Pioneer Natural Resources Co. (PNR), Dallas, plans to spend $1.85 billion in 2015 following a fourth quarter in which the company reported a net income of $431 million. The new budget represents a 45% reduction from 2014 capital spending for continuing operations, a change attributed to low oil prices (OGJ Online, Feb. 11, 2014).
Drilling activity and infrastructure build-out are the targets of the cuts, respectively receiving $1.6 billion and $250 million for water infrastructure, vertical integration, and facilities.
Infrastructure projects—including construction of the Spraberry-Wolfcamp area water system and expansion of the Brady sand mine—will be slowed down. Divestment of the Eagle Ford shale midstream business, meanwhile, continues to be pursued (OGJ Online, Nov. 4, 2014).
PNR says a 10% decrease in drilling costs has already been realized this year compared with last. That number is expected to rise to 20% by yearend.
PNR is reducing horizontal drilling activity in the Spraberry-Wolfcamp and Eagle Ford to 16 rigs by the end of February—a 50% reduction from yearend 2014—including six rigs in the northern Spraberry-Wolfcamp, four rigs in the southern Wolfcamp joint venture area, and six rigs in the Eagle Ford. Vertical drilling in the Spraberry-Wolfcamp will be shut down by the end of February.
The company notes, however, that it’s prepared to add horizontal rigs later this year in response to reduced costs or an improvement in the oil price environment.
Production growth of 10% compared with 2014 from continuing operations for 2015 is forecasted based on capital budget and the high-graded drilling program. Growth is primarily weighted to the first half, with production in the fourth quarter expected to be essentially flat compared with fourth-quarter 2014.
Oil production is forecasted to increase 20% this year compared with last.
