Pioneer Natural Resources Co. (NYSE: PXD) continues to high-grade its Midland Basin acreage with the sale of acreage in northeastern Martin County, Texas.
Pioneer said an undisclosed buyer will acquire the acreage with an average production of about 1,500 barrels of oil equivalent per day for $266 million. The amount of acreage was not disclosed but the company had been evaluating offers for 20,500 net acres in Martin.
The sale of the Martin acreage comes after January agreements to sell 5,600 net acres in Upton and Andrews counties, Texas for $63 million in gross proceeds.
The sales, along with ongoing acreage trades, continue “to advance the high-grading of Pioneer’s premier acreage position in the Midland Basin,” the company said.
The company has set its 2017 capex at $2.8 billion for drilling and completions. The company plans to fund its drilling program with cash flow of $2.2 billion and cash on hand.
The sale works out to about $10,500 per acre, which “appears quite reasonable given very limited drilling history on the acreage,” said David Deckelbaum, an analyst at KeyBanc Capital Markets, in a March 15 report.
Pioneer holds more than 200 vertical wells on the position but has yet to drilling a horizontal well and excluded it from its development plans.
After the sale closes, Pioneer’s liquidity should improve to $4.2 billion in first-quarter 2017, “easily supporting our modeled $512 million outspend [of cash flow] at strip [prices] in 2017,” he said.
Liquidity should be further enhanced by Pioneers efforts to sell 10,500 net Eagle Ford acres.
Pioneer’s estimated outspend may be as high as $535 million in 2017, said Gordon Douthat, senior analyst at Wells Fargo Securities.
The deal offsets some of last year's price to buy the Sale Ranch assets held by Devon Energy Corp. (NYSE: DVN) in August. At the time, Pioneer acquired 28,000 net acres from Devon for $435 million, or about $14,100/acre. The company also acquired 1,000 boe/d in production, 70% oil.
Pioneer said they planned to divest or trade 13,000 net acres purchased from Devon because they were not considered in the core Sale Ranch area.
“While the acreage count included in today's announcement is different” Pioneer’s implied sales prices of the 13,000 acres it wanted to sell equates to $10,000/acre.
“Pioneer's net cost of acquisition from Devon comes out to $17,700/acre, still very favorable for core assets relative to recent transactions in the area,” Douthat said.
The sale is expected to close by the end of April.
Darren Barbee can be reached at email@example.com.
2022-11-28 - The proposal would place monthly limits on flaring and require oil and gas companies to undertake methane leak detection programs on federal land.
2022-09-13 - The fire apparently occurred at one of some 20 active wells in Iran’s Shadegan oil field, which has an estimated total production capacity of about 70,000 bbl/d.
2022-11-23 - Mozambique's first LNG cargo left from the Coral Sul floating LNG installation on Nov. 14.
2022-11-23 - Norway’s crude oil and gas output rose in October from September but lagged official forecasts, preliminary data from the Norwegian Petroleum Directorate (NPD) showed on Nov. 22.
2022-11-08 - Oil producers in the U.S. have warned in recent weeks of weaker-than-expected output, citing aging wells, shortage of labor and materials, rising costs and a sharp focus on shareholder returns.