Pioneer drills down on its Eagle Ford, Permian acreage

An oil & gas drilling rig is drilling a well for Pioneer Natural Resources in the Eagle Ford Shale formation near Yorktown in 2012. (Photo by Eddie Seal for The Texas Tribune

Pioneer Natural Resources is getting 37,000 barrels of oil equivalent per day in the Eagle Ford Shale, an increase of about 12 percent from the fourth quarter of last year.

In its first quarter call with analysts recently, Timothy Dove, president and chief operating officer, said the company plans to drill 130 Eagle Ford wells this year, mostly in liquids-rich areas.

“We’re minimizing any sort of dry gas drilling, as we speak. The economics on the oil and condensate drillings is so much better than natural gas drilling even with an increase in natural gas prices,” Dove said.

But it isn’t necessarily looking at selling off its dry-gas acreage. “We’re kind of in the process of seeing where natural gas prices are going to go. Right now, we do have a substantial amount of our acreage held by production,” Dove said. So that’s something that we can assess through time.”

The company is also trimming costs. It is moving into pad drilling, placing multiple wells per site, which saves about $600,000 to $700,000 per well. And because it’s not driving equipment all over the region – (which companies must do at first so that they drill their various acres quickly enough to “hold” their mineral leases) – it’s able to drill with 10 rigs this year instead of 12 like it did last year.

Pioneer is also using more white sand for its fracturing operations than ceramic proppants, which saves $700,000 on its hydraulic fracturing costs.

It’s completed most of its Eagle Ford central gas processing facilities, but will add one more next year. “So in summary, Eagle Ford is hitting on all cylinders, and we expect this level of performance to continue into the future,” Dove said.

(Pioneer and its subsidiaries had about 430 employees in Bee, DeWitt and Victoria counties as of January).

But the Irving-based Pioneer really, really likes its Permian Basin acreage.

It says the Spraberry/Wolfcamp formations in West Texas are the country’s biggest oil field, with an estimated 50 billion barrels.

By comparision, the Eagle Ford has an estimated 26 billion barrels, the Bakken Shale has 12 billion to 13 billion barrels, according to various sources compiled by Pioneer.

During the call with analysts, company executives said production from the Permian will grow to 2.5 million barrels of oil equivalent per day, and that Pioneer ultimately will have about 750,000 barrels of oil equivalent per day. (And it is getting a 70 to 75 percent cut of crude oil, with the remainder natural gas and natural gas liquids).

Pioneer has a vertical drilling program in the Spraberry and a horizontal drilling program in the Wolfcamp. It’s in a recently-announced joint venture in the Wolfcamp with the Beijing-based Sinochem, which purchased a 40 percent stake.

You can read the full transcript of Pioneer’s call with analysts here on Seeking Alpha, which has free registration.

- Jennifer Hiller

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