Pioneer Natural Resources Plans Barnett Asset Sale

Dallas-based Pioneer Natural Resources will put its Barnett shale assets up for sale as the company focuses on oil drilling in its Permian Basin and Eagle Ford shale assets.

The sale will allow the company to focus on its higher-return, core assets in the horizontal Wolfcamp shale play, the Spraberry vertical play and the Eagle Ford shale, said Chairman and CEO Scott Sheffield in a statement Thursday.

The company has acquired approximately 155,000 gross acres in the Barnett shale, including two-thirds in the liquids-rich Barnett shale combo play, since entering the Barnett shale in 2007. The remaining one-third of the acreage is located in the dry gas portion of the play.

Pioneer has grown production in this acreage to around 7,000 barrels of oil equivalent per day (boepd), including approximately 55 percent oil and natural gas liquids and 45 percent dry gas production.

The company will open a data room in October, with plans to complete the divestiture process in the first quarter of 2013. Net proceeds from the sale will be used to reduce debt under Pioneer's credit facility.

The impact of low U.S. natural gas and natural gas liquids prices had prompted the company to reduce its rig count from two to one rigs, said Pioneer President and COO Tim Dove at the Barclays CEO Energy Power Conference Wednesday in New York.

The company has had success drilling wells in the western part of its Barnett assets, with seven recent wells drilled containing an oil content of around 60 percent and peak 30-day rates averaging 345 barrels of oil equivalent per day. Pioneer drilled 12 wells in the second quarter.

Pioneer has additional net resource potential of 300 million barrels of oil equivalent in the Barnett play.

Overall, Pioneer has proved reserves of 1.1 billion barrels of oil equivalent, additional net resource potential of 6.7 billion barrels of oil equivalent and an inventory of 35,000 drilling locations, Dove said.

The company is well positioned in the Permian and Eagle Ford shale plays, said Dove. Pioneer has 609 million barrels of oil equivalent of proved reserves in its Spraberry assets. In terms of additional net resource potential, Pioneer has 5.6 billion barrels of oil equivalent in its Permian assets, including the Horizontal Wolfcamp and Spraberry plays.

To accelerate development of its Wolfcamp Shale, the company is offering 33 to 50 percent of its working interest in around 200,000 acres in the southern Midland Basin.

This acreage has over 4,000 potential horizontal development locations, excluding downspacing potential, and over 2 billion barrels of gross resource potential, with over 70 percent oil content and more than 90 percent liquids content.

The company expects to drill 90 wells by year-end 2013 to hold 50,000 acres in the southern part of the Horizontal Wolfcamp shale play. Pioneer plans to begin delineating northern acreage by drilling in the Midland, Martin and Gaines counties in Texas in the fourth quarter.

Pioneer also is seeking to increase production from is Spraberry assets, where the company has increased its 2012 production growth target from 61,000 boepd – 65,000 boepd range to between 63,000 boepd and 67,000 boped. The company has 609 million barrels of oil equivalent of proved reserves in the Spraberry play.

The company is well positioned in acreage in the Permian and the Eagle Ford play in South Texas, Dove said.

Pioneer is continuing to focus on liquids-rich drilling in the Eagle Ford, with only 10 percent of the wells designated to hold dry gas acreage.

Pioneer has 70 million barrels of oil equivalent of proved reserves and an additional net resource potential of 600 million barrels of oil equivalent in its Eagle Ford assets. The company expects to drill around 125 wells in its 2012 Eagle Ford program.

The company has had success using white sand instead of ceramic proppants to hydraulically fracture Eagle Ford wells, said Dove.

Fifty-three wells have been stimulated using white sand through the second quarter, with early well performance similar to direct offset ceramic-stimulated wells.

Pioneer not only is experimenting with white sands as a proppant for liquids-rich wells, but for dry gas as well, Dove commented.


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