights
PSE - Investment Highlights Backed by a strong E&P parent with ~68% retained ownership (PXD) Strong sponsorship with large upstream and midstream drop-down potential Predictable, stable cash flow 100% proved developed producing reserves (no drilling required) Long-lived production with low decline r
Slide 5: Spraberry - A Premier MLP Field
Spraberry - A Premier MLP Field Large reserve and resource potential Spraberry original oil in place (OOIP) estimated at 30 billion barrels 5th largest U.S. oil field1 Rank Field Name Location Discovery Year 1 Prudhoe Bay AK 1967 2 Wasson TX 1937 3 Belridge South CA 1911 4 Mississippi Canyon Blk 807
Slide 6: Spraberry - Only Growing Large U.S. Onshore Oil Field
Spraberry - Only Growing Large U.S. Onshore Oil Field 10 Largest Oil Fields in the United States1: Production Growth Since 2003 Spraberry Trend Area Mars-Ursa Thunder Horse Wasson Belridge South Elk Hills Kern River Midway-Sunset Kuparuk River Prudhoe Bay 1997 22.1 31.9 0 15.1 41.1 20.5 48.8 61.6 96
Slide 7: PXD (PSE Parent) - Largest Spraberry Trend Producer
PXD (PSE Parent) - Largest Spraberry Trend Producer Gross production 44 MBOEPD (39 MBOEPD net)1 Represents >35% of total Spraberry production YE 2007 proved reserves of 481 MMBOE (48% PD / 52% PUD) 19,000 undrilled locations (includes 40-acre and 20- acre locations) provides substantial reserve grow
Slide 8: Spraberry Wells: Low Decline Rate Provides Predictable Cash Flow
Years Oil Dry Gas (BOE) 0 38 8 7 1 22.87 6.03 3.67 2 18.18 4.83 2.94 3 15.78 4.69 2.85 4 13.77 4.05 2.46 5 12.34 3.41 2.08 6 11.22 3.45 2.1 7 10.31 3.39 2.06 8 10.25 3.11 1.89 9 9.48 3.15 1.91 10 8.83 2.9 1.76 11 8.14 3.04 1.85 12 7.73 3.25 1.97 13 7.41 2.65 1.61 14 7.19 2.5 1.52 15 7.03 2.46 1.5 16
Slide 9: Spraberry - A Continuing Growth Story for PXD
PSE PDP PUD 1998 0 133 28 1999 0 162 41 2000 0 161 51 2001 0 164 72 2002 0 177 123 2003 0 180 154 2004 0 194 157 2005 0 199 205 2006 0 220 220 2007 34 199 248 Spraberry - A Continuing Growth Story for PXD PXD Proved Reserves (MMBOE) Consistent reserve growth through a combination of step-out wells a
Slide 10: PXD - Strong Spraberry Acquisition Track Record
PXD - Strong Spraberry Acquisition Track Record $458 million of bolt-on acquisitions totaling 196 MMBOE from 2001 through 2007 Reflects >25% of the total transactions in the Spraberry during this period1 Significant bolt-on upstream acquisition opportunities remain Option to increase ownership in Sp
Slide 11: PXD Drop-down Potential in PSE Operating Area
PXD Drop-down Potential in PSE Operating Area: 558 MMBOE1 Barnett Shale (gas) West Panhandle (liquids & gas) Edwards Trend (gas) Spraberry (oil, liquids & gas) PXD: 447 MMBOE2 Other Permian (gas) PSE Operating Area Reflects YE 2007 PXD proved reserves of 592 MMBOE in PSE operating area less YE 2007
Slide 12: PSE Favorable Structural Features
PSE Favorable Structural Features No incentive distribution rights ("IDRs") or management incentive units ("MIUs") that reduce distributable cash flow to LP unitholders Alignment of interests among all unitholders All investors share equally in cash flow PXD has significant ownership (~68%) Maximize
Slide 13: PSE - Hedging Program Provides Distribution Stability
PSE - Hedging Program1 Provides Distribution Stability NGL Hedges Gas Hedges Oil Hedges PSE will hedge 65% to 85% of total estimated production for 3 - 5 years 68%, 72% and 65% of total estimated production hedged for remainder of 2008, 2009 and 2010, respectively Some upside to current high prices
Slide 14: PSE: Forecasted Distributable Cash Flow
Estimated EBITDAX1 $65,436 Less: Cash interest expense (commitment fees) 383 Cash income taxes (Texas Margin tax) 594 Cash reserves for acquisitions 16,573 Cash available for distributions $47,886 Total cash distributions ($2.00 per unit) $(40,051) Excess cash available $7,835 Coverage ratio 1.20x S
Slide 15: PSE - A Premier Upstream MLP
PSE - A Premier Upstream MLP PSE Strong Yield & Growth Opportunities Stable, Planned Predictable § Distribution Cash Flow Focused, Experienced Management Team
Slide 16: Appendix
Appendix
Slide 17: Offering Summary
Offering Summary Issuer: Pioneer Southwest Energy Partners L.P. NYSE Symbol: PSE Units Sold: 9,487,500 common units (31.6%) PXD Unit Ownership: 68.3% (excludes PXD's GP interest of 0.1%) Total Units Outstanding: 30,008,700 Offering Price (4/30/08): $19.00 Initial Quarterly Distribution: $0.50 ($2.00
Slide 18: PSE - Focused and Experienced Leadership
PSE - Focused and Experienced Leadership Senior Management Team Position with PSE Position with PXD Years of Experience Scott Sheffield CEO and Director - MLP Experience Chairman, CEO and Director 32 Tim Dove President and COO President and COO 26 Rich Dealy Executive Vice President, CFO, Treasurer
Slide 19: Maximizes Distributions to LP Unitholders
Maximizes Distributions to LP Unitholders No IDRs or MIUs Investors share equally in all cash flows - no increasing share of cash flow allocable to GP or management Acquisitions deliver greater accretion to unitholders without IDRs or MIUs Unitholders $1.48 Distribution Growth Example Hypothetical 1
Slide 20: PSE: Oil-weighted & PDP-focused vs. Peers
PSE: Oil-weighted & PDP-focused vs. Peers Percent Proved Developed1 Percent Oil and NGLs1 1) As of December 31, 2007. Pro forma for acquisitions and divestitures in 2008. Source: Company disclosure, John S. Herold, Wall Street research PSE 1 0.8 BBEP 0.9 0.8 LGCY 0.89 0.8 ENP 0.87 0.8 EVEP 0.84 0.8
Slide 21: Reconciliation of EBITDAX to Net Income
Reconciliation of EBITDAX to Net Income EBITDAX is presented herein, and reconciled to the generally accepted accounting principle ("GAAP") measure of net income because of its wide acceptance by the investment community as a financial indicator of a company's ability to internally service or incur
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