Pioneer Natural Resources Company (PXD) successfully drilled its fourth well in the Eagle Ford Shale play in South Texas. This well is significant for the company as it produces the highest condensate amount as well as the largest combined gas and liquids volume in this play to date.
Located in Karnes County, the Handy Gas Unit #1 well initially produces 19.9 MMcfe/d (million cubic feet equivalent per day) of gas, including 2,030 barrels of condensate per day. Another three successful wells in this play are Riedesel #1 well, Sinor #5 well and Crawley #1 well.
Drilling in the South Texas area was sharply curtailed last year to support the company’s cost reduction initiatives. However, following this successful drilling result, Pioneer is quite confident with the strength of its holdings in this play. It holds nearly 310,000 gross acre lease position.
Pioneer continues to maintain a strong leasehold position in South Texas through renewals and acquisitions. Buoyed by the strong acreage position and solid drilling results, the company intends to seek a joint venture partner for all or a portion of its Eagle Ford Shale acreage position.
We favor the stock, given its oil growth exposure, low-risk exploitation-driven growth and significant drilling potential at Eagle Ford. The liquids content may be one of the keys to the competitiveness at the Eagle Ford play, compared with the other shale plays.
Pioneer’s oil-weighted reserves base (nearly 55% of total 2009 proved reserves) and large drilling inventory with significant resource potential are catalysts to unlock value for shareholders.
Price of Pioneer shares rose 1.94% to $62.02 at Tuesday’s closing.
Read the full analyst report on “PXD”
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