Pioneer eyes 4% production growth from 2022 exit rate

Feb. 23, 2023
Executives are putting capital toward its first test wells in the Barnett and Woodford formations.

Pioneer Natural Resources Co., Dallas, plans to increase production this year about 4% from the pace at which it ended 2022 and has allocated capital to drill four exploratory wells in the Barnett and Woodford shale formations in North Texas and southern Oklahoma.

Pioneer executives are targeting full-year oil production of 357,000-372,000 b/d. The midpoint is 4% higher than 2022’s exit rate and 3.6% higher than the company’s full-year daily volume of just under 352,000 bbl. Total production is forecast to grow to 670,000-700,000 boe/d versus about 662,000 boe/d in fourth-quarter 2022 and 650,000 for full year 2022. 

Embedded in those forecasts is the assumption that Pioneer will put on production 500-530 wells this year (versus 483 in 2022) with an average lateral length of more than 11,000 ft. Chief executive officer Scott Sheffield and his team have set aside $150-200 million for exploration, environmental, and other projects. Chief among those is work in the Barnett and Woodford, but that figure also includes funds for more testing of enhanced oil recovery and the addition of electric power infrastructure for future operations.

Asked on a conference call about that exploration budget when Pioneer has a deep inventory across the Midland basin, president and chief operating officer Rich Dealy said the company wants to get a sense of its assets’ quality, particularly because recent activity from other entities in the area has shown promise.

“We think it’s important with four wells to really understand what that productivity is going to look like, what the economics are going to look like and how it would compete for capital with our rest of our portfolio,” Dealy said. “We think it’s money well spent just to understand that.”

In addition to the exploration capital, Pioneer plans to spend $4.45-4.75 billion on capital projects this year, up from $3.8 billion last year. Sheffield told analysts the 2023 range includes an assumption that prices for equipment, supplies, and labor will rise about 10% this year and that Pioneer will add to rigs, growing its total to 24-26.

In fourth-quarter 2022, Pioneer produced a net profit of nearly $1.5 billion on revenues of $5.1 billion; those numbers were $763 million and $4.3 billion, respectively, in the prior-year quarter. Oil production for the quarter fell 11% from late 2021 to about 351,000 b/d while total production was down nearly 4% to nearly 662,000 boe/d.

For the year, the company had net income of $7.8 billion on $24.3 billion of revenues. Per boe, the company’s full-year margin climbed 33% to $56.60 but it was only $46.68 in fourth-quarter 2022 as Pioneer’s average sale price slipped and production costs rose 28% to $7.62/boe.

Shares of Pioneer (Ticker: PXD) traded down slightly Feb. 23 on the earnings news and outlook. In midday trading, they were changing hands at roughly $204. Over the past 6 months, shares have lost nearly 20% of their value, shrinking the company’s market capitalization to about $48 billion.