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Pioneer Gives 4Q2010 Wolfberry Update; Horizontals and Cost Control


Pioneer Natural Resources gave their 4Q and YE2010 earnings and operations conference call this morning.  There was a lot of Wolfberry talk considering the upwards of $1B Pioneer intends to spend there in 2011, by far the largest allocation of CAPEX in the company.  I’ll post a few of the slides I found noteworthy and some of my notes below.

One theme of Pioneer Permian activity as of late is vertical integration to control well costs.  Although completion costs have effectively doubled in the past year, Pioneer has found other ways to reduce costs.  They own and operate 12 rigs and currently operate 3 frac fleets.    Vertical integration saves Pioneer about $100k per well.  Current well costs are $1.4-$1.5MM.

Another theme, and this is happening throughout the trend with many operators, is the deepening of wells to include the deep Strawn formation and more fracking of the spraberry and wolfcamp zones.  At a recent SPE meeting in Midland, operators were discussing fracking up and down 3,000′ columns.  Incremental upticks in IPs and EURs is a result as Pioneer quoted a 20-40 BOPD increase from the Strawn.  In 2011, Pioneer will really begin to test the even deeper Atoka to further add reserves.

Finally, Pioneer is testing horizontal wells in the Wolfcamp and Spraberry.  They have two currently drilled and are awaiting completion.  These are 4,000′ laterals with 14 or 15 stage fracs.  The $6MM well cost is expected to lower as more development continues.

Stat-Column-530x398Here are two slides from Pioneer Investor Presentations.  One shows a rock column to get an idea of where the zones are located.  The other is the vertical integration slide.

Here is a Drillinginfo chart showing 2009-Present Pioneer producing wells.  Coloring by cumulative oil produced gives an idea of some potential sweet spots.

I’ll dedicate a post to Wolfberry horizontal wells as data becomes available.  Pioneer is not the only company testing them.

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