American Oil and Gas Reporter - PBIOS 2016 Official Program Guide - 100

pages 99-103_Layout 1 9/28/2016 2:48 PM Page 100

Permian Basin Reports
What lessons has Pioneer learned in drilling and completing horizontal wells in Permian resource plays, and
how is it applying those lessons to optimize development activity? Do you see any specific technologies on the horizon that could
significantly improve development economics or reserves recovery in these plays?

and produce it. The companies that survive a downturn come out
better than they went into it, by necessity. With new techniques,
better understanding of the geology, and using leaner operations,
the Permian is a natural place to return because it is a proven resource base.
For Pioneer, the Permian Basin has been a long-term, reliable
asset. We have developed fieldwide geological data, compiled over
many years, which allows us to continually improve and increase
our understanding of the rock. It has been, and continues to be,
the foundation of the company.

Pioneer is drilling longer laterals, which greatly increase the
returns from our wells. This has
led to an increased effort to
block up contiguous acreage
The Permian has been
through land trades, which
leads to much more efficient
the most active U.S.
field development. We also are
basin for the past several years. Do
pumping larger completion
you expect the U.S. activity recovjobs while reducing our stage
ery to come first to the Permian?
and cluster spacing. This allows
In what ways will the experience
us to concentrate the energy of
of the past two years shape operour completions closer to the
ators' response as prices recover?
wellbore, which in turn, may allow us to reduce our well spacWe have seen the start of a reing in certain areas.
covery already in the Permian
I think the industry will
Basin. Horizontal rig counts in the
continue an "all-of-the-above"
basin are up 45 percent from May
approach to technology, trying
2016. While activity in a lot of othdifferent techniques and
er basins remains flat or still in deprocesses to see what works for
cline, the Permian is picking up becertain areas. Hydraulic fracturPioneer is drilling Wolfcamp horizontals with lateral lengths
cause the economics support it.
ing itself has been around since
of more than 9,000 feet and completing them with larger
Many operators are seeing breakthe mid-1900s, but it took the
hydraulic fracturing treatments with reduced stage and
even costs fall as operations get
right application of the technolcluster spacing at an average cost of $6.5 million-$7.5 million
more efficient and companies
ogy and the right combination
per well. With the wells expected to produce in excess of
make changes to the ways they
with horizontal drilling to real1 million boe in their life spans, pretax production costs are
evaluate and execute projects.
ly unlock the potential that beas low as $2/boe.
We are seeing operators hedge to
came the shale revolution. As
lock in pricing at $50-$55 a barrel
some of the technologies bebecause they know they can make
come more mature, more reliable and less costly, you will see more
money at those prices, which would have been well below a lot of
widespread adaptation.
the Permian break-evens before the downturn. People are drilling

better wells, taking the time to make smarter decisions, and pushing the limits of what was possible even only a few months ago.
Mirroring the broader fortunes of the industry, the Permian has experienced numerous up and down cycles in
the years since Pioneer was established. Each time, the basin
seems to bounce back even stronger than before. The same can
be said for PXD. How do you explain the Permian's resiliency?
And what have been the keys to Pioneer's ability to achieve its
objectives under all types of business conditions?

The Permian always has had a tremendous amount of oil-producing rock. The key was figuring out the best way to unlock it
100 THE AMERICAN OIL & GAS REPORTER

You have announced your retirement at the end of the year.
On your first day as CEO, the company had a net worth
of $32 million. It now has an estimated value of $28 billion. What
would you point to as Pioneer's greatest accomplishments during your tenure?

That is a tough question, and it really deserves two answers.
I always have been concerned about the performance of the com-

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