Pioneer Natural Resources (PXD) 5 Nov 192019 Q3 Earnings call transcript

Company Profile

Participants

Scott Sheffield	President and CEO
Rich Dealy	EVP and CFO
Joey Hall	EVP of Permian Operations
Neal Shah	VP of IR
Arun Jayaram	JPMorgan
John Freeman	Raymond James
Ryan Todd	Simmons Energy
Nitin Kumar	Wells Fargo
Jeanine Wai	Barclays
Charles Meade	Johnson Rice
Scott Hanold	RBC Capital Markets
Brian Singer	Goldman Sachs
David Deckelbaum	Cowen and Company
Michael Hall	Heikkinen Energy Advisors

Call transcript

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Operator

Welcome to Pioneer Natural Resources Third 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 December

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 Pioneer best-in-class today's will Scott production. by strong Scott quarter Let performance our me our execution will for rate well third his return for remarks, call. of concludes up optimized After briefly horizontal the will from first. results delivering solid strong driven review discuss He team. the while Joey review be oil

social benefits then focus questions. Thank Pioneer’s on both the will governance Scott Rich for up your update planning After return you our the issues. will to discuss open sustainable to of for will commitment downstream our and on you. that oil call and then and we gas. practices

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

Scott Sheffield

Thank morning. you, Good Neal.

time really achieving flow in the million and want our I in free and short short especially quarter frame. to for of all, $XXX employees First quarters our third a very for management team great all very, three just cash in of thank

of for increasing to full-year million top at positive for quarter, the the a the $XXX benefits midpoint, our $XXX million $XX guidance continued the of crude additional see our oil, year. by our production reducing in million, by exporting guidance uplift end full-year for again we're X% total We’re

we're ESG our as that period, intensity. XXXX some in greenhouse free notice, a reduction more We'll cash return in to gas yield on And and you are Also, of talk employed. starting emissions later. Again we put those XXXX XX% time total we on capital reducing to got slides. focused flow about

the significantly by guidance number a the solid very Slide quarter execution to quarter. third Going our efficiency very, at is quarter X, improved by top quarter through of also again, results. Again, coming driving capital end production

X, the million $XXX X%. $XXX capital continue number again additional the being Again, in already reduced ranked by of savings million facility improve schedule. Slide to efficiency. of again ahead we're We did DC&F approximately to completion Going top growing end facilities achieve

achieve achieved goal the our focus it was If year in timeframe very, very short XXXX. it to of a production We you remember, a the for due to people.

plants we’re we're increased growth per Continued XXX from to on by two million again from new BOEs NGL barrels going efficiencies, guidance D&C XXX per production up BOE plants. yields addition midpoint gas million of the again, stronger improvements in on attributable increasing as barrels X% those to of about seeing about

every $X.XX high outlook to of the level. our DC&F Slide a XXXX continuing X, billion. are at guidance, very again quarter to execute to top teams Going lowering number about D&C end Again, very,

end the adding about already does XXX rig up And XX. rig We're pop Expecting November. include guidance to one towards in started original upper that XXXX updating to wells to guidance to our by XXX average about that's early XXX.

We're stage. report still Regarding for in the the DrillCo there's process our nothing really to and initiatives, Midstream quarter. new

we We have will information. update once more you

average a quarter production our roughly dividend price priorities buy about with annualized the X% mid-teens, include about back the that at yield. On We an results back year-to-date, stock $X.XX. continue shareholders, in S&P return, in the $XXX growth with aligned Slide be time the you are bought shares to again in XXX of of still number million about X, results shareholder their dividend the tend XX% competitive over when to of to increase about

the number over a competitive main advantage how answer again, lot much last and of is about we I questions made zero. of Midland Slide from think we've change X, federal Delaware do the the have the acreage Again, had the you basin. Basin Midland the the in Basin quarter,

So election, elected, regardless essentially risk. of this and next gets who Pioneer has no

the all from Midland of will Basin our We Texas. lines Gulf as have the within infrastructure to move Coast no risk,

and we're go focused been employed. they've next I up WTI to capital quarter. environment. again mid-teens since a no last number because XXXX won't focused over range the Looks Again, really on still on and change. continue on it'll move $XX the the repeated we're like to several other return up moving for Slide over it years, X, comparisons mid-teen,

showing a new again percent $XX acreage Wells developed of than years coming our and This with is XX. slide quality acreage peer WTI. inventory number of Slide less showing the price group group, is the out of Fargo breakeven

You to is best the Pioneer obviously. be see far toward can and right bottom

us probably allows activity. of our burden on economics we royalty have working achieve addition, of probably obviously drilling better the and the In probably some to highest much of some all interest lowest

over I'll Hall to now operations. to over go turn Joey it

Joey Hall

and over in good to appraisal Scott results seeing D Thanks, on program. Still the I'll great Wolfcamp everybody. Slide morning taking XX. be

resulting delineation approach Wolfcamp completion wells is combined performance XX approximately D XXX% our to Our since from the in optimization improvement with at drilled XXXX.

for November team able $XXX million a accelerate operations through the fully to adding optimization. to are was in savings in we facility annualized engineering value our and earlier, mentioned up set and Scott XXXX program As rig

reiterating simply approach negative spacing. our the XX, market address of Slide to now regarding Moving concerns to tight consequences

prioritize our space Our down negative increase and large us artificially allows returns and risk do parent-child to we acreage to position inventory not impacts.

to year-over-year. with in approach improve allowed conjunction well has development our Our completion optimization productivity

Pioneer best once oil These highest then normalize two we also percentage. best XX-month left, margins should fronts. right, you two on lead subsurface the on gross has production the and excellent time. starting stream the add on peers I'd all our I'll And on now completions XX, for to combined to Slide all over to like facts the looking cumulative production. quarter on returns now to and the highest it an oil for basin in drilling Rich. operations my And the over have congratulations basis, a And the teams turn over

Rich Dealy

per on free and flow see cash Thanks, corporate allows Slide is can chart going that to for be that where good you are imagine, margins can that's really to And as strong morning. generating able we the Joey returns start you capital to and shareholders. and EBITDA to foundation XX, generating BOE. the peer-leading what bar shows I'm return us

I And with highlights efforts oil cost us great is that thing priced that’s is and The our leading of the out higher it the of reduction this second moving combined to benefits gas markets. Permian to think really our year Basin margins.

This until These will improve benefits this from relative seen efforts to reflect the we've does peers. not earlier reduction our not further third year the G&A that fully realized quarter. we're the that

move significant sheet, with our higher financial you XXXX. as it provides really balance into combine when margins flexibility we strong So

upper quarter. $XX or the have were barrel Slide see peers $XX to is at the our that relative Turning so. per This you realized there, Permian price left for can XX, where to realizations would

firm where the was a transportation to really cash $XXX $X provided Coast incremental Gulf oil million realized of the $XX our move by So flow our quarter to year-to-date. we for and increase million

the exported that about For during of our to Gulf the the the quarter we here that to and transfer XXX,XXX volumes XXX,XXX will Coast move quarter, which Gulf XX% in about did was Coast. increasing barrels is to November

quarter. at a due the we limited If you costs are availability the sanctions have a to impact the what's in positive fourth differentials happened shipping with cash of look ships, and been have forecasting tanker nominal quarter flow higher slightly to narrowing so fourth

that, then we the moving to out oil, other down of with out point and thing And on, $XXX Gulf to coming is Express our about a we're gas million move Coast. the day Gulf I'd Coast the basin do similar

Indexes, XX% gas then move to of Index. off go a XX% our So They’re SoCal starting fourth be to will we NYMEX Arizona, the have will priced Houston still priced quarter, Coast Gulf out or of and in markets. the California will Channel off Ship about about

minimal very Waha exposure moving forward. So

just update on lastly, our then derivative And an positions.

the barrels Brent are we XXX,XXX For at $XX roughly fourth day a now from quarter, we're XXXX $XX we incremental oil, there. added barrels, so at of at and roughly with upside for hedged have XX,XXX Brent barrels

turn back it to Scott. to over I'm with So that, going

Scott Sheffield

Rich. Thanks,

open now our ESG slide. it forgot. oh will up -- We no, We I have do for

all three but in points ahead of report, the Sorry, again here we have to myself. measures I a think a and Slide all of measures row, on I released third got is is number year environmental focused forward, XX, will continue ESG going our On highlight just great focused key that we side. the the these these company of on

had emissions we've XX% in methane to Greenhouse from intensity reduction Again, gas reduction intensity a in and XXXX. XX% XXXX

not key the line new horizontal do One of we production that connect place. gas we in to any do, already unless the wells things is

we're leaks I think where Very, the about that do do feet. producers and leaks that's monitored to Basin. Leak are facilities few year. one oil repair. our a flying XXX% Detection by through fix companies something that to practice possible. those in We facilities early methane X,XXX as of soon our your as determine We should the and for X,XXX of Permian once aerial it it be important Also, adopted very

continued we this the regard industry, and oil level continued on up employees of one women focused gas the Again, inside diversity, percent on and community, all have the significantly the gender development, and teams, throughout talent move management inside the social Pioneer, to we're in culture company. focused board to improving on side,

a strong up Governance the the we Committee, Oversight committees very And on have Committee. set last governance both and key over very, some years, have few HS&E then Corporate

already breakdown to why going Slide regard gives regard of field. that practices our we you and data peer-leading in XX number leading for our to a intensity, peers business to in are gas Greenhouse better peers. discussed XXXX on reasons some taking, our the intensity in it’s out the Again, forward are our methane we Going

Times It's has is already to Permian York hot Slide out in in the I how or industry. X% take and focus data of and down Basin. called very this topic the much Rystad going to and best in do in number several the Norway. the getting X% been months off New to on This everybody venting taken a was of below published flaring on been we the company things think over a will XX recently, about newspapers, to several one by also regard but flaring last needs

the for lot to had same reasons is everybody are have do above And peers secondly, of coming see connected wells gas they same type a and there of to that to way average, new a needs to can needs side. on, some focused everybody flaring we monitoring the regard the that need be You in practice on line. the to

And going years. Again, into finishing about the Slide capital three I thanks. XX. and numbers will row now a flow, XXXX. great free for open execution, higher It's quarters in employed Again up it over excited delivering return the on cash again number just delivering about on several and company Q&A. had all next

Operator

Instructions] you. from question with take [Operator We a JPMorgan. Arun will Thank now Jayaram

Arun Jayaram

you Yes, the driving cost was comment could is facility if good what efforts. morning, wondering reduction I on

you expecting CapEx be $XXX think redesign the your of facilities, you're less. through million mentioned to that I

facilities be would cash today barrel how had on So are versus you when question I with perhaps you at before more generation, focus looking free target? of million the guess flow ultimate a my

Scott Sheffield

for five growth, Yes, rates from company stated XX% Arun. I simply really they I've the publicly since years. have is before and the to mid-teens It have think next we growth worth last it's building not to years two growth as a XX%, our rate, lowered this was shown the

our we're So facilities. designing

a We're fill of attention row. full. facilities the And secondly, everyone in based that's small to paying the special mid-things we're design on changes size making not our of

to three we to earlier, So were was probably six XXXX. hoping into achieving go that it months

So about third we achieved quarter.

I three to that thought. earlier achieving six So months it's really than

But main the drivers. are So a they the team great was those job. focused, did two

Arun Jayaram

did And note you could Great. is wondering commentary rig you follow-up, provide on November. my your added any Scott a plans XXXX. We I'm that in if in

rigs a to I XXXX two three couple, support to looking there's XXXX. at. scenarios was three add One later you're two, or either maybe a late growth, in XXXX add two think in in couple, or rigs that

calling about current at think I oil growth billion XX% in under the consensus just forecast for CapEx. $X.X. is

today? So just where your thoughts XXXX wanted to on and consensus get sits

Scott Sheffield

Yes, thanks Arun.

rigs back the both facilities, be we’re million in $XXX fact two the add year several to and per and to on publicly, years Midstream mid-teens out much have going in achieved $XXX adding number about growth three reduction When achieve As look already regard we're to rate. at from we we million per XXXX. roughly going have you you that to about over stated rig, rigs the into of we've next side lower to water a to the the our going

That their numbers. close I to think street fairly the is

We November next, meeting the implies CapEx budget early about the you this over roughly have early board XXXX the then go of But we will billion. be and to a February. in and in going still through when January releasing math, it board $X.X

Arun Jayaram

Scott. a Thanks lot,

Operator

from John now a take with We question will Freeman James. Raymond

John Freeman

Good morning, guys.

Scott Sheffield

Hi, John.

John Freeman

prior the question. follow-up a Just on

had about So averaging previously talked of kind you XX

if targeting November, And curious have timing just might maybe additional you all early XXXX some is know XX now the in next of which happen even efficiency previously XX you're gains, it to a add rig where for rigs issue year? might planned, added not just I rigs. was that's I'm with or rigs the till

Joey Hall

Hey, Whenever much see you to John, answer a question. start XX% this it And the is All you doesn't times cycle your efficiency winding is this year-over-year, count. down to take due rig gains. improvement Joey.

the efficiency yes rig So is to reduction purely in due numbers gains.

John Freeman

of continuing for growth expectations my then U.S. to macro what kind opportunistically kind the question, of sort changing reduced. of sort be levels really for just willing with good going fall if counts of done of Brent. hedge hedges just to side XXs sort curious of to historically anything price mid job continuing forward? of that's to follow-up kind And the the rig be just putting maybe on you'd you're thinking low If Great. I'm seeing that a these on you've

Scott Sheffield

John. Yes,

flow I’ve XXXX public is a my I about cash to my targets, through it that to slow through cash activity, of firms free has Permian talking lot of but model that the are with to get equity about public significantly next flow years, private going lowered on record think to over WTI. to significantly, in targets we the of and NGL start going we've with independents regards free down consolidation been prices reduction the have I've the deviated still from several issues XX% the do to reducing are annual adopting, XX% long-term

lot acreage. that propane are XX% is for to the strained down have, the we're companies especially Now of drilling of WTI parent-child lot left revenue, and Tier that butane, the sheets balance X a all relationships companies having, people of

about to So I'm much optimistic regard probably getting more XXXX in price. oil now XXXX to

think long-term. all worry U.S. that is more very much shale beneficial. about don't has And OPEC to that growth I

to we on over Brazil going XXXX big So Guyana next Norway, three coming XX probably the because obviously. much will not on years careful months and there's are continue, discoveries be countries in to the after bringing Guyana. that XXXX more the

bottom regarding oil of probably more end becoming that the definitely at price. the we're I'm But optimistic cycle

happen things XXXX we China still in and trade more going but happen, be go hedge time we that to may the XXXX as may to XXXX agreement, other cautious what with we're period. protect to So into will

John Freeman

Thanks, Scott. I appreciate it.

Operator

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

Ryan Todd

pumping the and shifts facility costs. and Thanks. quick step impressive over quarter. They the on Maybe reduction big We've completion sand and downs third year CapEx pressure a the efficiencies this follow-up from quite of were reductions. course and then obviously during seen

impressive gains this been The on this see big forward it's you pieces point behind side for you where completion potential the efficiency year? the at do going particularly further pretty

Joey Hall

being what certainly steps your did is would some for have down things perspective a had this I catch and transaction. focus and made I cost related and able huge and get And particularly reflect ever all big focused these XXXX just tremendous lean again, people of primarily ProPetro and operations gains temper but the slowing the on to on time to And best the team to time, year methodologies. we from one tell a happens that expectations year efficiency performance. manufacturing breath an we Ryan, because gains cycle Yes, reduction year this improvement in we

And that's this what transpired slowdown. last during

big expect that we’re So I but able also I to to your commentary basics make going the going but to forward have wouldn't and gains correct focus room see that suggest huge improve. wouldn't on forward, we just leaps is don't

Ryan Todd

Thanks. activity or growth whether the over you’re and And guiding at back-end quarters, you or should relatively or on oil in to production quarter, of provide few loaded? color see next flat any or trajectory the any can high a maybe fourth cadence relatively level level XXXX consistent front least we on at a volumes high

Neal Shah

Neal. Hey Ryan, it's

additional look at we exited throughout rig year, the If rig But of QX of the you our from at sitting, terms of at you quarterly XX, those if we a quarter perspective reflect how at we're XX, the rigs in the count throughout added POP POPs. started year will from XX. our at to down a now look lowest our QX perspective, XX. cadence cadence rigs the we down Right came dropped

of of production driver that's that oil relatively in flat main kind terms the So being quarter-over-quarter.

it. you as yet that's to to reason see forward quarter-over-quarter framework. precise consistent teams any progress setting formalize growth are and just really through why XXXX, see you Now, working the I plans XXXX. the look But would as the But don't we still for we've

needs I we'll And work that think to know, through plans. their the as you announce February. precise team in

Ryan Todd

Neal. Great, thanks

Operator

take Fargo. our with from next now Wells question will Kumar We Nitin

Nitin Kumar

taking guys little bit my could and you a questions. thank talk for morning you Good if Scott,

M&A the market. about

mentioned you Peak the We deal. Parsley Jagged You DrillCo just know, the saw strategy.

are how in thinking kind acreage, you guys talked about interested that? You running X Tier just of about

Scott Sheffield

or the should over type to independents. of lot their and to next those very contiguous the most are improves a will still aggressive did There's inventory up have to probably not decide consolidates go bulk to in acreage to sheet, regard not companies is record any that three transaction any majors I Parsley like whether on the to as balance saying the accretive that acquire do. Yes, They decide up think years activity. drilling whether not or two of

just that, get a while, so to happen And oil for it happen not market. besides better if it may we going is a price into

about that's So it. really

Nitin Kumar

expect then just it the zone, D. appraisal from Got Wolfcamp confidence XX move on back should it. to And that Slide to gaining Obviously in development into be mode? going when

Joey Hall

one you acreage if can a to those to watch appraisal of sure and this our the see B, economic Wolfcamp and fully the that also do continue fully beauties sit still these large curves position and long-term you that's from we and make opportunity more Wolfcamp having Spraberry the to you from traditional costs and and production that the the even to back decline until go shale is results have such the look, at your look costs can back in develop D. Yes, make and understand them to back A, wells go we meantime, reduce Lower and Wolfcamp understand

will see went appraised X%. come and to So But Mill put would a percentage in year Wolfcamp start transition look Jo into what sure I that it pretty probably a program see then little the out we I for smaller understand this is an pretty for we next we it this continue we up small if to make what wells you through we're probably years, year. you Mill slowly year our a program. to more at our was after adding perspective while. it, And percentage into activity similar say next to a you year, that this year would but fully But started from would able Jo in be suggest program you'll I the example, D the saw of to similar

Nitin Kumar

questions. Great, my thanks for answering

Operator

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

Jeanine Wai

Hi, good morning, everyone.

Scott Sheffield

morning, good Jeanine. Hi,

Jeanine Wai

friction you're efficiencies the way gains or question meaning Arun’s is with biased achieving more adds the more a adds. rigs that it perhaps that the the about think Can operational add budget XXXX be three rig you on to to with CapEx right historical rig you've walk following-up cadence maybe morning, or balancing mitigate about how downwards. Good faster on to in the with ratable versus really XXXX really talk trying efficiency two any having to on can been through

operational therefore, so And might on friction be for of kind concerns overblown XXXX?

Joey Hall

to fleets, the efficiency fully just the XXXX and wouldn't you we was look to I frankly Yes, let's friction. even just accomplish account just The we program of work we look because at gains didn't can the I whenever the in that efficiencies. frac say the just less you year to we amount fleets now of beginning would the would like during just sooner be gets but anticipated frac the you dropped than Jeanine, the count anything related to a expected. more rig need no, you put we you changing we operational need And amount as that what equipment certain grow at continue saw rigs, had XXXX, numbers play of year less game saw out. of out and

not perspective. it's any cycle to challenges better drilling it's and fact XXX% completing at operational gotten or to just that better a due wells we've time from frictions, So related the

Neal Shah

POPs yet look where XXX we're we're the year, right, XX at piggyback average on response. to with started Right the of if sitting rigs, to an down that you to Jean, XXX. the range POPs of but to XX And XX the now going XX we are Joey's I'm taking actually we're going XXX. high-end to with average of of rigs

as CapEx if has in our as by the anything, itself I'd resulted, Pioneer efficiencies increased the performance the less has the great numbers say which in well production. teams So and operational manifested friction, from

Jeanine Wai

very questions. Thank great. That's for taking my you helpful. Okay,

Operator

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

Charles Meade

I to and to Good team ask morning update. there. an your wanted you Scott

Scott Sheffield

thanks. Yes,

Charles Meade

flow pace the Yes, have you update your if us at takes price generating. guys you maybe meaningfully. free up could have going I what use assets. could look the forward, thank these you as on an to ask give wanted your you're I that big that deck buyback you. cash big XXXX, chunk about on how But dividend other a upped the depending of differences you side, thinking you're And

you of can related there's a going any sequencing together the bit how buyback go little a about to forward? So talk pieces and those if pace

Scott Sheffield

billion then it Yes, all much we're evaluating regard to the how how and still $X dividend cash we're goes still, How to pieces we goes we buyback, still much goes have the deliver to as balance free much the buyback? sheet. to and a flow,

be next that in So we'll several discussing our upcoming weeks. board meetings the over

And important. point, don't so at to that specific we in it's point any We have think all this time.

back we as get our we'll develop So you with plans.

Charles Meade

Got you. comments to your your of some And remarks. it. -- one go the Scott, Thank then of prepared or want to I in back

think you be practice? that words, I'm other industry whole? should you industry made of kind In coming you're on You what you intended, acceptable socially the industry towards a that, regard. you've your what's do kind the for you venting do clear. But acceptable think the in a I flaring and that pun in a made are curious change of as view and is or pretty still in Pioneer sensing no or think

Scott Sheffield

made the that’s speak First Governor Conference a by at April Mexico for Bordoff’s always March last black and so Basin. statement. in Jason be to It's to the had if spoken the Permian and a like no term Pioneer. leader a recently Grisham and We big out a good of there Methane I eye Yes, chance a New at Conference

become want years. what's over to we so happened five to the don't the And Bakken last

so something And to it. need do about we

I do taking thing. internally, other So do steps in something about it. the want same every we're Permian company And Basin to the

the follow leading, and people just the us steps. we're we this take want So to and do same

met need to pipelines, that's in and more faster. able solve get I also gas pipeline, issue been an haven't We them

agreements commitment and to in gas being to do midstream lines but lines XXXX can on the so don't board We relationships People legal Pioneer, know we need from will big make coming they the Coast, still one where have Basin the more that I but people committing commit to Permian definitely on gas. have lines. work you regard your the and MVCs like of have those more really volumes it out they Gulf companies going don't to to take early in of two gas

out really need a to to take especially But didn't until start going into figure need next took to we it and just off, need to the just off, it off, black take way XXXX and it Horizontal election. shut eye down the when we

Charles Meade

Scott, thanks for those comments.

Operator

We will our next RBC take Capital Scott Markets. now from with Hanold question

Scott Hanold

of to Hi, little the competes all thanks. Yes, on like in other the you'd of you terms good core some in provide some context morning. or on more of D from to Wolfcamp color competitive what capital a it to bit it maybe Could kind continue areas? for see it make how

Joey Hall

D is it expensive forward. think everybody's aware Yes, Scott, Wolfcamp challenging. But a deeper, going back to going plan more is bit is what I said earlier. It because little and is big more our it part of I

last can configurations in intermingled to four spacing we've wells, optimization, objectives. tests, see executed different some was which different One Whenever was there also are we spacing these areas. XX you done our try were completion but several there successful, in

to And of execute, to that the just side, we it sure understand were to and those opportunities cost are fully always things ready get make spacing I at understood. time we for again, takes said, down. be like looking cost So the completion, the we whenever impact optimization,

to the we things of competitive very the more the these So we know them by portfolio, more optimize just ability want that to strong have to wells and and go the understanding the an luxury and time make we but solution D we just for with and footprint performance. in rest best, essence the competitive. them Wolfcamp better because of will that, continue Having are said and of their do large our a because make

Scott Hanold

maybe improve inexperienced? just there Or right for on all cost you things other and well some aid that that in is really the trying Okay, potential to reductions, that? are now

Joey Hall

the in Wolfcamp D? Specifically

Scott Hanold

Yes, Wolfcamp the D. with I’m sorry, specifically

Joey Hall

challenging. deeper, you're think that Yes, secret wells, don't any pressured it's stimulating whenever these more is higher I it

we've adjustments make want but seen executed learned these you every But sure more, doesn't gotten cost does it that that performance. that better. whatever something made now and wells we've to So, impact we've time you

hand. So things those go two hand in

So but just better execution, now seem performance gradually things gotten and we have two at we tie together. to those understand

Scott Hanold

understand. Okay,

speaking? I was by LOE issue are several of you’re how then are that? of during power some and because the that to looking Okay hot that impacted And what areas on summer the of generally much at an some you all in cost, weather, your mitigate things mean

Rich Dealy

summer Scott particularly it of during heat were Definitely, August, impacted July, in us higher. just the the because quarter

gas So on electricity level. side both field then the the it processing it takes affects us and where

time, at to So, we're part, rest from rates it, time this to see seasonal, but and that refer hedge we look of the the most and to it's so more through as we move them look would for back to year. period normal that expect time past

Scott Hanold

Okay, thank you.

Operator

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

Brian Singer

you. what a of well peers? XX these improvement? improvement morning, moving your over are relative do think Well day see productivity Good performance versus on slides and the absolute of potential in highlighted further point you some about is making Thank drivers well XXX and XXX you scope and time. XXXX and and program, you How Slides XX, the the rates when

Joey Hall

there's you closure whenever at think you those the can lines, that see obviously -- I look year-over-year.

in to ago. I years improve it it's compared two was point that well to opportunity obvious or not what think So a performance is reaching the we're three where time

From convergence because cluster to understanding generating are tweaking there. the and perspective of the economics, designs science in just oil. doing at completion a trying improve end to spacing, continuing that, So the produce we're there's reduce more costs opportunity to to still the not regards of definitely day, we

all that to return. want make perspective, from we the So a completion decisions make sure have that a we

at technology, like are from So that don't of to But year-over-year. going well. perspective, opportunity or is at expects I that It'll continue flatten kind that out itself, it curves, eventually things think EOR we're looking improvement I all which new other presents into. as until looking some that said, Pioneer looking to anybody those see we're of

Brian Singer

for to the technology, XXXXs, company? improvement that is XXXX flattening barring are do you and now that the up think And that technological happening the XXXX relative

Joey Hall

it pattern lines just converge you’d going to I a flattening. Yes, do are see and think see you'll like you that continuing the

said I think you it best.

Brian Singer

made follow-up, authorized. my of some mentioned need repurchase what is But wondered of of as going already terms some have dividends you that leverage? what's the decisions sales. long-term ultimately, forward about then is level with think that pieces share what leverage do beyond talked earlier and thanks been all your was because be the asset Great, still you acceptable targets/acceptability to in I magnitude right and But sustainable the you'll earlier, moving

Rich Dealy

company. have Debt Yes, X.XX, the we leverage cash flow the target to Brian. at of still same

no there's So to that. change

Brian Singer

X.XX? to cash it push the to sales to free fair shareholders willingness it up get operational in more below or say asset then be $XX would world if return Is that you there a to cash that, flow to

Rich Dealy

Say again? your scenario

Brian Singer

to would continue world sales If i.e. there be we're operational to in the of a $XX of free willingness to it to flow asset via capital because is and would regard mid-cycle or either you get return or X.XX, you program to or as X.XX? below whatever add leverage cash normal

Rich Dealy

again free all flow is around, to to going look of cash still flow cash out at our long best see our free what go share and balance in whether to early toward, and I'm a or and I'm go addition we're strategy dividend, traveling going shareholders in the dividend our to Well, debating, increasing we're to we're long-term primarily trying determine But year. of variable sheet. next to and buybacks between not to what's regard

to how and buybacks share said, I like And distribute.

mention that did over the we I $X at Barclays several so billion. And roughly next about approximately years have

come to trying plan friendly that going of it's measures to price as toward such dividends. what all those. regard to is. two-thirds disperse with three in we're the oil related And Obviously, that buybacks so of and up shareholder to all with ideal deck And the

So we're I can't that regard, give that's how specifics but any in thinking.

Brian Singer

you. thank Great,

Operator

to We’ll Deckelbaum now with move Cowen. David

David Deckelbaum

to Thanks for me. moving

bring that thank your some Scott some side? perhaps your might if view swap in brand mover you of Just pricing? locking other transportation huge some contract of release outlook this you had to asset the an you have is TI of participants to to and if out a up capacity. around arbitrage advantage that on couple that brand you and a early you look capacity, willing cash, had for versus that And Curious, questions, uplift all the now of that is in Midland wanting time. pricing, there that year, or on place, how some firm guys, ask what's getting you agreements there's

Scott Sheffield

Yes, I'm than is expert, going let by to I do. Rich more he knows far it about

So him this I'm going question. answer let to

Rich Dealy

Gulf see price being Coast question, oil to being the would markets of by good the long-term exported. benefits Yes, I and higher the we moving that say

trading to this right see be So at those scenario a don't contracts thing where I out the of do. would point

incremental continue In and need our at capacity four we or trajectory look so. fact, three years out or to we long-term

continue will it’s something at I WTI up the of Brent and trying Midland forward-curve, look $X volumes. premium because $X trades roughly and think the So if get today, at assess. I a between filled And think with to to to pipeline's you we WTI

the long-term, can our a be demonstrating still have where think oil it Coast advantage it'll export the worldwide or either Gulf on sell market, been we've get uplift. price we refinery But we I an into that it to where

we're think with philosophy. I that going So to continue

David Deckelbaum

cash the Appreciate door I water And water big guess the in last that. or of items could ticket color handling then in is, terms the future my proceeds just larger around be one the of one sourcing. something on

online You Midland have at of with City end of coming the XXXX.

to you or the that guess. would decision in is factors What are around there source about sort water be the would very thinking be cost fit low your portfolio same a weighing of of said a I How right You not? there. are whether going made because now most you time,

Joey Hall

project of City specifically? the Midland Meaning

David Deckelbaum

Yes.

Joey Hall

large of next. certainly, is forward. cost coming contract And water. a very next That's the because it the into source we is water low barrels it year, our of Yes, in going on of of plans a that a such early excess fact and the part it XXX,XXX late significant entered obviously

holistically to we that that to in we leverage opportunities water make sure are specifically well our Having more our abilities reducing system on continues focuses looking purpose we a and it big Midland our at and that to looking said at the best I our of to But is of deliver City execution. that. cost. sure make in project part the water value the that is that ensure system of to want of mean,

David Deckelbaum

Thank you guys.

Operator

from question Michael last our Heikkinen with Advisors. take now Hall Energy will We

Michael Hall

Thanks, good morning.

follow guess, back up on the of around I of to, commentary wanted some and kind rigs. the Just XXXX in capital

seemed I to that, have XXXX? what to side number be think if Arun, we of you curious current something the shy confirmed XX% just targeting Street on into ought environment or more response the the volume just given reasonable but is in capital heading

Scott Sheffield

Yes, focus it's But rate. long-term, too now that right we're in early to growth on still that. mid-teens

Michael Hall

model square a other quarter just question And was of the the cash statement things, cash of kind on reported had was lower, Okay, trying which flow $XXX guess seemed of just function statement our on the of the to end at capital. balance cash million side of CapEx the I of the to relative the or flows, fair the abbreviated with of cash flows of enough. the kind to be the anyways,

flow you reverse the that help going next statement abbreviated something $XXX? of, $XXX on that'll of there versus the bridge quarter cash the kind Is in on gap or between the can

Rich Dealy

as quarter. that the you slowing third during timing. Michael, during second just of the year, them. mean, paid were as quarter They those it’s can the about in we imagine, talked activity were end down we and the Joey bills Yes, came I at accrued

did can drop. you So payables our see

and would would that that match So then in the fourth really down that just than third it's given level timing, just other expect consequences there's come really so for quarter you just quarter, I the the think timing. to of it's activity nothing there's nothing

Michael Hall

Pretty you. sense. thank Make Okay. good,

Rich Dealy

Thanks.

Scott Sheffield

go Yes, ahead.

Operator

ahead, Sheffield. Mr. Go

Scott Sheffield

thank quarter. Okay, participating sorry. Again, I in want this to for everyone

Bye-bye. later. next quarter. everybody seeing to forward Looking Talk to you

Operator

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

now may disconnect. You

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