PXD - Earnings call transcript Q1 2021 | Pioneer Natural Resources Co.

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Operator

Welcome to Pioneer Natural Resources first quarter conference call.

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

Neal Shah

thank will and Today, cash outlook Thank a for you of with you, accretive Nick. be to free our results quarter joining Energy we Good the first highly DoublePoint stronger significant strong acquisition and everyone, leads discussing generation. us. that flow morning,

also level will we the high top-tier we it After standards With over to I'll call your that, our and deliver to questions. will of the that, for detail teams adhere. up which to turn the ESG We continue open Scott. execution

Scott Sheffield

delivered Neil. generating very Good you, $XXX X. for Pioneer morning. cash partially Slide first adjusted Thank quarter, flow when strong a free million approximately of acquisition cost.

contribution continues which the cash the to about and as move up includes flow $X.X to DoublePoint higher the see can free acquisition commodity at our we prices up. that strip That's estimated You obviously, very strip at pricing, 'XX increased billion. accretive for

flow a remain and on slide. will be million, on And again, improve through of stewardship magnitude the generation, You subsequent can see $XXX synergies, environmental flaring operations. highlighted which our will cash our which minimize we'll focused free the

of company Basin XXXX. be going with and barrels the over XXXX, we're the of oil scale, economies brings Permian. the That day now producer will just lower into can facilities in infrastructure. Permian you largest And the in equivalent capital, per see cost of Lastly, DoublePoint, shared XXX,XXX in

X. to Going Slide

I think guidance, first the our to quarter the key levels new all in production, the of staff, of the our storm end was field sooner, solid Again, winter here, from field outperformance also point due production back of the and operation have top drive oil our and wells. exceeded strong of results. outperformance execution wake online the bringing

Going X. to Slide

XXX,XXX Basin next will of net of Neal -- As we accretion free our on acres flow Midland closed on variable transaction heart core mentioned, increased DoublePoint generates over enabling the approximately per share, take to in our the over dividends up several yesterday cash This double-digit Basin. Midland core the This on XXX,XXX acquisition, years. right the acres.

idea give which an how count Now XX% just later. drilling the we contiguous we'll talk Midland operational in of us of synergies, and the to frac longer you Rich basin the with dominant synergies, continued allow rig for count. basin Basin, and rig fleet will Again, the XX% laterals are on about have acreage the

the day equivalent press of averaging to moving months DoublePoint barrels equivalent about in which the oil release, of XXXX. this barrels over as exceeded production Our of XXX,XXX per we're X day forward production ahead discussed way exceeded -- as schedule, is oil last in of of week, XX,XXX per

to say of be rate our I as you will It'll and X, years several we X% capital the at leverage. remain our back We below, look over look a -- most XX%. continue year It's level. years, the down Going it strip, our of several to reduce We'll production We X.XX over our to our very returns. below it to continues to to corporate very, really, to and drive oil We'll Slide When reduce to to model returning continue mean, -- the per continue thesis double-digit the below returns, XX% of and committed next shareholders. strip long-term year reinvestment at last low move actually investment our next today. generate year strong growing thesis. be it XX at actually up next X the key here.

So we're later. about return. XX% targeting total more a We'll that talk

of the flow X, Going flow our the company. several increasing the over blue to adding now, -- Slide $X darker free brighter on cash DoublePoint with showing to top next about years compelling flow free generation. XXXX, total at in cash We're billion color, Energy cash free

strip a this is ago. With strip, the a few days and

$XX continues strip with number move flow. cash free the So billion the up generating to of moving up,

$XX current As of $XX our billion. free billion enterprise billion already cash our we have of on plus total including XX debt. this addition is that increase of enterprise XX% actually over -- -- over $X a That's DoublePoint top billion the represents value, The the market -- value, XX% $X stated, taken cap approximately flow.

peers, and current I XXXX. there around have to the I look that Rig's yield flow cash is -- I toward what's think margins out think at our do XX%. the in stock paying leading place years and dividend and fact X.X% over this our bottom up to in really to current of spot to move second from Devon They're stock X% our have that XXs, top great year, slide, Devon. year driver price, XX% Devon's low over their That's above the high for comparing is out versus our X, And just in over you the dividend to them X.X% the our XXXX we're next in addition at showing X%. X% Pioneer the key will then to moving up following we're primary price. basis when a at call will to moving low-cost the quartile. in the move

of XX% approximately the the Mechanics annual be X. the variable base free long roughly you after initiated long-term Slide dividend is dividend, at base dividend flow look paying to emphasizing expected will quarter, company's dividend, -- including cash cash to mechanics Going X year. all it. just Last remaining free is next shareholders. base model. paid. checks dividend. our dividend When of out return is the to we Between Again, the shareholder the flow the the on the and we separate Obviously, returned expect this shareholders should of to dividend subject variable XX% -- Board base the year per variable do will and like be approval, term,

Rich. to now turn over me Let it

Richard Dealy

to Thanks, capital. for Scott, of the our XXXX and to updated an with Slide on we And going closing start I'm transaction yesterday, X. morning. good provide outlook wanted and production the DoublePoint

at additional production, BOEs per currently the we the and producing XXX,XXX now by As to day, quarter day BOEs for a second of about planned of XX BOEs that to ramp day them expect end to to and POPs XXX,XXX Scott is XX,XXX XX an between the and mentioned, with maintain end. the up half quarter We year. DoublePoint per plan

that's by actual storm the embedded so for our And performance with able adjusted we operating we results QX in quicker-than-anticipated well have guidance our QX of from were reflect And guidance. the also and to execution where our to winter the and our along strength teams. production updated recover

production to per of of XXXX BOE XXX,XXX we XXX,XXX on a barrels to XXX,XXX. And oil per day. XXX,XXX barrels overall, basis, are So of forecasting oil day

of to transaction to to remainder cash Looking year. the at on million of adding billion of flow free flow incremental previous is the transaction now billion is announcement capital the to Scott what $X.X $XXX $X.X $X.XX over earlier million cash were billion strip is projected related year. about, at than leading originally capital, billion $X.XX DoublePoint bottom for we anticipated. based of the the talked we from are This the on Total the which CapEx about able of prices, to of course $XXX close our since up

Turning to Slide XX.

XXX to see we to and full our to can rigs -- You year, a for XXX POPs. XX plan XX average deliver that

just you X reducing DoublePoint fact X of we fleets. can drive consistent X XX from to to X% to X to are the plan year, X reducing X%, remainder down fleets. X we're with growth the our Currently, And This frac to X and for we we XX% think take does by term, that we that on to run DoublePoint, plan about XX frac addition as plan to the rigs reflect with rig that rigs over term. the down and year-end. If do of growth at XX we as count rigs from our longer rate the long

XXX,XXX You in acres acres, the over and can the see X there Basin, on the Delaware. predominantly XXX,XXX Midland million map in

that Delaware The for how Delaware of well forward this later efficiency terms burden. XX% will in oil to see same higher that the the the year. we Midland team we've improve see a is can reference, our Basin especially first Delaware plans, royalty quarter achieved in we given oil and first In Delaware. the our just in drilling bringing point lower was start production and looking returns, wealth gains to of we that further cut the And

to savings. we've to update $XXX related the On Parsley to our transactions. synergies XX. Turning accomplished and Slide Parsley want provide planned of I on an G&A, DoublePoint million

So that's -- we checked that box.

G&A. to million annually they're As it $XX DoublePoint, running in about relates

an Parsley's expect million of of beginning XXXX. $XX bonds under there we interest, January. we basis, third to in on we'll that the refinanced annual be bring On and quarter We think

the refinanced under average those X%. we those recall, weighted coupon. on you refinancing this If And well DoublePoint volumes later X% We plan were month. over on base a

tubulars DoublePoint's this, first synergies, relationships pumping, So other our sooner able our paying on and Joey of leverage like participants few to savings to we're fully in our are $XXX,XXX -- on more acreage originally will facility that during operational seeing tested the a yesterday, that the have interest industry casing talk quarter, to also, we're we wireline, done successfully seeing and accomplish and making like to industry off are that the cement, of by than savings along month. well. We've great On per savings significant things end about we progress with credit and significant name examples. simulfrac supplier and this those. we'll $XXX,XXX We've pressure on happened been going anticipated,

we'll something only also So our also team Pioneer's I acreage. able is that, to Parsley's to and DoublePoint's advantage we'll The to facilities. development optimize across to execute has that able existing continuing execute guess, take not plans acreage, of but be this be across

reuse really advantage that of us to XX,XXX we acreage system, X,XXX same savings. we can really salt to as those out significant wells. DoublePoint Scott much So gathering -- production laterals and we've drilled facilities And locations allow to capital adding And Parsley we've really disposal, into mentioned, allows the disposal and our is contiguous looking water benefits do, at drilling essentially one combining a to batteries, by is move then this successfully those up XX,XXX more optimizing really sorry, other and XXXX the really as program, longer the position. the feet tank drilling to longer of XXXX from water take which at, drill really laterals lot what fewer that efficient on, is for feet, of been adding of

across early, value of the blocking type just laterals. be of So long-term should it drill to to our significant but portfolio acreage it's that and contiguous still add having demonstrates able benefit

of to trend X we've from Slide our Turning acquisitions. synergies the XX. the past over on including reflects accomplished years, G&A Really, just the this what

G&A $X.XX per $X.XX year-end. around forecasting are BOE be by We to to

and think this returns shareholders. is of return our the and had really improving -- highlights of, I improving capital an focus of company's on so, to example And the just

cost overall our structure. lowering really it's So

costs, idea talk well of to you've with turn free per LOE, to down So about With flow us cash lower seen BOE, profile. our it Neal BOE, lower I'll drive improving the all breakevens. per lower interest that, G&A

Neal Shah

see a a how high-quality Rich. Pioneer's can us to below as E&P barrel realize Thanks, WTI our positions breakeven peer the base XX, $XX On within asset only Slide you group. corporate

I'll price investment the underpinning stated shareholders. financial to to portfolio, operational turn that cash the low and resilience peer-leading and low and With significant our flexibility. and free quality Pioneer's rate return it's earlier, attractive Scott drive this it oil breakeven capital of Joey. and This of strength breakeven that, flow generation over Pioneer's As our reflects enables price

Jerome Hall

going Thanks, morning, to and be on starting everybody. Neal, I'm XX. good Slide

Our resetting the and teams streak another drilling bar great continued quarter with completions of gains. their of efficiency

these still of than lateral greater X,XXX achieve but gains execution to program range Our well. is pads X This QX, to feet savings compared be days, to day. contributed simulfrac per where improvement when we in of we to XX% able successful of the the $XXX,XXX It's in were our average. completed to a approximately $XXX,XXX with per estimate operations early

second the trials to continue and our will operations We throughout refine quarter. conduct simulfrac more

water thank teams for leading DoublePoint. focused XXXX on our our of of Still, our for people construction so those this is which reducing and per You integration to want tremendous pad robust efficiency production and will slightly our contributes pad be operations, the down integration planning, safe schedule. a start note possible of all increase, DoublePoint from remain to due management the only performance, in into I and we of know none improvements further this our footprint. our to efficient and illustrates keeping also I teams, our also wells use Parsley our wells completions, quarter, is pads their peer that this drilling per projection last seeing continues want our and facilities, that with development gains. expanding to on that are and environmental We performance technology. support delivering in chain slide would emphasize I to supply great and

congratulations the to going Scott safe efficient so I'll that QX. I contributions I'm and brief. XX. in quarter, their go to for so to execution teams be our all detail know in some to covered Slide And last this now

So liquids day, hydrocarbon national of per lowest one chart represents produced operations and intensities barrels million emissions globally. oil the independents. Pioneer's with than largest majors the companies, of COX barrels associated this XX more including

will low-emissions Scott. turn with to the world. desired that, over barrels I'm And to continue going low-cost, it Our around back to be

Scott Sheffield

and late new of XX, We've of Scope year, compared Joey. intensity report peers intensity is Parsley Pioneer our which released focus hold to importance. you, reduction significant reducing ESG. of pillars X flaring both emissions, all inclusive continues reflects strides and Pioneer on very Thank methane to last our goals X Slide sustainability about On in gas and strong the incorporates talked ESG X.X%. of greenhouse Scope great emissions X.X% low both. on of a

with stewardship. bring Pioneer's work of also standards assets will high to line DoublePoint's We in environmental

up reflects to driving We the to for also continue for next the work. in there XX, to and back cash level, shareholders live workforce, we Q&A. diverse stop shareholders promote flow Board to a years. committed which and the up over several community and all Slide on really which We'll open way Again, the value returning the we're our it

Operator

[Operator And question Instructions]. first Neil from Mehta with Goldman our comes Sachs.

Neil Mehta

in opportunistic as Scott, done to get first a and guess, Or in question acquisitions DoublePoint were here, the Parsley just Pioneer I view of these that and you've is, two made sense a roll-up you and period whether short wanted consolidator in a both story the perspective, just in on time, transactions Basin? two your natural the Permian moment?

Scott Sheffield

No, will that two be focused pretty on. highly But we our both us. great came team components and DoublePoint, earlier as those already are to bringing synergies started to the the opportunities We us October. because had accretive, talked They're two. confident Basin in on are us -- we thought. Basin. the Basin. focused we Parsley than to key came in primarily on accomplished on Two the Midland Midland and about much Midland lot They're of we able of have opportunities. we're primarily the They stronger, makes we earlier those much closed last had I'm so before a bring

The other other large Basin. opportunity is Midland in mentioned past to available, analysts not our in I've the shareholder base to opportunity the other the and

Neil Mehta

take another transactions digest to some one? going you're these that assume to moving before ahead fair with So time to

Scott Sheffield

Exactly.

Neil Mehta

you Okay. just And one. is This the follow-up the guys. with really is on X. to a walk of And kind wanted Slide through math good I

in cumulative any if of of cash XXXX. $XX sounds got you $X Let But off. me billion this free know flow, billion

variable. billion On cash XXXX on like of cash or dividend, X $XX fixed XX% so, the of cash Over So free period or that you market period, you've through billion yield. year. slide, on it's from of XX% said $X either that paying per the flow think X-year got out a that's free you flow. cap I plan flow years, to next $XX in of And XXXX, form the billion a

cycle on is I'm through add? it yield anything you'd current should this thinking Anything And assume, So market cap? kind on missing X% the to fair about based there? be dividend of that we framework, the

Scott Sheffield

what backwardation. Neil, to that's -- stated. a you stated why you we the got in And the and realize we all strip is perfectly, got numbers it's had $XX

today current So take go strip it's years. the if through XX and you out 'XX,

So you increases. can is, flow price march imagine 'XX, number the forward the what cash you the through significantly free if just current

your the billion. an of with is even But X% it is So plus $XX extreme very backwardation, good. calculation

Operator

James. And Freeman our next from question John Raymond with comes

Scott Sheffield

Anything else, Neal?

John Freeman

Can you hear me? guys

Scott Sheffield

Operator?

Operator

Mr. ahead, Freeman. go Please Yes.

John Freeman

Yes, can hear you me?

Operator

can Yes, we you. hear

John Freeman

Okay, great.

that. about Sorry

I want just sure the... I Rich, that to right one make heard So on

Neal Shah

we are there? still did you Operator, you? lose Or

John Freeman

year not you, Just you me? operator? Can

Operator

a I can [Technical on just year moment you. Hold Difficulty].

John Freeman

Okay...

Neal Shah

All want we -- right, first of to... all

John Freeman

interrupt to that. Sorry

Neal Shah

It's Neal John. Apologies Hey, Shah. everyone on the line. to

sure we get reason in in. to to We're apologies as why, but we sure some back all take dropped. on to We'll and questions answer it all questions. we For on. Not Happy end. dialed our extend be ensure your required. But the

John Freeman

is John. This Great.

Scott Sheffield

John. never Sorry, your heard We first question.

John Freeman

worries. no Hey,

Rich, So on following I want up, heard -- the DoublePoint I was just to that -- sure make I legacy right DoublePoint. on just

'XX, Pioneer? So XXX,XXX after have to in the you that base if growth half similar X did it sort to hold of rigs, say of legacy the X% to to second basically to flat drops that the it rigs of kind X of dropped you X down rate you wanted kind barrels to

Richard Dealy

it XXXX. Yes. And XXXX, first for of to them that second say 'XX. not at I flat is half the XXX,XXX dropped we we keep would -- the free just

John Freeman

what yes. meant, I Sorry, that's

Richard Dealy

the in rigs will to low at to XX% XX move X-rig, growth, just plan. down moderates to -- XX% keep we'll growth term into that our rate, saying XX% production to it'll move X to -- that X% longer X in that's we're with rate but their back as that we so, range consistent decline mid-XXs be And is 'XX, higher our

their long X%, -- really consistent X%. it's we term grow take it'll at with that's what assets growing to So at assets think our

John Freeman

And and then you already made Slide synergies associated transaction. we you've on on to what's come. it. most Parsley you'd all up then, this the of all I of realized with sort point that the the of show that Got XX, said, believe, And Scott, progress sort synergies to the

the largely in mean that the that does sort integration million So that that up that? about think was show of in to for the the will XQ? expenses, by budget that Is Parsley way $XXX that, the financials

Richard Dealy

would it, water operational in -- about is still of wells batteries in, different those. disposal deep it's to We've The be to No. the think systems. that tie going and capital John, really tie-in it I to we're G&A interest. get the but some accomplished we before progressing, tank ones, year-end tie

So -- ours standards bring to of up and there's environmental. in terms their just

-- still there's still going progressing the capital So be year. that is throughout to

are Those made well Operationally, complete on that other we've on So it closer interest. accomplish, to to of our G&A the we chain supply able until good to for Parsley. but way won't done been things year-end. progress side get we're and and be on we've things

Operator

from comes Wai Jeanine question with next Our Barclays.

Jeanine Wai

Our first question is on maybe inventory.

what Parsley you update at X the the amount is inventory current the that Tier on a growth Now from And do inventory in X% right have that you the can number DoublePoint, us they're perspective? value both and you of think rate? portfolio, of

Richard Dealy

the the the combination of to our close locations this X adding transactions. inventory point, you, Tier -- X with probably with what Jeanine, I'd is XX,XXX Yes, things, these tell is at

these are developed, prices. get commodity premium low even all so, that locations in And will

there developed. So and long that's that's on we're a get what executing, inventory focused to out really

Jeanine Wai

Okay. Great.

got please you since on then, And have bit Can good. one talk about maybe how commentary longer-term a of activity I there. out see sneak could in little Sounds you if XXXX 'XX half you've back guess, of to fully the on XQ-to-XQ, just very pre-DoublePoint, and running? see the I be rate I'm capital bit was And up a little DoublePoint the in it for got you strong thinking forecasting Pioneer will now XXXX. last just X% year, this quarter, back see levels once when exit a still and set -- the a looks like DoublePoint, up strong maybe But favorable But rate could of XXXX. be exit the XX% year in commentary bit, back how to a moderating you've that exit. strong for half you of efficiency looking and

Richard Dealy

Yes, question. Jeanine, great

Devil XXXX. normalized think normalized weather. to when prepared had frac number As oil rigs a when about XX about BOEs Point, And it for for XXXX, I running that on we'll and think XX on and be we XXXX, X mentioned my assuming the growth from I in remarks, basically basis fleets. assuming to being that mean, days X adjusting for XXX,XXX XX like and But an Parsley X% then the I say a as day we

And Scott adjust And BOEs for it's look that a in things as BOE to those be slightly a about, that XXXX, so and oil on at over slightly be going day. you will when basis, talked in basically XXX,XXX X% growth.

Operator

Derrick with Our next Whitfield Stifel. question from comes

Derrick Whitfield

Rich Joey. plans Eagle of for degree is position? indirectly Perhaps legacy To their inclusive what or revised Double longer your lengths. The operational that to lateral revised estimate their plans, on now based plan legacy impact or directly XXXX targeting or

Richard Dealy

say Yes, as in and permitting development of plan earlier, already most those laterals, on still the team's 'XX Derrick, everything, we're well I'd talked of But are we because working we terms Point for and our about Parsley, that. and Devil of established. longer -- --

tweaks So longer we plan the And few think get more be a more as schedule can I they'll on -- purely likely laterals and our there but capital and in late just would But process. in our allocation here XXXX be about for the coming into part them portfolios may there. year, them of this appropriate.

projects allocation capital in of rate return of confidence in have return where it how those rate we that just terms looks and at looking of in and first. focusing doing that experience, rise and on those we'll have Now our start high

Derrick Whitfield

specifically, we've get Pioneer? further experiencing just depth, in the And with lengths, technical wanted little XX,XXX-foot on to you the you long could and think noticed believe appraisal And is lateral as show state we your view and Certainly, gain on to position from perhaps up contiguous highly where lengths and and lateral you're for as date, frontier to dig laterals data. a inventory stand -- guys your to most a comment lateral my follow-up on efficient blocky your optimal your development. challenges activity you few

Jerome Hall

as Yes, water, the kind into into we'll in to we've the slow days, particularly the program But but taking our again, moving risks, the land and the jump to we already. completions. than don't continue of Derrick, primarily a we've approach into mitigate with XX,XXX-foot longer -- seen rather of few done opportunity count, the tremendous able no presents feather drill-out laterals. were itself. those to minimal early the associated drilled we've I to In exact to the we've a quite risks laterals those And on taken know the trying mitigate job, challenges. being side

appraising you short story the portfolio lateral, we'll talking allows. the into XX,XXX-foot about, entire about question to appraisal long you're Are assume And put there, continue on that So our talking portfolio? those as opportunity I the the

Derrick Whitfield

lateral, certainly, XX,XXX-foot the to going applicability portfolio. of appraisal around within but there's your factor More be an

Jerome Hall

No, you'll XX,XXX-foot and see to more more Yes. drill laterals. us continue

bigger is of outside. said, like the I One challenges, drill the on

out. And great drilling and it makes it success, were and able lower them get was the pressures zones Parsley great those shallower on you had drilled in have success difficult. we because so some completed being and where zones We've and shallower some predecessors of had our more hesitant to

see XX,XXX-foot another use think forward. of continue our recognized, expand that we've going laterals us and that just is you'll So opportunity I to

Richard Dealy

They'll blocky just to forward. us acreage lease configuration Derrick, the highlights more be allow capital lengths. of again, contiguous Once benefit having just those and get going to efficient to and much

Operator

Meade question Rice. Charles next with from our Johnson comes And

Charles Meade

not maybe wanted up say, on the Middle, a bit a locations. the give is sense locations B, that sort sure, us down little sense is to Wolfcamp a Spraberry, I they can for this length more down long a to to across, Wolfcamp Can what -- of a you you ask ask of X,XXX us give break And how look? I is? picking lateral question the a drill and of a those bit A, of this Joey. wanted but I'm average question, X,XXX DoublePoint Lower question, on lateral

Richard Dealy

exact in have in of numbers Upland in the me. in front County. Yes. County here map, acreage Midland I the don't saw in on you the X,XXX general, the -- blocky and are down But

And been feet so generally, we're Typically, to laterals. to X,XXX they've XX,XXX. X,XXX drilling X,XXX

-- all for XX,XXX. going that surround X,XXX the all they're what laterals like. call yet to look terms their in that we that acreage. acreage be But to We assessed haven't would So longer in that it, of

going work. so haven't just And of clearly put there's can done that a big XX,XXX we We acreage on. be chunk that to

have So that's something we do to course to next few continue months. over the of the

so And remember don't on. for the apologies I zone, by later come to so more counts that. exact

Charles Meade

sense. Got that makes it. Yes,

Richard Dealy

-- in core. core all it's Predominantly, it's the the of

sure. Lower and B and So it's for Spraberry in all the Middle Spraberry, same X zones that we're D, drilling terms of Mill, Jo A

Charles Meade

sense. it yes, does make And it. Got

a a or underscores ask this it value appreciate really to predecessors, in the plan. the is, this foot that working of ever -- time of were you EV of than location. wanted you company -- have this Slide do or in or now. for? really of, free think flow could Scott, that Pioneer kind XX,XXX into to I get represented XX% it And so of right of cash I at the another years often you you is at XX% X. But your some ask X strip you more question really a And me, turn highlights we us And or glimpse given And a guys of you I'll don't XX,XXX case, X,XXX on XX,XXX maybe X-year a have -- that -- or even a when career the in recall group I

Scott Sheffield

No.

a out of last the XXX% XX% much But recent is the shareholders Pioneer XX to years. did over over returning than fact, as back our used we better us, We and per XX model, cash performance Pioneer. grew the In years, for spent less numbers. stock new year, me, cash the of for said last our think a they flow they at we XX% all shareholders what's over an Ember be going publication, confirm XX% And put flow to and interesting to example. has never and this I spending

think so unique and hope about environment And several model, companies the optimistic years. I next public it's pricing I disciplined. the all Because over a just I'm stay very

is this price -- around has one we're be it's be stating a to I've higher to to But a back know the moderated. is be go to obviously, supplied going so U.S. we demand It's been barrel. and this to going keep when up. because So to -- you XX. we're pay to over bring bounce not going it. down, and $XXX will XX the XX long oil closer going not going And between And to going to before thing going price. was what how to time to continue XXXX going have be it production 'XX that's

a $XX demand is reduce $XXX demand's going the to to price. going And reducing between and -- where take is barrel somewhere

of So let on much too care let's supply/demand I obviously, and like tanking market, the take cycles, better us. supply much the of coming and

about over I'm optimistic next years. So the very pricing several

Operator

from comes Paul with question next Scotiabank. Cheng our And

Paul Cheng

be hedging eliminated? how also From pricing more about forward. should very a optimistic company question. first scaled for going outlook. different we company. talking at Scott, that program that the about even back -- the look company And Should is standpoint, you the are the or That's dramatically

is question for maybe Rich. Second

say, to scaling you're DoublePoint, think you're now and rig X. X I the running, why down in

that about rigs, next probably XXX,XXX about day. at barrels grow that rigs, you for X to year, X you're as per will more, you you're think be about at -- stay X to X%. rig or that you're and be saying at But would then flat So able averaging going around able you

building -- program that for stock grow the to year? of a rig lot safe while why able reconcile Just you keep will rig lower be to remaining are you? the So this the year, for second be the half of will higher program of trying able next to this only that for by you year

Scott Sheffield

little for a had hedging just we Obviously, XXXX.

in of hedge So on far, is half first our that. core the 'XX

[indiscernible] that doing into [indiscernible]. price why we 'XX. probably more model range stronger Obviously. the we cash back [indiscernible] hedging in [Indiscernible] half have that's So into or reason free such One were of

Richard Dealy

really around roughly end And this steeper really I the program. production moving then, to being be John's year given that I growing from we're they've just numbers. on from about rate, that rigs, to and Paul, X have would plan a mean, moving grown you're on X-rig to X no in just it's base question, the down they the then because decline as by faster. talked but that exactly And -- X that right rigs the XXXX those XXX,XXX in the longer driven on their rig term of to DoublePoint, XXX,XXX. Really, the count,

of they XXXX. in when production in a moderated into XXXX, Parsley growing activity out ours. that. that that cut their came They their And and will low at mid-XXs back on then growth their when takes moderate looked -- get so saw that little while just back a were like growth XXXX, production slowed we this We X, in as from to to we're it but XX% big rate to back XXXX

the that anticipate thing So down same DoublePoint, and happening with count rig X to lower. ultimately move will and we

Paul Cheng

the be already? at you down be that it you so bring curve year? to that would can think At you quickly decline able underlying And grow X% X-rig next that will actually

Richard Dealy

Yes.

see end -- to I decline you'll that back on same normalized think I we the is of saw -- Parsley. that DoublePoint base thing with XXXX, by like ours back said,

being would anticipate range. I that So in

Operator

next question comes Dingmann Neal And with Truist our Securities. from

Neal Dingmann

specifically, continue question to type is your of primary just sort guys, you secondary space would first largely -- you on still assuming second, co-develop? you and going My what on zones? was And I are to spacing all wondering, are well and of then

Richard Dealy

Yes.

plan call looking that Our do to as development to we the -- full that. we're at geology that zones. for full doing co-development and And changed that still the and supports on XXX- spacing we full going it, it where either in ranges stack we're all stack, XXX-foot hasn't full the

development really that's no -- So there's in change that program.

Neal Dingmann

that? expectations and I'm -- some behind specifically price then baked including wondering, And the long-term the -- cash wondering, strip on just behind laid wondering quarter that. free quarter you of flow assumption assumptions just maybe And working sort sort of Okay. Scott, follow-up that, I'm out. could quarterly guide. out, capital just of on is -- the you that, about that just secondly, talk are the just on you wondering just a behind dividends? I'm I'm in,

Scott Sheffield

the -- includes It is it strip. Yes.

about As I backwardation. said, it's a $XX

And obviously increasing per roughly our X% a base and days includes XX% is today as year. year year include does next strip it's The So dividend the XX% strip on oil payout X% per few dividend, growing ago. higher. after It X% to and that. the base

Neal Dingmann

cap each -- capital in in change as in throw do well working working And you in there the quarter? the

Scott Sheffield

Yes.

Operator

to our with comes And Scott Citigroup. next moving This from Gruber question.

Scott Gruber

Yes.

the it about you starting gains appear to year. service assets, your at are your look extensions pricing. companies Obviously, intensifying. we you steel forces and the just on move, your be seen chemical inflationary of efficiency offset the to lateral you've have prices acquired legacy to now talk testing move to backdrop the and as and near simulfrac, gains prices inflationary speak So further term? Can Obviously, in next ability trends, assets

in color ability here these some inflationary on fully offset forces your Just near term. to

Scott Sheffield

[Indiscernible] Scott. being materials. Yes, is by raw inflation driven

talked So you sand, the particulars are really inflation. that those that chemicals, things seeing we're as notwithstanding [indiscernible] and about profit, cement,

rebuilding have to [indiscernible] [indiscernible] remainder well. it the really strips, year X% We're Scott. X% offsetting of so on not completions [indiscernible] on you the for expect and this point. case on pressure X% to seen be studios this offsetting drilling existing any efficiencies operations, to these that as and that We at the X%,

So to about don't that [indiscernible] see have efficiency. we completely offset any pressure we with

point, that's interesting inflection. an additional this at So

Scott Gruber

you'll some community Got it. you we to inflation continue rate think -- And about be should into offset starts just of or E&C inflation start modest analyst do think 'XX reasonable well? thinking be about as to as 'XX, to able

Richard Dealy

to assumption that to we'll efficiency We'll we'll to is have into to continue but it it and it going see gains. offset see, our watch gains, efficiency with be able to continue

Operator

America. And Leggate next Doug Bank question comes with of our from

Doug Leggate

hear of you okay? me all, First can

Scott Sheffield

I little vibrating. Yes. It's think a Doug. so,

Doug Leggate

below you, that sell relating how one, visibility appreciate for flow I've Neal, to one think And is probably finally your the for I question So then out DoublePoint. figuring the philosophical of thing side adding value question the preside goes a significant growth philosophy, over which very is other In market. global Scott, you in on great basin. about my against to discipline. to one got capital a now But free words, valuation cash question. guys I, DoublePoint business, kind supply, which your is

very So what grow a still Because a you're why it look little to at industry discipline. when kind capital saying already DoublePoint bit about contradicts you you're in XXXX? story aggressive growth of would acquiring

Scott Sheffield

CROCI and we all a per of hit all think dividend meet acreage. double-digit accretion help, variable corporate our our helps situation, -- making that add take got and we've I companies returns, if asset would time, of actually driver. sure accretion no, beat flow out we is other I focused on returns primarily the the mean, acquisition cash had that private, our ROCE, same to this can the take other we was core But and too. would value driven was could share. to we if value. that But the fact Well, our shareholders, obviously. key that significant -- other And corporate core double-digit and on the we deal net And At out

too. transaction did the So that,

to was part And are out I key have count, taken the your don't a They that's know answering a still and that too just of rig So hope growing privates question, the obviously, I've of And the a much. significantly. don't the and driver. that but are privates other at growing if the I OPEC large point this answered upset Haynesville, think situation in I the Haynesville in are lot that are question time. privates going

were your So answer question, that you... Or does Doug?

Doug Leggate

encourage is Great of just kind drilling Pioneer themselves crazy what they're of go going in question privates it no to about have Yes. to clear, really so this behind they encourage? I that terms the to the can the was going the because this. sell prepared worry. question. is guess, What bolt-on, be acreage to we behavior other fact that's that's feedback is and So to my do

Scott Sheffield

there's I to let It'll -- interesting to watch, be mean, don't I see. me me, think other

package well, has platform. Oxy only a Delaware. a the know right deal that I Chevron I of package think -- the in Basin in Central now has

to there's a sell going So don't this I other able privates see what in are that out marketplace. to time go. any other deals It'd they be this be But point few that there. at to in know of are interesting

Doug Leggate

XX. points My housekeeping is, you Okay. as you few that follow-up data Slide a may. Neal, it's in chart if probably And referenced

elaborate your unless easy about this given it's how inventory, to see mark. So the evolving? billion on cash breakeven flow price. price at accretion when a make a free if sustaining DCF a value look on the oil you I you're just using the you XX-year $X.X you stock. the of years call not Because accrete oil is you could if flow, wonder XX And do and what cash value But -- capital of accretion versus is in obvious the

sustaining how And how us you're changes exactly walk just this defining you can capital? through accretion? Pioneer's So

Richard Dealy

on Doug, where it you on kind start, And depends capital, the I'll -- as know. of Yes. capital. measure sustaining sustaining it you from,

we've I'll to QX year. full at from growth. the of We've towards XXXX the Clearly, XXXX, DoublePoint we capital what look so of call maintenance end Parsley in got And in. and generally, the QX got

really, we'll that maintenance year, think until we've -- that later pieces roll we on of forward when But looks of maintenance based before capital, get the like. come about then what together. and of got this quarter program kind we fourth kind all So out to

really for growth still the that and embed to early capital still that say brought is profile long we it's So us production keep this and just assets what together incorporate sustaining because need to these we've flat have that term to year. all we

come that'll and that, year. on this later tuned stay So

Neal Shah

Neal. is And this Doug,

that goal, the drive talked as past, pretty to cost we that companies can in at other really, accretion goal goal have annual that the CROCI. an is can that tell return comes bring and vision well-level to the modeling it high-margin stick-by-stick, the and And transactions. did we will the our a you was ability. consistent a did this. itself low high I do ROCE, then our shareholders. long-term I our the free the do basis. trade to rolling with to stock which tend DoublePoint disaggregate free on about within appreciation to way annual to did on that to in capital positive. tight capital in it returning accretive, we It's here capital within how and and the the flow us Scott we're to cash to, and I basis, E&Ps those historically they EBITDA. CROCI price our necessarily and itself It's the that understanding that When allow and embedded And model. We us On by really we in, flow over and and back Pioneer shareholders flow trade to be the what cash as years names Calculating looking you time then benefit and a with have operating ROCE said really Parsley benefit with both I in capital to able do band cash it on bear. manifest were our long-term and assets generate what an approached about the a the accretive. of from that Pioneer the The it and free double-digit that Scott can our provide leaks bear, to the generated flow. we look at to and trade cash to earlier, and it the assets. that drive band, E&Ps as accretion. course flow, and what that bring flow other annual of frac apply rigs cash in think synergies was of on model valuation, generation terms to free mean, and that level of sectors is free other wells mean, really, tight really alluded on The what I cash

Doug Leggate

Neal, well is multiple you know, free the the as the output And flow. cash of

appreciate reaffirmation I of that. So the

Operator

question Kumar next Nitin from Our comes Wells Fargo. with

Nitin Kumar

talked with I opportunity. Could really lot of look about to the -- leakage free see billion the revisit X, talk want tax money. strip you $XX tax a any know what cash but you the associated and growth, is flow Slide on you is that? impact? to I do appreciate X%

Richard Dealy

model as NOL. we an cash billion So well. $X about the on the [indiscernible] have [indiscernible]

accelerated higher about As call, commodity free now, and talked cash same flow, if billion [indiscernible] flow quarterly our think up, range something you bringing Scott that's prices our last of back prices, that $XX moved up -- also cash have using in deck in price that's liability. free price to as several XX% you've the [indiscernible] seen moved to -- but tax

And time the taxes things that that into your the so, we're with doing that the answers cash that's 'XX, taxes. the flow that period paying accelerated we're it 'XX before, from of that cash synergies now. what's Hopefully, of internally, question. when trajectory 'XX, That's into improvement paying built is model we're period looking that 'XX cash time at and free and in in commodity prices the

Nitin Kumar

Yes, That's especially scale emissions. And for my more other terms does. had was the you. appreciate question that. the in of as I life. you've the gas you taxes. company about a means Pioneer greenhouse appreciate the in look, comments more Basin I Scott, and of pay leadership it making Midland money

there are looked technologies. where you thinking given of can forward, you terms participate at green that? opportunities in in capture your technology, look I'm you Have As scale carbon other or selectively of revenues?

Scott Sheffield

we're ranches bill of -- extension acre go -- marketplace. to both those. waiting we We the doing, tax farms Yes. the the XX,XXX wind have both on to the credits some at out in do for of infrastructure things on looking solar we're and of We're those that the XX,XXX, services

over to we it. electrify doing to valuing [indiscernible] the do about or We to that Oxy talked does the We're It of practices. our gas fast moving time, the works from natural capture. COX as see, in studying [indiscernible]. measures or know work. carbon that. grid. as -- is We'll not enhanced it moving and But a from starting lot our we gas. have we're natural do diesel be Secondly, We're as getting gas I

on oxygen we So oxygen both working as research as [indiscernible] far an were capture hydrogen. and

Operator

comes JPMorgan. question with Jayaram next Arun from Our

Arun Jayaram

could think MBOE mix just production I'm thinking per day. My XXX would XXXX. you is how to you CapEx exceed, of pushes on XXXX as trying cetera think about deals, just outlook? the oil of anticipate, et first the kind question to we about trying think it, capture about and and and mentioned frac, some Scott, synergy pulls simul call what from both just about

Scott Sheffield

running. we've would oil I XX% say, we're and been is still Arun, that in range to an we percentage Yes, going be from believe where

on that's maybe be so plus there, XXX,XXX-plus don't BOEs mix that anticipate the And in I -- but day. X% or a a minus really

trying I on -- capital everything think get In look for get longer and it's terms facilities captured, more just synergies can incorporated, the early. XXXX at efficient still capital, of where to just the laterals. We're we batteries, tank get

parts. moving So just a of lot

hard rigs. tell X add for me today. would term, still to you I grow at to long we tell have we X%, it's to to that So believe you that X

helps. And that's so Hopefully, still I'd purpose, modeling for assume in your outlook. that capital that

Arun Jayaram

it. And thinking Rich, Got system potential it. source water synergies about Got XXXX? a the of well, Yes. be will as

Richard Dealy

Yes.

and our it when improves ESG getting facilities. the so standpoint, of of water cheaper think at off water system Midland but it mid our it from freshwater, the adds also sources year, look just of an or cities is effluent some or this I ESG we adds our coming the from reuse -- on

we use the how algorithm a all we've got in complex are water. getting of mix. those So And very

of to takes location. we also to get transport but it cost the have the source water, So how into it by -- account much the

a it's we sure it benefit to So can. biggest they we're thing the optimize complex that make getting and

the play sure. things will into those for all XXXX So capital budget

Arun Jayaram

the gotten of the is, the timing transaction? going one on Okay. we've to issue of post you're follow-up part DoublePoint is registration private of -- questions just to the that what And equity was, given is Diamondback my of the close shares the as the

Richard Dealy

if Under after is or that's can't in or get transaction remember had it's remember coming already week. was that it the time been actually of short the done just a part basically be I next we to so I can't it agreement -- but afterwards, early it's future, of if will just closing. registered period those yet work done the near

Operator

with question RBC Capital from Scott Markets. Hanold comes next Our

Scott Hanold

some with Big your line. it. I choppy been question billion apologize, Appreciate Yes. a the Scott, bit picture obviously, And forward. generating the narrative about the on, answers, had free flow of going $XX little of cash

question maybe the may big at run your point. holistically, over So picture, But on macro the on it on on view hedging. this

about time You've fuel oil bit do something obviously prices to come may take right that a obviously We back. jet talked of little robust now. see very being

good pretty got visibility You've the free on cash curve on flow.

So sense to these on in cash your we it quite you obviously as what is really be of to Is free hedge? know, Because strengthen recognize macro. some your should doesn't can start volatile. make view prices the going view, continue locking it the of some to so in flow? Or to oil

Scott Sheffield

pick the up another end pick up going and the million I lot Yes. and The We're X another pick We'll up as is to barrels toward in jet of demand. to X of about travel. talked positive A X earlier fuel million about said, day you that, probably a 'XX macro. million international 'XX. rest, the X in of million year.

is up so X to And XXX there's million back pick million. we're a no key up million going The extra day, XXX million to to X be to barrels supply.

is market next over to I or X And so think the to X tight going continue the years. be

It'll going to oil a there. though reason, we even period, that starts up there, we're got time And that The falling back to I where 'XX, issue demand test a $XX to the think for up. had price have off. you if 'XX, $XXX. to go continue price supply move So 'XX to not will the supply issue

few it'd think easily I those years. next prices So over test the

If high as in some that do dividend, range, both you'll variable and see So in at up to it that obviously, hedging. freeways do us as continue $XX we probably base done will past. to the less probably point the we've time to $XXX gets into not protect, the

Scott Hanold

when $XXX, Brent, And you say do you're is right? talking to $XX that

Scott Sheffield

yes. Yes,

Scott Hanold

barrel you Page really a which obviously, you producer a on clean going occur? of guys to Is going Joey, any think to as, that is relatively actually that the guys efforts sourced obviously, of responsibly a you road RSG path basis, that get you you, down do looking some Have down at relative And positions something I low premium are explored XX. that? on. gone your because And the out very, oil. there's could pointed there emissions? Okay. chart, Obviously, for for opportunity Have oil? you this have quickly Or

Scott Sheffield

that phases right don't and that now, at have initial on to We we're don't have looking than come future. educated the and it. it's good in just for We're other on of at you it. More answer I something getting more so looking -- to that come in a the

Operator

Instructions]. Heikkinen comes David our with next from Heikkinen Energy [Operator And question Advisors.

David Heikkinen

As savings, you do current your about after $XXX,XXX think $XXX,XXX the you where cost well stand now? or

Richard Dealy

completions, million Currently, capital look range, be. to average at we're in if what $X.X would our to $X.X that's that and million out budget it you and

David Heikkinen

you that burden million the you dollars as those the then about to undeveloped to price we're trying acquisition How purchase you DoublePoint price per it's added, X,XXX the several on inventory? of well. Okay. locations of through think allocate And acquisition that the do and think locations, some

Richard Dealy

about looking undeveloped Parsley. get mean, it -- It's And of not our property. on of bottoms-up well-by-well as was these evaluation at mean, I it's what valuation and the but in to our a this from we talked booked Neal unlike each did wells. standpoint going earlier, I

efficient at of but just as do free develop moved is rate most the the return in get flow. we just just prioritize and look -- just it'll cash to generate those, the and it longer those and capital and going everything like hierarchy over whatever will -- we're so synergies laterals, highest and the And all we'll else

how going always allocation, do it done to capital to we're have So we that's and that way. what continue

David Heikkinen

other? economics doesn't in as locations inventory from Do that So the forward? you cost your think asset that sunk your for here those undeveloped versus about ding a

Richard Dealy

inventory. Yes. right. That's Once it's in

Operator

turn And conference our the questions closing I'll back to additional presenters at time. we this any no remarks. have for now

Scott Sheffield

hopefully all seeing weeks. Again, of to call. X-minute work employees on listening for up the our to next the Again, fall. everybody we apologize road time. interruption. point things here the over to a in bringing back forward We're Look for you open X in thank the some Hopefully, at

about we're So excited that.

look forward Take So you seeing to care. all.

Operator

participation. your today's concludes this And for all call. you Thank

now may You disconnect.

Pioneer Natural Resources (PXD) 5 May 212021 Q1 Earnings call transcript