Earnings call transcript Q4 2022

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Operator

Good day, everyone, and welcome to Pioneer Natural Resources Fourth Quarter Earnings Conference Call.

Joining us today will be Scott Sheffield, Chief Executive Officer; Rich 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 Internet website to access the slides presented in today's call is www.pxd.com. tab then the select Investor web of the and page quarterly to found top at the Navigate results. Today's call is being recorded. the XXXX. of through replay call archived be A on March XX, will www.pxd.com

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

this opening At and Please the like call Vice to Financial to would go Officer, turn I President Pioneer's Neal Shah. Senior sir. Chief for over remarks, ahead, time

Neal Shah

to billion $X April. and you, – discuss morning and and the results everyone earnings quarter assets, capital free record strong Today, our which XX% to we in results Pioneer resulted our for XXXX fourth employed Pioneer's efficient excited deliver. return highlight continue delivered, generation and thank quarter of fourth dedicated that Good joining the operations. by strong our and year the will the over cash These for the employees underpinned flow. in XXXX were call. world-class We're teams also Thank us full on you efficiencies

the then open up questions. will your We for call

Scott. to over it turn will I that, With

Scott Sheffield

Number results XXXX. well and we'll strong seen be in Pioneer full XXXX the on as today's the you, Thank year our discussing call, Slide for accomplishments On fourth many morning. delivered through as X. results outlook Neal. quarter as XXXX Good

a Pioneer on state completion Texas, of and was a year gains. Pioneer Also, Strengthening drilling return active producer on our flow. and of rate of year employed most oil balance efficiency achieving of sheet disciplined cash total fifth remain the record achieved XX% XXXX, in capital largest delivered record. reinvestment a and the our fortress-like approximately driller XX%, the the with straight During also production, our at

highly strong results greater which of shareholders and attractive expect through generation, build already in completed. share we plan cash supported $XX a in compelling $X.XX of to XXXX strong months cash XXXX returned execution flow on strong free than with dividends billion deliver free flow our nearly XX% per We share repurchases. These these and to to results two

that we to $XX get I'm constructive remain oil prices. it that earlier this Brent $XX we'll sometime highly in swing We very move into summer still prices. $XX away from on and as $XXX optimistic move to back range this

billion bringing generated quarter, returned $X to $X.X the X, Pioneer yearly Turning billion, during billion fourth cash free and Slide dividends flow, flow repurchases year. free throughout which to approximately share through the we $X.X cash in of

our the fourth of over comprised are we quarter free our [Technical of cash returning XXX% For quarter, just first Difficulty]. flow

to capital shareholders. Just ability substantial our underpin return highlighted, to

through highest of XX% free see in our chart, of to returning you the This to cash can dividends shareholders As Pioneer more free from to returned compared flow the cash XXXX, than investors repurchases. flow and includes peers. share percentage

significant corporate capital enables to balance returns shareholders. strong compelling our to reinvestment disciplined ability rate and Our sheet, return

of offer yields with to compelling highest a continues XXX. one the the in dividend to Pioneer Turning X, Slide dividend S&P

our this quarter slide, you can first the exceeds see every Difficulty] sector. XXX XX%, from [Technical dividend – S&P majors peers, energy in which Our

Turning to Slide X.

further our repurchased at per Demonstrating attractive shares. intrinsic discount reducing improves the long-term during Pioneer this share share metrics. of fourth which importantly, value We believe shares in addition and payout, trade strong outstanding, value. the continue commitment, stock, to we returns quarter, see In dividend significant to a benefits repurchasing to $XXX our million

additional plan, share shares. completed the to share we repurchases, our million $XXX actively under quarter of XXbX-X exhibiting a addition repurchases fourth willingness quarter during In repurchase to an of the XXXX first

In since in the by shares reduce With share our $X.X equity beginning under Pioneer opportunities billion additional $X authorization, outstanding billion count repurchased of has in reducing billion have total, we remaining $X.X X.X%. XXXX, our approximately further to XXXX.

reduction, our successes. Slide XXXX XXX,XXX of XXX,XXX to X. our on company XXXX completions annual XXXX Consistent production my approximately of day We two last builds budget with full XXX,XXX outlined inflation help growth $X.XX ranging capital our to facilities XX% $X.XX total to commentary and billion The Turning which per our barrels to reflects and targets. capital drilling incremental oil year XXX,XXX day. which and program ranging support per rigs deliver plans production quarter, from BOEs to from billion

from exploration, range to other Our and for million. environmental, million years capital $XXX expected $XXX the to

four of and As the of Midland as key discussed Barnett as within project. we've the category in formations enhanced wells, includes well continued this appraisal previously, Woodford our exploration Basin, recovery targeting drilling oil projects

test early we to results significant acreage a have the peers rates and have by in position oil Woodford and potential in some future. as related forward thousand Barnett shown and Woodford looking Barnett We're to several the early locations some strong

exploration projects, our more included capital. and As certain, both ER these economic future become in drilling the the be those potential will of projects the

not capital. So billion to production approximately $X XXXX to flow expect cash this greater from generate we on in recurring and Based capital the midpoints of strip projected cash free of of at than be $X billion expected pricing, flow. is ranges our operating

This quarterly placed XXXX our wells additional XX XXXX, production. on production expected is to XX to between and some provides we program between XX Throughout Slide deliver drilling the throughout and on XXX expect year. operate rigs capital growth profile. detail

acreage, venture operating distributed and drilling joint drilling with XXXX our across contiguous Basin our approximately Our completions three Midland rigs activity in area. is large

be XX,XXX-plus drilling in production laterals greater XXXX. discussed past, our to of acreage contiguous foot completing placed than As benefits with multiple on position and the in operational XXX I’ve the of nature these expected provides including

These improved drive and [indiscernible] a I’ll that returns discuss higher in productivity further longer minute. laterals

by We provides of continued $XXX,XXX also reduces well the incremental which about per costs operational operations, efficiencies. benefit and from utilization simulfrac

significant Additionally, provides network across infrastructure position. that of spans reuse acreage our water diversified and disposal our most

Slide to XX. Turning

I increased just laterals to on foot efficiency significant XX,XXX-plus that XX% capital returns foot when strong length per our D&C reduce well. cost the productivity drive long of lateral mentioned, lateral XX,XXX-foot developments basis. savings and compared delivered these and lateral a a As approximately Drilling completing gains costs,

than these returns lateral for XXX and of we’ve long locations date, IRRs than combination drive placed a XX,XXX-foot development productivity more savings XXXX. than to when to X,XXX expect more these by wells production compared To more strong with The of points increasing XX lateral. percentage on and be increased identified in

chart left, on track you Turning XX. can record Pioneer’s peer-leading efficiencies completion multi-year Slide at that And see to XXXX. the continued of the looking during

completions to addition team’s the major implementation In and simulfrac efficiency of is our years. contributor the a efforts, great cost of improvements savings over our execution to last couple

build that of on simulfrac We full-time quarter. the with third fleet this continue a deployment earlier success to

our principally to to first two wells. XXXX, due of Additionally, use the close second of commitment approximately dual our with fuel electric costs per during well, sand Consistent is completion mines of to proximity by half $XXX,XXX mine’s the sand the savings utilize wells. local The XXXX. half as or of average operation, either our to reduced sustainable provide trucking cost fleets result deliver powered expected Pioneer localized to XXX% Pioneer to of a our to be of will sand expects

to Slide Turning XX.

a which This to are our operations. assets combination to fully generate resulted share XX% which book teens base and of that that development in At underpinned corporate that $XX dividends be year. to funding is and which highly expect barrel, forecasted our for XXXX impacts plan remains and program, inflation demonstrates efficient of WTI substantial flow, our maintenance pricing, at cash the about of of cycles. by is high earlier estimated XXXX $XX to Our through repurchases. of durability best-in-class free I to program highly the shareholders cash talked program the plan maintenance includes Including breakeven the competitive return XXXX through and price our and resilience we in majority taxes the income strip after we funded oil dividend, mid WTI, our

see you of the on independent the locations deepest inventory and gas oil to XX, with compared Midland high-quality high-quality peers. in of when left that can inventory Permian This Pioneer operator substantiates of Basin. Pioneer has the decades drilling Slide On analysis core the third-party

the earlier. is key efficiencies that As contiguous, seen highlighted Pioneer’s on to driver Midland Basin the I is right, which acreage highly a

with I’ll over So that, it to Neal. turn

Neal Shah

Rich. you, Thank

the this highest Turning on unmatched to builds peer-leading with cash the the per Rich highlight on flow a ability generate our graph to inventory depth combination slide and previous your depth Slide The on of noted that our attention inventory XX. BOE. free left

a our cash sustained provides free generation flow attractive durable cycle. investment through Our inventory through deep

to Pioneer’s from G&A peer-leading expense. best-in-class margins. and inclusive through previous low costs, realizations, slide of our Turning are These hedges top operating XX. generated margins Slide supported the interest BOE cash price per tier free is oil by flow and robust our

and operations underpin and Additionally, our comprehensive efficient results. to strong these diversified highly infrastructure, marketing strategy contribute

the Rich program sustained On durability cycle, is Slide at highly flow growth operations. and by and capital of share various low product which opportunity cash of dividends This world-class free compelling and to our our repurchases our breakeven provides XX, it oil significant that through efficient assets, cash ample shareholders discussed flow earlier. illustrates generation prices through return our to free and corporate our is the oil

XXX At we expect exceeding all S&P the an Slide and energy attractive of strip sectors overall to sector. current XX. the within the majors turning ROCE prices, deliver Now to

valuation with offer In a profile to generating believe to despite continues XXX. opportunity. the discounted high inexpensive Pioneer paired when leading Additionally, investment we in return our our corporate S&P ROCE a valuation compelling compared summary, results this

that, And to back hand I’ll it Rich. with

Rich Dealy

Thanks, Neal.

can XXXX. we’ve in commitment operations see XX, to on As to you continued our sustainable Slide

should OGMP Scott to a partnered can joined generation wind be with NextEra earlier, X.X we You develop that talked in Energy see XXX-megawatt project XXXX. about online as

which and business. XXXX commitment highlight climate and in sustainability We Pioneer’s their previously the position And initiatives and quarter, as focus accompanies our we believe demonstrates published these actions significant ESG on the focus progress reports a further during industry. report, on report. Both our published leader strengthens ESG our additionally, XXXX and our impacts fourth risk on Pioneer’s

report our can You climate our find sustainability report website. and both risk our on

low in intensity to breakeven from resilient of some global When emissions to Pioneer chart. low basis, XX. place to our price, see most world combined the barrels Slide exceptionally provides the we a on expect Pioneer market provide a the come. the as to in only the can Norway producing market, that with have will sustainable oil behind decades continues for production barrels you Turning COX

shareholders. our you Slide slide on the significant for Pioneer’s characteristics see key support creating concluding our can the to that XX, Lastly, commitment value on

And I’ll that, so for the call open with up questions.

Operator

you. And open. hear Thank Instructions] of first Doug And of from Leggate we’ll line is Bank [Operator your America. Doug,

Unidentified Analyst

Hello. you hear me? Can

Scott Sheffield

Yes.

Unidentified Analyst

Can you hear me?

Scott Sheffield

Yes, Doug, ahead. go

Unidentified Analyst

got on [Indiscernible] here. Doug. I’ve two for questions

very first year. is the So spending budget for just on the one the

So deep on $XXX locations some into exploration you guys have you’re a Can of exploration. to set industry, you why details what this that’s in on but dive inventory the feel this million spend you and the of the on are need planning spend you spending very year? year of to

Rich Dealy

And compete I rest productivity for with think several to Midland it’s our look in like, look – as economics important I wells what got to Basin. really talked at are going like would Yes, going that four portfolio. what under to about, we our the our how we’ve and capital locations existing of thousand Sure. with as is footprint we’ve it looked the think understand

think ongoing of our as we that year operations. well money this it’s So just to understand part spent

some results we’ve so I good comments, far. seen, so peers And in as from the mentioned

it. we’re going we’re see those the spending look So, half excited on to like. second But results year. focused that’s on in They’re be the what of to why

projects add I’d cycles that we’ve in can then see our as uplift more had that and And in a from XXXX, project, recovery XXXX Hopefully, on we We and about quarters. positive the just wanted to well. oil do in is some enhanced get those what other helps? that talked cash one prior we

Unidentified Analyst

It does.

you the tax. The down it to just looks cash given Obviously, question first the talk there a was of as quarter, that trajectory like on you in second continues deferred fourth about tax in there quarter. to Can XXXX? benefit here the here playing out guidance. show is It see benefit up

Neal Shah

at range morning. on Again, to to teens current effective is good Shah. year. prices, Rich – our Neal said book our going taxable in mid-to-high income as income the throughout prices. It’s tax But dependent be tax Hey earlier, oil that rate cash relative is strip

a are our QX, in moderate bit provision see teens you’ll taxes for tax that back lower basis. a Safe But cash a QX first the going that little quarter the to first of us as than go-forward QX result quarter. payment So cash it’s to that Harbor range and using on mid-to-high going forward,

Unidentified Analyst

I That’s the appreciate answers. great.

Operator

Next Mehta of Sachs. we’ll hear from Goldman Neil

Neil Mehta

Yes, good morning question. my team. Thanks for taking

lot been the for first a you talked about And and providing there’s an improvements of focus is, this well you anticipate. The a on lapping XXXX XXXX to that outlook lot productivity.

you I hear to we talk in ground, plan? have just where itself love really are it numbers? journey, on been against see XXXX manifesting And that made changes the execute So, what when do to about in that

Rich Dealy

Sure, morning. Neal. good I appreciate it and

of future really is expect inventory a say off and to XXXX more given our program deliver the year our in depth productive and So, really we would forward. program much I start, to great years going a this

to the that. in look progress of fall. we reporting I’d made we changes But forward on those that the So, say

to of really basin. then second see those, benefits year, a emphasizing activity you’ll across full see what just development changes, quarter, half going of stack it, the second You’re the in limited but I’ll it’s the the call but

Neil Mehta

of eyes quarter. We we’ll capital just most open saw a bigger The us And our keep than follow-up helpful. that. was That’s payout this model. for around what

will shares Just then And about Thank how have approach a you’re as payout? to normalized when sold to a you it talk you. buybacks, relates about dividend continue more take thinking off? countercyclical

Scott Sheffield

and benefits forward. our feedback to as base to going solicit Neil. dividends, on shareholders returning the to see thoughts continue to both It’s and buybacks said visit committed We’ll Thanks, their of with capital past Yes. are Scott. annually I’ve calls significant shareholder

So us. we as will you’ve same continue more of the seen

Operator

there And was anything further?

Scott Sheffield

Operator?

Operator

Raymond James. Next, of we’ll hear from Freeman John

John Freeman

guys. Good morning,

Scott Sheffield

John. Hi,

Neal Shah

Hi, John.

Rich Dealy

Hi, John.

John Freeman

to still I electric power. it’s install XXX% plan good of fuel dual a by electric completion to you The the XXXX? that all substations. half be three in fleets first the the all electric the question, will see second or Is to think be need year,

that sort Just of maybe an on timeline? update

Rich Dealy

Yes, but XXXX. I to depends activity it’s on buildup it’s of XXXX probably say we’re But will I the It’s be will moving mean, of it’s electrified. – wouldn’t way. all by most get you that, think I that more we our just when progressing.

to to a in just have it power to to facilities million XXX that’s takes XXX electrified allow with is is working us. us available providers As the you field know, time to part that But that get also transmission done. and the help of to that be when million position

bigger it’s some So be expected, all we XXXX focus as there’ll moving would’ve in forward but XXXX. and really probably in a than,

John Freeman

question, versus contracts are Great. we fixed you said my update your I this floating your of cost floating that fixed earnings your services And believe as price budget around contracts the how XX% at much kind an rate of inflation spot. were your of have Can somewhere like your year under assuming just kind of stand time versus give all of today, you just XX% sort spot? at call. you’re last of then follow-up on XX%, all the about said you

Rich Dealy

things. say steel at pretty the that XXX% fixed XX% or prices are is this rest of subject and Yes, then say to those linked is activity WTI what really are that XX% what this to to contracted call, at I’d prices to that I’d just point, that is well And point. I’d is linked our

there the still labor, are its end of is main of fluctuate. those of commodities, are to most that fluctuate will rest out so to That And what’s most the things is which going would but drive tied that it. the some

John Freeman

Great. Appreciate it. Thanks Rich.

Rich Dealy

Sure.

Operator

Scott Gruber Next, Citigroup. from Instructions] [Operator of we'll hear

Scott Gruber

Good Yes. morning.

Rich Dealy

Good morning, Scott.

Neal Shah

Scott. Yes,

Scott Gruber

about you midpoint And the question, the $XXX year. D&C that's maintenance question In comparison of the at of but D&C capital, here XX the for Slide kind on budget I year. running on budget cite a this or billion it $X.X this about clarification talked more just two is guys million the so to think rigs guys a this below year. you for Just

of $XXX Just guys like sure rigs, gap missing for closer the between two four to bridge capital budget D&C maybe this rigs, some that I'm year? help bigger you is pieces. of kind billion the million than and looks the $X.X just but Can gap maintenance I'm

Rich Dealy

year rigs that's I million talked so $XXX there. just that's two about Yes, matter a the the was as comes activity looking million really we program of being really piece how timing then this of the end – delta you're think $XXX of about, of a there. generated would roughly And of that ebbs and And have flows year, this in the some that growth capital fact into XXXX. for even our towards

of is that's things difference between that And that just drive timing years delta difference. so really, that Scott, the really happen to

magical out It's just nothing and it. timing. works there's about math how So the

Scott Gruber

Okay.

Okay. Thank all. was Well, appreciate that. you. That

Rich Dealy

Sure.

Operator

we'll from Neal next, of hear And Dingmann Truist.

Neal Dingmann

in Energy a guess, Good Can morning the learn and start? with what of identifying potential general question on into more Texas a project. My part construction XXX The bit terms wind expansion I is are too megawatts the the just on bit the NextEra wind everyone. respect second to first guys elaborate is steps, get the contractor the project? about and you this more

Rich Dealy

plant will Yes. constructing of – operations the our using in with it. starting things. one are maybe the couple be that electricity in of project project that's this our We're owner Neal, with from they're and operations of in XXXX so and construction NextEra the One, the service taking the gas idea and is being a and the year we Targa. generated

large for we’ll other of in on. still projects to future, three that we have in the renewable then future ranches terms other look And out there

electricity that over course still we time. our in incremental of that lot the a add use of could we potential have projects to so And renewable operations

stopping not here. we’re So

take it. It’s progress to going some time. to continue We just

Neal Dingmann

there. stuff Good

all curious also stacking relative have? was Thanks. it’s How sequestration. you capture these I to stacking the whether other I up a projects carbon follow-up wind. it carbon and question, was curious projects, As was around up capture is in that the

Rich Dealy

today bigger our as electrifying the field to our on, really moving and earlier, grid. the focus say is of operations about more I’d I talked

the think biggest and part do the operations in assessing is I I So electrified. mean getting – on focus most capture and first. more over But can our for sequestration. but really it our that’s think we think time, of we’re today, I emission carbon

Neal Dingmann

Thanks there. good Sounds very much.

Rich Dealy

Sure.

Operator

Scott call the will it And this there or at closing time. are additional no to questions comments. appears further for turn over back any I Sheffield

Scott Sheffield

much forward to this May thank Again, visiting on on you. call. very everybody with Thank listening Look for the call. you

Operator

you That conclude Thank your today’s call. does all for participation.

may disconnect. You now

Pioneer Natural Resources (PXD) 23 Feb 232022 Q4 Earnings call transcript