MIDLAND, Texas—Despite the prolonged weakness in prices, Pioneer Natural Resources Co. (NYSE: PXD) anticipates it can grow production by more than 15% over the next three years.

The trick: do it with fewer rigs.

The company recently added two rigs in the Spraberry/Wolfcamp putting its new total at 18 rigs, but that’s expected to be it for the remainder of the year.

More rigs might be added in 2016 as the company sees necessary, though this is dependent on several factors, said Joey Hall, executive vice president at Pioneer, at Hart Energy’s Executive Oil Conference on Nov. 10.

“We’ve discovered that we can keep production growth as we’ve projected with less,” said Hall, who heads the Irving, Texas-based company’s massive Permian operations.

Hall also discussed plans for infrastructure to support the Wolfcamp, several deceptively small Permian land swaps and the company’s progress in lowering costs.

In the third quarter, Pioneer placed 33 horizontal wells on production in the northern Spraberry/Wolfcamp. Early results from 30 of the wells targeting the Wolfcamp B (28 wells) and Wolfcamp A (two wells) are on average tracking more than 15% above the 1 million barrels of oil equivalent (MMboe) type curve.

Nineteen wells of the 30 benefited from Pioneer’s completion optimization program (17 Wolfcamp B and two Wolfcamp A wells). The program includes optimizing stage length, clusters per stage, fluid volumes and proppant concentration.

Hall said sometimes Pioneer gets caught in a debate over how the company is trying to grow production but not adding rigs. The answer—the company is doing too good of a job. Pioneer has knocked nearly 40%, or 15 days, off of its average drilling time in the Permian.

“The reality is our efficiency gains are requiring us to add less rigs,” he said. For Pioneer, it’s all about finding the right formula for optimization, which might get tricky.

“Trust me, when it comes to stimulation recipe, there are a lot of cooks in the kitchen,” he said.

Pioneer seems to be doing something right. The company continues to be the largest producer in the Spraberry/Wolfcamp with a resource potential of more than 11 Bboe and an inventory of more than 20,000 untapped horizontal drilling locations, according to the company's website.

Pioneer touts the Spraberry/Wolfcamp play, the company’s main focus area, as being the largest U.S. oil field and as the second-largest oil field in the world.

The company began its operations in West Texas in the early 1980s. Over decades, the company has amassed a 785,000-acre position in the Permian Basin's Spraberry oil field through property acquisitions, mergers and exploratory efforts, according to its website.

Initially, the company focused on vertical drilling and production but shifted to unconventional operations using advanced horizontal drilling and hydraulic fracturing technologies. The transformation has allowed Pioneer to target the field's multiple oil-rich shale intervals.

Since 2013, Pioneer has drilled 107 wells targeting the Wolfcamp A/B formations, said Jonathan D. Wolff, equity analyst with Jefferies LLC, in a Nov. 2 report.

Trading Sideways

Recently, Pioneer has filled in some of the blanks in its Permian Basin portfolio with several small land trades.

The company has done five trades varying from 160 acres up to 800 acres for a total of 2,240, Hall said. Per bench though, the deals are explosive—adding a total of 128,750 feet of lateral.

“You’re looking at one 160-acre trade, 1,500 feet—that’s a big deal and the NPV of that is substantial,” he said.

The company's three-pronged approach to the downturn: focus on its best areas, cut cost and keep its balance sheet in shape.

In June, for instance, Pioneer sold for $2.15 billion its Eagle Ford Shale (EFS) midstream business to Enterprise Products Partners LP (NYSE: EPD). Pioneer held a 50.1% interest in the business with the remaining 49.9% share owned by Reliance Holding USA Inc., a subsidiary of India-based Reliance Industries Ltd.

Analysts said the purchase price was in line with estimates and that Pioneer oil volumes could grow by 20% as a result of the deal.

After retiring about $75 million in EFS midstream business debt, Pioneer’s share of the net sale proceeds, before normal closing adjustments, is expected to be $500 million at close and $500 million one year later.

By the third quarter of 2015, Pioneer had received a book gain of $778 million before tax—a seven-fold return on its investment in five years. The company also reaffirmed its 2015 capex at $2.2 billion.

"This is another great example of infrastructure spending that we do, unlike a lot of our peers, and turn it into a tremendous gain,” said Scott Sheffield, chairman and CEO, in Pioneer’s third-quarter earnings call on Nov. 3.

‘The Next 20 Years’

After selling its Eagle Ford midstream, Pioneer is planning to stay ahead of the curve in the Permian by developing infrastructure for it Spraberry/Wolfcamp play.

The company plans to build-out horizontal tank batteries and saltwater disposal facilities, construct a field-wide water distribution system and additional gas processing facilities and expand the sand mine in Brady, Texas.

Assuming the sand mine expansion occurs next year, the company is expected to spend about $455 million on infrastructure in 2016, Wolff said.

“Pioneer often times gets criticized for our infrastructure cost, but I have another term for that—I refer to that as managing dependencies,” Hall said.

“If you’re in a big development and you’re not thinking about how you’re going to repeat this over the next 20 years, you’re going to be in a world of hurt,” he added.

The next step is crude oil exports.

Going forward with a forecasted $2 to $6 Brent-WTI differential, exporting oil and gas is “something worth chasing.”

Pioneer has demonstrated this by being one of the first companies to export processed lease condensate out of the Eagle Ford. The reason: to take advantage of better prices overseas, Hall said.

Even though the odds might still not be entirely in its favor, the company “believes that [lifting the ban] is more optimistic than ever before and it’s an important thing worth working toward,” he said.

Contact the author, Emily Moser, at emoser@hartenergy.com.