American Oil and Gas Reporter - June 2016 - 42

SpecialReport: Permian Basin Update
"We have pulled back from a much
heftier rig count," Hall acknowledges, saying the company expects to be running 12
rigs in the northern Midland Basin in June.
"We didn't want to lose momentum on
the lessons learned because these wells are
very complicated," he remarks.
Despite pulling back its drilling program as a result of lower commodity
prices, Pioneer still averaged 222,000
barrels of oil equivalent a day (55 percent
oil) in the first three months of 2016, beating its estimates by almost 3 percent.
Hall says the company now expects
production to grow 12 percent this year,
compared with the 10 percent growth it
projected earlier, while still maintaining its
$2 billion capital spending plan.
Great Permian Producers
"These wells have good returns," Hall
emphasizes. "We are drilling good wells.
The payout is just more protracted. This
extends the time it will take to have a selffunded drilling program out of cash flow
(at current oil prices)."
The company projects second-quarter
production of 224,000-229,000 boe/d. In
its first-quarter earnings report, Pioneer
said it could add 5-10 horizontal drilling
rigs "when the price of oil recovers to approximately $50 a barrel and the outlook
for oil supply/demand fundamentals is positive."
Pioneer also has been running two rigs
in its Southern Wolfcamp joint venture in
Upton, Reagan and Irion counties, Tx., but
plans to drop them by the end of June. Hall
says they were making good wells, but the

Pioneer Natural Resources averaged 222,000 barrels of oil equivalent a day in the Permian Basin during the ﬁrst three months of 2016, beating its estimates by almost 3 percent. Executive Vice President Joey Hall says the company expects production to grow
12 percent this year on a $2 billion capital spending program.

company's joint venture partner didn't
want to keep drilling in the current economic climate.
Part of the reason for Pioneer's production growth in the first quarter is its shift
to longer laterals. "It varies," Hall comments, "but we try not to drill anything under 10,000 feet. We just drilled a 13,000foot lateral, but I would say the sweet spot
is 10,000-12,000 feet. The longer the
better, although there is more risk with
longer laterals."
He claims Pioneer's "fracturing recipe
is all over the map. The Lower Spraberry is different from the Wolfcamp."
For example, he cites its Sale Ranch

Pioneer Natural Resources expects to have 12 rigs running in
the northern Midland Basin in
the month of June. The company has identiﬁed more than
20,000 drilling locations on its
800,000 gross acres in the
largest of the Permian Basin's
sub-basins.

42 THE AMERICAN OIL & GAS REPORTER

lease in Martin County, where Pioneer has
made some of its best wells, but is using
less water in its hydraulic fracturing operations than in other areas.
"We have cluster spacing of 30 feet in
some areas, while it is 60 feet in other areas," Hall continues. "We have experimented with 15 feet for cluster spacing. The answer is different in different areas."
He says Pioneer is drilling three-well
pads, usually with all three laterals targeting the same zone. While in some areas,
the company is focusing on the Wolfcamp
A and Lower Spraberry Shale, in other areas it is drilling the Wolfcamp B and then
coming back in six to eight months to drill
the Wolfcamp A, he says.
"It all ties together," Hall says of the variety of productive horizons to target.
"We have to characterize the pieces and develop it with the end game in mind. I
worked in the Eagle Ford previously, and
this is many times more complicated. After these current targets, we will be able
to go deeper to the Atoka and other formations. But right now we will stick with
what we know."
Hall says he likens his Permian Basin
operations to a NASCAR race.
"You have to have a car, which is the
acreage," he explains. "Next, you need a
driver, which is the development plan. The
pit crew is the people drilling, completing
and operating the wells. They have to find
a way to keep costs as low as possible. Finally, there is the strategy, which relates
to financing and sustainability.
"The two most important economic factors are the oil price and the estimated ul-

American Oil and Gas Reporter - June 2016

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