Texas-based Pioneer Natural Resources said it plans to increase its 2020 capital spending budget for drilling, at a time when many E&P companies are cutting that funding, Kallanish Energy reports.

The company said it plans to spend $3.15 billion to $3.45 billion in 2020, a slight increase from the $3.0 billion in 2019. It cited substantial improvements in efficiencies in announcing its plan.

Pioneer is among the most active E&P companies in Texas in terms of drilling permits filed with the Railroad Commission of Texas, according to the Houston Chronicle newspaper.

Net income rises

Cash flow in 2020 is expected to be $3.9 billion, said the company. In Q4 2019, the company reported net income of $344 million, or $2.06 per share, up from $324 million, and $1.89 per share, in Q4 2018.

Its average realized price for oil in the Q4 2019 was $56.01 per barrel, while its average realized natural gas price was $2.21 per thousand cubic feet and its average realized price for natural gas liquids was $18.60/Bbl.

For full-year 2019, the company reported net income of $756 million, or $4.50 per share, down from $978 million, or $5.70 per share in full-year 2018.

Annual revenue flat

The company produced free cash flow of $384 million in the fourth quarter and $540 million for full-year 2019. Annual revenue in 2019 was $9.3 billion, nearly equal to the $9.4 billion reported in full-year 2018.

It returned $780 million of capital to shareholders through dividends and stock repurchases in 2019.

“2019 was an excellent year for Pioneer, where we delivered strong cash flow, robust free cash flow generation and top tier corporate returns,” said president and CEO Scott Sheffield, in a statement.

“This was driven by an intense focus on execution that resulted in significant well cost reductions while maintaining peer-leading oil production per well in the Permian Basin,” he said.

Total production above guidance

In Q4 2019, total production averaged 363,000 barrels of oil-equivalent per day (Boe/d), above the top end of the company guidance.

In the quarter, oil production averaged 220,000 barrels per day of oil, at the top end of company guidance. The company placed 77 horizontal wells on production in the fourth quarter.

In 2020, it plans to operate 23 to 24 rigs in the Permian Basin of West Texas/southeast New Mexico. Its 2020 drilling program is expected to produce 345 to 375 wells in production, compared to 306 wells placed in production in 2019.

The wells placed in service in 2020 are expected to be 40% Wolfcamp B, 40% Wolfcamp A, 15% Spraberry and 5% other formations, with an average lateral length of 9,800 feet.

Total production in 2020 is projected to be 383,000 to 403,000 Boe/d.

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