Pioneer Natural Resources says it will ramp up its drilling program in the Permian Basin oil fields despite reporting a second quarter loss.
The Irving-based energy company reported a second quarter net loss of $218 million, or $1.46 per diluted share. Without adjustments for noncash derivatives and other unusual items, income for the second quarter was $15 million after taxes, or 10 cents per diluted share, the earnings report stated.
CEO Scott Sheffield said the company’s drilling program in the Spraberry and Wolfcamp fields continue to show strong margins and returns in a weak commodity market because of the Pioneer’s “aggressive pursuit of cost reductions” and “efficiency gains.”
“As a result, we are putting rigs back to work and plan to return to an activity level in 2016 that can result in a similar growth trajectory that we were delivering in the second half of 2014 before the downturn,” Sheffield said in a prepared statement as part of a second quarter earnings report.
Earlier this year, Pioneer announced it was dramatically cutting back on its drilling in Texas by cutting its capital expenditures by 45 percent to $1.85 billion and operate only 16 drilling rigs in the Permian Basin and Eagle Ford Shale oil fields through the first part of the year.
Now Pioneer plans to boost its drilling budget to $2.2 billion and add an average of two rigs per month in the northern Spraberry and Wolfcamp during the second half of 2015 and plans to continue adding rigs at this pace through the first quarter of 2016, the company said in the earnings report.
The company said it has reduced up to 25 percent and hopes to cut them by 30 percent by early 2016.
The current cost of drilling the wells in the northern Spraberry and Wolfcamp is up to $8.5 million, a price the company hopes to reduce to $7.5 million to $8 million by early next year. A similar reduction is projected for the southern joint venture area, from about $7.5 million to $6.5 million to $7 million in 2016.
In February, Sheffield said he thought his company was well positioned financially to weather the storm of lower oil prices because of its operating cash flow of $1.7 billion, $1 billion in cash on hand. After the sale of its Eagle Ford Shale pipeline business, the company reported having $700 million in the bank.
Pioneer said in the report that it is the largest acreage holder in the Spraberry and Wolfcamp with about 600,000 gross acres in the northern portion of the play and about 200,000 gross acres in the southern Wolfcamp joint venture area.
This article was written by Max B. Baker from Fort Worth Star-Telegram and was legally licensed through the NewsCred publisher network.