Pioneer increased its Eagle Ford Shale production from 24 MBOEPD in the second quarter of 2012 to 29 MBOEPD in the third quarter, achieving another record production level. Strong well performance continues to drive this growth. Fifty percent of Pioneer’s wells across the entire play are in the top quartile of industry EURs, while 80% of the Company’s wells are above the industry mean EUR. The choke management program being utilized by Pioneer on its wells is contributing to the strong well performance. The Company expects fourth quarter production to range from 32 MBOEPD to 35 MBOEPD. On a full-year basis, this will result in average production of 27 MBOEPD to 28 MBOEPD, up from 12 MBOEPD in 2011. The updated production forecast for 2012 reflects a narrowing from the previous guidance range of 25 MBOEPD to 29 MBOEPD.
Eleven central gathering plants (CGPs) are now operational as part of the joint venture’s Eagle Ford Shale midstream business. Pioneer’s share of its Eagle Ford Shale joint venture midstream activities is conducted through a partially-owned, unconsolidated entity. Funding for ongoing midstream infrastructure build-out costs that are in excess of operating cash flow is provided from external debt sources. Cash flow from the services provided by the midstream operations is not included in Pioneer’s forecasted operating cash flow.
On the North Slope of Alaska, Pioneer continues to operate one rig and drill development wells from its island drill site targeting the Nuiqsut and Torok intervals. The Company’s third quarter production was 4.5 thousand barrels oil per day, down slightly as expected from the second quarter of 2012. During the first quarter of 2012, the Company completed its first successful mechanically diverted fracture stimulation of a Nuiqsut interval well. Based on the success of this mechanically diverted fracture stimulation, the Company is currently drilling four more wells that will be stimulated early next year during the winter drilling season. Three of these wells will be in the Nuiqsut interval and one will be in the Torok interval. During the first quarter of 2012, the Company also drilled a successful onshore appraisal well to test the southern extent of the Torok interval. The production and subsurface data provided by this successful well supported the addition of 50 million barrels of oil to the resource potential of the Torok interval within Pioneer’s acreage. The well is now shut in awaiting permanent onshore production facilities for which an onshore development FEED study has been initiated. Pioneer is planning a second onshore Torok well for the first quarter of next year (winter drilling season) to further appraise this interval.