For the past 19 years, Tim Dove, the No. 2 at Irving’s Pioneer Natural Resources, has studied the Permian Basin’s shale reserves of oil. The play is stacked like a layer cake: The vertically tiered intervals can reach 11,000 feet deep, giving Pioneer plenty of opportunities to drill for millions of barrels of oil. This reserve is the only region in the U.S. where production has grown since the industry began its downturn in 2014. And it’s dominated by Pioneer. If South Texas’ Eagle Ford and North Dakota’s Bakken Shale started the revolution a decade ago, the Permian Basin represents the promise that those only hinted at. It contains enough oil and gas to be considered the mother lode of U.S. shale reserves.
Dove will trade his current title of chief operating officer for chief executive on Jan. 1, inheriting a company that has seen its stock price increase by more than 360 percent in the last 10 years under founding CEO Scott Sheffield. Dove is betting that Pioneer’s presence in the Permian will only continue that trend. The company is now, he says, the fourth largest independent producer in the U.S. by market capitalization, which, as of late September, was more than $32 billion. “That means something,” Dove says.
An engineering grad from Massachusetts Institute of Technology who also has an MBA from the University of Chicago, Dove is both technocrat and sharp businessman. He began his career at Diamond Shamrock in 1981, working in business development. He mostly analyzed merger and acquisition candidates. In 1994, he joined forces with Sheffield, who was then CEO at Parker & Parsley Petroleum. Dove’s international experience was highly desired because the independent oil and gas firms, including the “majors,” were all migrating to lands beyond America. The exploration opportunities in the U.S. were thought to be diminishing, being reduced to low-output stripper wells and the like.
Dove played a key role in the 1997 merger between Parker & Parsley Petroleum and Mesa Inc., a former T. Boone Pickens outfit, that created Pioneer Natural Resources. At the turn of the calendar, Pioneer will celebrate its 20th anniversary. And with its 100-year inventory of wells, the company sits atop the largest and most productive oilfields in the country. About 2 million barrels per day are pumped in the Permian by all producers, and that grows to roughly 5 million in the next decade. In the Spraberry/Wolfcamp field of the Midland Basin, where most of Pioneer’s acreage resides, production reached 1.1 million barrels per day—50 percent of the Permian’s entire production. Pioneer alone produces nearly a quarter of that area.
Don’t expect major changes. Pioneer defies all of the leadership change management orthodoxy, which suggests new leaders make their presence known in the first six months. “In my case, if we needed to change something we would have done it,” Dove says. “We are always looking to do things in new ways, but as far as a massive sea change, you won’t see it.”
The company has invested significantly in technology upgrades, which Dove says has improved resource recoveries, streamlined costs, and optimized the return on its wells. “The industry has become a very tech-rich business,” Dove says. “We are drilling oil wells into shale rock, which is dense and impermeable … We have had to change into a process-driven organization. Under the old model, dry holes were found, a hallmark of true exploration, and now we are exploring for economics.”
Each well must be financially viable. Some of the sections of the Midland Basin can hold between 25 and 50 million barrels. And the combined Midland and Delaware Basins of the Permian hold the “largest number of undrilled, low-cost tight oil locations in the Lower 48,” according to Wood Mackenzie, the prestigious industry analytics consultancy.
During the downturn, when oil dropped from $107 to $30 a barrel, competition rose. Dove says Pioneer increased efficiencies that improved manufacturing processes, freeing it to weather the storm while prices inched back up. With the U.S. crude oil export ban, a relic from the 1970s, removed, the company’s global story has flipped. In the late-90s and early 2000s, Pioneer’s global ambitions faced outward. The company, which played a key role in the ban’s removal in 2015, is now an exporter.
“We have come back to our roots in the Permian Basin, but [are] sending oil around the world,” Dove says. “We have two things that put us ahead of the pack: great people and great rocks. We can keep our heads down and execute.”