During the third quarter Irving, TX-based Pioneer Natural Resources Co. set a new production record in the Eagle Ford Shale, where it said its choke management program continues to improve well performance. Continued development of the Wolfcamp Shale in West Texas is setting the play up to be a “significant” contributor to production growth in the future, the company said.

“Our Spraberry vertical and Eagle Ford Shale plays continued to exceed production growth expectations in the third quarter,” said CEO Scott Sheffield.

Pioneer is the largest acreage holder in the horizontal Wolfcamp where it is targeting the Wolfcamp A, B, C and D intervals. Drilling is focused primarily in the southern 200,000 acres of Pioneer’s leasehold in the play (Upton, Reagan and Irion counties) where it expects to drill 90 wells by the end of 2013 to hold 50,000 expiring acres. Thirty to 35 of these wells are targeted to be drilled in 2012. Twenty-seven wells have been drilled to date, with 17 placed on production.

Pioneer’s first two successful horizontal Wolfcamp Shale wells were drilled in northern Upton County in the Upper B interval in the Giddings Estate area. The first had its one-year anniversary from first production in mid-October and has produced 135,000 boe to date. The second well has been on production for 10 months and has delivered cumulative production of 105,000 boe. A typical vertical well drilled to the Wolfcamp interval generally takes 40 to 50 years to produce 140,000 boe, Pioneer said.

Two A interval wells were placed on production during the third quarter, drilled to depths of 7,483 and 7,586 feet, with lateral lengths of 6,902 and 6,422 feet. One was successful and had an initial production rate of 585 boe/d, of which 85% was oil; the other well was drilled through a fault. Two more A interval wells have been drilled and are awaiting completion. Pioneer has also drilled its first Wolfcamp Lower B interval well, which is also awaiting completion.

In the Spraberry interval, Pioneer drilled two “highly successful” horizontal Jo Mill wells with lateral lengths of 2,628 and 2,178 feet. Current 24-hour production rates are 554 boe/d and 308 boe/d, with oil content greater than 80%. Pioneer said it plans on drilling additional horizontal Jo Mill wells, probably with longer laterals.

The company has four horizontal rigs running in the southern 200,000 acres of the play and plans to add three rigs late in the fourth quarter or early in the first quarter. During the third quarter, Pioneer added a fifth horizontal rig to accelerate the delineation of the northern portion of its Spraberry acreage in Midland, Martin and Gaines counties.

Pioneer has a data room open to pursue a joint venture partner to accelerate the development of the horizontal Wolfcamp in the southern 200,000 acres and is offering 33-50% of its working interest in the southern acreage.

The company continues to drill vertically to deeper intervals in the Spraberry field below the Wolfcamp interval. “Production from this deeper drilling has exceeded expectations and is the primary contributor to the production outperformance by this asset over the first nine months of 2012,” the company said.

Third quarter production from the Spraberry field averaged 69,000 boe/d, an increase of 5,000 boe/d from the second quarter. Production benefited by 1,800 b/d from the partial drawdown of natural gas liquids inventory at Mont Belvieu, TX, that was built during the second quarter as a result of third-party NGL fractionation constraints. However, this was offset by a production loss of approximately 4,000 boe/d due to continuing fractionation constraints during the third quarter, which were resolved last month.

Based on a fourth quarter production forecast, Spraberry production is expected to grow from an average of 45,000 boe/d in 2011 to 66,000-67,000 boe/d in 2012.

In the Eagle Ford Shale Pioneer said it expects to drill 125 wells this year. The 2012 drilling program continues to focus on liquids-rich drilling, with only 10% of the wells designated to hold strategic dry gas acreage. Pioneer drilled 38 wells in the third quarter and placed 35 wells on production. The company’s average drilling cost per foot in the Eagle Ford has decreased by 18%, and drilling feet per day has increased by 28% since the second quarter.

Pioneer increased its Eagle Ford production from 24,000 boe/d in the second quarter to 29,000 boe/d in the third quarter. “Fifty percent of Pioneer’s wells across the entire play are in the top quartile of industry EURs [estimated ultimate recoveries], while 80% of the company’s wells are above the industry mean EUR,” Pioneer said.

The company said its choke management program is contributing to the well performance. Fourth quarter production from the Eagle Ford is expected to range 32,000-35,000 boe/d. On a full-year basis, this will result in average production of 27,000-28,000 boe/d, and increase from 12,000 boe/d in 2011.

The capital program for 2012 of $3 billion includes drilling capital of $2.5 billion and capital for vertical integration of $500 million.

Pioneer reported third quarter net income of $19.2 million (15 cents/share) compared with $351.5 million ($2.95/share) in the year-ago quarter. Without the effect of noncash derivative mark-to-market losses and other unusual items, adjusted income for the third quarter was $104 million after tax (82 cents/share).