Pioneer Natural Resources Co., the energy explorer whose shares have doubled in value this year, rose as much as 5.8 percent after reporting record exploratory results in the Permian Basin.
Drilling results from three wells in the Permian’s Wolfcamp D area, also known as the Cline Shale, were the highest ever in that part of the basin, said Robert L. Christensen Jr., a New York-based analyst at Canaccord Genuity Corp. Pioneer, which released the results as part of its third-quarter earnings statement today, rose to as high as $225.88 in after-hours trading in New York, before dropping back to $215 at 5:30 p.m.
“The industry has tried pretty heroically in the Cline Shale” to get substantial amounts of oil from wells, Christensen said in a phone interview. “This is their first Cline test and it happened to be a record for the Cline and a record for any interval in the Wolfcamp.”
Pioneer was among the 10 largest holders of net acreage in the Permian Basin in Texas at the end of the second quarter, according to data compiled by Bloomberg. Permian oil production in Texas has climbed 33 percent in the past six years, rising to 921,413 barrels last year. The Irving, Texas-based company has estimated its 640,000 net acres in the Permian -- including the Spraberry and Wolfcamp areas -- will yield the equivalent of more than 7 billion barrels of oil.
The company’s E.T. O’Daniel #2H well had initial peak production equivalent to 3,156 barrels of oil a day, the highest horizontal 24-hour rate in the Midland Basin, Pioneer said. Production rates for two other wells in the Wolfcamp were 2,128 barrels and 1,509 barrels with oil content of at least 60 percent.
Pioneer is forecasting 2013 output will be 14 percent higher than last year. The company had previously anticipated a 14 percent to 16 percent increase.
Third-quarter net income more than quadrupled to $91.1 million, or 65 cents a share, from $19.2 million, or 15 cents, a year earlier, the company said in a statement today. Excluding one-time items, per-share earnings were below the $1.35 average of 38 analysts’ estimates compiled by Bloomberg.
Average sales volumes during the third quarter increased to the equivalent of 172,611 barrels of oil a day from 159,894 barrels a year earlier, based on continuing operations. That’s “slightly below” the company’s guidance for the quarter, Pioneer said.
The failure to meet the output estimate was “a result of delays in bringing new wells on production in the Eagle Ford Shale related to increased pad drilling,” Scott Sheffield, chairman and chief executive officer of Pioneer, said in the statement. “We expect fourth-quarter production to grow significantly as these delayed wells and a substantial number of new pad wells from the Eagle Ford Shale and the Spraberry/Wolfcamp areas are placed on production.”
Oil futures traded in New York rose 15 percent from a year earlier to average $105.81 a barrel in the third quarter. Gas futures traded in New York averaged $3.555 per million British thermal units in the quarter, a 23 percent rise from a year earlier.
Pioneer agreed to sell its Alaska unit to Caelus Energy Alaska LLC for $550 million in cash in October and will redeploy capital to its Permian assets.
The shares, have 27 buy, nine hold and three sell recommendations from analysts.