Chart Of the Week

Pioneer Natural Resources owns the largest contiguous acreage block in the four core counties of the Midland Basin; it is the largest producer in the entire Permian Basin and the most active with regards to drilling new wells. In this acreage block it is approaching 4,000 active, producing wells in three primary benches, the lower Spraberry and Wolfcamp A and B.

In 2022, 23% of the 549 wells Pioneer completed in "Saudi America" contained lateral lengths of 15,000 feet or greater.

In spite of these longer laterals in 2022, Pioneer's initial potentials declined significantly. It would be wise not to assume this is intentional reservoir management to increase recovery rates. In 2023 its guidance calls for 26% of its drilled wells to be over 15,000 feet long. Thru April, its 2023 initial potential rates are even lower than they were in 2022.

As you can see in the chart above, after initial potential its ensuing decline rates for 2022 wells were steeper than wells drilled since 2016 thru 2021. In fact, it's twelve month weighted decline rate for its 2022 wells is an astounding 74%. This would naturally translate to lower Estimated Ultimate Recoveries (EUR's).

Liquids productivity of Permian Basin tight oil wells is declining, significantly now. Most of this is a function of over drilling core areas and pressure depletion. It will likely only get worse and more wells will have to be drilled for less production. D&C costs are going up, again, in 2024.

When the Permian Basin peaks production volumes, and starts downhill, that is all she wrote for our nation and we are back begging the Middle East for help. If you think that is a good long term plan I suggest you go turn on the television right now and check the current status of the Israeli conflict and drone attacks on US military bases in Syria and Iraq. While Xi and Putin were meeting earlier this week, Biden wandered into the Middle East. Not one leader from a Muslim country would even agree to meet with him.