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Pioneer Natural’s Permian-Weighted Output Up 6% From 2Q, Despite Harvey Impacts

Pioneer Natural Resources Co., one of the leading Permian Basin oil and natural gas producers, reported a 6% sequential increase in third quarter production, even as it fought downtime from shut-ins and midstream issues related to Hurricane Harvey.

The Dallas-based independent produced 276,000 boe/d in 3Q2017, an increase of 17,000 boe/d from the second quarter.

Natural gas production, which took the biggest hit from Harvey, was down sequentially to 340 MMcf/d from 354 MMcf/d. Oil output, however, climbed overall by 10% to an all-time high of 162,000 b/d, led by the Permian’s Spraberry/Wolfcamp. Natural gas liquids (NGL) production also rose from 2Q2017, to 57,346 b/d from 53,268 b/d.

Harvey, which came ashore on Aug. 25 and spread destruction along the Gulf Coast that lasted for weeks, caused Pioneer to lose 3,500 boe/d overall in the quarter.

The losses came from well shut-ins in South Texas, near the storm’s landfall, but Pioneer also suffered significant downtime at a third-party facility in the Permian, where gas from the West Panhandle field is processed.

Adjusting for the losses, production “would have been at the top end of Pioneer’s production guidance” of 274,000-279,000 boe/d, management said.

The Spraberry/Wolfcamp facilities in West Texas, hundreds of miles from Harvey’s landfall, were not damaged directly by the storm. However, Pioneer’s NGLs in West Texas are separated at various third-party processing plants and transported to Mont Belvieu, TX, for fractionation.

The fractionation facilities near Houston sustained flood-related interruptions and as a result, the Permian gas processing plants curtailed NGL shipments from late August through mid-September.

“The impact to Pioneer’s Spraberry/Wolfcamp production was a loss of approximately 1,300 boe/d for the third quarter, with most of this loss being gas and NGLs,” management said.

Likewise, while no significant damages were incurred at Pioneer facilities in South Texas, production was shut in and fracture stimulation operations ceased before Harvey made landfall.  Production was back online and completions resumed in the first half of September, but Pioneer still lost around 900 boe/d from Harvey’s impact.

Besides the hurricane impacts, Pioneer said quarterly production also was impacted by unplanned downtime at the Sunray, TX, gas processing plant that is owned by a third party, where West Panhandle gas is processed. Sunray was damaged by a fire in mid-September.

Pioneer was forced to shut in all production in mid-September from the West Panhandle field, estimated at 8,000 boe/d, which reduced quarterly output by about 1,300 boe/d.

“Repairs to the Sunray plant are underway, but it is expected to be several months before the plant can be placed back into service,” said management. As a result, the plant’s operators and Pioneer are making modifications to facilities to enable field production to resume. Gas volumes have been rerouted to a facility in Spearman, TX, with production to resume in late October or early November.

“Despite the lost production during the third quarter related to the hurricane and unplanned downtime at the third-party gas processing plant, Pioneer continues to expect full-year 2017 production growth to be within its targeted growth range of 15% to 16%,” or 269,000-271,000 boe/d. Pioneer also had reported drilling delays in the Permian during the second quarter.

Full-year oil production still is set at 156,000-158,000 b/d, an increase of 17-18% year/year. Pioneer during the quarter received an average realized price of $2.58/Mcf for natural gas, $45.35/bbl for crude oil and $18.96/bbl for NGLs.

Quarterly results are scheduled to be issued on Nov. 2.

Several exploration and production companies have reported quarterly impacts from Harvey. Noble Energy Inc.and Encana Corp.said Harvey led to the loss of output from Permian and Eagle Ford operations. Chesapeake Energy Corp.revised down its full-year 2017 production guidance by roughly 2% in part because of Harvey. Permian-focused Callon Petroleum Co.also revised down its 3Q2017 and full-year guidance, while Occidental Petroleum Corp. also reduced guidance.

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