American Oil and Gas Reporter - September 2020 - 53

pages 51-60_Layout 1 9/18/2020 4:09 PM Page 53

SpecialReport: Permian Powerhouse
was the part we could change. The critical question we dialed
in on was whether shutting in wells with a lot of water on them
would be detrimental, especially young wells.
Delaware Basin wells can produce 70%-90% water cuts in a
steady-state condition after pumping the frac water back. Several
years ago, when we started using recycled production water in
our frac operations, we spent time looking at the effects of
pumping produced water onto these formations. We concluded
then that it would not cause problems because there is so much
water in the reservoirs to begin with. Our technical team was
confident we could shut in or curtail production without causing
long-term damage, regardless of the age of the well, even new
completions that had yet been flowed back. I am delighted to
say our technical team got it right and our production came
back as forecast.

Q:

You noted in the second quarter conference call
that Cimarex expects to start achieving better
average well productivity, based largely on increased spacing

between wells. Can you summarize what you have learned
about the optimal spacing in the Delaware Basin? How does
relaxed spacing impact your base completion design?
JORDEN: The well spacing conclusions that we have
discussed apply to the Upper Wolfcamp. Other reservoirs behave
differently and well spacing observations will differ depending
on the target reservoir and local area. With respect to the Upper
Wolfcamp, there is native permeability in the reservoir that
allows our wells to drain an area that extends beyond the
created fracture network. We learned this through extensive
testing that identified greater well interference than we had
originally modeled.
There is significant upside in this observation; we can recover
the same hydrocarbon volume with fewer wells. We can do this
by increasing our well spacing and upsizing our completion
effort, therefore allowing each well to drain a larger area. This
will result in greater capital efficiency, increased well performance
and better total program investment returns.

Holding An Enviable Position

RICHARD DEALY
Executive vice president and CFO
Pioneer Natural Resources

Q:

Pioneer managed to maintain drilling and completion activity throughout the second quarter, gener-

ating $165 million in free cash flow and exiting the quarter
producing the same volume on a barrel of oil equivalent
basis than at the end the first quarter, even with well shutins. How were you able to accomplish that? What does its
ability to withstand that almost impossibly challenging business environment say about Pioneer's Permian assets and
strategy?
DEALY: Pioneer was well positioned going into the most
recent downturn due to a combination of our strong balance
sheet, high-return wells and derivative positions. As a result of
COVID-19 and the macroeconomic environment, we adjusted
our 2020 capital plan and we were able to preserve a program
that is very capitally efficient and generates free cash flow. In
addition, due to the strong efforts of our employees, Pioneer
was able to significantly reduce our well costs by approximately

20% during the year through efficiencies and cost deflation.
Our results are underpinned by our high-quality acreage position
in the Midland Basin, which we believe offers the highest
returns for unconventional development.

Q:

You have indicated that Pioneer plans to average
five-eight rigs and two-three frac spreads through
year's end, bringing on additional rigs and spreads in 2021
to achieve 5% annual production growth. On what commodity
price levels are you basing those plans? What factors will
determine the pace at which you ramp activity? Could increasing natural gas prices materially impact the economics
of Pioneer's Midland Basin "oil" wells?
DEALY: The plan outlined during our second quarter call
was based on strip pricing at the end of July, when West Texas
Intermediate was in the low $40s. Our activity plans and
subsequent growth plans are a function of our new capital
allocation framework, where we will reinvest between 70% and
80% of our cash flow, therefore generating significant free cash
flow. We anticipate that oil prices will continue to improve as
the global economy stabilizes and a vaccine becomes available
for COVID-19. However, until that occurs, we will remain
flexible and responsive to global macroeconomic conditions.
Natural gas prices do not materially impact the economics of
SEPTEMBER 2020 53



American Oil and Gas Reporter - September 2020

Table of Contents for the Digital Edition of American Oil and Gas Reporter - September 2020

Contents
American Oil and Gas Reporter - September 2020 - Intro
American Oil and Gas Reporter - September 2020 - 1
American Oil and Gas Reporter - September 2020 - 2
American Oil and Gas Reporter - September 2020 - 3
American Oil and Gas Reporter - September 2020 - 4
American Oil and Gas Reporter - September 2020 - Contents
American Oil and Gas Reporter - September 2020 - 6
American Oil and Gas Reporter - September 2020 - 7
American Oil and Gas Reporter - September 2020 - 8
American Oil and Gas Reporter - September 2020 - 9
American Oil and Gas Reporter - September 2020 - 10
American Oil and Gas Reporter - September 2020 - 11
American Oil and Gas Reporter - September 2020 - 12
American Oil and Gas Reporter - September 2020 - 13
American Oil and Gas Reporter - September 2020 - 14
American Oil and Gas Reporter - September 2020 - 15
American Oil and Gas Reporter - September 2020 - 16
American Oil and Gas Reporter - September 2020 - 17
American Oil and Gas Reporter - September 2020 - 18
American Oil and Gas Reporter - September 2020 - 19
American Oil and Gas Reporter - September 2020 - 20
American Oil and Gas Reporter - September 2020 - 21
American Oil and Gas Reporter - September 2020 - 22
American Oil and Gas Reporter - September 2020 - 23
American Oil and Gas Reporter - September 2020 - 24
American Oil and Gas Reporter - September 2020 - 25
American Oil and Gas Reporter - September 2020 - 26
American Oil and Gas Reporter - September 2020 - 27
American Oil and Gas Reporter - September 2020 - 28
American Oil and Gas Reporter - September 2020 - 29
American Oil and Gas Reporter - September 2020 - 30
American Oil and Gas Reporter - September 2020 - 31
American Oil and Gas Reporter - September 2020 - 32
American Oil and Gas Reporter - September 2020 - 33
American Oil and Gas Reporter - September 2020 - 34
American Oil and Gas Reporter - September 2020 - 35
American Oil and Gas Reporter - September 2020 - 36
American Oil and Gas Reporter - September 2020 - 37
American Oil and Gas Reporter - September 2020 - 38
American Oil and Gas Reporter - September 2020 - 39
American Oil and Gas Reporter - September 2020 - 40
American Oil and Gas Reporter - September 2020 - 41
American Oil and Gas Reporter - September 2020 - 42
American Oil and Gas Reporter - September 2020 - 43
American Oil and Gas Reporter - September 2020 - 44
American Oil and Gas Reporter - September 2020 - 45
American Oil and Gas Reporter - September 2020 - 46
American Oil and Gas Reporter - September 2020 - 47
American Oil and Gas Reporter - September 2020 - 48
American Oil and Gas Reporter - September 2020 - 49
American Oil and Gas Reporter - September 2020 - 50
American Oil and Gas Reporter - September 2020 - 51
American Oil and Gas Reporter - September 2020 - 52
American Oil and Gas Reporter - September 2020 - 53
American Oil and Gas Reporter - September 2020 - 54
American Oil and Gas Reporter - September 2020 - 55
American Oil and Gas Reporter - September 2020 - 56
American Oil and Gas Reporter - September 2020 - 57
American Oil and Gas Reporter - September 2020 - 58
American Oil and Gas Reporter - September 2020 - 59
American Oil and Gas Reporter - September 2020 - 60
American Oil and Gas Reporter - September 2020 - 61
American Oil and Gas Reporter - September 2020 - 62
American Oil and Gas Reporter - September 2020 - 63
American Oil and Gas Reporter - September 2020 - 64
American Oil and Gas Reporter - September 2020 - 65
American Oil and Gas Reporter - September 2020 - 66
American Oil and Gas Reporter - September 2020 - 67
American Oil and Gas Reporter - September 2020 - 68
American Oil and Gas Reporter - September 2020 - 69
American Oil and Gas Reporter - September 2020 - 70
American Oil and Gas Reporter - September 2020 - 71
American Oil and Gas Reporter - September 2020 - 72
American Oil and Gas Reporter - September 2020 - 73
American Oil and Gas Reporter - September 2020 - 74
American Oil and Gas Reporter - September 2020 - 75
American Oil and Gas Reporter - September 2020 - 76
American Oil and Gas Reporter - September 2020 - 77
American Oil and Gas Reporter - September 2020 - 78
American Oil and Gas Reporter - September 2020 - 79
American Oil and Gas Reporter - September 2020 - 80
American Oil and Gas Reporter - September 2020 - 81
American Oil and Gas Reporter - September 2020 - 82
American Oil and Gas Reporter - September 2020 - 83
American Oil and Gas Reporter - September 2020 - 84
American Oil and Gas Reporter - September 2020 - 85
American Oil and Gas Reporter - September 2020 - 86
American Oil and Gas Reporter - September 2020 - 87
American Oil and Gas Reporter - September 2020 - 88
American Oil and Gas Reporter - September 2020 - 89
American Oil and Gas Reporter - September 2020 - 90
American Oil and Gas Reporter - September 2020 - 91
American Oil and Gas Reporter - September 2020 - 92
American Oil and Gas Reporter - September 2020 - 93
American Oil and Gas Reporter - September 2020 - 94
American Oil and Gas Reporter - September 2020 - 95
American Oil and Gas Reporter - September 2020 - 96
American Oil and Gas Reporter - September 2020 - 97
American Oil and Gas Reporter - September 2020 - 98
American Oil and Gas Reporter - September 2020 - 99
American Oil and Gas Reporter - September 2020 - 100
American Oil and Gas Reporter - September 2020 - 101
American Oil and Gas Reporter - September 2020 - 102
American Oil and Gas Reporter - September 2020 - 103
American Oil and Gas Reporter - September 2020 - 104
American Oil and Gas Reporter - September 2020 - 105
American Oil and Gas Reporter - September 2020 - 106
American Oil and Gas Reporter - September 2020 - 107
American Oil and Gas Reporter - September 2020 - 108
https://www.nxtbook.com/nxtbooks/aogr/202009
https://www.nxtbook.com/nxtbooks/aogr/202008
https://www.nxtbook.com/nxtbooks/aogr/202007
https://www.nxtbook.com/nxtbooks/aogr/202006
https://www.nxtbook.com/nxtbooks/aogr/202005
https://www.nxtbook.com/nxtbooks/aogr/202004
https://www.nxtbook.com/nxtbooks/aogr/202003
https://www.nxtbook.com/nxtbooks/aogr/202002
https://www.nxtbook.com/nxtbooks/aogr/202001
https://www.nxtbook.com/nxtbooks/aogr/201912
https://www.nxtbook.com/nxtbooks/aogr/201911
https://www.nxtbook.com/nxtbooks/aogr/201910
https://www.nxtbook.com/nxtbooks/aogr/201909
https://www.nxtbook.com/nxtbooks/aogr/201908
https://www.nxtbook.com/nxtbooks/aogr/201907
https://www.nxtbook.com/nxtbooks/aogr/201906
https://www.nxtbook.com/nxtbooks/aogr/201905
https://www.nxtbook.com/nxtbooks/aogr/201904
https://www.nxtbook.com/nxtbooks/aogr/201903
https://www.nxtbook.com/nxtbooks/aogr/201902
https://www.nxtbook.com/nxtbooks/aogr/201901
https://www.nxtbook.com/nxtbooks/aogr/201812
https://www.nxtbook.com/nxtbooks/aogr/201811
https://www.nxtbook.com/nxtbooks/aogr/201810
https://www.nxtbook.com/nxtbooks/aogr/pbios_201810
https://www.nxtbook.com/nxtbooks/aogr/201809
https://www.nxtbook.com/nxtbooks/aogr/201808
https://www.nxtbook.com/nxtbooks/aogr/201807
https://www.nxtbook.com/nxtbooks/aogr/201806
https://www.nxtbook.com/nxtbooks/aogr/201805
https://www.nxtbook.com/nxtbooks/aogr/201804
https://www.nxtbook.com/nxtbooks/aogr/201803
https://www.nxtbook.com/nxtbooks/aogr/201802
https://www.nxtbook.com/nxtbooks/aogr/201801
https://www.nxtbook.com/nxtbooks/aogr/201712
https://www.nxtbook.com/nxtbooks/aogr/201711
https://www.nxtbook.com/nxtbooks/aogr/201710
https://www.nxtbook.com/nxtbooks/aogr/201709
https://www.nxtbook.com/nxtbooks/aogr/201708
https://www.nxtbook.com/nxtbooks/aogr/201707
https://www.nxtbook.com/nxtbooks/aogr/201706
https://www.nxtbook.com/nxtbooks/aogr/201705
https://www.nxtbook.com/nxtbooks/aogr/201704
https://www.nxtbook.com/nxtbooks/aogr/201703
https://www.nxtbook.com/nxtbooks/aogr/201702
https://www.nxtbook.com/nxtbooks/aogr/201701
https://www.nxtbook.com/nxtbooks/aogr/201612
https://www.nxtbook.com/nxtbooks/aogr/201611
https://www.nxtbook.com/nxtbooks/aogr/201610
https://www.nxtbook.com/nxtbooks/aogr/pbios2016_programguide
https://www.nxtbook.com/nxtbooks/aogr/201609
https://www.nxtbook.com/nxtbooks/aogr/201608
https://www.nxtbook.com/nxtbooks/aogr/201607
https://www.nxtbook.com/nxtbooks/aogr/201606
https://www.nxtbook.com/nxtbooks/aogr/201605
https://www.nxtbook.com/nxtbooks/aogr/201604
https://www.nxtbook.com/nxtbooks/aogr/201603
https://www.nxtbook.com/nxtbooks/aogr/201602
https://www.nxtbook.com/nxtbooks/aogr/201601
https://www.nxtbook.com/nxtbooks/aogr/201512
https://www.nxtbook.com/nxtbooks/aogr/201511
https://www.nxtbook.com/nxtbooks/aogr/201510
https://www.nxtbook.com/nxtbooks/aogr/201509
https://www.nxtbook.com/nxtbooks/aogr/201508
https://www.nxtbook.com/nxtbooks/aogr/201507
https://www.nxtbook.com/nxtbooks/aogr/201506
https://www.nxtbook.com/nxtbooks/aogr/201505
https://www.nxtbook.com/nxtbooks/aogr/201504
https://www.nxtbook.com/nxtbooks/aogr/201503
https://www.nxtbook.com/nxtbooks/aogr/201502
https://www.nxtbook.com/nxtbooks/aogr/201501
https://www.nxtbook.com/nxtbooks/aogr/201412
https://www.nxtbook.com/nxtbooks/aogr/201411
https://www.nxtbook.com/nxtbooks/aogr/201410
https://www.nxtbook.com/nxtbooks/aogr/201409
https://www.nxtbook.com/nxtbooks/aogr/pbios2014_programguide
https://www.nxtbook.com/nxtbooks/aogr/201408
https://www.nxtbook.com/nxtbooks/aogr/201407
https://www.nxtbook.com/nxtbooks/aogr/201406
https://www.nxtbook.com/nxtbooks/aogr/201405
https://www.nxtbook.com/nxtbooks/aogr/201404
https://www.nxtbook.com/nxtbooks/aogr/201403
https://www.nxtbook.com/nxtbooks/aogr/201402
https://www.nxtbook.com/nxtbooks/aogr/201401
https://www.nxtbook.com/nxtbooks/aogr/201312
https://www.nxtbook.com/nxtbooks/aogr/201311
https://www.nxtbook.com/nxtbooks/aogr/201310
https://www.nxtbook.com/nxtbooks/aogr/201309
https://www.nxtbook.com/nxtbooks/aogr/201308
https://www.nxtbook.com/nxtbooks/aogr/201307
https://www.nxtbook.com/nxtbooks/aogr/201306
https://www.nxtbook.com/nxtbooks/aogr/201305
https://www.nxtbook.com/nxtbooks/aogr/201304
https://www.nxtbook.com/nxtbooks/aogr/201303
https://www.nxtbook.com/nxtbooks/aogr/201302
https://www.nxtbook.com/nxtbooks/aogr/201301
https://www.nxtbook.com/nxtbooks/aogr/201212
https://www.nxtbook.com/nxtbooks/aogr/201211
https://www.nxtbook.com/nxtbooks/aogr/201210
https://www.nxtbook.com/nxtbooks/aogr/201209
https://www.nxtbook.com/nxtbooks/aogr/2012_pbios
https://www.nxtbook.com/nxtbooks/aogr/201208
https://www.nxtbook.com/nxtbooks/aogr/201207
https://www.nxtbook.com/nxtbooks/aogr/201206
https://www.nxtbook.com/nxtbooks/aogr/201205
https://www.nxtbook.com/nxtbooks/aogr/201204
https://www.nxtbook.com/nxtbooks/aogr/201203
https://www.nxtbook.com/nxtbooks/aogr/201202
https://www.nxtbook.com/nxtbooks/aogr/201201
https://www.nxtbook.com/nxtbooks/demo/aogr_clone
https://www.nxtbook.com/nxtbooks/aogr/201112
https://www.nxtbookmedia.com