Operations Update
Pioneer’s continued operational excellence in the Midland Basin enabled the Company to place 124 horizontal wells on production during the second quarter of 2023.
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Pioneer’s large and contiguous acreage position provides the opportunity to drive further operational enhancements. The development of wells with lateral lengths in excess of 15,000 feet provides significant capital savings on a per foot basis and is expected to generate an internal rate of return (IRR) that is on average 35% higher than a comparable 10,000-foot lateral well, well above our previous estimate of 20%. The Company is expanding the development of 15,000-foot laterals from 2022 levels and expects to place more than 100 of these wells on production in 2023. In total, the Company has over 1,000 future locations with 15,000-foot lateral lengths in its drilling inventory.
Additionally, Pioneer has delivered significant cost and efficiency improvements from the utilization of simulfrac completions and localized sand mines. The Company added a third simulfrac fleet in the first quarter of 2023 and a second localized sand mine commenced operations during the second quarter. Consistent with the Company’s commitment to sustainable operations, Pioneer expects 100% of its completions fleets to be either electric or dual-fuel powered in the second half of 2023.
Extended laterals, utilization of simulfrac fleets, localized sand and the transition of completions fleets from diesel-only fuel are a few examples of the many continuous improvement efforts that the Company’s operational teams are progressing.
2023 Outlook
Pioneer is lowering the midpoint of its 2023 drilling, completions, facilities and water infrastructure capital budget1 by $125 million to an updated range of $4.375 billion to $4.575 billion. Additionally, the Company expects its capital budget for exploration, environmental and other capital to range between $150 million to $200 million in 2023, principally related to drilling four Barnett/Woodford formation wells in the Midland Basin, additional testing of the Company’s enhanced oil recovery (EOR) project and adding electric power infrastructure for future drilling, completions and production operations. Pioneer expects its capital program to be fully funded from 2023 cash flow5. The reduction in the Company’s 2023 capital budget is primarily attributable to strong production results and highly efficient operations resulting in reduced activity in the second half of 2023.
During 2023, the Company now plans to operate an average of 23 to 25 horizontal drilling rigs in the Midland Basin, including a three-rig average program in the southern Midland Basin joint venture area. The revised 2023 capital program is expected to place 490 to 520 wells on production.
This activity level is expected to deliver 2023 oil production of 364 to 374 MBOPD, an increase of 4.5 MBOPD at the midpoint when compared to original 2023 guidance. Total production is expected to range from 697 to 717 MBOEPD, an increase of 22 MBOEPD at the midpoint when compared to original 2023 guidance.
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