Pioneer Natural Resources Company (NYSE:PXD) ("Pioneer"
or "the Company") today reported financial and operating results
for the quarter ended June 30, 2021. Pioneer reported second
quarter net income attributable to common stockholders of $380
million, or $1.54 per diluted share. These results include the
effects of noncash mark-to-market adjustments and certain other
unusual items. Excluding these items, non-GAAP adjusted income for
the second quarter was $629 million, or $2.55 per diluted share.
Cash flow from operating activities for the second quarter was $1.5
billion.
Highlights
- Delivered strong second quarter free cash flow1 of $616
million
- Accelerated and increased variable dividend program; future
variable dividend payments2 up to 75% of prior quarter's free cash
flow after deducting the base dividend paid during the
quarter
- Declared inaugural variable dividend of $1.51 per share to
be paid during the third quarter; represents approximately 75% of
second quarter free cash flow after deducting the base dividend
paid in April
- Averaged second quarter oil production of 363 thousand
barrels of oil per day (MBOPD), in the upper half of
guidance
- Averaged second quarter production of 629 thousand barrels
of oil equivalent per day (MBOEPD), near the top end of
guidance
CEO Scott D. Sheffield stated, "Pioneer delivered a strong
quarter as we integrated DoublePoint operations into our asset
base, while continuing to execute one of the most efficient capital
programs in the industry.
We are witnessing strong oil demand growth as the global
macroeconomic environment continues to improve, with a
corresponding improvement in commodity prices. As a result of the
improved commodity price outlook, which is expected to further
strengthen our balance sheet, we have accelerated and increased our
variable dividend return framework with the declaration of our
inaugural variable dividend.
This inaugural variable dividend, combined with our base
dividend, represents a significant return of capital to
shareholders, with approximately 80% of our second quarter free
cash flow being returned to shareholders. This announcement
accelerates our long-term commitment to return capital to
shareholders under our investment framework. Over the next six
years, we expect to generate in excess of $23 billion of cumulative
free cash flow1 based on current commodity prices, creating a
compelling and durable value proposition for our shareholders."
Financial Highlights
Pioneer maintains a strong balance sheet, with unrestricted cash
on hand at the end of the second quarter of $93 million and net
debt of $6.8 billion. The Company had $2.1 billion of liquidity as
of June 30, 2021, comprised of $93 million of unrestricted cash and
a $2.0 billion unsecured credit facility (undrawn as of June 30,
2021).
During the second quarter, the Company’s drilling, completion
and facilities capital expenditures totaled $883 million. The
Company’s total capital expenditures3, including water
infrastructure, totaled $900 million.
Cash flow from operating activities during the second quarter
was $1.5 billion, leading to free cash flow1 of $616 million for
the second quarter.
The rebound in global oil demand has led to higher commodity
prices, further strengthening Pioneer’s balance sheet and enabling
the Company to accelerate its first variable dividend payment from
the first quarter of 2022. The Company now expects to distribute a
quarterly variable dividend of up to 75% of the prior quarter’s
free cash flow after deducting the base dividend paid during the
quarter2. In light of the improved outlook, the Board of Directors
has declared Pioneer's inaugural variable dividend of $1.51 per
share, or approximately $370 million being returned to
shareholders, representing approximately 75% of the Company’s
second quarter free cash flow after deducting the base dividend
distributed in April. The Company believes this differentiated
return of capital strategy, which combines a base dividend with a
substantial variable dividend, creates significant value for
shareholders2.
Pioneer continues to capture the expected annual synergies from
the acquisition of Parsley Energy Inc. (Parsley) and DoublePoint
Energy (DoublePoint), with expected combined annual synergies
totaling $525 million and a PV-10 of greater than $3 billion over
ten years. The Company is progressing on these synergies, with $160
million of annual interest savings and $115 million of general and
administrative (G&A) savings between Parsley and DoublePoint
being fully realized. The operational synergies related to both
transactions continue to progress and are expected to be fully
realized by year-end 2021.
Financial Results
For the second quarter of 2021, the average realized price for
oil was $64.55 per barrel. The average realized price for natural
gas liquids (NGLs) was $27.95 per barrel, and the average realized
price for gas was $2.69 per thousand cubic feet. These prices
exclude the effects of derivatives.
Production costs, including taxes, averaged $8.18 per barrel of
oil equivalent (BOE). Depreciation, depletion and amortization
(DD&A) expense averaged $11.31 per BOE. Exploration and
abandonment costs were $10 million. G&A expense was $75
million. Interest expense was $41 million. The net cash flow impact
related to purchases and sales of oil and gas, including firm
transportation, was a loss of $40 million, or a loss $53 million
when including the cash flow impact from the Company’s firm
transportation marketing contracts that are accounted for as
derivatives. Other expense was $47 million, or $14 million
excluding unusual items4.
Operations Update
During the second quarter, Pioneer continued to deliver strong
operational efficiency gains that enabled the Company to place 157
horizontal wells on production. Drilling and completion
efficiencies continued to improve, with an increase of greater than
65% drilled feet per day and 75% completed feet per day when
compared to 2017 averages. The Company continues to see benefits of
utilizing simulfrac technology and now plans to run two simulfrac
fleets during the second half of 2021. These efficiency and cost
improvements in drilling and completions continue to benefit the
Company’s overall capital efficiency and dampen inflationary
pressures. Additionally, Pioneer continues to upgrade the acquired
Parsley and DoublePoint facilities to Pioneer's high operational
and environmental standards.
2021 Outlook
The Company expects its 2021 drilling, completions and
facilities capital budget to range between $2.95 billion to $3.25
billion. An additional $100 million and $50 million is budgeted for
integration expenses related to the acquisition of Parsley and
DoublePoint, respectively, resulting in a total 2021 capital
budget3 range of $3.1 billion to $3.4 billion. The Company expects
its capital program to be fully funded from forecasted 2021 cash
flow5 of approximately $6.45 billion.
During 2021, the Company plans to operate an average of 22 to 24
horizontal drilling rigs in the Permian Basin, including a one-rig
average program in the Delaware Basin and a three-rig average
program in the southern Midland Basin joint venture area. The 2021
capital program is expected to place 470 to 510 wells on
production. Pioneer expects 2021 oil production of 351 to 366 MBOPD
and total production of 605 to 631 MBOEPD.
Pioneer's investment framework prioritizes free cash flow
generation and return of capital to shareholders. This capital
allocation strategy is intended to create long-term value by
optimizing the reinvestment of cash flow to accelerate the
Company's free cash flow profile. The Company expects its
reinvestment rate to be between 50% to 60%, generating increased
free cash flow. This investment framework is expected to deliver a
mid-teens total annual return, inclusive of a strong and growing
base dividend, a variable dividend and high-return oil growth of up
to five percent. The Company believes this differentiated strategy
positions Pioneer to be competitive across industries.
The Company’s financial and derivative mark-to-market results
and open derivatives positions are outlined in the attached
schedules.
Third Quarter 2021
Guidance
Third quarter 2021 oil production is forecasted to average
between 380 to 395 MBOPD and total production is expected to
average between 660 to 685 MBOEPD. Production costs are expected to
average $7.25 per BOE to $8.75 per BOE, with the increase primarily
reflecting the impact of higher forecasted commodity prices on
production taxes and gas and NGL processing fees. DD&A expense
is expected to average $10.75 per BOE to $12.75 per BOE. Total
exploration and abandonment expense is forecasted to be $10 million
to $20 million. G&A expense is expected to be $67 million to
$77 million. Interest expense is expected to be $39 million to $44
million. Other expense is forecasted to be $15 million to $30
million. Accretion of discount on asset retirement obligations is
expected to be $2 million to $5 million. The cash flow impact
related to purchases and sales of oil and gas, including firm
transportation, is expected to be a loss of $35 million to $65
million, based on forward oil price estimates for the quarter. The
Company’s effective income tax rate is expected to be between 22%
to 27%. Cash income taxes are expected to be $5 million to $15
million, principally related to forecasted state income taxes.
Environmental, Social & Governance
(ESG)
Pioneer views sustainability as a multidisciplinary focus that
balances economic growth, environmental stewardship and social
responsibility. The Company emphasizes developing natural resources
in a manner that protects surrounding communities and preserves the
environment.
Consistent with Pioneer's sustainable practices, the Company has
incorporated greenhouse gas (GHG) and methane emission intensity
reduction goals into its ESG strategy, with goals to reduce the
Company's GHG emissions intensity by 25% and methane emissions
intensity by 40% by 2030. These emission intensity reduction
targets are aligned with the Task Force on Climate-related
Financial Disclosures criteria for target setting.
In addition, the Company is building on its leadership position
related to minimizing flaring and has formally adopted a goal to
maintain the Company's flaring intensity to less than 1% of natural
gas produced. Pioneer also plans to end routine flaring, as defined
by the World Bank, by 2030 with an aspiration to reach this goal by
2025.
Socially, Pioneer maintains a proactive safety culture, supports
a diverse workforce and inspires teamwork to drive innovation. The
Board of Directors and its committees provide director-level
oversight of these activities. These committees help to promote a
culture of continuous improvement in the Company’s diversity,
equity and inclusion practices, along with the Company’s safety and
environmental practices. Consistent with the high priority placed
on Health, Safety and Environment (HSE) and ESG, the Board of
Directors has increased the executive annual incentive compensation
weighting for these metrics from 10% to 20% for 2021.
In addition to the increased weighting towards HSE and ESG
metrics, Pioneer's executive incentive compensation continues to be
aligned with shareholder interests. Beginning in 2021, return on
capital employed (ROCE) has been included as an incentive
compensation metric, along with cash return on capital invested
(CROCI), which was added in 2020. These metrics have a combined
weighting of 20%, while production and reserves goals previously
included as incentive compensation metrics have been removed.
Pioneer has amended executive equity compensation as well, with
the S&P 500 index being added into the total stockholder return
(TSR) peer group for performance awards beginning in 2021, and for
the second consecutive year, the long-term equity compensation for
the Company’s Chief Executive Officer will be 100% in performance
awards, with 100% of such awards at risk based on performance
relative to the TSR peer group. These updates to Pioneer’s
executive incentive and equity compensation programs demonstrate
the Company’s continuing commitment to aligning total executive
compensation with the interests of our shareholders.
For more details, see Pioneer’s 2020 Sustainability Report at
pxd.com/sustainability. Pioneer’s comprehensive 2021 Sustainability
Report is expected to be published during the third quarter.
Earnings Conference Call
On Tuesday, August 3, 2021, at 9:00 a.m. Central Time, Pioneer
will discuss its financial and operating results for the quarter
ended June 30, 2021, with an accompanying presentation.
Instructions for listening to the call and viewing the accompanying
presentation are shown below.
Internet: www.pxd.com Select
"Investors," then "Earnings & Webcasts" to listen to the
discussion, view the presentation and see other related
material.
Telephone: Dial (888) 204-4368 and enter
confirmation code 6765607 five minutes before the call.
A replay of the webcast will be archived on Pioneer’s website.
This replay will be available through August 30, 2021. Click here
to register for the call-in audio replay and you will receive the
dial-in information.
Pioneer is a large independent oil and gas exploration and
production company, headquartered in Dallas, Texas, with operations
in the United States. For more information, visit www.pxd.com.
Except for historical information contained herein, the
statements in this news release 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; the impact of a widespread outbreak of an illness, such
as the COVID-19 pandemic, on global and U.S. economic activity;
competition; the ability to obtain environmental and other permits
and the timing thereof; the effect of future regulatory or
legislative actions on Pioneer or the industry in which it
operates, including the risk of new restrictions with respect to
development activities; the ability to obtain approvals from third
parties and negotiate agreements with third parties on mutually
acceptable terms; potential liability resulting from pending or
future litigation; the costs and results of drilling and
operations; availability of equipment, services, resources and
personnel required to perform the Company's drilling and operating
activities; access to and availability of transportation,
processing, fractionation, refining, storage and export facilities;
Pioneer's ability to replace reserves, implement its business plans
or complete its development activities as scheduled; the risk that
the Company will not fully or timely realize the expected synergies
and accretion metrics from the Parsley Energy, Inc. and Double
Eagle III Midco 1 LLC acquisitions; access to and cost of capital;
the financial strength of counterparties to Pioneer's credit
facility, investment instruments and derivative contracts and
purchasers of Pioneer's oil, natural gas liquids and gas
production; uncertainties about estimates of reserves,
identification of drilling locations and the ability to add proved
reserves in the future; the Company’s ability to achieve its
emissions reduction and flaring goals; the assumptions underlying
forecasts, including forecasts of production, well costs, capital
expenditures, expenses, rates of return, cash flow and cash flow
from purchases and sales of oil and gas, net of firm transportation
commitments; sources of funding; tax rates; quality of technical
data; environmental and weather risks, including the possible
impacts of climate change; cybersecurity risks; the risks
associated with the ownership and operation of the Company's water
services business and acts of war or terrorism. These and other
risks are described in Pioneer's Annual Report on Form 10-K for the
year ended December 31, 2020, Quarterly Reports on Form 10-Q filed
thereafter and other filings with the United States Securities and
Exchange Commission. In addition, the Company may be subject to
currently unforeseen risks that may have a materially adverse
effect on it. Accordingly, no assurances can be given that the
actual events and results will not be materially different than the
anticipated results described in the forward-looking statements.
Pioneer undertakes no duty to publicly update these statements
except as required by law.
Footnote 1: Free cash flow is a non-GAAP financial measure. As
used by the Company, free cash flow is defined as net cash provided
by operating activities, adjusted for changes in operating assets
and liabilities and cash acquisition transaction costs, less
capital expenditures. See the supplemental schedules for a
reconciliation of second quarter 2021 free cash flow to the
comparable GAAP number. Forecasted free cash flow numbers are
non-GAAP financial measures. Due to their forward-looking nature,
management cannot reliably predict certain of the necessary
components of the most directly comparable forward-looking GAAP
measures, such as working capital changes. Accordingly, Pioneer is
unable to present a quantitative reconciliation of such
forward-looking non-GAAP financial measures to their most directly
comparable forward-looking GAAP financial measures. Amounts
excluded from this non-GAAP measure in future periods could be
significant.
Footnote 2: Future dividends, whether variable or base, are
authorized and determined by the Company's board of directors in
its sole discretion. Decisions regarding the payment of dividends
are subject to a number of considerations at the time, including
without limitation the Company's liquidity and capital resources,
the Company's results of operations and anticipated future results
of operations, the level of cash reserves the Company may establish
to fund future capital expenditures or other needs, and other
factors the board of directors deems relevant. The Company can
provide no assurance that dividends will be authorized or declared
in the future or the amount of any future dividends. Any future
variable dividends, if declared and paid, will by their nature
fluctuate based on the Company’s free cash flow, which will depend
on a number of factors beyond the Company’s control, including
commodities prices.
Footnote 3: Excludes acquisitions, asset retirement obligations,
capitalized interest, geological and geophysical G&A,
information technology and corporate facilities.
Footnote 4: Excludes unusual expenses of (i) $27 million
associated with the DoublePoint acquisition and (ii) $9 million
associated with the Parsley acquisition; offset by a $3 million
gain related to the early extinguishment of DoublePoint senior
notes.
Footnote 5: Estimated cash flow numbers are non-GAAP financial
measures. The 2021 estimated cash flow number represents first half
2021 cash flow (before changes in operating assets and liabilities
and cash acquisition transaction costs) plus July through December
forecasted cash flow (before changes in operating assets and
liabilities) based on strip pricing and utilizing the midpoint of
production guidance. Due to their forward-looking nature,
management cannot reliably predict certain of the necessary
components of the most directly comparable forward-looking GAAP
measures, such as changes in operating assets and liabilities.
Accordingly, Pioneer is unable to present a quantitative
reconciliation of such forward-looking non-GAAP financial measures
to their most directly comparable forward-looking GAAP financial
measures. Amounts excluded from this non-GAAP measure in future
periods could be significant.
Note: Estimates of future results, including cash flow and free
cash flow, are based on the Company’s internal financial model
prepared by management and used to assist in the management of its
business. Pioneer’s financial models are not prepared with a view
to public disclosure or compliance with GAAP, any guidelines of the
SEC or any other body. The financial models reflect numerous
assumptions, in addition to those noted in this news release, with
respect to general business, economic, market and financial
conditions and other matters. These assumptions regarding future
events are difficult, if not impossible to predict, and many are
beyond Pioneer’s control. Accordingly, there can be no assurance
that the assumptions made by management in preparing the financial
models will prove accurate. It is expected that there will be
differences between actual and estimated or modeled results, and
actual results may be materially greater or less than those
contained in the Company’s financial models.
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(in millions)
June 30, 2021
December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
93
$
1,442
Restricted cash
48
59
Accounts receivable, net
1,670
695
Income taxes receivable
1
4
Inventories
350
224
Derivatives
4
5
Investment in affiliate
152
123
Other
41
43
Total current assets
2,359
2,595
Oil and gas properties, using the
successful efforts method of accounting
43,083
24,510
Accumulated depletion, depreciation and
amortization
(11,154
)
(10,071
)
Total oil and gas properties, net
31,929
14,439
Other property and equipment, net
1,731
1,584
Operating lease right-of-use assets
346
197
Goodwill
261
261
Derivatives
2
3
Other assets
156
150
$
36,784
$
19,229
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
2,451
$
1,030
Interest payable
52
35
Income taxes payable
18
4
Current portion of long-term debt
—
140
Derivatives
1,170
234
Operating leases
123
100
Other
459
363
Total current liabilities
4,273
1,906
Long-term debt
6,926
3,160
Derivatives
155
66
Deferred income taxes
1,541
1,366
Operating leases
238
110
Other liabilities
1,013
1,052
Equity
22,638
11,569
$
36,784
$
19,229
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share
data)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Revenues and other income:
Oil and gas
$
2,682
$
600
$
4,505
$
1,695
Sales of purchased commodities
1,587
541
2,828
1,456
Interest and other income (loss), net
(20
)
48
40
(158
)
Derivative gain (loss), net
(832
)
(356
)
(1,523
)
100
Gain on disposition of assets, net
2
6
13
6
3,419
839
5,863
3,099
Costs and expenses:
Oil and gas production
316
167
568
343
Production and ad valorem taxes
153
47
266
120
Depletion, depreciation and
amortization
648
416
1,121
850
Purchased commodities
1,627
572
2,882
1,600
Exploration and abandonments
10
10
29
19
General and administrative
75
60
143
116
Accretion of discount on asset retirement
obligations
2
2
3
5
Interest
41
33
81
60
Other
47
90
351
175
2,919
1,397
5,444
3,288
Income (loss) before income taxes
500
(558
)
419
(189
)
Income tax benefit (provision)
(120
)
109
(109
)
31
Net income (loss) attributable to common
stockholders
$
380
$
(449
)
$
310
$
(158
)
Net income (loss) per share attributable
to common stockholders:
Basic
$
1.62
$
(2.73
)
$
1.39
$
(0.96
)
Diluted
$
1.54
$
(2.73
)
$
1.33
$
(0.96
)
Weighted average shares outstanding:
Basic
234
165
222
165
Diluted
247
165
235
165
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Cash flows from operating activities:
Net income (loss)
$
380
$
(449
)
$
310
$
(158
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depletion, depreciation and
amortization
648
416
1,121
850
Exploration expenses, including dry
holes
—
1
3
3
Deferred income taxes
109
(98
)
91
(20
)
Gain on disposition of assets, net
(2
)
(6
)
(13
)
(6
)
Loss (gain) on early extinguishment of
debt
(3
)
27
2
27
Accretion of discount on asset retirement
obligations
2
2
3
5
Interest expense
7
13
12
18
Derivative-related activity
262
484
632
69
Amortization of stock-based
compensation
17
17
69
33
Investment in affiliate valuation
adjustment
25
(44
)
(29
)
101
South Texas contingent consideration
valuation adjustment
—
1
—
64
South Texas deficiency fee obligation
—
—
—
69
Other
35
36
81
65
Change in operating assets and
liabilities, net of effects of acquisitions:
Accounts receivable
(263
)
(11
)
(593
)
468
Inventories
(12
)
18
(102
)
34
Other assets
7
8
23
26
Accounts payable
295
(29
)
560
(313
)
Interest payable
3
8
(54
)
(27
)
Other liabilities
(44
)
(66
)
(273
)
(154
)
Net cash provided by operating
activities
1,466
328
1,843
1,154
Net cash used in investing activities
(1,694
)
(423
)
(2,042
)
(1,106
)
Net cash used in financing activities
(354
)
(514
)
(1,160
)
(504
)
Net decrease in cash, cash equivalents and
restricted cash
(582
)
(609
)
(1,359
)
(456
)
Cash, cash equivalents and restricted
cash, beginning of period
724
858
1,501
705
Cash, cash equivalents and restricted
cash, end of period
$
142
$
249
$
142
$
249
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUMMARY PRODUCTION,
PRICE AND MARGIN DATA
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Average Daily Sales Volume:
Oil (Bbls)
363,046
214,959
322,258
218,808
Natural gas liquids ("NGLs") (Bbls)
147,135
90,184
126,520
87,271
Gas (Mcf)
715,719
416,516
620,124
412,704
Total (BOE)
629,468
374,563
552,132
374,863
Average Price:
Oil per Bbl
$
64.55
$
23.16
$
61.15
$
34.58
NGLs per Bbl
$
27.95
$
12.65
$
27.10
$
13.55
Gas per Mcf
$
2.69
$
1.15
$
2.83
$
1.38
Total per BOE
$
46.82
$
17.61
$
45.08
$
24.85
Three Months Ended June
30,
Six Months Ended June
30,
Margin Data ($ per BOE):
2021
2020
2021
2020
Average price
$
46.82
$
17.61
$
45.08
$
24.85
Production costs
(5.51
)
(4.92
)
(5.67
)
(5.03
)
Production and ad valorem taxes
(2.67
)
(1.35
)
(2.65
)
(1.76
)
$
38.64
$
11.34
$
36.76
$
18.06
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUPPLEMENTARY
EARNINGS PER SHARE INFORMATION
(in millions)
The Company uses the two-class method of
calculating basic and diluted earnings per share. Under the
two-class method of calculating earnings per share, generally
acceptable accounting principles ("GAAP") provide that share-based
awards with guaranteed dividend or distribution participation
rights qualify as "participating securities" during their vesting
periods. During periods in which the Company realizes net income
attributable to common shareholders, the Company's basic net income
per share attributable to common shareholders is computed as (i)
net income attributable to common stockholders, (ii) less
participating share-based basic earnings (iii) divided by weighted
average basic shares outstanding. The Company's diluted net income
per share attributable to common stockholders is computed as (i)
basic net income attributable to common stockholders, (ii) plus the
reallocation of participating earnings, if any, (iii) plus the
after-tax interest expense associated with the Company's
convertible senior notes that are assumed to be converted into
shares (iv) divided by weighted average diluted shares outstanding.
During periods in which the Company realizes a net loss
attributable to common stockholders, securities or other contracts
to issue common stock would be dilutive to loss per share;
therefore, conversion into common stock is assumed not to occur.
The Company's net income (loss) attributable to common stockholders
is reconciled to basic and diluted net income (loss) attributable
to common stockholders as follows:
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Net income (loss) attributable to common
stockholders
$
380
$
(449
)
$
310
$
(158
)
Participating share-based basic
earnings
(1
)
—
(1
)
—
Basic net income (loss) attributable to
common stockholders
379
(449
)
309
(158
)
Adjustment to after-tax interest expense
to reflect the dilutive impact attributable to convertible senior
notes
1
—
3
—
Diluted net income (loss) attributable to
common stockholders
$
380
$
(449
)
$
312
$
(158
)
Basic weighted average shares
outstanding
234
165
222
165
Contingently issuable stock-based
compensation
1
—
1
—
Convertible senior notes dilution
12
—
12
—
Diluted weighted average shares
outstanding
247
165
235
165
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUPPLEMENTAL
NON-GAAP FINANCIAL MEASURES
(in millions)
EBITDAX and discretionary cash flow
("DCF") (as defined below) are presented herein, and reconciled to
the GAAP measures of net income (loss) and net cash provided by
operating activities, because of their wide acceptance by the
investment community as financial indicators of a company's ability
to internally fund exploration and development activities and to
service or incur debt. The Company also views the non-GAAP measures
of EBITDAX and DCF as useful tools for comparisons of the Company's
financial indicators with those of peer companies that follow the
full cost method of accounting. EBITDAX and DCF should not be
considered as alternatives to net income (loss) or net cash
provided by operating activities, as defined by GAAP.
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Net income (loss)
$
380
$
(449
)
$
310
$
(158
)
Depletion, depreciation and
amortization
648
416
1,121
850
Exploration and abandonments
10
10
29
19
Accretion of discount on asset retirement
obligations
2
2
3
5
Interest expense
41
33
81
60
Income tax provision (benefit)
120
(109
)
109
(31
)
Gain on disposition of assets, net
(2
)
(6
)
(13
)
(6
)
Loss (gain) on early extinguishment of
debt
(3
)
27
2
27
Derivative-related activity
262
484
632
69
Amortization of stock-based
compensation
17
17
36
33
Investment in affiliate valuation
adjustment
25
(44
)
(29
)
101
South Texas contingent consideration
valuation adjustment
—
1
—
64
South Texas deficiency fee obligation
—
—
—
69
Other
35
36
81
65
Parsley acquisition transaction costs
(including stock-based compensation)
9
—
215
—
DoublePoint acquisition transaction
costs
27
—
27
—
EBITDAX before acquisition transaction
costs
1,571
418
2,604
1,167
Acquisition transaction costs (excluding
stock-based compensation)
(36
)
—
(209
)
—
EBITDAX (a)
1,535
418
2,395
1,167
Cash interest expense
(34
)
(20
)
(69
)
(42
)
Current income tax (provision) benefit
(11
)
11
(18
)
11
Discretionary cash flow (b)
1,490
409
2,308
1,136
Cash exploration expense
(10
)
(9
)
(26
)
(16
)
Changes in operating assets and
liabilities
(14
)
(72
)
(439
)
34
Net cash provided by operating
activities
$
1,466
$
328
$
1,843
$
1,154
_____________
(a)
"EBITDAX" represents earnings before
depletion, depreciation and amortization expense; exploration and
abandonments; accretion of discount on asset retirement
obligations; interest expense; income taxes; net gain on the
disposition of assets; gain or loss on early extinguishment of
debt; noncash derivative related activity; amortization of
stock-based compensation; noncash valuation adjustments on
investments, contingent consideration and deficiency fee
obligations; and other noncash items.
(b)
Discretionary cash flow equals cash flows
from operating activities before changes in operating assets and
liabilities and cash exploration expense.
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUPPLEMENTAL
NON-GAAP FINANCIAL MEASURES (continued)
(in millions, except per share
data)
Adjusted income attributable to common
stockholders excluding noncash mark-to-market ("MTM") adjustments
and unusual items are presented in this earnings release and
reconciled to the Company's net income attributable to common
stockholders (determined in accordance with GAAP), as the Company
believes these non-GAAP financial measures reflect an additional
way of viewing aspects of the Company's business that, when viewed
together with its GAAP financial results, provide a more complete
understanding of factors and trends affecting its historical
financial performance and future operating results, greater
transparency of underlying trends and greater comparability of
results across periods. In addition, management believes that these
non-GAAP financial measures may enhance investors' ability to
assess the Company's historical and future financial performance.
These non-GAAP financial measures are not intended to be a
substitute for the comparable GAAP financial measure and should be
read only in conjunction with the Company's consolidated financial
statements prepared in accordance with GAAP. Noncash MTM
adjustments and unusual items may recur in future periods; however,
the amount and frequency can vary significantly from period to
period. The Company's net income attributable to common
stockholders as determined in accordance with GAAP is reconciled to
income adjusted for noncash MTM adjustments, including (i) the
Company's derivative positions and (ii) the Company's equity
investment in ProPetro Holding Corp. ("ProPetro"), and unusual
items is as follows:
Three Months Ended June 30,
2021
Ref
After-tax
Amounts
Per Diluted
Share
Net income attributable to common
stockholders
$
380
$
1.54
Noncash MTM adjustments:
Derivative loss ($262 MM pretax)
204
0.83
ProPetro stock loss ($25 MM pretax)
19
0.08
Adjusted income excluding noncash MTM
adjustments
603
2.45
Unusual items:
DoublePoint transaction costs ($27 MM
pretax)
(a)
21
0.09
Parsley transaction costs ($9 MM
pretax)
(b)
7
0.02
Gain on early extinguishment of debt ($3
MM pretax)
(c)
(2
)
(0.01
)
Adjusted income excluding noncash MTM
adjustments and unusual items
$
629
$
2.55
_____________
(a)
Represents transaction costs associated
with the DoublePoint acquisition.
(b)
Represents costs associated with the
integration of Parsley.
(c)
Represents a gain attributable to the
early extinguishment of DoublePoint senior notes.
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUPPLEMENTAL
NON-GAAP FINANCIAL MEASURES (continued)
(in millions)
Free cash flow ("FCF") is a non-GAAP
financial measure. As used by the Company, FCF is defined as net
cash provided by operating activities, adjusted for changes in
operating assets and liabilities and acquisition transaction costs
(excluding stock-based compensation), less capital expenditures.
The Company believes this non-GAAP measure is a financial indicator
of the Company’s ability to internally fund acquisitions, debt
maturities, dividends and share repurchases after capital
expenditures.
Three Months Ended June 30,
2021
Six Months Ended June 30,
2021
Net cash provided by operating
activities
$
1,466
$
1,843
Changes in operating assets and
liabilities
14
439
Acquisition transaction costs (excluding
stock-based compensation)
36
209
Less: Capital expenditures (a)
(900
)
(1,504
)
Free cash flow
$
616
$
987
_____________
(a)
Capital expenditures are calculated as
follows:
Three Months Ended June 30,
2021
Six Months Ended June 30,
2021
Costs incurred
$
7,232
$
18,587
Less: Excluded items (a)
(6,349
)
(17,114
)
Plus: Other property, plant and equipment
capital (b)
17
31
Capital expenditures
$
900
$
1,504
_____________
(a)
Comprised of proved and unproved
acquisition costs, asset retirement obligations and geological and
geophysical general and administrative costs for the three and six
months ended June 30, 2021.
(b)
Includes other property plant and
equipment additions related to water infrastructure and
vehicles.
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUPPLEMENTAL
INFORMATION
Open Commodity Derivative
Positions as of July 30, 2021
(Volumes are average daily
amounts)
2021
Year Ending December 31,
2022
Third Quarter
Fourth Quarter
Average daily oil production associated
with derivatives (Bbl):
Brent swap contracts:
Volume
17,000
17,000
—
Price
$
44.45
$
44.45
$
—
MEH swap contracts:
Volume
43,000
43,000
2,055
Price
$
40.52
$
40.52
$
42.80
Midland WTI swap contracts:
Volume
5,000
5,000
—
Price
$
40.50
$
40.50
$
—
NYMEX WTI swap contracts:
Volume
15,000
15,000
—
Price
$
52.85
$
52.85
$
—
NYMEX rollfactor swap
contracts:
Volume
35,000
35,000
—
Price
$
0.17
$
0.17
$
—
Midland WTI basis swap
contracts:
Volume
37,000
37,000
26,000
Price
$
0.89
$
0.89
$
0.50
Brent call contracts sold:
Volume (a)
20,000
20,000
—
Price
$
69.74
$
69.74
$
—
Brent collar contracts:
Volume
—
—
10,000
Price:
Ceiling
$
—
$
—
$
60.32
Floor
$
—
$
—
$
50.00
NYMEX WTI collar contracts:
Volume
16,000
6,000
—
Price:
Ceiling
$
64.66
$
55.54
$
—
Floor
$
56.25
$
50.00
$
—
Brent collar contracts with short
puts:
Volume
110,000
90,000
67,000
Price:
Ceiling
$
54.46
$
50.74
$
66.02
Floor
$
47.82
$
45.11
$
52.39
Short put
$
36.87
$
35.07
$
39.25
MEH collar contracts with short
puts:
Volume
9,446
9,446
—
Price:
Ceiling
$
51.29
$
51.29
$
—
Floor
$
41.55
$
41.55
$
—
Short put
$
31.55
$
31.55
$
—
NYMEX WTI collar contracts with short
puts:
Volume
—
—
12,000
Price:
Ceiling
$
—
$
—
$
65.86
Floor
$
—
$
—
$
52.50
Short put
$
—
$
—
$
40.00
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUPPLEMENTAL
INFORMATION (continued)
2021
Year Ending December 31,
2022
Third Quarter
Fourth Quarter
Average daily gas production associated
with derivatives (MMBtu):
NYMEX swap contracts:
Volume
60,000
160,000
—
Price
$
2.95
$
3.63
$
—
Dutch TTF swap contracts:
Volume
30,000
30,000
30,000
Price
$
5.07
$
5.07
$
8.87
WAHA swap contracts:
Volume
116,304
116,304
4,932
Price
$
2.36
$
2.36
$
2.46
NYMEX collar contracts:
Volume
247,000
247,000
1,726
Price:
Ceiling
$
3.19
$
3.20
$
3.45
Floor
$
2.60
$
2.60
$
2.75
NYMEX collar contracts with short
puts:
Volume
—
—
100,000
Price:
Ceiling
$
—
$
—
$
4.00
Floor
$
—
$
—
$
3.20
Short put
$
—
$
—
$
2.50
Basis swap contracts:
Permian Basin index swap volume (b)
7,000
7,000
1,726
Price differential
$
(0.39
)
$
(0.39
)
$
(0.39
)
_____________
(a)
The referenced call contracts were sold in
exchange for higher ceiling prices on certain 2020 collar
contracts.
(b)
The referenced basis swap contracts fix
the basis differentials between the index price at which the
Company sells a portion of its Permian Basin gas and the NYMEX
index price used in swap contracts.
Marketing derivatives. The Company's marketing derivatives
reflect two long-term marketing contracts that were entered in
October 2019. Under the contract terms, beginning on January 1,
2021, the Company agreed to purchase and simultaneously sell 50
thousand barrels of oil per day at an oil terminal in Midland,
Texas for a six-year term that ends on December 31, 2026. The price
the Company pays to purchase the oil volumes under the purchase
contract is based on a Midland WTI price and the price the Company
receives for the oil volumes sold is a weighted average sales price
that a non-affiliated counterparty receives for selling oil through
their Gulf Coast storage and export facility at prices that are
highly correlated with Brent oil prices during the same month of
the purchase.
PIONEER NATURAL RESOURCES
COMPANY
UNAUDITED SUPPLEMENTAL
INFORMATION (continued)
Derivative Gain (Loss),
Net
(in millions)
Three Months Ended June 30,
2021
Six Months Ended June 30,
2021
Noncash changes in fair value:
Oil derivative loss, net
$
(203
)
$
(552
)
Gas derivative loss, net
(76
)
(77
)
Marketing derivative gain (loss), net
17
(3
)
Total noncash derivative loss, net
(262
)
(632
)
Net cash payments on settled derivative
instruments:
Oil derivative payments (a)
(548
)
(854
)
Gas derivative payments (b)
(9
)
(17
)
Marketing derivative payments
(13
)
(20
)
Total cash payments on settled derivative
instruments, net
(570
)
(891
)
Total derivative loss, net
$
(832
)
$
(1,523
)
_____________
(a)
Includes the effect of liquidating certain
of the Company's 2022 WTI swap contracts for cash payments of $13
million during the six months ended June 30, 2021.
(b)
Includes the effect of liquidating certain
of the Company's 2021 NYMEX swap contracts for cash receipts of
$447 thousand during the six months ended June 30, 2021.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210802005715/en/
Pioneer Natural Resources Company Contacts:
Investors Neal Shah - 972-969-3900 Tom Fitter - 972-969-1821
Greg Wright - 972-969-1770
Media and Public Affairs Tadd Owens - 972-969-5760
Pioneer Natural Resources (NYSE:PXD)
Historical Stock Chart
From Mar 2024 to Apr 2024
Pioneer Natural Resources (NYSE:PXD)
Historical Stock Chart
From Apr 2023 to Apr 2024