Pioneer Natural Resources produces more oil in 2015 than forecast

Pioneer Natural Resources expects 2015 production growth of 12% compared to 2014, increase from previous guidance of 11%

Pioneer Natural Resources says it produced more oil than forecast earlier and the company is raising $1.4 billion, partly to continue developing West Texas fields.

“The performance from our Spraberry/Wolfcamp horizontal drilling program continues to be outstanding,” said CEO Scott D. Sheffield.

“Our strong balance sheet, strong derivatives position and improving capital efficiency are allowing us to continue to bring forward the inherent net asset value associated with this world class asset during a period of low commodity prices.”

Pioneer Natural Resources Company announced Wednesday that it has priced a public offering of its common stock at $117 per share and upsized the offering from 10.5 million shares to 12 million shares.

The company will receive total gross proceeds (before underwriters’ discounts and commissions and estimated expenses) of approximately $1.4 billion.

Proceeds will be partly used to develop acreage in the West Texas Spraberry/Wolfcamp play.

Pioneer Natural Resources also said its Q4 2015 production was between 213 thousand barrels equivalent per day (MBOEPD) to 215 MBOEPD, which is above the top end of its previously announced production forecast of 206 to 211 MBOEPD.

The company said in a press release that the increase is driven by the strong Spraberry/Wolfcamp horizontal drilling program, which continues to deliver better than expected horizontal well results.

During Q4 Pioneer Natural Resources placed 44 Spraberry/Wolfcamp horizontal wells on production (35 in the northern acreage and 9 in the south).

The completion optimization program was expanded at the end of Q3 to include an additional 50 horizontal wells as a result of the strong production exhibited by the company’s initial 26-well completion optimization program. Almost all of the Spraberry/Wolfcamp wells completed during Q4 benefited from the continuing completion optimization program, the company said in the release.

Of the 35 wells placed on production in the northern acreage, 22 wells targeted the Wolfcamp B interval and are on average tracking 30 to 40 per cent above a type curve that represents estimated ultimate recoveries (EURs) of one million barrels oil equivalent (MMBOE) over the life of the well.

Eleven Lower Spraberry Shale wells were also placed on production during the quarter. Early production results are on average tracking EURs between 800 thousand barrels oil equivalent (MBOE) to one MMBOE over the life of the well.

An additional two Wolfcamp A interval wells were recently placed on production. In the southern Wolfcamp joint venture area, the Company placed nine horizontal wells on production during the fourth quarter. Early production from the Wolfcamp B (eight wells) interval wells and Wolfcamp A (one well) interval well are on average tracking a one MMBOE EUR type curve.

“The Company plans to continue to prudently and economically execute the active development of the Spraberry/Wolfcamp through 2017 in the event a ‘lower-for-longer’ commodity price scenario unfolds. Conversely, Pioneer has the financial flexibility to increase the pace of development sooner if the commodity price environment improves,” said Sheffield.

As a result of the company’s better-than-expected well performance during the fourth quarter, Pioneer now expects full-year 2015 production growth of 12 per cent compared to 2014, an increase from previous guidance of 11 per cent.

The company expects that its full-year 2015 capital budget expenditures will remain consistent with its previously forecast budget of $2.2 billion (excluding acquisitions, asset retirement obligations, capitalized interest and geological and geophysical G&A).