Pioneer Natural Resources Co. will increase its rig count for horizontal drilling in the northern part of its Midland basin Spraberry-Wolfcamp play to 17 from 12 after an acquisition from Devon Energy Corp. and in response to its “improving outlook for oil prices.”
Pioneer agreed to acquire 28,000 net acres, mostly undeveloped, from Devon for $435 million, subject to normal closing adjustments. The acreage is in Martin, Midland, Upton, Reagan, Glasscock, Andrews, Dawson, Gaines, and Howard counties. Net production is 1,000 boe/d, of which 70% is oil.
About 15,000 net acres is in the Sale Ranch area of Martin and northern Midland counties, where Pioneer is active. Combined with its existing acreage, the acquisition will add 70 locations targeting the Permian Wolfcamp B shale to Pioneer’s Sale Ranch drilling inventory in an area where lateral lengths average about 9,000 ft.
A separate 8,000 net acres in the Sale Ranch area and northern Midland County will add about 80 Wolfcamp B locations where lateral lengths are less than 7,500 ft.
Pioneer said it will use the remaining 13,000 net acres acquired from Devon and existing acreage in trades to consolidate its land positions in core areas.
It expects to add its first rig in the area in September, followed by two rigs each in October and November.
The company also reported an underwritten public offering of 5.25 million shares of its common stock, with an estimated value of $827 million, to fund the acquisition and general corporate activities.
The agreement is one of several sales announced by Devon of noncore Midland basin acreage. The agreed sales prices total $858 million, bringing to $2.1 billion the total proceeds of program by the company to divest noncore properties.