Permian Investor Presentation October 2012

Embed Size (px)


Permian Investor Presentation October 2012. Forward-Looking Statements. - PowerPoint PPT Presentation

Text of Permian Investor Presentation October 2012

Slide 1

Permian Investor Presentation

October 201212Forward-Looking StatementsExcept for historical information contained herein, the statements, charts and graphs in this presentation are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements and the business prospects of Pioneer are subject to a number of risks and uncertainties that may cause Pioneer's actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties include, among other things, volatility of commodity prices, product supply and demand, competition, the ability to obtain environmental and other permits and the timing thereof, other government regulation or action, the ability to obtain approvals from third parties and negotiate agreements (including joint venture agreements) with third parties on mutually acceptable terms, litigation, the costs and results of drilling and operations, availability of equipment, services and personnel required to complete the Company's operating activities, access to and availability of transportation, processing and refining facilities, Pioneer's ability to replace reserves, implement its business plans (including its plan to complete certain asset divestments) or complete its development activities as scheduled, access to and cost of capital, the financial strength of counterparties to Pioneer's credit facility and derivative contracts and the purchasers of Pioneer's oil, NGL and gas production, uncertainties about estimates of reserves and resource potential and the ability to add proved reserves in the future, the assumptions underlying production forecasts, quality of technical data, environmental and weather risks, including the possible impacts of climate change, the risks associated with the ownership and operation of an industrial sand mining business, international operations and acts of war or terrorism. These and other risks are described in Pioneer's 10-K and 10-Q Reports and other filings with the Securities and Exchange Commission. In addition, Pioneer may be subject to currently unforeseen risks that may have a materially adverse impact on it. Pioneer undertakes no duty to publicly update these statements except as required by law.

Please see the appendix slides included in this presentation for other important information.

2TopicsPXD OverviewTim DoveSpraberry Overview & GeologyChris CheatwoodSpraberry OperationsDanny KellumHorizontal Wolfcamp ShaleChris Cheatwood34PXD Overview45U.S. asset base

Oil exposure from proved reserves + estimated net resource potential of >7 BBOE

2012 drilling program focused in three liquids and resource rich core assets in TexasSpraberry VerticalHorizontal Wolfcamp ShaleJoint venture accelerates future developmentEagle Ford Shale

Barnett Shale divestiture allows reallocation of capital to three core Texas assets Strong production growth profile

Vertical integration substantially improving returns

Attractive derivative positions protect margins

Strong investment grade financial positionInvestment Highlights562012 Production Growth Target1MBOEPD25% - 29% 120~65% Liquids147Reflects Tunisia and South Africa as discontinued operations39% Oil34% Oil2012 E104148 153 FY Guidance 27% Oil15141% OilIncreased 2012 production growth target from 23% - 27% to 25% - 29%Strong drilling and well performance outweighs continuing third-party NGL fractionation capacity shortfalls and reduced 2H drilling activityProduction growth rate beyond 2012 dependent on commodity prices and service costs150 - 1556

Capital program includes:Drilling capital 2.4Vertical integration0.5Includes $100 MM for field facilities accelerated into 20122.9Capital program funded from:Operating cash flow 1.8Equity offering proceeds 0.5 Liquidated derivatives and inventory reduction0.3Credit facility borrowings 0.2South Africa divestiture and South Texas acreage sale 0.12.9

NYMEX Oil Price ($/BBL)NYMEX Gas Price ($/MCF)$85/bbl oil and $3/mcf gasSensitivity to Commodity Prices ($ MM)72012E Capital Spending and Cash Flow11)Capital spending excludes acquisitions, asset retirement obligations, capitalized interest and G&G G&A$B7Horizontal Wolfcamp Shale80% Oil / 10% NGLs / 10% Gas400,000+ Gross Acres3.5 BBOE Resource Potential~8,000 Drilling LocationsPioneers Liquids-Rich Growth Areas8

Spraberry Vertical70% Oil / 20% NGLs / 10% Gas900,000 Gross Acres609 MMBOE Proved Reserves2.1 BBOE Resource Potential~23,000 Drilling Locations64 MBOEPD Q2 Net ProductionEagle Ford Shale40% Oil / 20% NGLs / 40% Gas300,000 Gross Acres70 MMBOE Proved Reserves600 MMBOE Resource Potential~1,800 Drilling Locations24 MBOEPD Q2 Net Production912/31/11 Proved Reserves: 1.1 BBOE2

Additional Net Resource Potential: 6.7 BBOE

All drilling locations shown on a gross basisSEC pricing of $96.13/BBL for oil and $4.12/MMBTU for gas (NYMEX)Primarily reflects Alaska, Raton and South TexasIncludes vertical well potential from Wolfcamp and deeper intervalsAssumes average EUR of 575 MBOE per well, >8,000 locations, >400,000 acres , 140-acre spacing, laterals in all intervals (A, B, C & D) and 75% NRIPermian 5.6 BBOESpraberry 609 MMBOE4,700 PUD locationsRaton 170 MMBOE150 PUD locationsOther 107 MMBOE120 PUD locationsMid-Continent 107 MMBOESpraberry40-ac Drilling4600 MMBOE5,200 locationsSpraberry20-ac Drilling41.2 BBOE13,500 high-graded locationsSpraberry Waterflood 300 MMBOE 40% acreageEagle Ford Shale600 MMBOE1,700 locationsOther3200 MMBOE500 locationsBarnett 300 MMBOE1,300 locationsEagleFord Shale70 MMBOE 120 PUD locationsHorizontal Wolfcamp53.5 BBOE8,000 locationsProved Reserves + Estimated Net Resource Potential of >7 BBOE and 35,000 Drilling Locations 9Significant Proved Reserves and Resource Potential110Spraberry Overview & Geology10Permian Basin Producing Fields 11

Source: Geomap, 2006Spraberry TrendLargest Field in Midland Basin (~5,000 sq miles)>14,000 producing wells>1 billion barrels produced>180,000 BOPD current productionPermian Basin is composed of multiple uplifts and basins that formed during the Pennsylvanian and early PermianThe Spraberry Trend, which includes the Wolfcamp interval, is located in the Midland Basin of the Permian BasinIt was discovered in 1948 and commenced production in 1949It contains 40 BBO in-place in Spraberry-Dean intervalMuch more oil in-place in deeper zones of Wolfcamp, Strawn, Atoka and Mississippian


Geologic Provinces of the Permian BasinPEDERNAL UPLIFT &ROOSEVELT POSITIVEDEVILSRIVERUPLIFTBasinBasementUpliftShelfThrust BeltCONFIDENTIALSpraberry Trend13Midland Basin Depositional Setting and SourceSubmarine fans of Dean and Spraberry were deposited during relative sea-level fall via submarine canyons cut mainly in Northern ShelfSpilled into main depocentre to south forming distal fansSaddles between atoll mounds acted as conduits for clasticsSpraberry formation was a mud-rich fan complexHigh transport efficiencies allowed extensive network of muds, silts and very fine sands over 150 milesMain productive interval in Spraberry Trend is the middle-upper Spraberry FormationSubordinate production Dean and WolfcampSourced from Spraberry shales and basal shales

Handford, 1981

Blakey, Early Leonardiian Representation~6,000 ft~10,000 ftClear-forkDeanUpper SpraberryWolfcampLowerSpraberryAtokaor Miss.~11,000 ftStrawnLimestone PaySandstone PayNon-Organic Shale Non-PayOrganic Rich Shale Pay13

Evolution of Spraberry Trend Area1983429,000 acresPresent Day>1,700,000 acresand growing14PXD Acreage Spraberry FieldSource: Bureau of Economic GeologySource: PXD1415Spraberry Operations15Operations 16

Example of Spraberry Development, NW Martin CountyExcellent operating environmentPXD has long history of development in the area16


1950s Early Development

1960s Field extension

Progression of Field Development11) Source: IHS Well location data prior to 1970 is limitedMajor Oil Company development; principally Texaco, Phillips and MobilContinued development by Majors with a few minor Independents1970s Dramatic expansionContinued development by Majors with a few minor Independents1980s Expansion & Infill1990s Infill and efficiency2000s Infill and efficiencyIndependents including Parker & Parsley (Pioneers predecessor Company) become large players; less emphasis by MajorsIndependents continue to dominant the landscape driven by Pioneer Independents lead the charge going deeper; activity builds in the Horizontal Wolfcamp Shale in southern portion of the basinIndependents become the dominant player2010s Deeper and horizontals1718History of Spraberry Trend Completions2010+2008 - 092000s1980 - 90s1950 - 70sLimestone PaySandstone PayNon-Organic Shale Non-PayOrganic Rich Shale PayAverage Casing DepthTesting deeper zones~6,000 ft~10,000 ftClear-forkDeanUpper SpraberryWolfcampLowerSpraberryAtokaor Miss.~11,000 ftStrawnFracture Stimulation StagesDrilling deeper, adding fracture stimulation stages and capturing pay from non-traditional shale/silt intervals have added production and improved recoveries

18Permian Basin Historical Oil Production19


Permian Rig Count Increased 5X Since 2009Source: Baker Hughes2020

PXD Largest Spraberry Acreage Holder, Driller and ProducerPXD Acreage (~900,000 Acres; ~75% HBP)

21Spraberry FieldPXD leasehold represents ~50% of total Spraberry acreage~7,000 operated wellsDrilling locations:>23,000 vertical (central and northern parts of the field)>8,000 horizontal Wolfcamp (based on 400,000 acres primarily in the southern portion of the field)5