PXD - Earnings call transcript Q2 2022 | Pioneer Natural Resources Co.

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Operator

Good day, ladies and gentlemen, and welcome to the Pioneer Natural Resources' Second Quarter Earnings Conference Call.

Joining us today will be Scott Sheffield, Chief Executive Officer; Richard Dealy, President and Chief Operating Officer; and Neal Shah, Senior Vice President and Chief Financial Officer. Pioneer has prepared presentation slides to supplement comments made today. These slides are available on the Internet at www.pxd.com. Again, the shared Web site to access slides presented in today's call is www.pxd.com. tab then the select Investors web of the and page, Investor to found top at the Navigate Presentations.

in public described periods through may be For subject These for Shah. differ recorded, in the Exchange information, I filings include made business on forward-looking ahead, to Pioneer's the will the pursuant today and statements. presentation, being that Commission. prospects XXXX. two forward-looking Harbor www.pxd.com, are archived a release the remarks, the Securities to actual replay statements the news Private Chief company's today's of slide the future page time, with will on and conference materially comments Please risks August XX, from Neal Pioneer's and of and President Safe cause uncertainties this At Pioneer's number Financial to is call opening in Litigation Reform to The and made risks Pioneer turn statements and are to Officer, the provisions of go Act Senior a These of over of XXXX. like results of would Securities call sir. Vice uncertainties and

Neal Shah

results, Thank operating Pioneer's and you, joining quarter our discussing be morning, return call. thanks Today, will and us and peer-leading second capital for George. Good everyone, for we earnings second strategy. quarter Pioneer's financial of strong

in depth recently and best-in-class which our unmatched We inventory, Report. detailed margins, detail ESG high-quality Sustainability published our our will strategy, along also of is also XXXX with leading

it over With questions. for turn then to will We call will open I your the Scott. that,

Scott Sheffield

second Pioneer in We're results, starting Thank in $X.X strong you, delivered the free generating cash Neal. on slide billion morning. three. flow quarter. Good

price increase is increased This greater represents a our XX% assets, our previous This of this variable quarter's repurchased second base to dividend shares we XX our months. which payout strong results S&P share third than the supported repurchase quarter, year, of over that per said we Inclusive share in the current July And quarters, outstanding. more has approximately quarter, XXX inventory, dividend first at is this aggressively end at in dividend the quarter fourth dividend million of yield and the always base paid a in by to in dividend this an the $X.XX a four million plus shares presented base XX%, of X.X% be base previous per market total when balance increase stock deep we peer-leading retired have since I've share $XXX high-quality and annualized of the increase, in sheet. and average $XXX the exceeds Since dividend the Consistent price. base repurchased $XXX quarter, base by the million reinitiating last with including would opportunities. additional $X.XX of average during mid-September. buybacks margins, share of the than we the our Additionally $X.XX.

stewardship, goals. significant and routine Methane our X.X. published Report XXXX, Partnership Pioneer to a initiatives, our the Sustainability recently on which focused toward on joining our accelerating progress Gas places end and target make our priority we and Additionally, Oil XXXX continues to high ESG highlights including to progress environmental flaring and

the supporting production range, second upper-half $X.X in number quarter, of billion. slide guidance significant with generation strong the our total execution four, of free flow cash to Going Pioneer's during continued

one balance strong be sheet horizontal best LOE this Our our low, and is sector. the in to of continues

capital the strategy. to base return foundation of number strong Going five, growing slide believe we and maintaining is a our that dividend

the dividend strength years. cycles. is of base have of period, last greater and balance This increase our this by now than of both XX% material our many or we an mentioned further increase sheet durability I over cash their annually strengthened quarter. flow with have XX% across of price from average commodity by significant the majors earlier, cut dividend suspended our increase, of As a This our our grown six which peers increase dividend. same and previous has over Inclusive significantly outpaces underpinned

with six, Going at since by an price average to our slide the have through XXXX, July, an statements we outstanding opportunities, strong be shares market quarter This repurchased dividends, share returns to opportunistically, pullback, number $X.XX. $X.XX during to total during share complementing of of the shareholder our $X.XX. continue fourth billion approximately Consistent and market $XXX shares of an of aggressive repurchase stock cash represents our we average price reduction a in additional X.X%. million executed

repurchase the utilize authorization, market leaving we $X [XXbX] utilized by billion to of take [Ph] date, to billion we continue our programs July, during have of evidenced As To opportunities. will current one-quarter advantage $X remaining.

compelling low Going majority number returns leverage strong in cash repurchases, form fortification. variable X% production delivers to shareholders corporate thesis, dividends, this by share opportunistic continued of free of by free we This than second XX% total our of an rate. and greater When flow. returned XX%. of reinvestment and repurchases and annualized committed second to growth returned free equates flow which approximately the we up sheet cash including slide to cash investment to balance quarter The of seven, plus representing of flow. returned low return XX% is annually, approximately cash flow, underpinned cash base all significant our core remain dividends yield generates free to was share quarter with via This cash enhanced

eight, number remains Going capital to best-in-class. return framework slide Pioneer's

can on dividend here cash shareholders return to free percentage prior all see described is forecasting being lead of you of peers in framework returned the repurchases. capital slide, and to Pioneer flow share the With the through

over quality taxes. dividend a number of through ability through of up slide wide OR to breakeven, free dividends expected range cash X% prices low the cash Going to cycle, of the is high nine, disciplined significant impact growth commodity to Pioneer assets, flows provides return inclusive

the WTI WTI approximately at yield to $XXX increase is next outcome on X.X over believe years we prices S&P oil were minimal current At five supply This more shareholders be likely barrel flat, share per average. the graph, with demand flat. is most the prices. over annual I over March seen which five that next if to the X% times upside. as will average $XX the yield yield will XXX than significant $XX as is years, continues Pioneer increases, XX%, As Again, so forward receive

and of in the XX, XX%. peers, approximately yield annualized S&P average Going number the to extremely third This dividend the slide yield compelling XXX. payments exceeds of all resulted majors outlined previously quarter yield

XX, annualized number surpasses than X slide to dividend Going greater average the by Pioneer's XX% yield S&P XXX times.

dividend dividend compelling. yield share every Looking and to over than beyond up and double yield, S&P growth, stock any broader repurchases, of I'll to Rich. market, owning the peer our now the remains to sector our company turn in individual it X% case complementary With exceeds oil higher digit Pioneer's XXX S&P is group XXX. Pioneer

Richard Dealy

BOEs guidance and can good morning, everybody. per at I going see day production and to $XXX,XXX $XXX,XXX Scott, $XXX,XXX where $XXX,XXX slide to per full-year Thanks, am XXXX barrels day. oil you current on unchanged to our remains start XX,

inflationary X.X sand up $X.X You steel billion diesel chemicals can pressures in $X.X billion are primarily up extent capital to and and billion revised and from in XXXX to see we billion, we reflecting lesser labor. to $X.X previously to our seeing and the really

plan than the in is cash which from billion at generate the operating expected of to Our $XX.X is greater year. flow $XX billion up beginning

the cash on $XXX increase This $X.X Scott framework forecasted million free the majority back midpoint modest XX% capital. to less to relative and of our with reinvestment $X rate On growth midpoint that remains year to average, unchanged. going Consistent via opportunistic billion returning our expect and share this to investors So, our vast flow free in and year outlined, level over flow a we activity XXXX. result in repurchases. billion dividend of than of production investment is cash for

drilling roughly which simul on XXX XXXX. those run six will Of approximately two in wells This result fleets. fleets. expect production in rigs frac We to to XX of placing of in are frac XX

Turning to realize for improvements. the efficiency we work thanks our operational teams the focus across really slide hard of XX, and company, and continue

cycle a of implementation and been in success both frac cost. time has reducing Our simul great

leading operator. As chart left, have ourselves a we as any having established the operator frac completed of evidenced simul on by the wells simul most the

the from see combined with efficiency. can right completions side graph, the have -- you on our the of simul of right improvements significantly benefited As the continued frac implementation operational

improvement since and early XXXX have completed further of targeting addition XXXX are frac peek fleet third We with in simul next the per year. our day doubled

that you with inexpensive efficient get inventory decades support position third slide by high durability quality margins Basin. inventory. tier a XX, our margins, you borrowing XX, oil capital marketing our low to Pioneer's margins of debt this party framework. per structure strong peer field Turing and cost BOE. shows percent combine data return operations, when quality at highlights our corporate Turning and cash our those realizations our to our our best-in-class highly X%, arrangements the leading which sustainability result high slide in drilling strong slide and cash overhead, showing And low of of the of of with really top cost that best-in-class the price unmatched realizations below our This drive as Pioneer's highlights Midland

remaining that the top is more inventory Midland in Basin. on the two see side You tier can than times the Delaware basin right

Pioneer With to for depth matches inventory XX, and significant Turning provides the with quite distribute combination inventory. position duration free this decades flow to cash to I'm longest going that, Pioneer's Neal. with the slide over considering of BOE, ability it compliments favorable to flow flow the quality to prior free slide free turn well. cash This BOE. per and inventory cash our slide highest shareholders highlighting our the It per

Neal Shah

Rich. you, Thank

and the left inexpensive Turning to which high is and our slide, margins, on efficient two the Pioneer's combination high-quality this development, capitally proposition slide value The graph returns. through drive demonstrates best-in-class the our corporate returns the people, assets, on corporate strong our of evidenced XX, valuation. an further of our graphs culmination compelling

it exceeds In fact, I'll over Pioneer XXX results on the include strong all sector. this turn the with within our and also right that, Scott. and sectors Pairing S&P opportunity. in to energy other we extremely returns graph, is investment the the projected compelling believe majors an broader durable discounted to With ROCE valuation, profile

Scott Sheffield

details ESG, XX, side XXXX our and decades of Finishing up and leading which The right brings published plan, of report who ESG We of on and our actions highlighted our Jacinto further we the to and Hernandez comprehensive Since slide. on targets, into our the a Sustainability this initiatives. that significant Directors, leader we call, sustainability industry. initiatives our progress those Board highlights position Pioneer's addition on demonstrate Pioneer's Report, focus investment the number last and of environmental these slide including in our X.X, recently as strengthens earnings announced our OGMP commitment experience. focus membership our believe on

can be an Our shareholder all summarizes updated year. we found in on value. the Slide sustainability updated later enhancing that doing site. our publish just report report climate regard risk things to we're to And Web XX this expect additionally,

We will Thank now you. Q&A. open up it for

Operator

[Operator Today's much, very calling James. Freeman John sir. you Thank Mr. from question first from Instructions] Raymond is coming

Your line open, is sir.

John Freeman

Good morning, guys.

Scott Sheffield

Hi, you doing? how John, are

John Freeman

And, we kind than the so all I the the guess is plus things thanks. we got than like percent us of that Good, be of better going rate of just to -- underlying initially the in goes year it take little growth sheet we would you forward, was framework, you you better the of sort the that wanted pricing? think maybe better to idea, else on environment something asset you'll have how dividend should commodity introduced. you a dividend, base have get of to your that specifically, some was where expected, of like versus And introduced rapidly sort or as was have much sense, about so trying impressive all stronger base wouldn't anything base outlook when first of remind balance dividend reinvestment when so sort a that? -- have into far change the dividend. very ago, base I dividend. can since just the A done the A this dividend, about on that couple variable you obviously, some dramatically how other Just think this maybe base about in of, confidence the mid-cycle rate, aware focus

Scott Sheffield

great John, question. Yes,

over recent the stable As quarters, before, I our it XX% to increasing a said in XX% in base over increase. and increased materially our past by dividend, base time. growing we we'll increase dividend dividend this and We believe year, base continue including

our without five it increasing it commitment like XXX past the cutting or years, our dividend, base many by the of Over we've it demonstrated suspending to peers.

lower the even between $XX We prices to WTI. ability still stress the dividend base at have when $XX oil testing grow to

In dividend addition, I'll to expect commensurate continue to production our by increase with up the we finish saying growth. base

a So, if long-term, increase X% in dividend annual X% grow basis. year to able on you we're anticipate the would an base a

John Freeman

all thoughts like has companies you guess an here the tightness? Great, the Rich, pick quarter easy actually you has you it pick easy are crews gone And all later sort last overall talking sand thanks. stalled months maxed I'm like they're got higher. assets in how up just out things interested even to sort all count diesel. ready And you've couple how I count much last you a my had for three Scott. because think of of was someone as updated months frac access to or see follow-up to up frac that for any just the [traction] side. update, Do Thanks, still? pretty on needed service spot here maybe [Ph] you when lot it U.S. starting question, out then you rig more pretty about on And and mentioned keep you to relatively as

Richard Dealy

capacity I know lot say a continue out time. gotten over just would little to a pick of generally frac I tighter, leads. there. activity bit rig don't some spare John, there's think of I seen in if you've it's up

market year are some there next that that new this into think or you've electric early pressure pumping on the fleets are seen, fleets later help coming year I that'll the side.

us all our is move I do than timeline years. prior So, XXXX for think of up has caused what in it's to earlier contracting

services don't tighter market, we getting think have or Pioneer so, so need the that we're that but earlier. a starting it's concern about underway. all or I is mean I materials, And I work any equipment definitely

John Freeman

Thanks, guys, it. I appreciate

Richard Dealy

John. Thanks,

Operator

Thank Thank ahead. Wai to We'll go move Please sir. Jeanine you. from now you, Barclays. calling

Jeanine Wai

questions. Hi, our good morning, everyone. Thanks taking for

Scott Sheffield

good morning. Jeanine, Hi,

Jeanine Wai

morning, Good Scott.

done to is Our of to you're first Is And in That do work pretty that on QX. needs that concentrated work think areas? soon? be question beyond there that in that work, the is to battery whatever tank going expansions. handle I more certain starting you're

Scott Sheffield

at timing out hasn't hasn't really at is beginning Yes, of consistent that capital was bit with little Jeanine, we quarter there. I'd of into year. battery impacting tank of planned it reasons, how had nothing changed. third new say the then various program second for but our the It that nothing sliding a so, that production laid We -- quarter just the for all, that's

we existing the the we're size where wells just battery capacity before, we're that tank that tank batteries done is and on really we've Our still really going into focused have selecting already. excess same

the say, would it just of at beginning tank So, as nothing planned really I would normal on year. and as the we on and unusually is, is batteries have work side, going the

Jeanine Wai

to you. CapEx second we question, thank our move number. perfect, can just maybe the And Okay,

know certain in way thinks but budgets of some mark-to-market I not, it this outlook, Pioneer change. prices kind -- and don't based 'XX prices if price that understand, on directionally, oil CapEx their analysts helps about base the how change or if change companies could a just So,

and do XXXX based on to locked $X.X you price, a oil updated percent certain on is $X.X or billion an price? your billion that is budget, of on So, Thank what is updated you. in have XXXX

Scott Sheffield

would biggest prices that's obviously, because we they'll in is into. to of in, say pick the that that of fluctuate. is around range on get I we terms billion With billion year capital diesel, -- generally can really XXXX tied variable to fits what $X.X probably $XXX The in specific say is we of the in. oil that, through it the you capital -- other budget Jeanine. Sure, of go terms longer price, that $XXX more but to target a Brent would kind locked don't locked is $X.X than of

we're XX% probably number, that about quarter, don't I in guess think, this given have XX%. to talked I XX% we're last but point. where the at, I just at being range my exact

up early there's orders for anywhere to on purchase XXXX mean early, bit I midst well is indications. we've little Still it's think be plan inflation I In just previous most based I you're locked XXXX, think the So talked place. order as put think, that still just a around. of that [indiscernible] in roughly XX% early. XXXX calls, increase on on in of or planning -- pretty good been going another purposes but think we're would still see number or have a I general, we just as for in about to probably in

Jeanine Wai

Very gentlemen. helpful. Thank you,

Scott Sheffield

Yes.

Operator

Now much, Goldman go to ahead. very you Instructions] from calling Mehta [Operator we'll Please Thank ma'am. Sachs. go Neil

Neil Mehta

good Yes, team. morning,

you wanted And last a are do this way have industry? in visibility, production little it -- comment how to build how at for seems, thinking Just broader grow Scott, worked and profile as our markets you're that to sense point makes we and XXXX. think through both your E&P oil bit we've into company on the year, it around XXXX, the for XXXX the thinking as on more U.S. the about you about given

Scott Sheffield

more going optimistic as going to China's flying the UAE I'm still you Biden important ammunition, obviously downside. back. don't the announced world, Saudi. and it morning. upside much though a and the is They minuscule agreement today. march minuscule the is coming than some price very supply that in to very know was come just have even more. OPEC+ increase oil little not OPEC are administration good with today there's the left to supply, Neil, Yes, give Demand to people continue Around probably back forward

march will price that And so, on the forward. basis to continue oil

production of be X% growth on focus that oil. Our will

-- see, that's We to long years X% enter do year I it. if downturn, So, term in production but a still one we we on we're focused of different ratchet And positive actually that question. those back that enter a next oil. can ever should regard, be on

Neil Mehta

around Okay. follow-up is That's stock share in then ended And highlighted the program. buying here you back up the helpful, Scott. you July. opportunistically up repurchase that, And

you. Should loaded your one about a going supplements of which around the or dividend program, to framework act? where weakness you're as it. this to talk level look Thank use to Just think we

Scott Sheffield

the months. back it I Yes, over bought opportunistic. of to the were, A about it depends it we've We've stock. what Obviously, they X.X% our lot XX call goes. X.X% mean, X averaged I call X, call in last is is, it of on share price where --

cash to will I continue in and we power step do that the to really we a pullbacks got and As that's policy. to we'll policy, said And continue little always as the quarter. be we'll our bit free when then to on transact each when flow the that, buy past, able see and fire we up

Neil Mehta

Thank you, Scott.

Operator

Bertrand sir. is much, next question calling Please you go from Thank The ahead. Truist coming Securities. Donnes for

Bertrand Donnes

piggyback the Good just last repurchases. to that on on going I'm share morning. one

pulled Or view You opportunity? oil and maybe Or an obviously position I'm pulls Pioneer optimistic pullback? oil? so did just better back, on level Pioneer it stock? is of characterized a kind it creates was of stock, anytime oil the just the back So a your opportunistic, the it so during in it as relative nominal is wondering,

Scott Sheffield

go on the go We the did; into net I the and we on Yes, like to return don't when asset to market going we we the our lot like value obviously of where based buy marketplace. the run stock's do a get know we company. great stock mean,

it's policy have. then, each aggressive to we dips we we'll something then reason see marketplace, in a buy more like else if is the for some big affecting back oil our be or continue little quarter whether So, and

about So, it. hopefully describe we as simple can that's as

Bertrand Donnes

acreage Sounds your you versus that'll maybe Martin how year? good. your like year rigs, versus of shifting and talk run gears maybe the at Howard position your influence JV And this look position returns and end then, about the maybe and next maybe your across on, you where could Southern what in

Scott Sheffield

Yes.

have spread water supply manage where and around. at the across You rigs we running to and things we can look out the rigs our moving and really basin

but talked And I acreage depth our really position. that at look mean, when we've basin for of so, across our inventory tier returns, you consistent about, our our and top the the inventory it's

XX-year that just we're So, Tier regard we're X over inventory. in less that locations, acreage XX,XXX

they at And look locations. just so, amongst different don't

we the are not areas. how have we're seen over couple in spread really you've last that's those returns area. all concentrating We So, out activity years, any our the -- one and great

Bertrand Donnes

Okay.

to because fair more the kind of returns? it uniformity important of that the is of So, say infrastructure's the

Scott Sheffield

that's – we've really is Pioneer, water the ability around. water move was yes, Well, separates infrastructure it think I really why the that to

to to be that may simulfrac at others it allows do do So, -- the two and have consistently the to it same get simulfrac we really fleet add not that fleets are can actually third scale. ability at scale us where is the infrastructure

Bertrand Donnes

all Thanks. me. for That's

Operator

Thank you.

now will We calling go from Stifel. Please to Derrick sir. ahead, go Whitfield

Derrick Whitfield

morning. Thanks and good

question, in to Pioneer? on on my expected in components. to first focus speak Could the you methane be touch I wanted which implications could week fee minimum tax for the Reduction the For this Inflation on voted Act,

Scott Sheffield

And on Yes, reduce goal really of our past, curve goals Pioneer, our I'll impact that but but done and that to about proposal productions. outlined what we've positioned Neil sustainability the we'll we've are emissions intensity we're just the out report we're with We've hit material monitor, fee and it. where don't morning. tax can methane to to our on reduce And feel reduce of if based thing, this on our emissions at and the so expect looked that continue to we talk methane our laid emissions, far. we well continue

far. analysis our not material really so anything on So, expecting based

Neal Shah

this Derrick, Neil. good Hey, is morning,

said, above going in effective XXXX, act cash tax threshold. at XX% be the to we full look becoming we and that payers a anticipate is rate as our Rick took that, As tax

our got anticipate wouldn't we have So, proposal profile. us this cash to on tax impact and any

Derrick Whitfield

thinking attaining and side, follow-up, help of self-help in I about you but the capital 'XX simulfrac Terrific. expecting second-half projections, was you're XXXX on That's maybe the degree and it's and lateral frame the long your operations could my development? tax what

Scott Sheffield

I talked we've Yes, simulfrac, the about think per well. $XXX,XXX well, about saves

benefit is what's per there, So, roughly more XX%, driving is but we're day. we're that the cost completing also, feet

infrastructure is get it's allowing been frac as to our And that So, I big and really earlier, that benefit. to us supports just mentioned operation fleet third -- year. per longer us is of And seen next drilling then on a foot. lateral we've cost out wells, the it productivity saves great and a really allow water but just early completion XX% one a

And more so, -- got capital the way to and continuous we're position, acquisitions given for but acreage today, that it's us just efficient and a acreage blocking contiguous is. those that in to just and position about allowed just of our adding our up we've thousand do it locations to we've with how to trades at, well identified work acreage we it continue sets inventory that small a

Derrick Whitfield

and Terrific. for Great update thanks your time.

Scott Sheffield

Derrick. Thanks,

Operator

Chase. you, ahead, Arun from Please calling go sir. JPMorgan The Whitfield. from next question Thank Jayaram coming is Mr.

Arun Jayaram

that? you're or to in is future do on year on equipment? with DGB you gains more I on around to Scott, thoughts just And of electrification We morning. good on getting shift Tier thoughts thoughts on kind to get frac future, the your highlight Yes, future you XX, what towards needs, Wanted the know on X to get get ends frac end. side. wanted plan of your your frac. a your just, relationship with PUMP slide kind Pioneer's all procurement your strategy that want the of some efficiency I

Scott Sheffield

but it, terms DGB, of we're great XXX% be the they'll that. you as still take of XXXX, and XXXX job, are I the And really, grand, moving electric then And program, part They I'll in with in did of a looking of earlier, as process be of Arun, it to electric contract terrific midst they're in are relationship a at our going it. have will Yes, to fleet part the in that, fleets. definitely, and we some mentioned, mentioned fleets in we moving definitely contracting PUMP. we not probably of

think build I We'd time transition highline some and but base that going out. get there be to take power. current get it'll love a infrastructure to to to to the the is sooner,

off we'll probably it's will so, progression evaluating move that LNG we're where a now. And move these going to be right CNG, to

it's next timeframe. on. we'll also then to of highline later some the in First midst and DGB year, the But And definitely, have we're get power, XXXX going path equipment. that,

have we're years more moving -- we'll out. going that we're couple that still and ultimately electricity, a way XXX% be that's but to Hopefully helps. So,

Arun Jayaram

super follow-up we've That's was helpful. integrated a how getting assets, but Parsley Pioneer trends? historical to would you questions And sense I'll have for you relative the my of and been have -- well would couple give completely a you Rich, well wondering, gauge of leave as DoublePoint the just I productivity, around be if could productivity year-to-date there. us it

Richard Dealy

We're Yes. continuing field. to complete our the across wells

you generate flow are that has that our profile, overall, returns cash per seeing we from but different a significant. free the bench little And so, bit each view

'XX. consistent because Wolfcamp they that I'd just quite it field parent And the some of so, as longer the or the overall 'XX, as develop we've were full consistent production issues, high say with so avoid and we're Wolfcamp couple last and a not We're better year profiles. doing term maximize because A They're doing to had they're way B, but just probably NAV results years. last in stack, relative child the and

Arun Jayaram

Rich. lot, a Thanks Great.

Richard Dealy

Good.

Operator

or very concludes you to additional you. the gentlemen, Thank Sheffield remarks. I'd over much, like question-and-answer Mr. call today's session. sir. and Ladies Thank for back to the turn closing that will

Scott Sheffield

much. to the road and you today at in participating the either thank on forward again, everybody for you or look thank call Again, call, seeing very next quarter's

Operator

Ladies sir. for your much participation. call. very concludes Thank this gentlemen, thank and you much, you today's We

a Have disconnect. now and may You good day goodbye.

Pioneer Natural Resources (PXD) 3 Aug 222022 Q2 Earnings call transcript