Reed came within two shots of equaling the tour's 36-hole scoring record of 124 first set by Pat Perez at this tournament in 2009.
After a 63 posted at the PGA West Palmer Course on Thursday, Reed shot the same score Friday at the LaQuinta Country Club. Three courses are used for this pro-am tournament, which annually produces some of the lowest scores on the tour.
Reed's 126 total gave him the lead over Brendan Todd, whose 63 at the Palmer Course left him alone in second place at 128.
Reed, whose first and thus far only tour victory came last year at the Wyndham Championship, is in position to challenge the circuit's 72-hole scoring record of 254. That is the score Tommy Armour III posted in winning the Texas Open in 2003.
Reed suffered his first bogey of the tournament at the par-4 second hole, but beginning at the fourth he went birdie-eagle-birdie to get his round going. He also birdied three holes in a row beginning at the 15th.
Former PGA Championship winner Keegan Bradley recorded his first hole-in-one on the tour at the par-3 third of the Nicklaus Course. He finished with a 66 that put him in a tie for 26th place at 9-under 135.