Pioneer Natural Resources Co.’s Eagle Ford Shale play is “hitting on all cylinders,” and in the liquids-rich Barnett Shale combo play, well costs are declining, COO Timothy Dove said during an earnings conference call.

During the quarter, Pioneer beat its production guidance of 165,000-170,000 boe/d, turning in 171,000 boe/d.

“Our three liquids and resource-rich core assets in Texas, the Spraberry vertical, the horizontal Wolfcamp Shale and the Eagle Ford Shale, were the drivers of this significant increase. Importantly, oil production grew 10% in the first quarter of 2013 compared to the fourth quarter of 2012,” said CEO Scott Sheffield.

“Our extensive geologic and engineering evaluation of the resource potential of the Spraberry/Wolfcamp area ranks it as the largest oil field in the United States. Pioneer’s 900,000-acre leasehold position in the Spraberry/Wolfcamp holds multiple prospective horizontal targets with an aggregate estimated resource potential of more than 4.6 billion boe. Our joint interest agreement with Sinochem is allowing the horizontal development of the Wolfcamp Shale over our southern 200,000 acres to be accelerated, and we are now ramping up our appraisal activity of the Wolfcamp, Jo Mill and Spraberry Shales across our northern acreage.”

Pioneer’s horizontal Wolfcamp Shale and Jo Mill drilling results in the Spraberry Trend Area field have led the company to shift a significant portion of its 2013 drilling activity from vertical drilling to more capital-efficient horizontal drilling. Pioneer is the largest acreage holder in the Spraberry Trend Area field, where it believes it has more than 4.6 billion boe of estimated resource potential from horizontal drilling.

The company recently signed an agreement with Sinochem to sell 40% of its interest in 207,000 net acres leased by the company in the southern portion of the Spraberry Trend Area field for $1.74 billion (see Shale Daily, Jan. 31). The thickness of the Wolfcamp B interval in the southern joint interest area provides the opportunity to complete two stacked laterals in this interval.

The 2013 drilling program will continue to focus on delineating acreage and testing multiple Wolfcamp intervals, while the program in 2014 and beyond will primarily focus on development drilling and accelerating production growth.

First quarter production from the entire Spraberry/Wolfcamp area averaged 75,000 boe/d, an increase of 6,000 boe/d, or 10%, from the fourth quarter of 2012. This included horizontal production of 5,000 boe/d from the Wolfcamp and Jo Mill intervals and vertical production of 70,000 boe/d from the Spraberry, Wolfcamp and deeper Strawn, Atoka and Mississippian intervals.

For 2013, total Spraberry/Wolfcamp production is forecasted to grow to 75,000-80,000 boe/d, an increase of 14% to 21% compared to 2012. Pioneer expects horizontal production to increase from an average of 2,000 boe/d in 2012 to 11,000-14,000 boe/d in 2013. This forecast takes into account that more than 4,000 boe/d of horizontal production, on an annualized basis, is expected to be conveyed to Sinochem at the time the joint interest transaction closes, which is currently assumed to be on June 1.

In the Eagle Ford Shale the company drilled 37 wells in the first quarter and placed 35 wells on production. Pioneer increased its Eagle Ford production by 7% from 35,000 boe/d in the fourth quarter of 2012 to 37,000 boe/d in the first quarter, achieving another record, it said. Strong well performance continues to drive this growth. The Company expects 2013 production to range from 38,000 boe/d to 42,000 boe/d, an increase of 36% to 50% compared to full-year 2012 production of 28,000 boe/d.

Pioneer expects to drill 130 Eagle Ford Shale wells in 2013 at a cost of $7 million to $8 million per well, essentially all liquids-focused. The number of wells drilled from pads, as opposed to single-well locations, is expected to increase from 45% of the wells drilled in 2012 to 80% of the wells drilled in 2013, reflecting that most of Pioneer’s acreage is now held by production. Pad drilling saves $600 thousand to $700 thousand per well, the company said.

In the liquids-rich Barnett Shale Combo play, Pioneer drilled eight wells in the first quarter and placed four wells on production. Pioneer operated one rig in the play during the first quarter and added a second rig in April. The cost for a 5,000-foot lateral horizontal well has been reduced to $2.9 million as a result of improved drilling and completion performance. The company plans to utilize two rigs going forward to hold acreage in the highest-return areas of its 80,000 net acreage position.

Production in the first quarter for the Barnett Shale Combo play was 9,000 boe/d. Pioneer said it expects production to increase from an average of 7,000 boe/d in 2012 to 9,000 boe/d to 12,000 boe/d in 2013.

Pioneer’s capital program for 2013 remains at $3 billion, including $2.75 billion for drilling, $25 million for vertical integration, $70 million for the expansion of the company’s Brady, TX, sand mine and $145 million for Pioneer’s new Midland office building and several new field buildings. Drilling capital expenditures in the first quarter totaled $759 million.

Overall production is forecasted to average 174,000 to 179,000 boe/d during the second quarter, assuming Pioneer does not experience any significant ethane recovery losses in the Spraberry/Wolfcamp area as a result of the new Driver gas processing plant, with a capacity of 200 MMcf/d, which came online in mid-April. The guidance for the second quarter also assumes that Pioneer does not reject ethane into the gas stream in any of the company’s operating areas due to low ethane prices.

Pioneer reported first quarter net income of $101 million (75 cents/share). Excluding noncash derivatives losses and other special items, adjusted income was $136 million after tax ($1.02/share). Adjusted net income was in line with Wells Fargo Securities’ estimate and above the 97 cents/share Wall Street was looking for, Wells Fargo analysts said in a note. Year-ago net income was $214.6 million ($1.68/share).