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Pioneer Natural Resources Reports Third Quarter 2021 Financial and Operating Results
With the divestment of the
Our strong financial and operational outlook is complemented by Pioneer's commitment to sustainable practices as evidenced by our robust emission reduction goals and targets that we outline in our recently published 2021 Sustainability and Climate Risk reports. With our solid Environmental, Social and Governance (ESG) foundation and our unmatched investment framework, we believe our differentiated strategy will drive significant long-term value for Pioneer shareholders.”
Pioneer maintains a strong balance sheet, with unrestricted cash on hand at the end of the third quarter of
During the third quarter, the Company’s drilling, completion and facilities capital expenditures totaled
Cash flow from operating activities during the third quarter was
The Company announced today that its Board of Directors has approved an increase in the Company's quarterly cash base dividend from
In addition to a strong base dividend, the Company's investment framework provides significant shareholder returns through a quarterly cash variable dividend3 of up to 75% of the prior quarter’s free cash flow after deducting the base dividend paid during the prior quarter. For the fourth quarter, the Board of Directors has declared a quarterly cash variable dividend of
Including the base and variable dividend, total dividend payments during the fourth quarter will be
Pioneer's balance sheet and leverage metrics continue to strengthen with the divestment of the
Third Quarter Financial Results
For the third quarter of 2021, the average realized price for oil was
Production costs, including taxes, averaged
During the third quarter, Pioneer continued to deliver strong operational efficiency gains that enabled the Company to place 142 horizontal wells on production. Drilling and completion efficiency improvements have resulted in a 70% increase in drilled feet per day and an 80% increase in completed feet per day when compared to 2017 averages. The Company continues to see benefits from utilizing simulfrac technology and plans to run two simulfrac fleets during the remainder of 2021. These efficiency improvements continue to benefit the Company’s capital program and capital efficiency metrics.
The Company expects its 2021 drilling, completions and facilities capital budget to range between
During 2021, the Company plans to operate an average of 22 to 24 horizontal drilling rigs in the
Pioneer's investment framework prioritizes free cash flow generation and return of capital to shareholders. This capital allocation strategy is intended to create long-term value by limiting the reinvestment of cash flow to enhance the Company's free cash flow profile while targeting a long-term leverage ratio of 0.5 times net debt to EBITDAX. This investment framework is expected to deliver a mid-teens total annual return, inclusive of a strong and growing base dividend, a significant variable dividend and high-return oil growth. Pioneer's investment framework is further augmented by the ability to fund opportunistic share repurchases during market dislocations. The Company believes this differentiated strategy positions Pioneer to be competitive across industries.
The Company’s financial and derivative mark-to-market results and open derivatives positions are outlined in the attached schedules.
Fourth Quarter 2021 Guidance
Fourth quarter 2021 oil production is forecasted to average between 388 to 403 MBOPD and total production is expected to average between 670 to 695 MBOEPD, reflecting the impact of the
Environmental, Social & Governance (ESG)
Pioneer views sustainability as a multidisciplinary focus that balances economic growth, environmental stewardship and social responsibility. The Company emphasizes developing natural resources in a manner that protects surrounding communities and preserves the environment.
During the third quarter, Pioneer published its 2021 Sustainability Report, highlighting the Company's focus and significant progress on its ESG initiatives. The report highlights the Company's Net Zero ambition by 2050 for both Scope 1 and Scope 2 and enhanced emissions reduction targets for greenhouse gas (GHG) and methane. In addition, the report details the Company's 2020 performance in a variety of ESG related endeavors.
Many key initiatives are underway that will result in tangible progress towards the Company's planned pathway to reach Net Zero. In support of this, Pioneer achieved a 27% reduction in GHG emission intensity and a 50% reduction in methane intensity in 2020, when compared to a 2019 baseline, exceeding the Company's previously established targets. With this achievement, Pioneer has strengthened its 2030 emission reduction goals to a 50% reduction in GHG intensity and a 75% reduction in methane intensity from the Company's 2019 baseline. Additionally, the Company achieved a flaring intensity that was 79% lower in 2020 than Pioneer's goal to limit flaring to 1% of natural gas produced. As previously disclosed, the Company plans to end routine flaring, as defined by the
In addition to emissions related goals, Pioneer is adopting a target to reduce freshwater use in the Company's completion operations to less than 25% by 2026. Pioneer expects to achieve this goal by expanding the Company's recycling capabilities and through its unique partnerships with the cities of
Pioneer recently published the Company's first Climate Risk Report, which increases the transparency of Pioneer’s progress toward integrating climate-related risks and opportunities into the Company’s governance structure, business strategy and planning process, and risk management practice. The report is structured in accordance with the four core principles of the
Socially, Pioneer maintains a proactive safety culture, supports a diverse workforce and inspires teamwork to drive innovation. The Board of Directors’ Health, Safety and Environment (HSE) and Nominating and Corporate Governance Committees provide director-level oversight of these activities. These committees help to promote a culture of continuous improvement in the Company’s diversity, equity and inclusion and safety and environmental practices. As part of this ongoing effort, the Pioneer Board of Directors expanded the responsibilities of its
In addition to the increased weighting towards HSE and ESG metrics, Pioneer's executive incentive compensation continues to be aligned with shareholder interests. Beginning in 2021, return on capital employed (ROCE) has been included as an incentive compensation metric, along with cash return on capital invested (CROCI), which was added in 2020. These metrics have a combined weighting of 20%, while the production and reserves goals that were previously included as incentive compensation metrics have been removed.
Pioneer has amended executive equity compensation as well, with the S&P 500 index being added into the total stockholder return (TSR) peer group for performance awards beginning in 2021, and, for the second consecutive year, the long-term equity compensation for the Company’s Chief Executive Officer will be 100% in performance awards, with 100% of such awards being "at-risk" based on performance relative to the TSR peer group. These updates to Pioneer’s executive incentive and equity compensation programs demonstrate the Company’s continuing commitment to aligning total executive compensation with the interests of our shareholders.
For more details, see Pioneer’s 2021 Sustainability Report and 2021 Climate Risk Report at pxd.com/sustainability.
Earnings Conference Call
Telephone: Dial (800) 667-5617 and enter confirmation code 5853688 five minutes before the call.
A replay of the webcast will be archived on Pioneer’s website. This replay will be available through
Pioneer is a large independent oil and gas exploration and production company, headquartered in
Except for historical information contained herein, the statements in this news release are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements and the business prospects of Pioneer are subject to a number of risks and uncertainties that may cause Pioneer’s actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties include, among other things, volatility of commodity prices; product supply and demand; the impact of a widespread outbreak of an illness, such as the COVID-19 pandemic, on global and
Footnote 1: Free cash flow is a non-GAAP financial measure. As used by the Company, free cash flow is defined as net cash provided by operating activities, adjusted for changes in operating assets and liabilities and cash transaction costs associated with acquisitions, less capital expenditures. See the supplemental schedules for a reconciliation of third quarter 2021 free cash flow to the comparable GAAP number. Forecasted free cash flow numbers are non-GAAP financial measures. Due to their forward-looking nature, management cannot reliably predict certain of the necessary components of the most directly comparable forward-looking GAAP measures. Accordingly, Pioneer is unable to present a quantitative reconciliation of such forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures. Amounts excluded from this non-GAAP measure in future periods could be significant.
Footnote 2: Excludes acquisitions, asset retirement obligations, capitalized interest, geological and geophysical G&A, information technology and corporate facilities.
Footnote 3: Future dividends, whether variable or base, are authorized and determined by the Company's board of directors in its sole discretion. Decisions regarding the payment of dividends are subject to a number of considerations at the time, including without limitation the Company's liquidity and capital resources, the Company's results of operations and anticipated future results of operations, the level of cash reserves the Company may establish to fund future capital expenditures or other needs, and other factors the board of directors deems relevant. The Company can provide no assurance that dividends will be authorized or declared in the future or the amount of any future dividends. Any future variable dividends, if declared and paid, will by their nature fluctuate based on the Company’s free cash flow, which will depend on a number of factors beyond the Company’s control, including commodities prices.
Footnote 4: Excludes unusual expenses of (i)
Footnote 5: Forecasted cash flow numbers are non-GAAP financial measures. The 2021 estimated cash flow number represents January through
Note: Estimates of future results, including cash flow and free cash flow, are based on the Company’s internal financial model prepared by management and used to assist in the management of its business. Pioneer’s financial models are not prepared with a view to public disclosure or compliance with GAAP, any guidelines of the
Marketing derivatives. The Company's marketing derivatives reflect two long-term marketing contracts that were entered in
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