(Reuters) – Pioneer Natural Resources Co beat Wall Street estimates for quarterly profit on Monday, and said it sold its Eagle Ford and remaining assets in South Texas to become a pure-play Permian basin producer.
The company said it will get up to $475 million in total proceeds from the sale, $25 million of which was received at closing and $450 million is contingent on future commodity prices.
Shares of Pioneer were up 2.4 percent at $160 in trading after the bell.
Reuters had reported in April that the oil producer was in advanced talks to sell its Eagle Ford acreage in South Texas to privately owned energy producer Ensign Natural Resources, citing five sources familiar with the matter.
The deal will help Pioneer achieve its aim to solely focus on the Permian basin of West Texas and Eastern New Mexico to produce energy.
Output from the basin has driven U.S. crude production to near 12 million barrels per day (bpd), making the country the biggest oil producer in the world.
The company forecast second-quarter production from Permian to average between 313,000 boepd and 328,000.
Pioneer also plans to divest its gas processing midstream assets during the year, Chief Executive Scott D. Sheffield said in a statement. The sale would reduce Pioneer’s capital expenses and increase free cash flow.
The company expects a pretax noncash loss of $400 million to $550 million in the second quarter from the latest asset sale.
Total production rose about 7 percent to 333,430 barrels of oil equivalent per day (boepd) in the first quarter, ahead of the company’s forecast, as output in the country’s largest oil field of Permian averaged at 320,000 boepd.
The average realized oil prices fell 19.88 percent to $49.38 barrels.
Net income attributable to common stockholders surged to $350 million, or $2.06 per share, in the quarter ended March 31, from $178 million, or $1.04 per share, a year ago.
Excluding one-time items, the company earned $1.83 per share, while analysts were expecting $1.61, according to IBES data from Refinitiv.
Reporting by Arundhati Sarkar in Bengaluru; Editing by Shinjini Ganguli