This is a pretty good Novi chart I pulled a few days ago,
but you gotta know what to look for to know why its important.
Pioneer's initial liquids productivity from its wells in Saudi America have been declining since 2017. Until 2022 they were declining fairly significantly. Then in 2022 PXD got on the longer lateral bandwagon and its initial IP's went up, making their well productivity 'look' better on a snapshot basis. But as I have pointed out countless times those longer laterals are good for cash flow, but not so good for ensuing decline rates after month 18 and definitely not so good for EUR's. This chart shows how much steeper decline rates are for 2022 wells after year one. Some of this longer lateral crap seems to decline 65-75% the first year of production life.
In the beginning of 2023 the focus was still on longer laterals for PXD and IP's improved even more. We do not know yet what their ensuing decline will look like past 18 months but it will likely be the same, or worse, than 2022.
In 2022 Pioneer's percentage of plus 15K foot long laterals was 14%, I believe. In 2023 its guidance suggests it might be as high as 22%.
All quite cool, that, providing they can keep doing it. Cool for cash flow,
not cool for EUR's.
It can't too much longer, I do not believe. And, for the record, neither will Exxon as it is now assumed Pioneers Saudi America block of acreage. Why? Because there is not enough damn room in the middle of those thousands upon thousands of existing 8,000 foot long HZ laterals and thousands upon thousands
of vertical Spraberry wells.
Look at a TRRC GIS map and tell me I am wrong. Pioneer's plus 15,000 foot lateral inventory is a small percentage of whatever remaining drilling inventory it has left. Or had left. The idea that Exxon can cover this block with longer laterals is a lie.
Here is one other thing I want to show you from PXD's 2Q23 SEC filings. The good 'ol days of production streams consisting of 75% of oil and condensate are over for PXD, and over for Exxon and pretty much over for the Permian. This is a direct result, I believe, of over drilling, pressure depletion and rising GOR. Tight oil lovers hate the term
bubble point and will scoff at it like its nothing, a bunch of bullshit. They could NOT be more wrong. Pioneer's production stream is down to something close to, or south of 50% C+C. More and more of its revenue stream is now related to associated gas and NGL's. It is part of why well economics, even at $80 WTI, are sucking right now.
Exxon, I believe, will soon be the biggest natural gas producer in the US, and most of that gas will be associated gas from tight oil wells in the Permian Basin.