Pioneer Natural Resources to ramp up Permian Basin drilling at $50/b

Pioneer says it will add 5 to 10 horizontal drilling rigs

PioneerAs global markets slowly recover, Pioneer Natural Resources Company says it plans to begin drilling again when oil prices hit $50 a barrel. 

The company was reporting its financial and operating results for the quarter ended March 31.

“The performance from our Spraberry/Wolfcamp horizontal drilling program continues to be outstanding. Our strong balance sheet, derivatives position and improving capital efficiency are allowing us to continue to grow and bring forward the inherent net asset value associated with this world class asset during a period of low commodity prices,” said Chairman and CEO Scott D. Sheffield.

Pioneer reported a Q1 net loss attributable to common stockholders of $267 million, or $1.65 per diluted share.

Without the effect of noncash mark-to-market derivative losses and other unusual items, adjusted results for Q1 were a net loss of $104 million after tax, or $0.64 per diluted share.

Pioneer
Pioneer Natural

“We have the financial flexibility to prudently manage through the current commodity price downturn and quickly ramp up drilling activity when prices improve,” said Sheffield.

Q1 highlights:

  • producing 222 thousand barrels oil equivalent per day (MBOEPD), of which 55 per cent was oil; production grew by 7 MBOEPD, or 3 per cent, compared to the fourth quarter of 2015, and was significantly above Pioneer’s first quarter production guidance range of 211 MBOEPD to 216 MBOEPD; oil production grew 9 per cent, 10 thousand barrels oil per day during the quarter,  compared to the fourth quarter.
  • placing 55 horizontal wells on production in the Spraberry/Wolfcamp during the first quarter with all wells benefiting from Pioneer’s completion optimization program;
  • continuing to realize significant capital efficiency gains in the Spraberry/Wolfcamp where Pioneer’s completion optimization program and the extension of lateral lengths are enhancing well productivity, while drilling and completion efficiency gains and cost reduction initiatives are driving down the cost per lateral foot to drill and complete wells;
  • reducing combined production cost and G&A expense per barrel oil equivalent (BOE) by 15 per cent compared to the fourth quarter of 2015;
  • starting up the new Targa-operated Spraberry/Wolfcamp gas processing plant, which has a capacity of 200 million cubic feet per day (MMCFPD); and
  • increasing oil and gas derivative coverage for 2017.

PioneerPioneer plans for 2016:

  • planning to maintain 12 horizontal rigs in the northern Spraberry/Wolfcamp based on favorable well returns in this area; the Company is currently operating 12 horizontal rigs in the northern Spraberry/Wolfcamp and two horizontal rigs in the southern Wolfcamp joint venture area (both southern Wolfcamp rigs are expected to be terminated by the end of June); the northern rig activity level will allow the Company to continue to progress its completion optimization program;
  • expecting to deliver production growth of 12 per cent in 2016 compared to the Company’s previous production growth target of 10 per cent; the higher forecasted growth rate reflects improving Spraberry/Wolfcamp well productivity;
  • maintaining capital expenditures for 2016 of $2.0 billion, of which $1.85 billion is for drilling and completions (includes tank batteries, saltwater disposal facilities and gas processing facilities) and $150 million is for vertical integration, systems upgrades and field facilities;
  • expecting to add five to ten horizontal drilling rigs when the price of oil recovers to approximately $50 per barrel and the outlook for oil supply/demand fundamentals is positive