PXD - Earnings call transcript Q4 2018 | Pioneer Natural Resources Co.

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Operator

Welcome to Pioneer Natural Resources, Fourth Quarter Conference Call.

Joining us today will be Tim Dove, President and Chief Executive Officer; Rich Dealy, Executive Vice President and Chief Financial Officer; J.D. Hall, Executive Vice President at Permian Operations; and Neal Shah, Vice President of Investor Relations. Pioneer has prepared PowerPoint slides to supplement their comments today. These slides can be accessed over the internet at www.pxd.com. to slides site call to internet www.pxd.com. is the access related the today's Again, select select Investors, website, the At then Earnings Webcasts. and is call being This recorded. Internet the archived XXXX. A will site the of XX, through replay March call on be company's the Harbor Reform to Act The made XXXX. Securities the Safe today forward-looking Provisions will statements comments pursuant Private of of Litigation include materially may statements from periods of risks number and to subject a future statements. the These forward-looking in uncertainties the business cause that are to results prospects differ of Pioneer actual and uncertainties risks release, made Commission. These Pioneer's presentation, in on Exchange page are filings and described and Pioneer's X with public slide and news the Securities of the in At call Shah. this to remarks, Pioneer's like Relations, would turn over Neal time, the for Vice opening I to President, Investor ahead, go sir. Please

Neal Shah

Anna. for everyone, you, Good you us. thank and joining morning, Thank

me differentiate from including performance agenda with then review first. social commitments benefits Thank discuss we and our on strong our will will for today's Coast in Further, brief your financial discuss will you. the the will call from receiving. and and oil horizontal Gulf remarks, his Tim to our Basin, production a of and open move results. recap that, solid the Rich many review we After best-in-class the questions. Midland will are Joey will the XXXX oil strong our transportation commitment update He to our governance will commentary. environmental Joey, return and well specifically then up you call. principles. firm Pioneer After to Tim the our be strong XXXX operational our that results peers. up our Tim concludes outlook, Permian briefly Let for factors

Tim. it So over that with turn I'll to

Tim Dove

large the We're efficient more you, our for results Thank talk in very and and as we our focus to an year outlook. Permian about good chance that's efforts we capital development XXXX XXX% better of to even strong forward XXXX XXXX plan. and our year everyone. company a look our excited to was a morning, on have XXXX Neal,

that If directly you That's That's the of wells significantly a an delivered in bottom a in we ROCE XXXX. to in have sign of slide from the at we X% P&L. look take for level had margins digits about high-return not hedges fourth we clearly eventually year the that X%. up had line. the hit quarter, high-return been Actually we went which the double liquidated would X,

Cash on Pioneer basis. flow in fourth export is of all up and XXXX. year oil some in flow the firm deliver in XX% cash quarter that -- to realized million $XXX priced delivered divesting cash Brent-related the course, this transportation is Pumping particular particularly is Permian being key a Basin, not assets important the that long-term Coast in steps by phenomenal coming benefit for year and fantastically actually Gulf XXXX, uplift, increased billion $X.X oil volumes ability flow to the And the contracts noncore Services. were in our which took for and Our almost about FT our We that the taking. on from very

first As our Eagle shortly sand the Ford Brady on all the to of already also we're work that will sale. been be in you completed in process of mine here have advised, the asset continue de-commissioning And very we quarter.

as last XXX% eightfold at shareholders two goals, $X months, increase as to our our of attractive prices repurchased yesterday years, in doubled I Again, continues last and over expand an about December amounts might we in two the we that to to now add. the $XXX our increase. billion That a about over dividend. main Our return million put as place we of part of capital authorization

XXXX to will XXXX, while XXXX in it to in time decrease plan comes that we compared the XX% can XX% in point production. a increase at Finally, took the same CapEx a our steps about to we really significant sense the be XXXX in when delivering important strong

XXXX of excited can capital So, show when about holds kind gains. that what efficiency we we're very

slide turn Let's three. now to

Very in to expenses. where was just success fourth which again the was the it's quarter, billion per then $X.X efficiency that. and showed course we guidance think important quarter. achieved almost that with focus of $XXX I that operating ended sorry, in the therefore, And end the FT, quarter. about with XXXX reductions day. in up Oil We production fourth BOPD first the have even Of toward mentioned. And world was did of a the to I build quarter the of a to production good addition quite million an today's in reduction on forward the in for commodities fourth Permian of our XXXX important, guidance. heavy better capital LOE lease as Permian to look improvement the quarter in and on XXX,XXX in the at we fourth shown Permian top top range, end BOE had the

balance our there, was metrics significantly And in was amount year-end. retain in debt in still versus up very XXXX. XXXX mentioned, are one that XXXX. the strong at cash debt the quarter fourth industry. Again, already of we As shown significant of our the metrics about XX% sheets flow And a strongest versus

can cost Turning on four. strong returns cycle. slide supply low the margin we refers that is through high to our This our really generate of and very wells based to

our And and those allow so cash us our XX% continue of operating. flow. or receiving So, will barrels it our Brent-related margins pricing, cycles expand with increase further

in chart, this $XX achieve production on structure interest rates per full cost adding it's is probably of also taxes, has the future on case and And see expense the $XXs can well return that bodes but our and here, drilling F&D, for horizontal even production wells putting the helped, can why the company. cost the about low breakeven base cost developed if XXXX resource Basin, and successful Brent-related proved G&A barrel. lowest is large industry. as the build we're for in WTI. that from Permian certainly higher for and actuals And we for these basin it the at a in we this That's we have therefore, on look pricing You

slightly Turning achieving production now be XX% XXXX is strong going capital CapEx I've of be that points which again that, compared mentioned this capital to million also five. despite about to our be already efficiency to will slide XXX to to range about all we'll material to POPs. while We're We're the a rigs. $XXX about to averaging year Activity efficiency. in And reduction a year. of to capital reducing about last XX be showing XX%, XXX going higher XX about the growth our mid-point year.

X D. on well prices, changes. which for and about easily of the $XXX With generate and cash completions C, and very mix heavily oil sensitive million Wolfcamp $X.X WTI or Cash oil change you that skewed A Slide drilling price of based that can flow. effort You addition pay facilities is to in tests is towards case see is When in still compare B. currently $XX F D, Spraberry, additional and the CapEx, additional to pretty cash XXXX our we a $X billion. that some flow our is the in increasing our Wolfcamp approximately of to on a course, case $XX Brent cash enough budget that flow to

The sand to efficiency. efficiency of when year course, indicates Xst. initiatives messages it rate of the then it to And we Turning capital and of related of are drivers main of growth XXXX, the improving in announced list some of show or for our with XX% the those all It's sort are X, done benefits. West was contractual Slide divestiture we when that ProPetro. capital such will it's sky December point XX% part out supply really that we or it's to in arrangements pie January to wish significant capital effective under the whether time That on that can in to one not a of ProPetro based quarter. achieved essentially reduction the these transforming comes arrangements today. midst last very to the is then point on we XXst, so second at that PPS are completed And, cost whether the -- is These end are contract. becomes all And sand in important our are be cost Texas of all at early really and sand the completed the benefits. of

readily that. And like based so these I are achievable feel on

in They savings runs tremendous with be could gives They're run level them cost had smaller they as very well. their market able the of much per efficiencies run to neighborhood that being excellent at spread as because and over pressure ProPetro and fleets. costs fixed It's than from and of a example more that lean. standpoint efficiently top company organization great simply operation. we $XXX,XXX the For and done it an share our pumping the a

at going it's beneficial that think to to both so be you I And ProPetro effort we this put with in arrange the contract when place to look companies.

our that saves it the similar simplify has designs. XXX also well, to sands we've from the this well is another the what cost using CapEx completion course. mesh also impact is by that benefit can all heavier on that and sand structure we And But a you it which need that cost per surfactant which have been into we go to And amount sand is to amount $XXX,XXX will going A will and sense the reduce the another when by we us addition In can $XXX,XXX. of reduce XXX in means them. $XXX,XXX is of on own well. gel the mesh if otherwise fleets gets probably big to of

a of than these on it's anything again, sand the So, else. wells more change product out

averaged for the see high on addition the year of us continue our benefit we've the the out which of to in some XXXX infrastructure. coming also we're inflation XXXX. and completions very year. see starting whole been drilling In to And all We of over potential during when water do benefits efficiencies

period in focused in inflation stream rate to of a in X% new year. call half baking about and point. inflation. with of at lead could we'll might half be to would of therefore it coming think a I the for second We're ramp the this minimal on opportunities increased be connection space I pipeline on second weighted the activity as people up terms But mostly

X, combination all of with enhancing value. the here. decrease shareholder year want we're it material bodes an growth drive And strong efficient talk five really turning spending, think, little bit I utilizing principles to production pillars focus capital that and in five a about these robust or of increasingly program to efficiency. And for So, will on the that I the slide to capital a here well

on returns. because wells that our wells. per the focusing is improving Joey we the strong on are course returns numbers I've already and the slide, the The that that's talk increase continue EUR very mentioned as of we first cost down drive will in more this about ROCE these well. and to subsequent are

of gives we of the on steps moving our that we've vis-à-vis, sheet, focus trying strongest the is company us on the time balance course, the the have in we generating shareholders. flexibility capital increase all yesterday lot are and taken fact energy focus recently strong a and well aspect where to it considerably the One cash One return to the dividend as very of that a December the achieve, at is to The that's of flow, of going major a things forward. same we're perhaps patch free growing show capital financial as in capital and is discipline.

subsequent use high-return benefits, want wells accomplish in our course, us we're address is our do is these on pathway some details that long-term tremendous more low-risk actually a growth. the a that of to wells, We'll each in inventory, what five some inventory I few of organic of runway One next give And to or how to of going slides. slides.

low-cost of And at you the benefits let's we that the look first focus ROCE, slide Number X. have returns there's that effectively. is reasons of returns can see is focus that's because that very here. was ROCE in a above see the in we put of on generating assets, we're have when to you what done are acreage due XXXXs on fact one couple Pioneer can terms being high corporate few in one, acreage -- low-cost for on average the our of slide is, case together peer idea the really you which XXXX. X the that on acquisitions. that So that And We've

peers on have up an many acre. the of can graph some look very in the our almost them acquisitions, engaged right, of at see If you you to $XX,XXX expensive

our sheet on bases $XXX acreage is average the an balance acre. for Our

is you're see across to a well amortize going the you to cost a we for that that bottom can is what $XX,XXX locations, unproved that at So acreage amortize well. if the well

of look shown going you're you the $X.X right, here, the acquisitions amortizing If at the again on the million per most location. expensive to acquisition XXth be

going And going to years that so growth us support in our our return basis And advantage. it's to low-cost use an able a unlike low-cost advantage give advantage that to been forward. to which the at we've fact addition The us returns. bases continue to generating many give of tremendous corporate level. a peers, That's going as higher can

give companies this WTI waterfall us presentation to to would on it discipline we've on be the $XX, you to that see ranges got other $XX us One growth other as essentially if or you course that which would do about now $X.X repurchases about of options, you and flow of were that sheet yesterday; actually well generate XX $XX about that two of we the be to it those allows above Going that and does second to above the XXXX. a capital. to increase We of to whether balance what The also lot a is left case on oil. in at But flexibility is have whole get for some is extent We've sort slide you case, dividend, our opportunities cash lot investments flexibility. Slide we've growth It things. of this. growth, done other $XX like the one's basis sufficient at on, capital have cover our similar prices talking of This the as case. based This it's maintenance a you. shown that financial five utilizing we're see and focusing which production or is which topic. it share a the just be price of different look we is billion. chart what return can a the When chart, our topics. answer on see CapEx building X lot additional have and operating of focused then a next is, a

main capital ours. the mentioned, shareholders. of we've to substantial already As increase a I've had in return of a It's mantra

million was dividend the in quarter we authorization. eight the first is as XXXX. $X I Our what And it also of times repurchased of said over billion $XXX

and the is turning year shareholders combining generated a a this to return slide. This far So about X.X%, dividends also sheet-related Slide X% the XXXX. with -- to roughly and XX. the we've of And in buybacks, this balance combined share

relative the cap. sits in You can in its measures debt-to-market this debt-to-EBITDA see company terms on of case the of axis and where debt, vertical

investments balance have under billion basically the the the any see -- debt in $X among strongest the are amount on it gives industry. substantial made. just Net then we reflecting at decisions of You of of can us to next that basically And measure under $X.X sheets the forward and a year-end cash billion. flexibility largest industry to of hand financial even relates companies set in of as lots be going course

to of unmatched of have continue year of slide really over And is the our another year footprint, continuity. in have what amounts year they so. repeatability to scale, an fact over talks XX slide, Now our do terms in as wells program. and We about the unmatched improved terms

see, phenomenal see can we're that drilled. XXXX, productivity the we've all top the this able been do to this terms able and that that. where increases many years is wells of on on do still is which in to graph right. Again You the you

Of we course it a with have that has tremendous to do data fact the set.

to Of course horizontal years XXXX we we've and XXXX drilled now some the or drilled wells wells. vertical over plus XXXX had XXXX

using learning. with and way complete all appraisals. allows to That's the that of to wells We that and any have company of evaluations wells data to the us data including set these develop machine proprietary set the kinds and largest best do

methodical to the it's appraisal. really year So a that. year after resource keys to to us. it's increase been to And us allowed the approach available That's

that over operational performance So formula actually efficiency is increasing going What on contiguous now per up some to forward. recent it do and the gives efficiencies an well going of EURs I'm match to a significant on And for you that's an lot we're update with when going that. Joey you he's again, pass acreage update very to and we a realize capital of bit and well improvement you It's do cost a a and results. to related as have a also give you of so. to result

J.D. Hall

Thanks which margins. where deliver Slide XX Tim message, ability morning and two good be speak going strong to to out our on we starting want I'm main to deliver sustainably everybody. of both to

right-hand On Permian to production that to margins. has left-hand Again Pioneer in ability side, our in of can side combine speak the production this Basin. oil can Pioneer importance, XXXX the the and that the generate course is percentage on basis and our then the And ability robust leader consistently margins of to And these since equal deliver two cumulative highest see a and in Permian. deliver oil facts gross you in you strong to the see returns. our strong the on is foundation

Martin Stackberry and first Last from Midland test Central updated to our Slide County. second Stackberry in results I'm going you we our Now XX. Western in similar County. quarter, test encouraging be turning on to Very

outperforming that by are area wells pad eight Here project. on drilled in and about one completed XX%. had wells same previously drilled this Wells we as Spraberry

it our But our more ability completion in also strong well speaks importantly, large-scale and to performance full in to implement our XXXX. development to Of results strategies. our advancements course I believe mode. These deliver speaks more drive strategy to this projects

We for and in Wolfcamp pad the production Glasscock it test in is continuing These XX-hour early we on XXXX weeks with day in of D, be the these And another time QX a appraisal County. have very on mix. wells our in work we'll two D over wells course IP but success Martin County few BOEs per oil showing will call. up. online continued with Western been in D XXXX. be cleaning we performance online the average We've our also have third a Wolfcamp reporting X-well And only on Stackberry and XX% our that POP’d Wolfcamp strong

shifting XX. slide Now to

Here to These to highlight planning see our Completion want resulting will larger In we XX% cost thoughtful pads XX% in sustainable commitment to that and wells or reduce XXXX XXXX. of our course gains. of will be to four and help us due unit only compared approximately pads larger efficiency Drilling you practices. the

other effluent cost the of capital. supplied freshwater of our and overall use our our of supply. and usage And infrastructure with being this Midland our to completion leverage of with Combine about to our XXXX, We significantly water reduce XX% our water. stay end will cities of our on that facilities development down we're centralized allow automated and needs All recycling. we the XXXX the going we through from needs evolve while XX% using of supplied freshwater. decreasing our to and also were these us future remain XX% by about to positions things continue committed of year for recycled this reduce combined At and to through journey drive be of in Odessa water and to us sources end the plan that current

safe, important absolutely to message be sustainable slide very to operations. Now Pioneer and XX, just moving really responsible but committed a here. is I'll simple

Pioneer insight that from XXXX could sustainability news these these and to to direct the our we the the operate outlined we'll of is responsibly that practices running to you want just highlight and read great practices. go As for into you And practices previous sustainable some here report taking measures at take great proactive opportunity is, we the hand-in-hand where to operations. we're some just of with see slide, efficient that

going And it I'm so to with to Rich. pass that off

Rich Dealy

good has to Thanks morning. entering very of at where long-term and impact XX returns has to into planning and margins oil had The to the on going pricing in Joey both of this cover a ability Brent-related I'm the XXXX. Gulf slide been move benefits our that positive oil arrangements to can one Coast. firm you transportation sell see

to moved For which instance oil fourth during Coast quarter, had about per our effect margins the oil the our the by barrel. we $X Gulf over XX% increasing of of

the see of was on improved barrel over per was where $XX of Midland the our about as slide our upper by per price of $X pricing year price the including versus benefit For realized you left margin $XX, corner barrel. can the the market Brent-related

for on If fourth cash perspective, in you an sales or these put incremental year. $XXX added quarter this million the the a million flow $XXX

fourth the going of we which day were quarter barrels -- those Asia. of During and XX% Gulf Europe about transported barrels internationally about Coast about with to of to XX% a XX% exported to those XXX,XXX the barrels

do of volumes million oil barrel. Brent and again, uplift to get production And million price returns. quarter Once margins barrels to we the X January starting $X of day. per are Midland $XXX first between $XX forecasting Brent-related pricing, and importantly, most transport improving and XXX,XXX transportation approximately for on Our $X firm a quarter pricing to that based you pricing us a see differentials is most can on or to really forecasted the increase allowing our

that, for with I'm So comments. back to kick closing it Tim going few to a

Tim Dove

are towards there And I to a drive are, I do tremendous And our drive at on of and five be as got high-return a on Rich, we've going call. we focus we as results five aspect same basis we're in Q&A referred or to Thanks, the on again, want and we wells. everybody company the appreciate returns that minute. I want heavily key to fact to that course, well the that and are focus on going to the growing. just advantage I focused the cash they everyone very low-cost have here push really model, that earlier, what with pillars turn of flow-generative and a performance. acreage being fact this. free But, think to again, to We're And time

keep with Return I And we're to capital way, want that. because market as I today. are balance good you be to model, as going would shareholders have the low think industry certainly one think to never plan those continue showing repeat leverage, on that's the the to and with we happen together. responsive commodity coupled increase to in We the think that that outcome a know We of the the and finally, to in sheet well. be this. And to when we what's can able I position that's that with important it already be deal us, to prices. continue forward and best going to any balance sheets we're have to plan right

we And many a do growth of next quite what's going to some inventory wells really without years. our have We large over from to need And drill going our acquisitions. it's this returns essentially to And basically acquisitions grow. and goals. in to best of these And from the there proceed the way is the I to bit. occur preserves of drill And low-cost large don't basis standpoint happen, growth that's like think that acreage. the of the all peers organic then to

excited gain be it's as we're capital which efficiency, a So to XXXX. from in our going something focused presentation, year very And can very on. about is which we we're heavily tell substantially you in

So over Q&A. going Anna, and going there it kick to I'm stop to to we're

Operator

of question you. Doug take We Lynch. Thank now Merrill from Instructions] with will Bank sir. Yes, a [Operator Leggate America

Doug Leggate

Tim, morning, Thank to new the update the everybody. can I congratulate team deck. format. tremendous I a love on you. Good IR the presentation

Tim Dove

good. Yes. So PXD Doug, it's look, all new okay? The

Doug Leggate

All right.

looking So if was we I talking, first questions undervalued. is were obviously chart. got may. your But you the Tim, just I philosophically of that, believe I've tremendously and with two share while at price all

is today price pretty XXXX. share was where it Your much March in

Your in has production time frame. doubled that

than Your growth, I'm is a is, net it And debt and lot paying isn't flat price point flow. free buyback model. just still your for not with oil at the then. pretty back considered, curious, higher Have My you is of clearly the announcement, looking market you're punchy actually business organic the cash why, and really the shares that the the debt in point, right and share be to their slow if to more was growth have buying opposed at the today, in absolute hard reaction? at share to market look case per adjusted back aggressively, as looking for model might a not share growth down but marathon given pay growth seems price

Tim Dove

years, think, this terms the compared I two been if the down percentages. Doug, to are we've first of growth, all, slowing well at prior we Well, you look year into XXs in of growth

down. We this have moved

to But range wasn't that be go dividend we wouldn't and based a want we $X that look we future, now the much moment's billion Obviously, of can subject you I within think It's on mean, return dividends at activity if forward. still go shareholders our increases have we steps if to a at execute a have further. But capital on. think, evaluate business we fundamentally, I range I XX%. to announcements case. to significant plan to notice. we model I ratchet which which taken repurchase have a believe share on the basically have our further increase as will yesterday, in We centers we've how and

I even get will considering room peers which that before would what be some of some up We to have be that our near we we respect.

along So, those lines. I move to think answer room the there's forward is

Doug Leggate

guess your price of the right should your point share flow, clarification. a Rich the buying free sheet balance strength at of your of words, debt-to-EBITDA In a think expect as to buyback just share where out balance think but way about program, is, out I guess the little probably, The more back take advantage I of level it? when or exploit not of given you for weakness look one the but other and Okay. this to sheet, we about shares essentially. price to is coverage you if balance of that cash sheet not is I

Rich Dealy

Yeah. keep predicated of balance to today was we're on to sheet when to a the like going When, we mean, just have repurchase stock us balance if where debt-to-EBITDA sheet done type the we're industry we buyback we've appropriate share be. the in past, our the program, knowing that valuation our volatile take debt company And But at going it metrics we to than manage less leverage I that we think obviously, advantage to allows given think when point clearly approved live in was time. it's low I in in. one-time aggressively levels. the need those of great that

Doug Leggate

Okay.

Tim Dove

only at track the increases generate that we it's actually is incremental add actually if our that cash capital that regarding would look or I cash to dividend outcome. ultimate decide excess above Yeah, can a to model, from such We're needs. you what share on that, repurchases exact

Rich Dealy

And it’s definitely a long-term goal.

Doug Leggate

thanks to an I know it’s guys. to let all taking I to easy not Tim, someone else it. I’ll question Thanks. for on. don’t the want answer so hold it. questions, jump Appreciate

Operator

Arun next JPMorgan. our Jayaram from take now We'll question from

Arun Jayaram

cost in I D&C today has has puck Yeah, terms good think the higher in focus been XXXX. been Tim, the where morning. of

cost. suggests is D&C going where lower towards much the outlook Your is puck

investors what can in happened meet wondering million of give number kind do confidence this CapEx you you given to $X.X have, Just you $X.X kind XXXX? billion that of can what morning this

Tim Dove

XXXX, on little high comment I capital. on me come we in let because first, did bit know Yeah, a

more as our were very expenses year. mean, for the the efficient. a efficiencies, one that of run land-related was going good so, result rate strange quarter which is is fact means and reasons And we that's that. as got expenses to construction efficient increases had that we first we terms we fourth from capital of some also I POPs conundrum, our end in primary, a were what half to that drilling I the this year and but projects done the primary a and in the gas the said of other be prices thing. mean, so hit and of And completions the

say things the What we the run are behind that you I would have is about when rates. us current look essentially XXXX, the contractual. simply so, those And from that, basically stuff standpoint at all of

contracted We have the sand.

the pumping. We contracted pressure have

specific have in every price case. books We

that I a various you year surfactant using that and entire we And as we're cost because also as consider so point result, other savings gel then efficiencies to last as and mentioned bringing well have specific the ended regarding reductions. can occur We and of a on. those sand year, bear the have when efficiencies as finer result to throughout earlier then we

cost not reduction is and this guess so point. main I This is pie-in-the-sky said plan. I a contractual the And as

Arun Jayaram

Great.

and XXX Just wondering South different to on of XXX and here. POPs, kind between mix the intervals. the could a just follow-up program. follow-up little some the XXXX if North provide on details a you And

XXX the sand the switch productivity in is As to given a that you cost design? simplified Tim, to versus changes mesh completion gel, there perceive you lower terms well any more of

Tim Dove

Yes.

finer were the -- very in result, that take seen There not as question to produced is last the difference lower what savings. of we've reason no the the advantage I there's results. cost actually a mesh And has sands no results. strong think On

more in North, can of will we've neighborhood the Now, kind translate look rigs. watching I at after our South POPs. we're that, the on rigs in we data. well, the be of essentially We'll five be in probably quarters you pure that said data, only rigs, balance not watching I the your I multiple believe the but and now like On proved can but over continually but question -- been to already

Operator

have anything you further? Do

Arun Jayaram

No.

Operator

you. Bob Morris Thank We'll with question take from Citi. our great. now next Okay,

Bob Morris

nice to initiatives the here. Tim, cost the you. see reductions on well Thank

or the the XXXX, in going cost much here any to further well will achieved? initiatives out are to pretty As works reduce further there forward look it you all be

Tim Dove

day on the trying of And Every cost the reduce But some you Joey, other Bob. Joey, chunks to things. major comment. out – the comment some day initiatives? we're these we've might well taken Every you of why want to other there's don't year. are

J.D. Hall

are by realities Yes, XX% XXXX translate an Bob. we by that This numbers drilling effective capital-efficient those advantage and the we most but XXXX. necessarily XX% the But operation doesn't those design, we eliminating and When -- every We're day. contractual focus going mean All reflecting most these not waste significantly necessarily can. of faster, on XX% actually into make our continuing that to doesn't morning. on XX% by We're are can from less. momentum do reduced on course side side our it going less, times just a you the making everything impact. cycle focusing XXXX to I is we're almost of from completion -- mean look through that some on it and and chain that does in NPT and taking the things get this supply are was improvements

That's contracts the hard And mirror lots So to we've works continue to to where in is drive work do the of got rearview absolutely, the we've work hard things that. different. cost. to now the other and making be in that's got down

Bob Morris

here. congrats And great. accomplished initiatives That's on the you've

on inflation lot the a peers source Permian year. The XX% of this to of deflation are X% expect cost pointing this second just your you question is cost the to X% year, a

just what comes but about was half the a gives more mentioned cost the bit play? little in that source of where of that So second you year, the X% into inflation the curious

Tim Dove

about think Yes. the average really Bob, for for I average year. X% talking numbers referring is is because the to we're XXXX we're

heightened is mentioned labor averaging I You could by you'd earlier, X% be because of end activity. about here. in largely very be the That of commentary driven easily I the the the time or by And could cost. it's means, have well the think and X% year as X% it

be activity and should realize of much DUC increase an like do could numbers the unleashed, haven't some in I lead year. We is see the inflation. seen that certainly just you count that and to space pipeline there You this once yet

fact, lower In than rigs. that year. they're another last costs some have make, rig reductions This Joey our our tied in including been to they costs prices is seen didn't because just our we've are point oil but of certain

expectation. positive. so And average to are mean feel with really disagree that's I think of think achieve. X% others a being I what I conservative and reasonable It I like saying. kind here a we're made is it doesn't But trying what maybe on definitely

Bob Morris

nice and you Thank quarter. great. Okay,

Tim Dove

Thank you.

Operator

our Johnson take now from Rice. next Charles We'll with question Meade

Charles Meade

and you Tim, there. morning Good your team

Tim Dove

Hi Charles.

Charles Meade

I new Tim briefly question design. to but wanted You've go completion touched in on just back to this to an response this earlier

see what course might guys to if You XXXX going on of Can put seen savings we to here these a you expect the if you wells you're also as that anything date should over looking side. lot change the of what -- capital side. should not on outside thought and talk seeing get you about you've any and But on the what in come well online detail produce? you're productivity mentioned you we about or in expect different the the

Tim Dove

Yes.

techniques. about first of what's I in of be changed, think, zone completion sort of of just course, this the should a whole XXX% mixture everything dialed that particular, X.X-plus area. of just is -- or when year everything first not are all, completions our completion design, there's into other specific the types year, different you're words It's by by In talking there's this X.X.

seen years. improvement of like that's you incremental just in leads and four -- last to EURs the we've So hope the what actually

the formula learning show exceeds more it's so a of exactly completions hope to efficient. extent to that. it in line product just our what's a doing understand And the we again And great efforts XXXX other lines right performance I to these by make can machine

any think we're the program. really the I we're optimize not whole across but rather in just specific to trying versions, bucketing completions So,

J.D. Hall

a would is in relationship order is XXX able similar effect that substantial same for in sand. to we'd Charles amount use we higher And viscosity and sand that And the the and less the cause are we're mesh requires decision amount cost. coarser deliver Whenever is gel West from about sand, the coarser add able Texas to one ones. an thing in And sand I of that shifting using we're sand talk which it. sand we just And cost. deliver contractual previously And of lower that with on mesh reduce fluids savings we're to that the there get to savings as example. a there goes

of has no that's example some changes So impact of these an have on how also technical change contractual performance. but well a

Charles Meade

Right. key. grain guess impact this I change from size. well to the no of And really performance that's There's the the

J.D. Hall

Correct.

Tim Dove

That's peers. across our also and data our

Charles Meade

Stackberry test the the me that's XXXX. or it. Joey, -- what Got that's second to then you, move I that interacts bigger ask used pads in this and -- have of it using. looks there. It are with big you And like Thank how could thing I your it, this test well kind is big about got of Stackberry Tim, if pads was after one to more guys Stackberry

that in that to specific completion So, is on we is from that's Wolfcamp more co-develop longer? your program, this zones? crew Or the need three something rig having for something B the -- and just this use efficiencies should to to location where and there's you those can look A

J.D. Hall

Stackberry the some the we future, And The in and applies doing combined Charles. development, not your towards that, co-developments. we're to to even A and have the D B several end does question with only of Stackberry Yes B is be XXXX co-developments. to answer but going also A,

reasons; develop wells operators that that the point for do two really I efficiencies that we impacts But and lot the you way one, mentioned. about. believe out we parent-child avoid of hear these you most important think also that's to for the it's to talking the operational that a optimal

win-win. for from cycle perspective upside the larger far outweigh efficiency it's longer a is do you only cost So a us that and But EUR these downside the times pads cycle an from endure. The have times. perspective

Charles Meade

detail. Thanks Got added it. for the

Operator

Goldman Sachs. next Brian with our take Singer question from now We'll

Brian Singer

a Thank morning. plan. executing on on question follow-up the of initiating you. and CapEx is Good the My topic

the continuing to is that quarter I start, you impacted half. partly or first the first fourth into think CapEx First that Tim construction quarter mentioned spending the

to to on expectations spent be budget there's that expect you no on percent just set trajectory? do to QX So surprises make the what in just sure the you've said

Tim Dove

Yes.

part second first think as going of we until to try I into So as the the get savings we're of quarter. all know the sand we early

the to at higher, first time going got and run have a that's including costs things So hit cost. to example rate we've same Targa-related certain the we're that's an of quarter

answer that? So more to give Neal you and want detail

Neal Shah

as extends count and trajectory that we through exit normalize the average other full quarter at and really Yes. of really day ramp rigs we rig kind the first rig year, year. throughout on the we Brian that our rig were that looking dropping where rate start on moves until

So that somewhat of too also fullness be drives higher. versus to the XQ XXXX spending

Brian Singer

could percentage you Got little to Is it. clear? a bit on the give clarity any make again there more greater it just

Neal Shah

Yes.

going to XQ for rate be Your -- QX run QX or to your rate. run going QX, be is than it's higher definitely

rig about related got got an quarters based So rate. help ramp about modeling somewhere for as we're around And exit to talking the you you've throughout could the rigs definitely with additional million. Targa in - and the cost the of here to obviously additional additional well as can we out million running -- But on and We've think few think the -- about rigs around your you -- then decrease the rigs. like coming spending well. offline. versus can rig the running But third the $XXX $XXX second year somewhere you

Brian Singer

flow. with a bit cash within CapEx picture seems but to is mindset the The now much little the same company bigger follow-up to free topic. of more of regard prioritization cash my then And the be you. thank flow/delivering Great, spending

won't wondered just year? the sure restructuring pumping capital in you $X.X mindset cultural making You're of execution and your to throughout later talk of you pressure billion on billion ensure need speak the the that raised to Can if the $X.X the I execution sand the past to to that sources efforts front. volatility to and and could get is company.

J.D. Hall

in initiatives. with these through things Yes, Brian. organizationally for both and XXXX. obviously a We focus is mean, us I this deal

evaluation at meeting day on making whether on a cost we looking or in that cost single the daily So we're will that's be ensuring have projected focused XXXX. daily we've We're every dedicated and targets. not our team those that met

as my taking operations that be will And gets we're XX gets what it certainly primary So fixed. focus. an been as focused organization leading has on seriously over for our and that experience is years

that is of these I us. that and that think things a how we've the together, it's lot learn to to a reservoirs work also of say behind stuff doing lot understand important been

execution dialing As our of in so Tim -- there's is. a not of what our there's are, lot mentioned what -- plan a we're not onto completions of earlier, uncertainty on lot

in helping consistent of So understand what a are towards plan also having a goes you way front your costs going you long be. to

are think XXXX. all I things greater a together capital to those going to lead combined So discipline in

Brian Singer

Appreciate that. The range appreciated. of CapEx is

So much. you thank very

J.D. Hall

Brian. Sure,

Operator

James. question take We'll next Freeman Raymond from our now with John

John Freeman

guys. morning, Good

Tim Dove

John. Hi,

John Freeman

Hi.

sort on following-up the Brian's this I'm about thinking that of million earlier Just on right of the question and plan, of kind the free the and to $XXX increasing way Doug context just sure make of sort a previous cash flow. importance

X, each barrel that shows embedded plan the one the options the free always oil rigs $XXX was million two current kind and of like year slide kind versus that cash slide previous should that you of above which kind of a XXXX, prices million how free goes cash. think barrel cash So the in roughly you that of above incremental on incremental the to plan, waterfall $XX is number $X assume your basically talked we kind improvement get you of you your the than previously I guess and a that just in of $X for of if have that in cash. And about how much for flow higher say kind oil show price, about where amount it's flow to of you've what plan is theoretically to that target.

how the the two? we trade-offs of think of sort Just about

Tim Dove

flow million target is, on deliver thing first generation. at We're main free as I'd and continue making don't sure capital we we focus really the line discipline Well, on our here. consider driver bottom trying focus returns the the say and barrel cash to

of we've allocated of Let $XX-plus at the me a we $XX-plus extent case, state -- lot in a or there. WTI be look Brent options that to take first. a you terms different case how money But that got would when

some words, different sustainable we areas of all allocate in question a change be? Brent are real that regarding would the our environment, that to other capital. the will we're $XX think ideas In is, potential how of different price case I in the a

we make In that out put there have capital sure of terms decision-making, to a of range it. XXXX understands everybody

We capital to for haven't XXXX, made is there in and that. us a on consider yet range any but adding rigs a decisions

something to that we add get address through a range remainder need So in might cover do the of we be XXXX so to intended as will decide is of the if capital to summer. we at run XXXX look as into to we anything particularly rate. go the But year, we this

John Freeman

assume we when projects we're rest the if like go we these the times. larger-scale just POP can increasing how got with big cycle appear didn't plan. on maybe XX% my have projects. the as of projects just the of XX% think completion of of Joey the would the with actually that wondering on the rough these activity then follow-up of just those as am And continue that on going kind give amount about I activity year year. projects Thanks. POP of scale the look roughly you go assume impressed given was larger But versus -- times question, an great. the I'm beyond. assuming us That's about larger-scale this you've numbers on last what times and normally you bigger to that's XXXX improvements I talking was materially those up kind to of on the to forward, sort of and I versus some about would drilling the kind

J.D. Hall

Yes. And POP. pad, John, of a a you're three-well basically to to it about days. a that days got add takes pad three-well is still for have XX% you pads look to in And typically XX mixture would every way at XXXX. to we've XXX the about I speaking going well XX

those percentage it's you greater, consistent the of wells. three-well those some about and cycle pads small POP-ing pads in are to pads. be of keep XX% eight-well four-well then keep but and important there, will a plan our of so seven So of And only

consistently and as pads. ability opposed that on us to deliver mixture good larger that So I eight-well POPs of just a a think to the full gives pads program whole goes three-well it of pads show to

Tim Dove

XXX would the I about days. XXX. think of accounts average different for average site pads. all We're about be in That And types going the all that of

J.D. Hall

Yes.

John Freeman

guys, Thanks it. appreciate

J.D. Hall

Thanks John.

Operator

our take question Jeanine Barclays. next now Wai from with We'll

Jeanine Wai

good morning Hi, everyone.

J.D. Hall

Hi Jeanine.

Jeanine Wai

few We've activity? as be thing been flow at planning a $XX could like on guide XXXX for at as oil Hi. something become your on cash following being the process deck? driving the back year $XX seeing messaging like kind rigs I And outlook the up of very mean of $XX XXXX kind other gold there well more XX that's a to questions. free the as a arbitrary this prices. anchored which has XX standard of for I versus lower question versus showing using question. Is recognize moderating an bunch is further guess a we of operational WTI But mean was this thought really $XX. what operationally I WTI to that

Tim Dove

only a there. have But we prices. reason based let's our question, on oil $XX We're discuss all you used $XX the Well fact is is start actually crude case, of is parlance all first on of helps your how United focused Brent Brent it on because the business. so the of States first business on

use just we'll differential So $X. generic the of

idea WTI. parlance outcomes of And the really a more we of -- just it's are. POPs So rig achieve We less were product fundamental Brent $XX to count are IRSP to more how into if just like in efficiency. rigs say is put the or the and course we when $XX translating able that we actually use of of capital terms that's capital-efficient the to we

Jeanine Wai

follow-up Great. Okay. related my capital then And efficiency. is question to

structurally you're forward larger it you kind look improvement working your more of the upside from current continue $XX? to progressively And are breakeven to As of larger is do nonproductive see of kind from we that things the Or CapEx? see you primary Is that how drivers pads? on? and you're on that more incremental XXXX, always there trending to corporate completion reduce working

Tim Dove

of so completion level. huge so the a reduce -- said a business in NPT to And the drilling It's can We're and time. reducing across board. to and focusing Joey it. we're to on looking every doing drain make all detail nonproductive high just efficiencies focus types details of above. process, is all on back sure our achieve we what at But different the it's we as of regarding it is have heavy the at a

Jeanine Wai

much. Okay, Thank great. very you

Operator

We'll now Simmons with take our next Energy. question from Ryan Todd

Ryan Todd

sector follow-up the much, a questions. market may beat Thanks. I from to from want but increasing free the approaches earlier require broader capital market X%. don't closer in to more of Do hear reduce you the the organically to Pioneer need Maybe as Or view some some that cash on outcome of flow something its and that yield And envision from too growth? get will do or that continue as reasonable the a a on so, down continue hear you We line? investors own this that proactively if interest -- that you do happen it to that we outlays as efficient? for you to of

Tim Dove

on own. I think to it its us happen will

on Now are that for would that off. that the we have certain day question is because that now occurs necessary spending things put we're day right, what it right money us,

materially flow So a and available significant it facility the treatment water to that to is That end towards example facility. in be be done. bump you've At point a finished of flow XXXX going got cash push generation. and the your time cash therefore will by is free the Midland

are those be it are the which gives certain flow have years over say be the in therefore, cash done Ford is to deficiency significant are for that payments a couple some us that to the on that there cost, that in -- the generation same made. next shot arm And, a to Eagle capabilities. same have example when fees We free paid the including of has of --

commodity repetitive main actually thrust have where drilling basis free That's basis reasonable so have especially though your return you get prices. that's you you rate be What of yield, is flow support and business. a margins, one wells which And really on high-margin high growing if cash rest flow The really the should a really the means which and our so wells, going yield, free going generate ultimate the are of on. fees things these and It's plant. We're then as the finish to focuses. We'll is occur. really the key a generation to competitive. deficiency to our is of water finish so which that goal, cash of

Ryan Todd

of purely given one appraisal moderated Stackberry the monetize sense and already project those? you in additional Right. off periodically inventory a portfolio Spraberry continued rate but maybe I Jo your other, the the that. about depth point is and make what this quite the to you and bottom know resource might the carve success of I slightly we end Wolfcamp the At combined derisking, it acreage appreciate portions your asked like at lower growth with and programs enormous. Mill, Maybe D of

Tim Dove

Yeah.

we I think the we're that looking look at at -- all time.

– look at your opportunity there's which course of as a projects. as as a portfolio In fact couple best efforts strong -- tale have in do of this and underway to you isn't that any exactly

wells situations to to quite for the let's things, won't And be divestiture. our of look monetize won't decades a look the where we course, at so three terms have look inventory. therefore, inventory. in some And say. inventory we drilled an certainly, time for at those for of at are day vis-à-vis a and situation long the every looked opportunity at tremendous of being it's Also at potential we And the we to get

those certainly consideration. under So are

depends is Of for acreage. is. now, of Right course, the terribly on sale what exactly the the not strong market it market

they're which made last said, But line traded that's it's governor And interest whether acres X.X consideration We the will real in basically best bottom has our long for added whatever so inventory be year, of million coming. is acreage, lower because going under money little been the in in in that is the is because a a do selling today. or everything shareholders. But it a certain time trades. of XX,XXX acres. to We're bit our

Ryan Todd

Tim. Thanks,

Operator

Matt from question next with our take Portillo TPH. now We'll

Matt Portillo

Good morning, all.

Tim Dove

Matt. Hi,

Matt Portillo

XXXX? lot about on of the market just the side capital guidance regarding water think investment next the of been and in allocation, the question ledger. few infrastructure in But how gas a $XXX focus D&C curious morning there's should versus million Tim the a this over facilities years

Tim Dove

facility. I Well, think I've water certainly addressed

to completed supply are We with barrels investment of when essentially say our afford this facility. we cheap That after us water the of water relatively project Midland, as XXXX. XXX,XXX going a which in is very done day in is

in already in a for have the we've But with to we that. second So in evaluate of up, on in course, more you and got in can gas further we've basin in coming relationship the we'll investment as gas processing now, count that quarter. processing great first to in reduction And of had Right the time going facilities. course, need a so the are new plants future, the basin. being, here as the significant two Targa

Matt Portillo

And a go-forward question, Great. a perspective. just follow-up savings cost around on

any laid terms just clear potential mean that on is these very as color changes. incremental what ultimately pad around in developments you line to improvements the out I efficiency? capital some there shift long-term move curious, larger You've might and contractual to provide you sight of was of could some of the

J.D. Hall

it things time. flow thing the synergies. repeatedly and Yeah. – or down also repeatability have whenever rig and just two you of is drilling drilling ability on three Matt, the same and But going line several than the one that we're reduced a of the mean facilities One wells at I do has location to nature. obviously more lines

is So I by full pad, expectation say it's minimum would XX% to is a pad thing countering our But to Again, emphasize we cycle development would different. that the times. But you're full as X% that just on save great expect absolute a that benchmark as larger-scale that cycle on I thing compared some the that's with of it cycle spud-to-POP to smaller the ones. is basis. the an the

So benefit wells. these we're we try big to another the codeveloping whenever where balance what -- is comes from gaining EUR where we're

the to most program trying year. get to things balance each we those So order we're in all can capital-efficient

Tim Dove

would saltwater line related substantially necessities flow with development. to exact where to add get a years only incremental batteries, tank more tell to the there's would done. We're the a field years that. on We XXXX. already one-third disposal from the to done has to I amount the completed. a few you going sight two-thirds calculate two-thirds But also get few done would've entire It's calculate facilities have as to been we of years that we're year basically to the few And do. Yes. now that date I it first target as take don't as all can of such done. that There's going But capital we of taken end two-thirds about an to line and

Matt Portillo

much. very you Thank

Operator

will session. or this closing the to Mr. And remarks. turn conference question-and-answer additional today's back for Dove that I any concludes at you time,

Tim Dove

Thanks, your Anna. when the Thanks in year. the on And you things pleased being performance taking now. Valentine's all think to XXXX be we year a the focused much. on look I'm as really time really And We call be forward forward our appreciate a call. And everybody have we've for I stellar year. to to looking enjoy mentioned. We're the Day. will same we this everyone from meantime, very hope And

Operator

that today's your We you And does all conference. participation. thank for again, once conclude

disconnect. You may now

Pioneer Natural Resources (PXD) 14 Feb 192018 Q4 Earnings call transcript