Pioneer Natural lowers top end of 2019 Permian capital budget range
Pioneer is lowering the top end of its 2019 Permian drilling, completions and facilities capital budget range by an additional $150 million, or approximately 5%, to a new range of $2.80 billion to $2.85 billion. The reduction in the Company's capital budget is primarily attributable to improvements in drilling and completions efficiencies, combined with reducing facilities spending ahead of schedule. The budget for capital spending associated with midstream facilities and water infrastructure spending remains at approximately $250 million. In total, the Company is reducing its 2019 capital program1 to a range of $3.05 billion to $3.10 billion and expects it to be fully funded with 2019 forecasted cash flow4 of approximately $3.4 billion. The Company plans to operate an average of 21 horizontal rigs in the Permian Basin during 2019, including approximately five rigs in the southern joint venture area. This program is expected to place approximately 290 wells on production, compared to 270 wells placed on production during 2018. The average lateral length planned for 2019 is approximately 9,800 feet, with an average estimated ultimate recovery (EUR) of approximately 1.6 million barrels of oil equivalent per well. This activity level is projected to deliver 2019 Permian production of 336 to 340 MBOEPD, an increase of approximately 3% at the midpoint when compared to the original 2019 guidance, and 208 to 211 MBOPD, an increase of approximately 1% at the midpoint when compared to the original 2019 guidance. The increase in production guidance is attributable to higher gas processing plant NGL yields, including from the new Hopson and Pembrook gas processing plants that came online in 2019, positively impacting NGL production, and wells being placed on production slightly ahead of the forecast due to improvements in drilling and completion efficiencies. Pioneer increased its oil derivative positions to 110 MBOPD for the remainder of 2019 at approximately $65 Brent pricing and 80 MBOPD for 2020 at approximately $63 Brent pricing. The Company's financial and derivative mark-to-market results and open derivatives positions are outlined in the attached schedules.