Pioneer Natural Resources Co. plans to drill more wells in the Permian basin using proceeds from selling its share of the EFS Midstream LLC joint venture (See story p. 6 this issue).
On June 1, Pioneer and Reliance Holding USA Inc. announced Enterprise Products Partners LP was buying EFS Midstream for $2.15 billion, subject to regulatory approvals. Pioneer owned 50.1% of EFS Midstream and Reliance owned the rest.
Scott D. Sheffield, Pioneer chairman and chief executive officer, said the sale of EFS Midstream improved his company's "already strong balance sheet and allow us to strategically redeploy capital to our core, oil-rich Spraberry/Wolfcamp asset in the Permian basin of West Texas."
In early June, Pioneer operated 10 horizontal rigs in the Spraberry/Wolfcamp. Plans called for Pioneer to ramp up drilling activity on high-return Wolfcamp B and Wolfcamp A horizontal wells during the second half.
Average production from all Wolfcamp A and B wells drilled since early 2013 in the northern Spraberry/Wolfcamp continue to support estimated ultimate recoveries of 1 million boe per well with oil content of more than 70%.
"We will also reinitiate horizontal drilling in the Lower Spraberry shale interval where production from wells drilled since early 2013 support EURs ranging from 650,000 boe to 1 million boe per well with oil content of more than 75%," Sheffield said.
Starting in July, Sheffield planned to add an average of two horizontal rigs per month in the northern Spraberry/Wolfcamp area for the rest of the year "as long as the oil price outlook remains positive." The additional drilling activity was expected to increase Pioneer's capital budget by $350 million.
He estimated the additional 12 rigs would have minimal impact on Pioneer's forecast 2015 production growth of about 10%. Meanwhile, Sheffield said Pioneer will add more rigs next year and plans to deliver production growth of 15%/year during 2016-18.
"During the first quarter of 2016, we are planning to add another 8 horizontal rigs, of which 6 rigs will be in the northern Spraberry/Wolfcamp and 2 rigs will be in the Eagle Ford shale," Sheffield said. "This rig ramp will bring our total horizontal rig count to 36 rigs (28 rigs in the Spraberry/Wolfcamp and 8 rigs in the Eagle Ford), which is essentially the same as our horizontal rig count prior to the oil price collapse in late 2014/early 2015."
