Pioneer Natural Resources Company is an American energy company engaged in hydrocarbon exploration in the Cline Shale, which is part of the Spraberry Trend of the Permian Basin, where the company is the largest acreage holder. The company is organized in Delaware and headquartered in Irving, Texas. Pioneer Natural Resources is focused on delivering competitive and sustainable results as we responsibly produce natural gas and oil to help meet the world’s energy demands. We also handle many of our own oilfield services and operate frac fleets, drilling rigs and coil tubing units.
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The Company expects its 2021 drilling, completions and facilities capital budget to range between $2.95 billion to $3.25 billion. An additional $100 million and $50 million is budgeted for integration expenses related to the acquisition of Parsley and DoublePoint, respectively, resulting in a total 2021 capital budget3 range of $3.1 billion to $3.4 billion. The Company expects its capital program to be fully funded from forecasted 2021 cash flow5 of approximately $6.45 billion.
During 2021, the Company plans to operate an average of 22 to 24 horizontal drilling rigs in the Permian Basin, including a one-rig average program in the Delaware Basin and a three-rig average program in the southern Midland Basin joint venture area. The 2021 capital program is expected to place 470 to 510 wells on production. Pioneer expects 2021 oil production of 351 to 366 MBOPD and total production of 605 to 631 MBOEPD.
Irving-based Pioneer Natural Resources said Feb. 16 it plans to operate an average of 22 to 24 horizontal drilling rigs in Midland Basin in 2022. The 2022 capital program is expected to place 475 to 505 wells on production.
Average lateral length of wells will increase from 10,000 feet to 10,500 feet in 2022. Pioneer forecasts 2022 oil production of 350,000 to 365,000 b/d and total production of 623,000 to 648,000 boed. Production in 2022Q1 is forecast at 348,000 to 363,000 b/d of oil and 620,000 to 645,000 boed. The company plans a 2022 capital budget of $3.3 billion to $3.6 billion (after $3.4 billion in 2021, including placing 534 horizontal wells on production).
Scott D. Sheffield, CEO, said, “Our deep Midland Basin inventory of high-return well locations, coupled with best-in-class margins and operating efficiencies, provides attractive corporate returns that generate durable cash distributions through commodity price cycles. The company’s high-return asset base and low-cost structure, combined with our leading ESG practices, continue to drive significant value for Pioneer shareholders.”
Speaking to analysts and investors on a conference call Feb. 17, Sheffield said regulators should increase efforts to limit flaring in Permian Basin, especially by private operators. He said many Permian operators have limited flaring to less than one percent of gas withdrawals. “We need to rein in the privates through regulation, whether it’s EPA, state or investors,” he said. Pioneer boasts of some of the sector’s lowest greenhouse gas emissions rates, but Sheffield noted higher flaring rates of private companies, who don’t face as much scrutiny on environmental issues as their public peers. He said private operators also are expecting to grow production more aggressively than Pioneer.
He told Bloomberg that U.S. shale lacks the capacity to “come to the rescue” of consumers facing high energy prices with much more oil production. He said only OPEC countries such as Saudi Arabia and UAE can meaningfully increase production quickly in the wake of supply shortages. U.S. shale is constrained by labor shortages, increases in production costs, and demands by shareholders to return cash.
2022 Outlook Update
The Company expects its 2022 total capital budget3 to range between $3.3 billion to $3.6 billion. Pioneer expects its capital program to be fully funded from 2022 operating cash flow8, which is forecasted to be greater than $12.5 billion.
During 2022, the Company plans to operate an average of 22 to 24 horizontal drilling rigs in the Midland Basin, including a three-rig average program in the southern Midland Basin joint venture area. The 2022 capital program is expected to place 475 to 505 wells on production. Pioneer expects 2022 oil production of 350 to 365 thousand barrels of oil per day (MBOPD) and total production of 623 to 648 thousand barrels of oil equivalent per day (MBOEPD).
Second Quarter 2022 Guidance Update
Second quarter 2022 oil production is forecasted to average between 342 to 357 MBOPD and total production is expected to average between 623 to 648 MBOEPD. Production costs are expected to average $11.00 per BOE to $12.50 per BOE. DD&A expense is expected to average $10.50 per BOE to $12.00 per BOE. Total exploration and abandonment expense is forecasted to be $10 million to $20 million. G&A expense is expected to be $70 million to $80 million. Interest expense is expected to be $32 million to $37 million. Other expense is forecasted to be $20 million to $40 million. Accretion of discount on asset retirement obligations is expected to be $2 million to $5 million. The cash flow impact related to purchases and sales of oil and gas, including firm transportation, is expected to be a loss of $25 million to a loss of $55 million, based on forward oil price estimates for the quarter. The Company’s effective income tax rate is expected to be between 22% to 27%, with cash taxes expected to be $120 million to $140 million, representing estimated federal and state tax payments that will be paid based on forecasted 2022 taxable income.
Areas of Operation
Drilling By Texas County
Drilling By Field
Pioneer’s Permian Basin asset team initiated a comprehensive study during 2007 to quantify the additional resource upside offered by enhanced recovery techniques in the Spraberry field, the fifth largest oil field and the 15th largest gas field in the U.S. according to the Energy Information Administration. Of the ten largest oil fields in the U.S., the Spraberry field is the only onshore field from which production has increased since 2003. Pioneer is the largest driller and producer in the field with 869,000 gross acres (more than 75% held by production), 5,300 active wells.
Spraberry reserves as of year-end 2007, and based on the comprehensive study, the Company estimates that the field has 1 billion BOE.
The Company estimates that its acreage in the Spraberry field holds a drilling inventory of approximately 19,000 locations. Pioneer plans to accelerate drilling and expects to add approximately 250 million BOE of proved reserves.
Historical waterflood results from ten projects in the Spraberry field have recovered 82 million barrels of oil reserves and suggest that secondary waterfloods, where appropriate, can be expected to recover an additional 50% of the reserves recovered under primary recovery. Pioneer estimates that approximately 40% of its Spraberry acreage has potential for secondary recovery through waterflooding and plans to initiate a large-scale waterflood program.
Wolfcamp formation extends across the Delaware Basin, Central Basin Platform, and Midland Basin—the three sub-basins that comprise the Permian Basin. The Wolfcamp play has helped drive overall crude oil and natural gas production growth in the Permian Basin during the past decade. Crude oil production in the Wolfcamp accounts for nearly one-third of total Permian crude oil production and more than one-third of Permian natural gas production.