PXD - Earnings call transcript Q2 2019 | Pioneer Natural Resources Co.

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Operator

Welcome to Pioneer Natural Resources second quarter conference call.

Joining us today will be Scott Sheffield, President and Chief Executive Officer; Rich Dealy, Executive Vice President and Chief Financial Officer; Joey Hall, Executive Vice President of Permian Operations; and Neal Shah, Vice President, Investor Relations.

Pioneer has prepared PowerPoint slides to supplement their comments today. These slides can be accessed over the Internet at www.pxd.com. Again, the Internet site to access the slides related to today's call is www.pxd.com. Investors, Earnings select Webcasts. website, the then & select At recorded. This being call is call A X, through site replay XXXX. will archived of the be on the Internet September

The prospects Litigation These risks actual risks may X from statements. Reform and made cause and in of XXXX. the Pioneer's number forward-looking harbor company's filings of in and and of Securities to are Act will the subject statements the a future business of provisions Securities public Commission. with made presentation Page uncertainties that materially differ to Pioneer and news results safe statements periods Private slide in on the These described Pioneer's comments Exchange the are today of forward-looking release, the uncertainties pursuant include to

opening the At Investor President, sir. Neal like I remarks, to over this Pioneer's would time ahead, call go Vice to for Shah. Please Relations, turn

Neal Shah

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

agenda reduced today's Scott Scott by up remarks, for quarter brief Let update a for recap review his me return. our optimized execution then will for horizontal will second and full strong and call oil rate year. call. the downstream up After our guidance briefly your Joey our well will and first. results solid the strong performance underpinned planning concludes both for with discuss the Rich He commentary. capital the After you review be we will of benefits then on for our questions. will open will of gas. return that, Scott

over to it I'll that, with turn So Scott.

Scott Sheffield

Slide X, Good morning. creating on you, On value. Neal. Thank

What's aggressively the back business continuing is is obviously, do that had of we us And is the to best back price on third the this. independents we The first quarter to stock in today, down. where sheet allow our stock. averaging to we'll point balance to great stock continued buy be buy key the

share guidance of achieved X.X%, million we our We of dividend of capital efficiency. top than our our the lowered a We increased quicker moved with quarterly savings per much G&A $XXX about capital end distribution. We with by yield $X.XX expected. a to to and up

be we'll On below about of $X, a BOE. quarter, basis moving be on below $X.XX we'll a $X target and basis, cash the established -- company cash toward a to down a $X.XX Third in XXXX BOE basis. on toward for

million, our cash We're on based of did quarter We free you vision to $XXX several F flow Gulf restructuring Coast free cash first C second & quarter; strip achieve cash add in exporting establishing half world. uplift for significant the years on $XX and X, the oil million, Footnote of for second flow second ago flow our to about ago. week great around a continuing based the show the exporting half. D, when XXXX back crude the charge about on

at Going with top capital Again, and X. production guidance on of efficiency. to Slide improved end we're significant the

guidance our I the million. end top Next $XXX X. mentioned that Slide Again, by capital reducing slide, we're at

at and performing of end the the accelerated Texas approximately levels infrastructure West are our reducing guidance very clock. completion Our X.X%. annualization lowering top drilling by high spending teams and million, $XX cost around about our We've

great. is X. Slide Outlook still

at increased efficiency the congratulate our been Our $X.X restructuring of teams throughout level very -- billion charges. D&C the would billion a Again, mention have company. executing I'll over $X.X high without for

our top quartile improving given already of in on X, our peers. highlights, significantly. already our is the I've Slide to down stay goal the The cost there. targets moving We're structure.

BOE, and a to time. on drive As be below I said, is goal $X.XX basis the below over it long-term get -- to per continuing goal down cash $X

X. Slide

yield fourth dividend and third the including increasing shareholders, up shareholders, aligned When the mentioned, buybacks forma and million with forma future in Our shareholders. look our our dividend when occur with and now already already, returning as $XXX to quarter and back the over already X% buying I It's X,XXX% giving to to quarter, X.X% is you of already dividend quarterly to back stock 'XX. back of you mid-teens, in our first at from priority buying a X.X% shares XX% we're going yield to pro growing the pro distribution.

Basin. and ahead Global Pioneer contiguous hit to On acreage most give not Basin sell-side the else most more the Slide I'm to and the drilling big-picture wells the six some the WoodMac, reports than productive has convinced returns position Rystad, Permian going due our years. and highest put XX, on anybody highlights with over do out on the studying wells the downspace in XX, returning Midland XX the have those XX. XX, comments four been X, I'm on S&P our IHS, and and last nature widest-spacing recent slides, by position a We go X, to XX, few of After that's in and some items contiguous reports,

aggressively of peak is aggressive in a are showing mid-XXXXs. Basin XXXX Midland until the the more rate. Similar because because quick not very count companies exhausted the inventory. being will and and operators. are The have of same the essentially downspacing reports being that out Rig drilling by reports, peaking running Tier at reports drilled these is From Delaware Delaware many X acreage

Midland the in Permian with U.S. reaching I'm annually per I past did the barrels growth am growing XXXX. slower a it X barrels Basin day in oil reach day basin X the a Permian, as XXXX. the lowering convinced as my million of at still will pace only million expectations the of much

XX, just X, to points, it key our X just we'll XX, speaker. Slide obviously a to and few to turn over Slide back points XX make make. Going On to next are

and the OpEx commodity already, quality, position they're be think mix. best in is well I cost, our Basin As with obvious mostly to why I the to place mentioned on Midland oil acreage regard

with have in that -- the the with from swaps returns to in weeks Brent returns, side that to -- we've mid-XXs. aggressively employed This business, ramp XXXX help with Going XX. a we capital convinced for Rich the I'm best reports also which will We're that those and our other and hedged with the second up have that. is into reading price more in several aggressively these fact in talk about help and will return slide Slide ago, showing the by the do on growth. hedged Also, the XXXX, we up half sell also

or goal market. mid-teens X Brent to next the $XX the the is Over to the years, years $XX, next WTI our over X a up $XX market to several ROCE get in

fact key we all WTI of XX have We're is of that fact there prices. the is taken XX, the highest crude. gravity Slide degree positions getting Midland, crude. And premium the our already the in price a Delaware exporting that getting to most

interest We'll this over deliver quarter as from opportunity first probably we One independents, the interesting, see net And of an private that for cash coming two $XX,XXX noncore per to last saw things a a acre. sold equity seen all we great asset that revenue among unmatched to years. footprint, do royalty. continue have the deal time low with assets And us, on noncore it's we happen. couple sales. the highest It's some again, Slide XX, the the in fact we we've

deal Oxy that go acre with saw announced we assets a $XX,XXX noncore per for addition, recently. In

Slide Joey it I'll now to turn for over XX.

Jerome Hall

is which, know, impacts. well your this in to increases prioritize rather Pioneer contiguous everybody. through see on parent-child noted, efficiency to And well a as spacing morning, just of there's we the It's Good And capital there our Scott XX. Scott. productivity returns the inventory as position to strategy, about our having and as artificially well improve discussion development and acres. XXX,XXX our the with completions resulting Slide I mostly what has you right-hand be Thanks, going on been increasing parent-child us that over enviable year-over-year, acreage effects. I'm than methodology of it's allows is allowed picking can combined lot side. approximately us exposure know to position advances tight recently time, up And the in spacing,

be to going I'm Slide on Now moving to XX.

illustrating an we're ability to margins. factor additional our sustainably strong Here, deliver in

in production see in stream basin delivered on then XX-month two the percentage in in side, the the oil cumulative on returns left-hand Looking These the gross the combined a over with on on oil and lead highest basin normalizing you the production Pioneer highest And Pioneer the XXXX. consistently the margins time. best see best facts, can since has strategy has and development basis, can also basin. that to should right-hand the based two you previous that the side, discussed our slide,

my last slide. to on XX, moving Now Slide

until in half outperforming We is back to pad X-well This County. XX year. of a and we we're days, note XX%. the POP of Permian important noted, quarter area the Glasscock projects highlighting it that successful the team. XXX D as same wells D Here, the appraisal. And by was execution another QX, in Congrats Western in solid the after Once Scott wells Wolfcamp Wolfcamp did it's previous for all. to again, some deferred facilities

over going And I'm now to to turn Rich. it

Richard Dealy

increased that third good Slide realized we for our to of flow Gulf and about million related June. on for include from to to talked the and can where our Gulf $XX oil the million significant an our by of that quarter export oil ability provided transportation oil oil $X we cash Joey, uplift as about Scott $XX Coast forecasted year-to-date barrel uplift Thanks, prices it the mentioned, about, to $XX quarter Brent-related I'm morning. our XX of or price firm in the a Based quarter move on for This third did pricing. are the on million had $XXX incremental Coast. and, the start where a for expecting through the you get prices going see to we quarter, moving Scott over million $XX the

was quarter, XXX,XXX oil, -- of to day which second the XX% roughly XXX roughly Gulf we a XX% our with XXXX, forecasted going consistent with to over which of it XX% of barrels Europe. the to Coast, our moved our of Asia transportation XXX,XXX is about to exported During late Longer term, growth. into XX% firm increase production commitments that and about barrels

up gas in products SoCal And the it during we second move all markets. the our west index. try to XX% and of our discussed of quarters, quarter, higher-priced about moved I priced As prior we out to

provided cash the second $XX improved of to players. other incremental $XX realizations Permian flow relative million about to our gas and price this quarter, million During

quarter, Coast Once sold fourth comes outside on price we on day that of of a price And be at Gulf virtually to a Express million Channel and will our Coast the the Gulf Ship about point, Permian all XXX index. move in that will feet the gas cubic Basin.

As Scott pullback prices, we the commodity in aggressively hedge before for XXXX. did mentioned, XXXX,

the day remainder a for have barrel, of XXXX we of XXXX $XX XX,XXX a and So hedged around at XX,XXX oil $XX with Brent per at of production now hedged prices those upside. barrels of barrels each roughly day

Turning to Slide XX.

slide two that this key I financial think highlights Pioneer benefits has.

our the measured not against peers. -- First, the can does This strongest of recent that the the balance per highest we it highlights wells debt we secondly, peers. that EBITDA have as versus BOE our And savings. highlights we have And cost annualized then through see $XXX it restructuring and sheet reflect and structure you million amongst the the went of our basis. quality by our that fact EBITDA

margins And and our our Both these industry-leading so improve and that financial point efforts improve position will to margins. our continue to corporate returns. just to further

stop I few back I'll Scott there, closing for don't why turn So a comments. and to it

Scott Sheffield

flow XX, Thank And as to points possible free cash my I to key there On around you, think I is how back and when employees quarter. add about I the charges quickly are all got efficient, flow back. But I'm the the quarter when all get for speak comment and as free as for X,XXX Slide goal surprised getting cash themselves. second made already company restructuring us second working came you these the Rich. primary clock

dividends. increasing cash of. be to free flow, between it's to returning balance We're that's going continue I'm So going deliver most what to growth, and a -- proud

As goal also XXX quickly S&P is of up average earlier continuing the past, the the to the in to I mentioned possible and our get as program. buyback share as then

Q&A for speak Again, So won't points over to over go the up We'll session. it now so turn detail. again, I key I think all these thanks. themselves,

Operator

of And Jayaram we'll our question JPMorgan. now Instructions]. [Operator Arun take from first

Arun Jayaram

project This or I was you maybe and size Joey. that there Joey, from to flow optimal discuss base. if wondering, first free optimize for packet question returns cash think is your the perhaps could asset well generations you

Jerome Hall

through. extremely these of with the But increasing us drill larger four been to has sweet X the and getting that I six is in well to and say sometimes it's But through we're drill butter what wells, So pad a But is uncommon package time we're from for an rig on as probably, as one execution good going at because kind somewhere well it explain perspective, now, six our pad projects XX and three would size. that. to and bread hard not two same pads. it's we forward, And see be well spot, and we and rigs. X, X, sometimes, going the with to going

Arun Jayaram

the generation. press generating outlook is just couple how the my on best started is free question the returns top-tier you next oil year you release, terms executing to XX optimal And the rigs. about highlighted the you believe Great. optimizing and cash running years, guys thinking Scott, flow growth follow-up, in in your My of of or mid-teens that

to XX. down You're

guidance for rig you XX to rigs thought or I XX a growth. of support count year, between this kind annum and called your to that add think three we two needed and per

how thinking towards moving now in the next the just Brent years, particularly you're with So couple prices about of mid-XXs. wondering

Scott Sheffield

Yes.

be the I $XX years. people but could, to prices to puts First about it world's -- $XX, $XX don't net down I don't WTI world's or the three of just to all, next think $XX. That for think to the going going

Permian a fallback You're significant going to see in growth.

move You'll great most on But that for growth we've sheet. toward basis, got a probably no balance people.

if cycle choose. can cash and have we the balance sheet, through we We drill the in

with our sticking long three mid-teens year. we're term, two to rigs adding growth per So

we point in go -- we at changed So even time the mid-XXs. have our I haven't opinion this if to

Operator

America. Bank We'll now take with of Leggate our next question from Doug

Douglas Leggate

got are Scott, the yourself two on and green you progress only stocks back. made the since you've the so offspring in morning, congrats screen your this

I've questions, if may. I got two

guess, you is in sales had and expect if commentary asset meaningful infrastructure. considerations give the how that we of stuff growth, around press process Pioneer. rate longer-dated thought previously the might can you Do things evolving? update with going on versus acreage maybe slower not And of are about broader Targa to on I this a just First, get release that maybe in How water you period? your on sales us what

Scott Sheffield

update also regard to In water items natural complete drillco, we all when three you both we Yes. three, and on infrastructure those and mentioned, gas, items. will midstream

by the decision as and -- we of the of water, year. the the Board two in And them XXXX. expect I So we're a then make will be it past, mentioned done end evaluating in it now we'll will make

are So all proceeding evaluated, as expected. three being

in much acreage In for except acre. transaction, treasure Oxy Ecopetrol years, Midland was experts, past maps established in and regard the to hasn't sell-side XX% where over We've only -- been core, acreage somewhere continue $XX,XXX noncore. $XX,XXX in various sales, costs as XX% our last per recent the I $XX,XXX two people transaction mentioned at deal with Oxy -- we by done, per transaction was the which there that and external is this the acreage for between that have for acre the doing of In seen reports. a Basin will

it seems asset for very, for We noncore we'll acre. acreage So acre. $XX,XXX price $XX,XXX long get day high Hopefully, a would acreage continued at noncore very like per acreage. all noncore per sell

transaction. So we about excited that are

the piece when I would is as around their already process, the per of the acreage selling I've so $XX,XXX it's somewhere be you mentioned at that year, we to And look drillco the expected decide to end in far, earlier, of for what returns. with $XX,XXX same pursue established that we that by acre mentioned, prices if the

Doug. helps, that hope So

Douglas Leggate

an so almost general acreage maybe a thinking with you've to which kind for follow-up obviously discount the sector is that the the of depths of really E&P guess, with, is been have My philosophical or dividend stepping on. is the because I model challenged does. that of of And that question, along that it you Rich. has space a inventory the address the guess, it in your industry I how to you starts up done and in tripling and particular lines Yes, the dividend way issue, oil point value to

the strategy, is idea have order help future capacity ratios, So do to might trajectory for flow in something your on my you an what to payout question thoughts underlying growth that are like need generals really your that, dividends for cash how follow growth.

that just to the you've remain reset dividend about to wondering I'm So as us, that? competitive now share you could you with how rate growth with how if do -- think the

Richard Dealy

soon over of We'd Scott where mean the XXX. about, about of as get time. term, part we cash basis with is at. I to And on couple important competitive as a value As be company. to last it And I S&P annualized a we'll we've of I as commodity about model, talked move are returning our that it's proposition that's longer said generative increasing do as to the shareholders prices but years we've $X.XX, to like from is we want prudent it do the continue got and to focus dividend possible, as we free flow and over an that $X.XX something to think capital think an demonstrated to clearly before, a to level

Douglas Leggate

that of of cash target But than is flow would keeping it less there ilk? like something consider or you that a payout like XX%

Richard Dealy

of designated money Doug, we back want positive, I want be returning to we a go over flow and Clearly, into cash that. that shareholders. be chunk to to think, to time, free evaluate will

Douglas Leggate

see it evolves. We'll how Okay.

Scott, ahead. go Sorry,

Richard Dealy

it amount free shareholders. but returned that a be, today, to be percentage the percentage be fair can't cash what tell flow exact I of will will just will exact The you --

Operator

with a I'll from question now Jeanine take Barclays. Wai

Jeanine Wai

rig of trying for lead pick Pioneer maybe considerations the purposes and additions rigs? how and deciding year about the back time rig are the much best on the half up fleet and you primary those year in whether how you do of in XXXX, for can to terms potentially you talk quickly the you operationally for in So planning what actually can add need position

Neal Shah

Neal. it's Jeanine,

In terms that XX we We roughly rig XX full the for year to around in XX year. of year XX exiting have XX the put We for of We're during of average that out in the budgeted, at where to rigs. rig XX XX. count the of at we XX, average, started -- terms averaged beginning QX.

our QX know, count as roughly with a will evaluating you've encompassed, So flat it's from remain year, within thoughts we're within activity currently. the as -- last historically, as from seen XXXX well But QX guidance. we we'll on be final be, discussed QX. our we're we budget. expecting on still plans, which rig perspective, all based we will

But whatsoever be as plans. XXXX would increase activity to there So again, still XXXX. advance process of or the think we our adds no formulating we're of rig QX adds CapEx in about in

Jerome Hall

notice, just far I'll get on again that as just those have available and to we Jeanine, to back rigs need XX And And XX add rigs us. advance notice that days as are to we advance mobilized.

Jeanine Wai

Okay. Great. And switching then, I gears. guess,

of whether differentiator comment industry other during kind in ramp over provide And And barrels ramps firm Your next there's industry-wide? XXX,XXX dock, new on if can own years. port generally next that associate you XXX,XXX new debate your over amount going can you all think of your been existing you then tank in couple any to dock marketing the day XXX,XXX changes incremental are just transport status in Corpus of a some barrels you is Pioneer's thoughts XXX,XXX infrastructure on this of supports a and those Do Gulf dredging production from a of the QX. any Christi, the there couple the the Coast too. the strategy over and tank And on years, status I believe build-out details you the to as on Pioneer that your and capacity big transported for day and stuff. of

risk/reward the your to trying of evaluate just agreements. marketing So

Richard Dealy

Sure, Jeanine.

particularly export I in happening and capacity think look a being at you added. the tremendous at Corpus, look there Gulf amount is of Coast, when on it what's

don't see oil glad -- that as added, thing. that And a are hopefully really so we're ships approved being get bigger And see to the see we offshore SBM take restrictive those projects offshore. and are to we're load to glad

So most of U.S. I that the what get that from exported. be crude a really don't has because market growth got bottleneck really perspective see will of to to the

we would in I Pioneer's for would -- in by those a What profile those started say when agreements all barrels. contracts, the have built XXX,XXX to the XXXX, we when space built barrels and we of in XX,XXX our that all end day we up the terms of going at dock capacity storage from

well. so have to And that past XXXX, continues XXX,XXX contracts dock as storage even and grow, we space to as

all together those without to stuck we've get to don't the we matched that being water. on make able So things get sure

Jeanine Wai

there's guess and debate capacity and the I of some with on space dock new things. whether there's -- after is part tanks that delays in

that on just Or So projects? everything you new can you is are you verify have existing? relying

Richard Dealy

existing. all No, ours is

not projects we're barrels moving on of and trajectory offshore. So production our to any relying meet those new growth

Operator

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

John Freeman

capital quarter, Last was of one on partly higher highlighted reducing existing facilities the facilities. spending of utilization field you to due initiatives that

the by $XX infrastructure at the about reduced down spending that reduction look gas get sense to I just Slide -- outer-years. of driven half by CapEx in and trying I'm of as like how opposed the be about some was coming being I when reduction and pushed guess, guidance water spending million, So X of of to is some that should to much permanent a processing a

Richard Dealy

timing it's when timing I'm gas would those need it the -- just going growth on little to of that timing was XXXX fast. as relates build to eventually I Yes. the plant just that it's know just well, to It I say thinking get really -- will really just it's quite so It's don't they processing, get slower done. and there. plants built, because on as

really that's water our subsystems. the side, On really,

a previously profile to we reduced bit changed able we facilities, of utilization we growth where were so how of from maximize our just little some in capital were existing that push And we out. as and

it's years. so deferred, And them get we need XXXX. to But build will going built in in get so later those to don't subsystems

Neal Shah

John, commentary, Rich's going water so well, talked say spend that being next was spending over for about down not I we it's see So on you're going an to increase said, as that our XXXX. in have to coming tagging year water XXXX

it water While will come in deferred, that still down is spend XXXX.

Richard Dealy

what Midland the -- XXXX. water treatment, The is less than significantly are XXXX it facilities is for in capital

John Freeman

guess, Midland, of follow-up. schedule sort I like And said of what sort remind what was? The of the that looks had facility where Can it just early a along ahead late us cost last now those you facility same XXXX upgrade my upgrade, that's XXXX. and you lines quarter is little treatment you from wastewater in the of it's planned all

Richard Dealy

facility The cost I budget. really on would and of is schedule million. on on no that around timing. It's And say, roughly $XXX total there's changes John,

Operator

from question Singer Goldman take Brian with now a Sachs. I'll

Brian Singer

and to buy to leverage back down are, above the generated either use you a cycle and your willing free you through how flow? drill in your cash Can you and Scott, are mentioned, balance the cycle, low leverage debt. at have You that to sheet beyond a balance sheet internally through with comments minimal talk very to to stock certainly thresholds the flexibility the spend or is where

Scott Sheffield

think great long-term is a have flexibility have the having balance the And can't sheet. obviously, mean I the I goal got to but on without to we commodity have Yes. you just flexibility. views various prices,

Brent, reduce So could flexibility. stay $XX reduce the question, to was with cash have with we probably years, then got the count. We we've we obviously, like low, to it Arun combine but rig I change think have flow. plans. flexibility -- earlier achieving I next too asked But the Brent we count, could three the rig drops $XX If wouldn't asked about the we the at free that our

under the come cost So scenarios those down companies. would significantly our service from

OPEC you question countries the to lower severe is going the hard commodities up think cycles. generate big through what's answer in oil things the will if happened don't prices rest higher generally quickly years. will drop, it's As just -- prices have for so the a the to do several so have seen fairly pick that's -- Generally, oil then that of drop we've world various as I demand, and a

have the it's but that to Brian, of important the flexibility above to we is most mentioned. really the tough that any you So answer that do thing term, long

Brian Singer

I hoping buy post-dividend guess, for know maybe what, what ceiling and you of you there upward stock not upward kind environment you worth was is be to you're cash what is would leverage would of flow? say, beyond commodity was through? free by there any above tolerant I necessarily that ceiling leverage Or which from drilling it's getting back regardless the

Richard Dealy

in this to to that want metric wouldn't Xx. just be we debt-to-EBITDA business We're Brian, -- a it want say, we that need I'll from thinking our Yes. leverage level. outlook be a and wouldn't below above basis, we

think be. would So I I upper say be what would would the that limit

Brian Singer

the And the chosen different a Slide is Can performance D XX. results of here? on Wolfcamp that little my then follow-up the with regards you're well or locations color the what's completions the bit of drove performance add on Great. about to just you seeing

Jerome Hall

Yes.

Wolfcamp in D So we on relatively each that far the are three reported away all here is other. recently from

I think in from pad XX instance, away about miles; area. south our in XX previous in and actually the about another XX one instance, miles miles

clusters the and So spacing fractures, completions completion most the The of our some is different testing we're done and have of ability different it energy. different what the to same. same. amount create been testing for because those we're recipes are pressure the part, But doing higher, We've areas. cluster the relatively relatively more is takes

different two similar testing not Wolfcamp tests and got in We've previous are D future methodologies. we're other three new to four and ones are again, the areas. planned, them of really also -- and other they're testing But areas. We're different areas the in

again, mainly necessarily and are testing we as areas we're not So but go. tweaks making appraising we technique, areas, the completion

Operator

take with from Deckelbaum David question our now We'll Cowen. next

David Deckelbaum

next into as -- ask about you your prices about going the commodity or to talked plans just cash rather. flows, year, wanted guess I you Just think sensitivities around -- rig

rigs, XX guess of about to about flat should Or of going you I compel Or be increase thinking that that -- south? to we As still split are XX to state the should sort rigs in think steady is X be what there? the of you there allocation? seeing kind recently that that you

Jerome Hall

No.

of think you a currently you could kind as the in south activity see. of expect level I to see similar

David Deckelbaum

do some sands Okay. part tweak -- the some equal going just your of how realizing do the budget budgeted. now, of percentage know else I trends capital a And see all out in-basin the had going into about fat still 'XX, think was end where well are guess, bit of you year And on I earlier than guess basis? down the from into we to guess today? I of or cost some adopting a I the -- take you you

Jerome Hall

would gel some year, to the sand. the chunks, type from the of -- changes and and the we've the that relate realized The I Texas even related ProPetro namely those that big moving and and West water. to say of the chemicals to less them gels slick also to first other half we made being transaction of

the for transpired. changes those most So have part

seen moving most forward the we've drilling say would what on completions the efficiency both see what gains. are of That's we'll on I So side. and

and year. So I in have see happened gainers the of half efficiency the the first second mostly just say gains we'll big in half, the would

David Deckelbaum

how, I could don't you basin your we high more. in I beyond other other any ask level, Midland. see XXXX one in guess, view, just if America, about talked And growing than of size North Scott,

that around free over that view, already or some company the And have wouldn't square inherently your your does projection value drillcos that process acreage? that achievable scarcity given there out the Just time? with thought increase selling kind You that's of does mid-XXs. for how pursuing -- cash a in

long You're in that you dividend. over just already as growing the how this guess about balancing think are term? I you business managing

Scott Sheffield

Yes.

next that years. before, the acreage focusing As is focus I've it acreage five the And is. expiring main said is the David, on drillco of where that's over

activities it offsite in -- it. that are worth outside rates It's returns. lower it's above but the shown drilling are drilling mean current drilled wells have XX%. so some on meet and a And doesn't we our area, that operators still few hurdle other And there today, I

main focused And we're so that the difference. so on, that's drillco, that's the on acreage

think will basin past worth much the X right. only at I Pioneer's Basin next as XXXX, over or X money scarcity, to Xx make Midland is the if it money properties on in point time But years. Based twice growing some much you're the as

Operator

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

Charles Meade

to question. a wanted ask I

spoken arrangements. You bit quite guys your already have a on marketing

Rich. I a ask wanted perhaps to So question for

you been between more differentiation there's If you forward? that market there's Permian. Do out coming going guys emerging some in of see I'm the -- you pricing grades you how already receive -- guys differentiation, the see -- and both talking

way understanding going is further And XX-degree crude. looking these lighter, My to there road, that's down more relatively the this the guys where compared grades. have short in we're you condensate be U.S. to

Coast make but to And it do you maybe the term, going crude Gulf to so long stay there? that anticipate that is guys actually

Richard Dealy

of pricing. mean it's still all grade, getting for chunk Whether going Midland -- I gravity the think big exported. is grade the degree and to Coast, No. to is Gulf but it get premium going I get it sure, But to a clearly, -- gets XX

XX four much step-on, so, And the the relative last going months crude the Scott degree to of out the should For growth that out be which lighter lighter it's make our talked exceeding coming of the that about the $X.XX the about, higher. Midland value averaged or with more to there's barrel Delaware. of Delaware of quality

So up. to to I going move see that think continue you're price

think side, basin out got demand there, not it's to elsewhere have so get important the got California it's to LNG Coast there's the mainly the get of in I the markets. markets think basin On of and any and into most takeaway because it's I and gas to gas Gulf to around

exported so to moving whether into down Mexico. Gulf And grow to the locked Express via Coast or gas getting continue it Whistler LNG our Coast Gulf we it's we're facilities aggressively or to as and

both those are think important of I things. So

Charles Meade

that. it. questions you. your your Got quick comments enjoyed I your willingness have I've two for opinion And Scott, macro to and always on offer

peaking of volumes assumption half XXXX so that. as in than of it thoughts in these watching growth way growth You the Permian is growth be I'm some for of looks piece, And Permian through seen year half XXXX -- the then what to the Permian to your to was in offer reach the I'm And back I'm whole. wondering the mentioned far have Brent mid-XXs. the more 'XX. I we've the to Midland on in you was estimates as a back there's the price Delaware can me if going second that to and XXXX, in maybe starting for wondering is

Scott Sheffield

reasons it to tank going think this last all to lowering said. XXX,XXX their forward Most they're about for And growth year XXXX the for year. groups also Yes. XXX,XXX that I've lowering Permian from are for and

are the -- people drilling and They're fact that downspacing. aggressively. So due to that's

going to a less this I price in to so see people think we build Now we're long-term if to reasons lot debt cash of stay in environment. going don't why lower environment, are there's want flow growth. have oil the just People don't the

don't So so the they're are They've drilling the is right coming on some see growth have just But that so reasons them calls slowing are that issues. I there. for -- the I some now, down comments don't ones I having majors aggressively. mentioned, I'll -- their stop made only down.

Operator

with now Research. our question from I'll take Bob Brackett next Bernstein

Robert Brackett

those either debt relative available question the how paying on 'XX buybacks? A But prioritize enterprise for do due funds your coming 'XX. to modest and maturities you versus in sort or using of of They're them relatively share refinancing the out value.

Richard Dealy

Yes.

plan into right But what balance now, right targeting really sheet with XXXX. now, the currently, current our the cash basis the evaluate still on off XXXX, is think sits. pay on where that look it to to I we're do a debt-to-EBITDA and leverage in we and at

Robert Brackett

separate somewhat noncore? Or $XX,XXX. say, you'd a sort get you acreage you contrast core? that day timely it less Scott, in to of Can sort mentioned a Is sell earlier geologically fashion? you that in, then question. acreage mean just what high-quality all you noncore wouldn't by And really of be to long happy is the it

Scott Sheffield

piece North $XX,XXX County. an sold the per that for we acre Martin extreme was Well,

ago, isolated. Dawson, It's you Martin asset line. It three that remember, the an sale did in area. If and was was about on County we that similar years

of the you looking sort drillco. not that's whether in that pieces on drillco are But noncore. or type we're are on, It's call question the the area. those stuff focused core. I So lower-tier acreage it call a the that we're

so -- And extensive got position. the an so that's the difference we've between But two. acreage

So or how range. if noncore have, can't $XX,XXX it tell up, pieces do exactly we some that but per trade we're sell we much you block to that I have going between we can't and acre $XX,XXX somewhere

Robert Brackett

Is to it's it more non-Pioneer fair core? say nonbasin core versus

Scott Sheffield

Exactly. Exactly.

Operator

closing I'd conference like today's the session. to this or back turn And for Mr. question-and-answer time any Sheffield at to that over remarks. concludes additional

Scott Sheffield

participating. next Again, you. the three Great you next everybody quarter. Thank for months. to we'll thank over see talk and questions, And you

Operator

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

You may now disconnect.

Pioneer Natural Resources (PXD) 7 Aug 192019 Q2 Earnings call transcript