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Pioneer plans to increase rig count

22 Apr 2015 13:00 (+01:00 GMT)
Pioneer plans to increase rig count

Houston, 22 April (Argus) — US independent Pioneer Natural Resources plans to increase its rig count in south Texas' Eagle Ford shale by July as oilfield service providers lower charges for drill rigs and crews, and in possible early signs pointing to the US shale industry bottoming out.

"We are looking to increase our rig count by five to 10," chief executive Scott Sheffield told Argus. "We are well-hedged and we have low operating costs."

A 50pc plunge in crude prices since June has forced producers to sharply pullback drilling plans and focus operations only on areas that offer best returns, making service providers lower costs to win contracts in a declining market. That fall in service costs is allowing producers with sound finances such as Pioneer to meet their growth targets with reduced capital expenditure.

Pioneer has nearly 90pc of its projected 2015 oil production at $71/bl, the company said at its investor meet on 6 April. It has set a growth target of about 10pc to 200,000 b/d of oil equivalent for 2015 from a year earlier. Of the total, about 53pc would be crude compared to about 48pc a year earlier.

The independent is targeting that growth despite lowering its capital expenditure (capex) to $1.85bn this year, by 45pc from a year earlier. Of that, it plans to spend $1.6bn in drilling. The company is targeting an average oil price of $55/bl.

Of its key producing areas, the company expects to increase production in the Sparberry/Wolfcamp area of the Permian basin by 20pc to 119,000 boe/d from 99,000 boe/d a year earlier, and in the Eagle Ford area by 9pc to 50,000 boe/d from 46,000 boe/d

The company has already realized 10pc savings in drilling costs compared with 2014 and expects those to fall by at least 20pc by year end.


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