PNR further trims 2016 budget, hones in on northern Spraberry-Wolfcamp

Pioneer Natural Resources Co. (PNR), Irving, Tex., plans a 2016 capital budget of $2 billion, down from the preliminary forecast of $2.4-2.6 billion and actual spending of $2.2 billion in 2015.

The most recent reduction follows a 2015 net loss of $273 million, compared with 2014 earnings of $930 million. During the fourth quarter, it posted a net loss of $623 million, compared with fourth-quarter 2014 earnings of $431 million.

The 2016 budget includes $1.85 billion for drilling-and-completions-related activities, including tank batteries-saltwater disposal facilities and gas processing facilities; and $150 million for water infrastructure, vertical integration, systems upgrades and field facilities.

Of the total, the northern Spraberry-Wolfcamp area will receive $1.71 billion, the southern Wolfcamp joint venture area will take $60 million, and the Eagle Ford will get $60 million.

Companywide first-quarter production is forecast to average 211,000-216,000 boe/d.

PNR produced 204,000 boe/d in 2015, an increase of 22,000 boe/d from that of 2014. Oil production rose 18,000 b/d and represented 52% of the company’s total 2015 production, up from 48% in 2014.

Halving rig count

As part of its trimmed budget for the year, PNR says it’s reducing horizontal drilling activity to 12 rigs by mid-2016 from 24 rigs at yearend 2015, while still increasing 2016 production by 10%.

All 12 of those rigs will be in the northern Spraberry-Wolfcamp, where 14 were running at yearend 2015 and 1 has already been released. PNR says the 12-rig program will allow the firm to continue to progress its completion optimization program in the northern Spraberry-Wolfcamp at favorable returns.

The firm’s Eagle Ford rig count is being reduced to 0 during the first quarter from 6 at yearend 2015, with 2 released in January. The southern Wolfcamp JV area count is being reduced to 0 by the middle of the year from 4 at yearend 2015.

PNR expects to place 230 horizontal wells on production in the Spraberry-Wolfcamp area during 2016. Of the total, 190 will be in the northern area and 40 will be in the southern area.

The firm also reported that it added proved reserves totaling 210 million boe during 2015 from discoveries, extensions, and technical revisions of previous estimates. These drillbit proved reserve additions equate to a drillbit reserve replacement of 273% of PNR’s full-year production of 77 million boe.