PNR reports $3.3 billion capex plan for 2014

Pioneer Natural Resources Co. (PNR), Dallas, reported capital expenditure plans of $3.3 billion for 2014, $2.2 billion of which will be used to target the northern Spraberry-Wolfcamp area in the Midland basin of West Texas.

The company expects production growth from continuing operations to reach 14-19%/year from 2013 to 2014 based on planned drilling capital expenditures of $3 billion.

The company is targeting compound production growth from continuing operations of 16-21%/year for 2014-16 and expecting to more than double production by 2018 compared with 2013.

Overall for 2013, the company produced 161 million boe/d, an increase of 12% compared with 2012. PNR attributes the rise to a 35% increase in the Eagle Ford and 19% increase in the Spraberry-Wolfcamp.

The company’s increase in reserves can primarily be attributed to its horizontal drilling programs in the Spraberry-Wolfcamp and Eagle Ford shales.

PNR said it will continue to shift drilling activity in the Spraberry-Wolfcamp from vertical drilling to horizontal drilling, hoping to enhance ultimate resource recoveries.

Northern Spraberry operations

The $2.2 million purposed for the northern portion includes $1.2 million for the horizontal drilling program, $440 million for the vertical drilling program, $400 million for infrastructure additions, land and science, and $100 million for gas processing facilities.

Most of the production growth will occur in the second half as the company ramps up its drilling program from 5 rigs at yearend 2013 to 16 rigs by the end of the first quarter.

The 16-rig program is expected to spud 140 wells this year with an average lateral length of 8,200 ft, with 90% of the drilling program taking place in Wolfcamp A, B, and D interval wells.

The remaining 10% will be Spraberry shale wells—Lower Spraberry, Jo Mill, and Middle Spraberry shales. This well mix could include more Spraberry shale wells if the strong performance of the Lower Spraberry interval wells continues and strong results are delivered from the Jo Mill and Middle Spraberry wells that are expected to be placed on production during this year’s first half.

Southern Spraberry operations

The Southern Wolfcamp joint venture will receive $205 million, including $140 million for the horizontal drilling program and $65 million for infrastructure addition, land and science.

PNR expects to spud 115 horizontal wells this year with an average lateral length of 9,400 ft, an increase of 13% from the average lateral length of 8,300 ft in 2013.

The 2014 drilling program will be focused on the higher return areas in northern Upton and Reagan counties, including Giddings and University Block 2, with two thirds of the wells being completed in the Wolfcamp B interval and the remainder being a mix of Wolfcamp A, C, and D interval wells.

Spraberry overall

PNR is currently operating 11 vertical rigs in the Spraberry field that are expected to drill 200 wells in 2014. These 11 rigs, a reduction of four vertical rigs from 2013, are required to meet continuous drilling obligations.

Full-year 2013 production in the Spraberry-Wolfcamp averaged 79 million boe/d—including the conveyance of 4 million boe/d in May 2013 to Sinochem as part of the southern Wolfcamp joint venture transaction (OGJ Online, June 3, 2013)—an increase of 19% compared with 2012.

Production in 2014 is expected to grow to 95-100 million boe/d, an increase of 21-27% compared with 2013.

PNR is the largest acreage holder in the Spraberry-Wolfcamp, holding more than 600,000 gross acres in the northern portion of the play and more than 200,000 gross acres in the southern Wolfcamp joint venture area.

The company believes it has 10 billion boe of net recoverable resource potential from horizontal drilling across its entire acreage position based on its extensive geologic data and successful drilling results to date.

Eagle Ford operations

The company plans to spend $545 million in the Eagle Ford, including $480 million for the horizontal drilling program and $65 million for infrastructure additions and land.

PNR in 2013 added 300 drilling locations in the liquids-rich area as a result of downspacing from 1,000 ft between wells to 500 ft between wells.

The company plans to drill 45 Upper Eagle Ford shale wells as part of the downspacing program in 2014. Twenty-five percent of PNR’s acreage is expected to be prospective for this interval.

PNR in 2014 expects to drill 110 liquids-rich wells in the Eagle Ford. Full-year production is forecasted to range from 45-49 million boe/d, an increase of 18-29% compared with 2013. For the first quarter, PNR expects to place 26 horizontal wells on production, with production from these wells to be mostly realized in the second quarter.

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