The King of Frackers Oil Production At Record Levels; Plans to Put More Rigs in the Field at $50

Pioneer Resources is sharply higher today on better than expected results. What’s interesting to note is that cheap crude has not deterred them from producing oil. Moreover, they fully intend to deploy additional resources at $50 crude, as stated in today’s call.

Via Briefing.com

The co hit record production again, Q1 2016, 222,000 barrels of oil equivalent per day, 55% oil so co is well along in its movement from 52% to 56% oil (Above Pioneer’s guidance range of 211 MBOEPD to 216 MBOEPD)

Oil production is up 10,000 oils a barrel per day or 9% versus Q4, obviously driven by the growth of the Spraberry/Wolfcamp horizontal drilling program

Increase of 7 MBOEPD, or 3%, vs. Q4 2015
Placed 55 horizontal wells on production in the Spraberry/Wolfcamp during Q1

All wells benefited from completion optimization
Continuing to realize significant capital efficiency gains in the Spraberry/Wolfcamp

Co has increased oil and gas derivative coverage for 2017
2016 Outlook:
Pioneer plans to maintain 12 horizontal rigs in the northern
Spraberry/Wolfcamp based on favorable well returns in this area
Currently operating 12 horizontal rigs in the northern Spraberry/Wolfcamp and 2 horizontal rigs in the southern Wolfcamp JV (both will be terminatedby the end of June)
This activity level is expected to deliver production growth of 12%+ in 2016 compared to 10%+ previously and will allow the Company to continue to progress its completion optimization program

The higher forecasted growth rate reflects improving Spraberry/Wolfcamp well productivity

Planned capital expenditures for drilling activity and vertical integration spending continue to be $2.0 B for 2016

Pioneer expects to add 5 to 10 horizontal rigs when the price of oil recovers to ~$50 per barrel and the outlook for oil supply/demand fundamentals is positive

Strong commodity derivatives position helps protect the Company’s cash flow

Oil derivative coverage of ~85% for 2016 and ~50% for 2017
Gas derivative coverage of ~70% for 2016 and ~25% for 2017
Strong investment grade balance sheet coupled with forecasted cash flow enables Company to grow production and fund its expected capital program through 2017 without increasing debt

It’s becoming abndantly clear who is benefitting from this rout in crude. All of the marginal, highly leveraged, producers are getting crushed, while the larger operators continue to drill and acquire assets like it’s business as usual. This had nothing to do with supply/demand dynamics.

As oil continues to March higher, producers like PXD are shining up their rigs, getting ready to deploy them back into the field, as crude stair-steps back towards $100 for no discernible reason, other than the fact that it’s business as usual.