After delivering consistent quarterly production growth since the inception of Pioneer’s drilling activity in the Eagle Ford Shale in 2009, production for the third quarter declined by 3 MBOEPD compared to the second quarter. This reflects delays in placing wells on production related to increased pad drilling in the third quarter (approximately 2,000 BOEPD) and a higher number of wells that had to be shut in for offset fracture stimulation activity related to downspacing tests (approximately 1,000 BOEPD). At times during the third quarter, as much as 8% of Eagle Ford Shale production was shut in for this reason. Based on the number of wells that were placed on production towards the end of the third quarter (11 in September) and the schedule to place wells on production in the fourth quarter, production is forecasted to increase from 35 MBOEPD in the third quarter to 39 MBOEPD to 41 MBOEPD in the fourth quarter. The Company expects 2013 production to range from 37 MBOEPD to 38 MBOEPD, an increase of 34% to 38% compared to full-year 2012 production of 28 MBOEPD. This reflects a reduction in the previous full-year guidance range which was 38 MBOEPD to 42 MBOEPD.
2013 Capital Budget
Pioneer’s capital program for 2013 remains unchanged at $3 billion (includes land capital but excludes asset retirement obligations, capitalized interest and geological and geophysical G&A). The capital program includes $2.75 billion of drilling capital and $240 million for vertical integration additions and construction of new field and office buildings. Drilling capital expenditures totaled $608 million in the third quarter of 2013 and $2.1 billion for the first nine months of 2013.
The 2013 capital budget is expected to be funded from forecasted operating cash flow of $2.3 billion, assuming commodity prices for the full year of $98 per barrel for oil and $3.70 per thousand cubic feet (MCF) for gas, and from cash on the balance sheet.