DUG Operator Spotlight: Pioneer Natural Resources Exceptional Eagle Ford Shale October 15, 2012
Forward-Looking Statements Except for historical information contained herein, the statements, charts and graphs in this presentation are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements and the business prospects of Pioneer are subject to a number of risks and uncertainties that may cause Pioneer's actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties include, among other things, volatility of commodity prices, product supply and demand, competition, the ability to obtain environmental and other permits and the timing thereof, other government regulation or action, the ability to obtain approvals from third parties and negotiate agreements with third parties on mutually acceptable terms, litigation, the costs and results of drilling and operations, availability of equipment, services and personnel required to complete the Company's operating activities, access to and availability of transportation, processing and refining facilities, Pioneer's ability to replace reserves, implement its business plans or complete its development activities as scheduled, access to and cost of capital, the financial strength of counterparties to Pioneer's credit facility and derivative contracts and the purchasers of Pioneer's oil, NGL and gas production, uncertainties about estimates of reserves and resource potential and the ability to add proved reserves in the future, the assumptions underlying production forecasts, quality of technical data, environmental and weather risks, including the possible impacts of climate change, the risks associated with the ownership and operation of an industrial sand mining business, international operations and acts of war or terrorism. These and other risks are described in Pioneer's 10-K and 10-Q Reports and other filings with the Securities and Exchange Commission. In addition, Pioneer may be subject to currently unforeseen risks that may have a materially adverse impact on it. Pioneer undertakes no duty to publicly update these statements except as required by law. Please see the appendix slides included in this presentation for other important information. 2
PXD: Industry Leader in Eagle Ford Shale Geologic Data Drilling Efficiency Completion Optimization Operational Optimization First Mover Midstream Build Out Production Growth 3
PXD: First Mover in the Eagle Ford Shale Edwards Trend Band of dry gas below the Eagle Ford Shale extending 250 miles across SE Texas Started infill drilling in 1991 in legacy Edwards field (Pawnee); horizontal drilling in 1999 Acquired ~300,000 acres along the trend in 2005 Drilled 150+ Edwards wells with full suite of logs; each well drilled through Eagle Ford Shale Shot >2,000 sq. miles of 3-D seismic Eagle Ford Shale Re-completed several vertical wells in late 2006; first completions targeting Eagle Ford Shale Drilled several high-rate horizontal wells beginning late 2009 Cut over 1,500 feet of core 4
PXD: Significant Progress Over the Past 3 Years Successful joint venture with Reliance Industries Limited 210 wells on production 12 rigs operating during 2012 11 Central Gathering Points (CGPs) and >600 miles of pipeline completed Sophisticated geologic and reservoir models 5
PXD: Technology Leader in Eagle Ford Shale A Microseismic Surface Downhole Core Analysis A 3-D Seismic Coherency Curvature Geologic & Reservoir Model Logging Pilot hole logs Open hole horizontal logs Production logging Radio active tracers Mud logging 6
PXD: Technology Drives Strong Well Performance N Geologic and reservoir models identify: Resource in place Productivity by area Wellbore placement Completion optimization 7
PXD: Delivering Strong Well Results 50% of PXD wells are in the top quartile of industry EURs across the entire Eagle Ford Shale 1 80% of PXD wells are above the industry median EUR 1 Well performance varies across the Eagle Ford Shale due to geologic properties PXD has 14 type curves with EURs averaging 1 MMBOE (6 BCFE) 1) Based on public wellhead production data from IHS; does not include NGL uplift 8
PXD: Drilling Results Improving Average drilling cost per foot has decreased 12% and average drilling feet per day has increased 27% over the last year $300 $150 $0 800 400 0 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 9
Days PXD: Well Spud to POP Time Decreasing 1 200 Spud to put-on-production (POP) time has decreased 40% over the last year 150 159 145 100 116 105 96 50 0 1) Reflects single well pads only Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 10
Pad Drilling Expected To Increase in 2013 75% 80% 25% 20% Single Well Multi-Well Pads Single Well Multi-Well Pads 1H 2012 2013 11
PXD: Leading Fracture Stimulation Optimization Implementing completion optimization study to improve frac design Varying frac size, pump rate and clusters per foot by area according to analysis of Pioneer and offset operator data Utilizing zipper fracs on pad completions Saves $400 M - $500 M per well Testing sliding sleeve technology Continuing to test white sand proppant 53 wells stimulated using white sand through Q2 Early well performance similar to direct offset ceramic-stimulated wells Saves ~$700 M per well 50% of 2012 program, expect further increase in 2013 12
PXD s Vertical Integration Improves Returns and Enhances Execution Spraberry 5 vertical frac fleets (~20,000 HP each) 2 horizontal frac fleets (~35,000 HP each) 15 drilling rigs Well service equipment 1 Barnett Shale Combo 1 frac fleet (30,000 HP) 1 coiled tubing unit Eagle Ford Shale 2 frac fleets (50,000 HP each) 2 coiled tubing units Brady sand mine Current frac capacity: ~300,000 HP 13 th largest pressure pumping company in North America 1) Includes pulling units, frac tanks, hot oilers, water trucks, blowout preventers, construction equipment and fishing tools 13
PXD: Production Operations Developments Choke management reduces well production declines and increases well EURs Artificial lift Installations beginning in oilier areas Varying hydrocarbon yields across PXD s acreage require multiple artificial lift methods including rod pump, gas lift and plunger lift Capillary strings enable chemical paraffin inhibition 14
1 8 15 22 29 36 43 50 57 64 71 78 85 92 99 106 113 120 127 134 141 148 155 162 169 176 183 190 197 204 211 218 225 232 239 246 253 260 267 274 281 288 295 302 309 Cumulative BOE Per Lateral Foot PXD: Example of Choke Management Effectiveness 100.0 E.Roeder 03 Harlan Metting Riedesel Cum BOE/Lateral FT Cumulative Production Per Lateral Foot 12/64 Choke 22/64 Choke 16/64 Choke 10.0 Cumulative production from wells operating under choke management crosses over cumulative production from wells operating at higher choke sizes within 6 months 1 Choke management benefits: Higher well EURs Higher sustained wellhead pressure and extended stable flow regime 1.0 1) Wells are geologically similar Days 15
PXD: Midstream Build Out Almost Complete 11 Central Gathering Points on line to date Gas and condensate gathering and separation Gas treatment and condensate stabilization Build out executed ahead of drilling plan Infrastructure build out minimizes production delays Modular design allows for expansion ahead of drilling plans Processing third-party volumes EFS Midstream is open for business Allows delivery of wet gas and condensate to multiple third-party processors EFS Midstream LLC. Midstream Development 16
Midstream Build Out 2010 2011 2012 2013+ Total CGPs 3 5 3 3 14 Pipelines (Miles) 70 210 181 106 567 Key Capabilities Multiple gas redelivery points (Copano, Enterprise, DCP) 665 MMcfd of gas gathering, treating and dehydration capacity 79 Mbbld of condensate gathering and stabilizing capacity 11 17
Area 71 Central Gathering Point 18
PXD: Secured Third-Party Takeaway and Processing Capacity Contracted gas and NGL transportation, processing and fractionation for the joint venture s forecasted production volumes Utilizing multiple parties over 5-year to 10-year periods Enterprise (10-year), Copano (5-year), DCP Midstream (5-year) Diversifies gas processing and NGL fractionation capacity Greater market access Cost control Contracted condensate transportation with Enterprise Pipeline commitment substantially reduces trucking Provides flexibility to move condensate to Cushing and Houston markets 19
PXD: Delivering Substantial Production Growth PXD Eagle Ford Production (MBOEPD) 67 34 Gross 5 12 23 PXD Net 2010 2011 1H 2012 20
Certain Reserve Information Cautionary Note to U.S. Investors --The U.S. Securities and Exchange Commission (the "SEC") prohibits oil and gas companies, in their filings with the SEC, from disclosing estimates of oil or gas resources other than reserves, as that term is defined by the SEC. In this presentation, Pioneer includes estimates of quantities of oil and gas using certain terms, such as resource, resource potential, EUR, oil in place or other descriptions of volumes of reserves, which terms include quantities of oil and gas that may not meet the SEC s definitions of proved, probable and possible reserves, and which the SEC's guidelines strictly prohibit Pioneer from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of being recovered by Pioneer. U.S. investors are urged to consider closely the disclosures in the Company s periodic filings with the SEC. Such filings are available from the Company at 5205 N. O'Connor Blvd., Suite 200, Irving, Texas 75039, Attention Investor Relations, and the Company s website at www.pxd.com. These filings also can be obtained from the SEC by calling 1-800-SEC- 0330. 21