Return on capital employed is increasing for Pioneer Natural Resources (NYSE: PXD) now that its underwater hedges are rolling off. Earnings are set to double in 2008 and triple in 2009, said Pioneer Natural Resources CEO Scott Sheffield, speaking at the Howard Weil investment conference in April. Pioneer is, of course, well-known as the leading player in the Spraberry oil trend in West Texas' Permian Basin, having close to a million acres under lease there. The position dates back to Pioneer's predecessor company, Parker & Parsley, which was based in Midland. It's been drilling on 40-acre spacing there for decades. The Spraberry is the fifth largest oil field in the U.S.--but the only one of the top 10 that is growing production, Sheffield said. Production is up 22% since 2003. Pioneer plans to drill 350 wells there in 2008 and recently started drilling on 20-acre spacing. There is about 12 million BOE of oil in place per section. Meanwhile, Pioneer plans 15 wells to the Pierre shale in Colorado's Raton Basin, where it dominates the action in CBM as a result of its purchase of Evergreen Resources a few years ago. "We've been working for 18 months to two years on the Pierre," Sheffield said, without revealing much more about it. "The first two wells were 14 miles apart and were excellent. It's deeper and more brittle than other shales. It's the geological equivalent of the Mancos shale. We think the total resource potential is 2 Tcf. Since we are already there, and we own about 85% of our own well services, we have zero entry costs and can drill from exisitng well pads."
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