0001038357-21-000067 | 10-Q | XBRL Viewer | Pioneer Natural Resources CO

Print Document View Excel Document

Cover Page - shares	9 Months Ended
Cover Page - shares	Sep. 30, 2021	Nov. 03, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Document Transition Report	false
Entity File Number	1-13245
Entity Registrant Name	PIONEER NATURAL RESOURCES CO
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	75-2702753
Entity Address, Address Line One	777 Hidden Ridge
Entity Address, City or Town	Irving
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75038
City Area Code	972
Local Phone Number	444-9001
Title of 12(b) Security	Common Stock, par value $.01 per share
Trading Symbol	PXD
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		244,133,701
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Central Index Key	0001038357

Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 581	$ 1,442
Restricted cash	46	59
Accounts receivable, net	1,680	695
Income taxes receivable	1	4
Inventories	340	224
Derivatives	4	5
Investment in affiliate	144	123
Other	45	43
Total current assets	2,841	2,595
Oil and gas properties, using the successful efforts method of accounting:
Proved properties	35,582	23,934
Unproved properties	8,498	576
Accumulated depletion, depreciation and amortization	(11,836)	(10,071)
Total oil and gas properties, net	32,244	14,439
Other property and equipment, net	1,726	1,584
Operating lease right-of-use assets	319	197
Goodwill	261	261
Derivatives	1	3
Other assets	157	150
Total assets	37,549	19,229
Accounts payable:
Trade	2,227	928
Due to affiliates	168	102
Interest payable	30	35
Income taxes payable	29	4
Current portion of long-term debt	244	140
Derivatives	1,176	234
Operating leases	115	100
Other	546	363
Total current liabilities	4,535	1,906
Long-term debt	6,685	3,160
Derivatives	151	66
Deferred income taxes	1,833	1,366
Operating leases	220	110
Other liabilities	932	1,052
Equity:
Common stock, $0.01 par value; 500,000,000 shares authorized; 244,122,575 and 175,525,268 shares issued as of September 30, 2021 and December 31, 2020, respectively	2	2
Additional paid-in capital	19,104	9,323
Treasury stock at cost: 139 and 11,047,856 shares as of September 30, 2021 and December 31, 2020, respectively	0	(1,234)
Retained earnings	4,087	3,478
Total equity	23,193	11,569
Commitments and contingencies
Total liabilities and equity	$ 37,549	$ 19,229

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Common stock, par value (usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	244,122,575	175,525,268
Treasury stock, shares (in shares)	139	11,047,856

Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Revenues and other income:
Revenue	$ 4,961	$ 1,857	$ 12,294	$ 5,008
Interest and other income (loss), net	2	13	42	(145)
Derivative loss, net	(501)	(141)	(2,024)	(41)
Gain on disposition of assets, net	1	2	14	7
Total revenues and other income	4,463	1,731	10,326	4,829
Costs and expenses:
Production and ad valorem taxes	179	63	445	182
Depletion, depreciation and amortization	704	393	1,825	1,243
Exploration and abandonments	10	16	40	35
General and administrative	72	64	216	180
Accretion of discount on asset retirement obligations	2	2	5	7
Interest	41	34	122	94
Other	34	98	384	273
Total costs and expenses	3,127	1,831	8,571	5,118
Income (loss) before income taxes	1,336	(100)	1,755	(289)
Income tax benefit (provision)	(291)	15	(400)	46
Net income (loss) attributable to common stockholders	$ 1,045	$ (85)	$ 1,355	$ (243)
Net income (loss) per share attributable to common stockholders:
Basic (usd per share)	$ 4.27	$ (0.52)	$ 5.88	$ (1.47)
Diluted (usd per share)	$ 4.07	$ (0.52)	$ 5.60	$ (1.47)
Weighted average shares outstanding:
Basic weighted average shares outstanding (in shares)	244	165	230	165
Diluted weighted average shares outstanding (in shares)	257	165	242	165
Dividends declared (usd per share)	$ 2.07	$ 0.55	$ 3.19	$ 1.65
Oil and gas
Revenues and other income:
Revenue	$ 3,282	$ 922	$ 7,787	$ 2,617
Costs and expenses:
Costs and expenses	323	163	890	506
Sales of purchased commodities
Revenues and other income:
Revenue	1,679	935	4,507	2,391
Costs and expenses:
Costs and expenses	$ 1,762	$ 998	$ 4,644	$ 2,598

Consolidated Statements of Equity - USD ($) $ in Millions	Total	Common Stock	Additional Paid-in Capital	Treasury Stock	Retained Earnings
Beginning balance (in shares) at Dec. 31, 2019		165,547,000
Beginning balance at Dec. 31, 2019	$ 12,136	$ 2	$ 9,161	$ (1,069)	$ 4,042
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared	(91)				(91)
Exercise of long-term incentive stock options (in shares)		8,000
Exercise of long-term incentive stock options	0		(1)	1
Purchases of treasury stock (in shares)		(1,007,000)
Purchases of treasury stock	(122)			(122)
Stock-based compensation costs:
Vested compensation awards, net or issued awards (in shares)		316,000
Vested compensation awards, net	0
Compensation costs included in net income	16		16
Net loss	291				291
Ending balance (in shares) at Mar. 31, 2020		164,864,000
Ending balance at Mar. 31, 2020	12,230	$ 2	9,176	(1,190)	4,242
Beginning balance (in shares) at Dec. 31, 2019		165,547,000
Beginning balance at Dec. 31, 2019	12,136	$ 2	9,161	(1,069)	4,042
Stock-based compensation costs:
Net loss	(243)
Ending balance (in shares) at Sep. 30, 2020		164,403,000
Ending balance at Sep. 30, 2020	11,598	$ 2	9,305	(1,235)	3,526
Beginning balance (in shares) at Mar. 31, 2020		164,864,000
Beginning balance at Mar. 31, 2020	12,230	$ 2	9,176	(1,190)	4,242
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared	(91)				(91)
Equity component	230		230
Capped call	(113)		(113)
Deferred tax provision	(25)		(25)
Purchases of treasury stock (in shares)		(592,000)
Purchases of treasury stock	(50)			(50)
Stock-based compensation costs:
Vested compensation awards, net or issued awards (in shares)		4,000
Vested compensation awards, net	0
Compensation costs included in net income	17		17
Net loss	(449)				(449)
Ending balance (in shares) at Jun. 30, 2020		164,276,000
Ending balance at Jun. 30, 2020	11,749	$ 2	9,285	(1,240)	3,702
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared	(91)				(91)
Exercise of long-term incentive stock options (in shares)		62,000
Exercise of long-term incentive stock options	6		(1)	7
Purchases of treasury stock (in shares)		(19,000)
Purchases of treasury stock	(2)			(2)
Stock-based compensation costs:
Vested compensation awards, net or issued awards (in shares)		84,000
Vested compensation awards, net	0
Compensation costs included in net income	21		21
Net loss	(85)				(85)
Ending balance (in shares) at Sep. 30, 2020		164,403,000
Ending balance at Sep. 30, 2020	11,598	$ 2	9,305	(1,235)	3,526
Beginning balance (in shares) at Dec. 31, 2020		164,477,000
Beginning balance at Dec. 31, 2020	11,569	$ 2	9,323	(1,234)	3,478
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared	(122)				(122)
Equity component	(202)		(230)		28
Deferred tax provision	44		50		(6)
Exercise of long-term incentive stock options (in shares)		55,000
Exercise of long-term incentive stock options	6		(2)	8
Purchases of treasury stock (in shares)		(99,000)
Purchases of treasury stock	(13)			(13)
Shares issued or reissued for acquisition (in shares)		51,655,000
Shares issued or reissued for Parsley Energy, Inc. ("Parsley") acquisition	6,882		5,644	1,238
Stock-based compensation costs:
Vested compensation awards, net or issued awards (in shares)		623,000
Vested compensation awards, net	0
Compensation costs included in net income	19		19
Compensation costs included in net loss associated with Parsley acquisition	33		33
Net loss	(70)				(70)
Ending balance (in shares) at Mar. 31, 2021		216,711,000
Ending balance at Mar. 31, 2021	18,146	$ 2	14,837	(1)	3,308
Beginning balance (in shares) at Dec. 31, 2020		164,477,000
Beginning balance at Dec. 31, 2020	$ 11,569	$ 2	9,323	(1,234)	3,478
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity component			(230)		28
Deferred tax provision			50		(6)
Exercise of long-term incentive stock options (in shares)	55,173
Stock-based compensation costs:
Net loss	$ 1,355
Ending balance (in shares) at Sep. 30, 2021		244,122,000
Ending balance at Sep. 30, 2021	23,193	$ 2	19,104	0	4,087
Beginning balance (in shares) at Mar. 31, 2021		216,711,000
Beginning balance at Mar. 31, 2021	18,146	$ 2	14,837	(1)	3,308
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared	(138)				(138)
Purchases of treasury stock (in shares)		(2,000)
Purchases of treasury stock	(1)			(1)
Shares issued or reissued for acquisition (in shares)		27,187,000
Shares issued or reissued for Parsley Energy, Inc. ("Parsley") acquisition	4,234		4,234
Stock-based compensation costs:
Vested compensation awards, net or issued awards (in shares)		63,000
Vested compensation awards, net	0
Compensation costs included in net income	17		17
Net loss	380				380
Ending balance (in shares) at Jun. 30, 2021		243,959,000
Ending balance at Jun. 30, 2021	22,638	$ 2	19,088	(2)	3,550
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared	(508)				(508)
Exercise of long-term incentive stock options (in shares)		53,000
Exercise of long-term incentive stock options	5		(2)	7
Purchases of treasury stock (in shares)		(34,000)
Purchases of treasury stock	(5)			(5)
Stock-based compensation costs:
Vested compensation awards, net or issued awards (in shares)		144,000
Vested compensation awards, net	0
Compensation costs included in net income	18		18
Net loss	1,045				1,045
Ending balance (in shares) at Sep. 30, 2021		244,122,000
Ending balance at Sep. 30, 2021	$ 23,193	$ 2	$ 19,104	$ 0	$ 4,087

Consolidated Statements of Equity (Parenthetical) - $ / shares	3 Months Ended						9 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2021	Sep. 30, 2020
Statement of Stockholders' Equity [Abstract]
Dividends declared (usd per share)	$ 2.07	$ 0.56	$ 0.56	$ 0.55	$ 0.55	$ 0.55	$ 3.19	$ 1.65

Consolidated Statements of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Cash flows from operating activities:
Net income (loss)	$ 1,355	$ (243)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depletion, depreciation and amortization	1,825	1,243
Exploration expenses	3	8
Deferred income taxes	371	(36)
Gain on disposition of assets, net	(14)	(7)
Loss on early extinguishment of debt, net	2	27
Accretion of discount on asset retirement obligations	5	7
Interest expense	19	34
Derivative-related activity	636	129
Amortization of stock-based compensation	87	54
Investment in affiliate valuation adjustment	(21)	119
South Texas contingent consideration valuation adjustment	0	42
South Texas deficiency fee obligation	0	69
Other	116	94
Change in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	(601)	371
Inventories	(93)	13
Other assets	24	24
Accounts payable	515	(164)
Interest payable	(76)	(37)
Other liabilities	(318)	(201)
Net cash provided by operating activities	3,835	1,546
Cash flows from investing activities:
Proceeds from disposition of assets	59	58
Cash used in acquisitions, net of cash acquired	(826)	0
Additions to oil and gas properties	(2,191)	(1,297)
Additions to other assets and other property and equipment	(77)	(103)
Net cash used in investing activities	(3,035)	(1,342)
Cash flows from financing activities:
Proceeds from issuance of senior notes, net of discount	3,247	1,091
Proceeds from issuance of convertible senior notes	0	1,323
Purchase of derivatives related to issuance of convertible senior notes	0	(113)
Borrowings under credit facility	650	800
Repayment of credit facilities	(1,287)	(800)
Repayment of senior notes, including tender offer premiums	(3,371)	(1,198)
Payments of other liabilities	(153)	(162)
Payments of financing fees	(32)	(36)
Purchases of treasury stock	(19)	(174)
Exercise of long-term incentive plan stock options and employee stock purchases	11	6
Dividends paid	(720)	(255)
Net cash provided by (used in) financing activities	(1,674)	482
Net increase (decrease) in cash, cash equivalents and restricted cash	(874)	686
Cash, cash equivalents and restricted cash, beginning of period	1,501	705
Cash, cash equivalents and restricted cash, end of period	$ 627	$ 1,391

Organization and Nature of Operations	9 Months Ended
Organization and Nature of Operations	Sep. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Nature of Operations	Organization and Nature of OperationsPioneer Natural Resources Company ("Pioneer" or the "Company") is a Delaware corporation whose common stock is listed and traded on the New York Stock Exchange (the "NYSE"). The Company is a large independent oil and gas exploration and production company that explores for, develops and produces oil, natural gas liquids ("NGLs") and gas in the Permian Basin in West Texas.

Basis of Presentation

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Presentation. In the opinion of management, the unaudited interim consolidated financial statements of the Company as of September 30, 2021 and for the three and nine months ended September 30, 2021 and 2020 include all adjustments and accruals, consisting only of normal, recurring adjustments and accruals necessary for a fair presentation of the results for the interim periods in conformity with generally accepted accounting principles in the United States ("GAAP"). The operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of results for a full year.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with the rules and regulations of the United States Securities and Exchange Commission (the "SEC"). These unaudited interim consolidated financial statements should be read together with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

Correction of previously issued financial statements. During the Company's review of its marketing contracts during the fourth quarter of 2020, the Company identified two long-term marketing contracts that should have been accounted for as derivative contracts. The contracts were entered in October 2019, each with a January 1, 2022 contract commencement date and a December 31, 2021 contract termination date. In accordance with Staff Accounting Bulletin ("SAB") No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the Company evaluated the misstatements and, based on an analysis of quantitative and qualitative factors, determined that the related impact of the misstatement was material to its consolidated financial statements for the interim period ended September 30, 2020. In accordance with Accounting Standards Codification 250, Accounting Changes and Error Corrections, the Company has corrected the misstatement for the three and nine months ended September 30, 2021 by restating the consolidated financial statements appearing herein. The net impact of these noncash corrections to the Company's previously reported consolidated financial statements for the three and nine months ended September 30, 2021 is as follows (in millions, except for per share data):



	As Reported				Adjustments				As Restated
	Three Months Ended		Nine Months Ended		Three Months Ended		Nine Months Ended		Three Months Ended		Nine Months Ended

Oil and gas revenues	$	922	$	2,617	$	—	$	—	$	922	$	2,617
Derivative gain (loss), net	$	(57)	$	60	$	(84)	$	(101)	$	(141)	$	(41)

Total revenues and other income	$	1,815	$	4,930	$	(84)	$	(101)	$	1,731	$	4,829
Total costs and expenses	1,831		5,118		—		—		1,831		5,118
Loss before income taxes	(16)		(188)		(84)		(101)		(100)		(289)
Income tax benefit (provision)	(4)		18		19		28		15		46

Net loss	$	(20)	$	(170)	$	(65)	$	(73)	$	(85)	$	(243)
Basic and diluted net loss per share attributable to common stockholders	$	(0.12)	$	(1.03)	$	(0.40)	$	(0.44)	$	(0.52)	$	(1.47)

Use of estimates in the preparation of financial statements. Preparation of the Company's unaudited interim consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Depletion of oil and gas properties is calculated using estimates of proved oil and gas reserves. There are numerous uncertainties inherent in the estimation of quantities of proved reserves, the projection of future rates of production and the timing of development

expenditures. Similarly, evaluations for impairment of goodwill and proved and unproved oil and gas properties are subject to numerous uncertainties including, among others, estimates of proved, probable and possible reserves and commodity price outlooks. Actual results could differ from the estimates and assumptions utilized.

Adoption of new accounting standards. In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, "Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" ("ASU 2020-06"). ASU 2020-06 simplifies the accounting for certain convertible instruments by removing the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion feature. Additionally, ASU 2020-06 amends the diluted earnings per share calculation for convertible instruments by requiring the use of the if-converted method. The if-converted method assumes the conversion of convertible instruments occurs at the beginning of the reporting period and diluted weighted average shares outstanding includes the common shares issuable upon conversion of the convertible instruments. The Company early adopted ASU 2020-06 on January 1, 2021.

Upon issuance of the Company's $1.3 billion principal amount of 0.250% convertible senior notes due 2025 (the "Convertible Notes") in May 2020, the Company bifurcated the debt and equity components of the Convertible Notes to long-term debt and additional paid-in capital in its consolidated balance sheet. The amount recorded to additional paid-in capital represented a debt discount that was being amortized to interest expense over the life of the Convertible Notes. As part of the adoption of ASU 2020-06, the Company (i) reversed the debt discount and related deferred income tax liability recorded to additional paid-in capital of $230 million and $50 million, respectively, (ii) recorded a cumulative effect of the adoption of ASU 2020-06 of $22 million to retained earnings, representing a reversal of $28 million of the debt discount that was amortized to interest expense, net of an associated deferred income tax impact of $6 million, in 2020 and (iii) recorded the respective offsets for items (i) and (ii) above, representing the unamortized debt discount attributable to the Convertible Notes of $202 million to long-term debt and the associated deferred tax impact of $44 million to deferred income tax liabilities. See Note 7 for additional information.

Additionally, upon adoption of ASU 2020-06, the treasury stock method utilized by the Company to calculate earnings per share through December 31, 2021 is no longer allowed. As such, the Company has transitioned to the if-converted method utilizing the modified retrospective approach, resulting in 12 million incremental shares being included in the Company's weighted-average diluted shares outstanding for the three and nine months ended September 30, 2021. See Note 16 for additional information.

Acquisitions, Divestitures and Restructuring Activities

9 Months Ended

Sep. 30, 2021

Business Combinations [Abstract]

Acquisitions, Divestitures and Restructuring Activities

Acquisitions

DoublePoint Acquisition. On May 4, 2021, the Company acquired Double Eagle III Midco 1 LLC ("DoublePoint") pursuant to a definitive membership interest purchase agreement to acquire DoublePoint dated April 1, 2022 (the "DoublePoint Acquisition") in exchange for 27 million shares of Pioneer common stock and $1.0 billion of cash. The Pioneer stock consideration transferred had a fair value of $4.2 billion.

Parsley Acquisition. On January 12, 2021, the Company acquired Parsley Energy, Inc., a Delaware corporation that previously traded on the NYSE under the symbol "PE" ("Parsley"), pursuant to the Agreement and Plan of Merger, dated as of October 20, 2020, among Pioneer, certain of its subsidiaries, Parsley and Parsley's subsidiary, Parsley Energy, LLC (the "Parsley Acquisition"). On the closing date of the Parsley Acquisition, Parsley merged into a newly formed wholly-owned subsidiary of the Company, and the subsidiaries of Parsley, including Jagged Peak Energy LLC ("Jagged Peak"), became indirect subsidiaries of the Company.

As part of the Parsley Acquisition, each eligible share of Parsley Class A common stock and each membership interest unit of Parsley Energy, LLC were automatically converted into the right to receive 0.1252 (the "Exchange Ratio") shares of Pioneer common stock. As a result, the Company issued 52 million shares of Pioneer common stock upon the consummation of the Parsley Acquisition, representing total stock consideration transferred of $6.9 billion.

Both the Parsley Acquisition and the DoublePoint Acquisition were accounted for using the acquisition method under ASC Topic 805, Business Combinations, which requires all assets acquired and liabilities assumed to be recorded at fair value at the acquisition date. Provisional fair value measurements were made for acquired assets and liabilities, and adjustments to

those measurements may be made in subsequent periods (up to one year from the acquisition date) as information necessary to complete the fair value analysis is obtained.

The following table summarizes the provisional fair values assigned to assets acquired and liabilities assumed (presented in millions):


	Parsley Acquisition		DoublePoint Acquisition
	As of January 12, 2022		As of May 4, 2022
Cash and cash equivalents (a)	$	118	$	58
Accounts receivable	253		131
Derivatives	8		—
Proved properties	5,110		3,929
Unproved properties	5,636		2,406
Other property and equipment	118		72
Operating lease right-of-use assets	201		2
Other assets	22		11
Total assets acquired	11,466		6,609

Accounts payable	337		232
Interest payable	49		22
Derivatives	317		86
Operating leases	201		2
Deferred income taxes	140		—
Long-term debt	3,238		975
Other liabilities	301		58
Total liabilities assumed	4,583		1,375
Net assets acquired	$	6,883	$	5,234

______________________

(a)Cash used in investing activities as a result of the Parsley Acquisition and DoublePoint Acquisition includes (i) $2 million of cash used in the settlement of partial shares related to the conversion of Parsley Class A common stock at the Exchange Ratio and (ii) $1 billion of cash used to acquire DoublePoint, respectively.

The following unaudited pro forma summary presents the results of operations as if the Parsley Acquisition and DoublePoint Acquisition had occurred on January 1, 2020. The pro forma summary uses estimates and assumptions based on information available at the time. Management believes the estimates and assumptions to be reasonable; however, actual results may have differed significantly from this pro forma financial information. The pro forma information does not reflect any synergy savings that might have been achieved from combining the operations and is not intended to reflect the actual results that would have occurred had the companies actually been combined during the periods presented.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)				(in millions)
Revenues and other income	$	4,463	$	2,168	$	10,373	$	6,797
Net income (loss)	$	1,045	$	(40)	$	1,210	$	(3,870)

Divestitures

•In March 2021, the Company sold its well services business to a third party for (i) net cash proceeds of $20 million and (ii) up to $4 million of additional cash proceeds to be earned over the next three years. The Company recorded a gain on sale of $9 million, which is reflected in net gain on disposition of assets in the consolidated statements of operations for the nine months ended September 30, 2021.

•In May 2020, the Company completed the sale of certain vertical wells and approximately 1,500 undeveloped acres in Upton County of the Permian Basin to an unaffiliated third party for net cash proceeds of $6 million. The Company recorded a gain of $6 million associated with the sale which is reflected in net gain on disposition of assets in the consolidated statements of operations for the nine months ended September 30, 2020.

Restructuring

During 2020, the Company implemented changes to respond to a reduction in expected activity levels as a result of the COVID-19 pandemic. In October 2020, the Company initiated a corporate restructuring whereby approximately 300 employees were involuntarily separated from the Company. The Company recorded $74 million of employee-related charges, including $3 million of noncash stock-based compensation expense related to the accelerated vesting of certain equity awards, in other expense in the consolidated statements of operations during the three and nine months ended September 30, 2020. See Note 8 and Note 14 for additional information.

In June 2020, the Company implemented changes to its well services business, including a staffing reduction of approximately 50 employees.

The employee-related costs associated with restructuring activities were primarily recorded in other expense in the consolidated statements of operations. Obligations associated with employee-related charges are included in accounts payable - due to affiliates in the consolidated balance sheets. See Note 14 for additional information.

The changes in the Company's total employee-related obligations associated with divestiture and restructuring activities are as follows:


	Nine Months Ended September 30,
	2021		2020

	(in millions)
Beginning employee-related obligations	$	3	$	6
Additions (a)	1		75
Less:
Noncash stock-based compensation	—		3
Cash payments	3		7
Ending employee-related obligations	$	1	$	71

______________________

(a)Additions for the nine months ended September 30, 2021 primarily represent employee-related charges associated with the divestiture of the Company's well services business in March 2021. Additions for the nine months ended September 30, 2021 primarily represent employee-related charges associated with the 2020 corporate restructuring of $74 million and the Company's staffing reduction in its well services business of $1 million. See Note 14 for additional information.

Fair Value Measurements

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

The Company determines fair value based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based upon inputs that market participants use in pricing an asset or liability, which are characterized according to a hierarchy that prioritizes those inputs based on the degree to which they are observable. Observable inputs represent market data obtained from independent sources, whereas unobservable inputs reflect a company's own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort. The fair value input hierarchy level to which an asset or liability measurement in its entirety falls is determined based on the lowest level input that is significant to the measurement in its entirety.

The three input levels of the fair value hierarchy are as follows:

•Level 1 - quoted prices for identical assets or liabilities in active markets.

•Level 2 - quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability

(e.g. interest rates) and inputs derived principally from or corroborated by observable market data by correlation or other means.

•Level 3 - unobservable inputs for the asset or liability, typically reflecting management's estimate of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore, determined using model-based techniques, including discounted cash flow models.

Assets and liabilities measured at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows:


	As of September 30, 2021
	Fair Value Measurement
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total

	(in millions)
Assets:
Commodity price derivatives	$	—	$	5	$	—	$	5
Deferred compensation plan assets	74		—		—		74
Investment in affiliate	144		—		—		144
Total assets	218		5		—		223
Liabilities:
Commodity price derivatives	—		1,239		—		1,239
Marketing derivatives	—		—		88		88
Total liabilities	—		1,239		88		1,327
Total recurring fair value measurements	$	218	$	(1,234)	$	(88)	$	(1,104)


	As of December 31, 2021
	Fair Value Measurement
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total

	(in millions)
Assets:
Commodity price derivatives	$	—	$	8	$	—	$	8
Deferred compensation plan assets	72		—		—		72
Investment in affiliate	123		—		—		123
Total assets	195		8		—		203
Liabilities:
Commodity price derivatives	—		209		—		209
Marketing derivatives	—		—		91		91
Total liabilities	—		209		91		300
Total recurring fair value measurements	$	195	$	(201)	$	(91)	$	(97)

Commodity price derivatives. The Company's commodity price derivatives represent oil, NGL and gas swap contracts, collar contracts, collar contracts with short puts, option contracts and basis swap contracts. The asset and liability measurements for the Company's commodity price derivative contracts are determined using Level 2 inputs. The Company utilizes discounted cash flow and option-pricing models for valuing its commodity price derivatives.

The asset and liability values attributable to the Company's commodity price derivatives were determined based on inputs that include (i) the contracted notional volumes, (ii) independent active market price quotes, (iii) the applicable estimated credit-adjusted risk-free rate yield curve and (iv) the implied rate of volatility inherent in the collar contracts, collar contracts with short puts and option contracts, which is based on active and independent market-quoted volatility factors.

Marketing derivatives. Under the contract terms of the marketing derivatives, the Company agreed to purchase and simultaneously sell 50 thousand barrels of oil per day at an oil terminal in Midland, Texas for a six-year term that ends on December 31, 2026. The price the Company pays to purchase the oil volumes under the purchase contract is based on a Midland West Texas Intermediate ("WTI") price and the price the Company receives for the oil volumes sold is a weighted average sales price ("WASP") that the non-affiliated counterparty receives for selling oil through their Gulf Coast storage and export facility at prices that are highly correlated with Brent oil prices during the same month of the purchase. Based on the form of the marketing contracts, the Company determined that the marketing contracts should be accounted for as derivative instruments not designated as hedges. The asset and liability measurements for the Company's marketing derivative contracts are determined using both Level 2 and 3 inputs. The Company utilizes a discounted cash flow model for valuing its marketing derivatives.

The asset and liability values attributable to the Company's marketing derivatives were determined based on Level 2 inputs that include (i) the contracted notional volumes, (ii) independent active market price quotes, (iii) the applicable estimated credit-adjusted risk-free rate yield curve and (iv) stated contractual rates. The Level 3 inputs attributable to the Company's marketing derivatives include the historical monthly differential between Brent oil prices and the corresponding WASP of the counterparty to the marketing derivatives ("WASP Differential Deduction") and, to a lesser extent, an estimated annual cost inflation rate. The average WASP Differential Deduction used in the fair value determination as of September 30, 2021 and 2020 was $2.07 and $1.97 per barrel, respectively. The WASP Differential Deduction and the estimated annual cost inflation rate reflects management's best estimate of future results utilizing historical performance, but these estimates are not observable inputs by a market participant and contain a high degree of uncertainty. The Company could experience significant mark-to-market fluctuations in the fair value of its marketing derivatives based on changes in the WASP Differential Deduction if it deviates from historical levels. For example, a 10 percent increase or decrease in the WASP Differential Deduction would impact the fair value of the Company's marketing derivatives recorded by approximately $20 million as of September 30, 2021.

Deferred compensation plan assets. The Company's deferred compensation plan assets include investments in equity and mutual fund securities that are actively traded on major exchanges. The fair value of these investments is determined using Level 1 inputs based on observable prices on major exchanges.

Investment in affiliate. The Company elected the fair value option for measuring its equity method investment in ProPetro Holding Corp. ("ProPetro"). The fair value of its investment in ProPetro is determined using Level 1 inputs based on observable prices on a major exchange. See Note 11 and Note 13 for additional information.

Assets and liabilities measured at fair value on a nonrecurring basis. Certain assets and liabilities are measured at fair value on a nonrecurring basis. These assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances. These assets and liabilities can include inventory, proved and unproved oil and gas properties, goodwill and other long-lived assets that are written down to fair value when they are impaired or held for sale.

Parsley Acquisition and DoublePoint Acquisition. Both the Parsley Acquisition and DoublePoint Acquisition were accounted for using the acquisition method under ASC Topic 805, "Business Combinations", which requires all assets acquired and liabilities assumed in the acquisitions to be recorded at fair values at the acquisition date of each transaction. Oil and gas properties were valued based on income and market based approaches utilizing Level 3 inputs, including internally generated development and production profiles and price and cost assumptions. Debt assumed in the acquisitions was valued based on Level 2 inputs that included using observable market prices to determine fair value. Net derivative liabilities assumed in the acquisitions were valued based on Level 2 inputs similar to the Company's other commodity price derivatives. See Note 3 for additional information.

South Texas Divestiture. The Company recorded a deficiency fee obligation and related deficiency fee receivable in conjunction with the divestiture of the Company's Eagle Ford assets and other remaining South Texas assets in May 2019 (the "South Texas Divestiture"). The fair value of the deficiency fee obligation and deficiency fee receivable was determined using Level 3 inputs based on a probability-weighted forecast that considers historical results, market conditions and various development plans to arrive at the estimated present value of the deficiency payments and corresponding receipts. Changes to

the Company's forecasted deficiency fee obligation resulted in the Company recording a charge of $69 million to other expense during the nine months ended September 30, 2020. The present value of the estimated future cash payments and expected cash receipts were determined using a 3.6 percent and 3.2 percent discount rate, respectively, based on the estimated timing of future payments and receipts and the Company's counterparty credit risk assessments. See Note 10 and Note 14 for additional information.

Financial instruments not carried at fair value. Carrying values and fair values of financial instruments that are not carried at fair value in the consolidated balance sheets are as follows:


	As of September 30, 2021				As of December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value

	(in millions)
Assets:
Cash and cash equivalents (a)	$	581	$	581	$	1,442	$	1,442
Restricted cash (a) (b)	$	46	$	46	$	59	$	59
Liabilities:
Current portion of long-term debt:
Senior notes (c)	$	244	$	249	$	140	$	140
Long-term debt:
Convertible Notes (c) (d)	$	1,305	$	2,139	$	1,100	$	1,756
Senior notes (c)	$	5,380	$	5,469	$	2,060	$	2,230

______________________

(a)Fair value approximates carrying value due to the short-term nature of the instruments.

(b)Primarily relates to funds in escrow for use in future deficiency fee payments related to the South Texas Divestiture. Any remaining balance after the payment of the deficiency fees will revert to the Company on March 31, 2023.

(c)Fair value is determined using Level 2 inputs. The Company's senior notes are quoted, but not actively traded on major exchanges; therefore, fair value is based on periodic values as quoted on major exchanges. See Note 7 for additional information.

(d)Upon issuance of the Convertible Notes, the debt discount and related deferred income tax liability were recorded to additional paid-in capital. As part of the Company's early adoption of ASU 2020-06 on January 1, 2022 (see Note 2), the Company reclassified the debt discount and related deferred income tax liability of $230 million and $50 million, respectively, from additional paid-in capital to the Convertible Notes reported in long-term debt and deferred income taxes, respectively, in the consolidated balance sheets.

The Company has other financial instruments consisting primarily of receivables, payables, other current assets and liabilities that approximate fair value due to the nature of the instrument and their relatively short maturities. Non-financial assets and liabilities initially measured at fair value include assets acquired and liabilities assumed in a business combination, goodwill and asset retirement obligations.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Derivative Financial Instruments

9 Months Ended

Sep. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

The Company primarily utilizes commodity swap contracts, collar contracts, collar contracts with short puts and basis swap contracts to (i) reduce the effect of price volatility on the commodities the Company produces and sells or consumes, (ii) support the Company's capital budgeting and expenditure plans and (iii) support the payment of contractual obligations and dividends.

Oil production derivatives. The Company sells its oil production at the lease and the sales contracts governing such oil production are tied directly to, or are correlated with, New York Mercantile Exchange ("NYMEX") WTI oil prices. The Company also enters into (i) pipeline capacity commitments in order to secure available oil, NGL and gas transportation capacity from its areas of production and (ii) purchase transactions with third parties and separate sale transactions with third parties to diversify a portion of the Company's oil pricing to Gulf Coast refineries or international export markets at prices that are highly correlated to Brent oil prices. As a result, the Company uses a combination of Brent, Magellan East Houston

("MEH") and WTI derivative contracts to manage future oil price volatility.

The Company's outstanding oil derivative contracts as of September 30, 2021 and the weighted average oil prices per barrel for those contracts are as follows:


	2021		Year Ending December 31, 2021 (a)
	Fourth Quarter
Brent swap contracts:
Volume per day (Bbl)	17,000		—
Price per Bbl	$	44.45	$	—
MEH swap contracts:
Volume per day (Bbl)	43,000		2,055
Price per Bbl	$	40.52	$	42.80
Midland WTI swap contracts:
Volume per day (Bbl)	5,000		—
Price per Bbl	$	40.50	$	—
NYMEX WTI swap contracts:
Volume per day (Bbl)	15,000		—
Price per Bbl	$	52.85	$	—
NYMEX rollfactor swap contracts:
Volume per day (Bbl)	35,000		—
Price per Bbl	$	0.17	$	—
Midland WTI basis swap contracts:
Volume per day (Bbl)	37,000		26,000
Price per Bbl	$	0.89	$	0.50
Brent call contracts sold:
Volume per day (Bbl) (b)	20,000		—
Price per Bbl	$	69.74	$	—
Brent collar contracts:
Volume per day (Bbl)	—		10,000
Price per Bbl:
Ceiling	$	—	$	60.32
Floor	$	—	$	50.00
NYMEX WTI collar contracts:
Volume per day (Bbl)	6,000		—
Price per Bbl:
Ceiling	$	55.54	$	—
Floor	$	50.00	$	—
Brent collar contracts with short puts:
Volume per day (Bbl)	90,000		67,000
Price per Bbl:
Ceiling	$	50.74	$	66.02
Floor	$	45.11	$	52.39
Short put	$	35.07	$	39.25


MEH collar contracts with short puts:
Volume per day (Bbl)	9,446		—
Price per Bbl:
Ceiling	$	51.29	$	—
Floor	$	41.55	$	—
Short put	$	31.55	$	—
NYMEX WTI collar contracts with short puts:
Volume per day (Bbl)	—		12,000
Price per Bbl:
Ceiling	$	—	$	65.86
Floor	$	—	$	52.50
Short put	$	—	$	40.00

______________________

(a)Between October 1, 2021 and November 1, 2021, the Company liquidated certain derivative contracts as follows (i) 8,152 Bbls per day of MEH swap contracts for January 2022 through March 2022 production with a weighted average swap price of $42.80, (ii) 10,000 Bbls per day of Brent collar contracts for January 2022 through December 2022 production with a weighted average call price of $60.32 and a put price of $50.00 and (iii) 20,000 Bbls per day of Brent collar contracts with short puts for January 2022 through December 2022 production with a weighted average call price of $57.88, put price of $45.50 and short put price of $35.00.

(b)The referenced call contracts were sold in exchange for higher ceiling prices on certain 2020 collar contracts with short puts.

NGL production derivatives. All material physical sales contracts governing the Company's NGL production are tied directly or indirectly to Mont Belvieu, Texas NGL component product prices. The Company uses derivative contracts to manage the volatility of NGL component product prices. As of September 30, 2021, the Company did not have any NGL derivative contracts outstanding.

Gas production derivatives. All material physical sales contracts governing the Company's gas production are tied directly or indirectly to NYMEX Henry Hub ("HH") gas prices or regional index prices (e.g. WAHA, SoCal and Houston Ship Channel) where the gas is sold. To diversify the gas prices it receives to international market prices, the Company sells a portion of its gas production at Dutch Title Transfer Facility ("Dutch TTF") prices. The Company uses derivative contracts to manage gas price volatility and basis swap contracts to reduce basis risk between HH prices and actual index prices at which the gas is sold.

The Company's outstanding gas derivative contracts as of September 30, 2021 and the weighted average gas prices per MMBtu for those contracts are as follows:


	2021		Year Ending December 31, 2021
	Fourth Quarter
NYMEX swap contracts:
Volume per day (MMBtu)	160,000		—
Price per MMBtu	$	3.63	$	—
Dutch TTF swap contracts:
Volume per day (MMBtu)	30,000		30,000
Price per MMBtu	$	5.07	$	8.87
WAHA swap contracts:
Volume per day (MMBtu)	116,304		4,932
Price per MMBtu	$	2.36	$	2.46
NYMEX collar contracts:
Volume per day (MMBtu)	247,000		1,726
Price per MMBtu:
Ceiling	$	3.20	$	3.45
Floor	$	2.60	$	2.75
NYMEX collar contracts with short puts:
Volume per day (MMBtu)	—		100,000
Price per MMBtu:
Ceiling	$	—	$	4.00
Floor	$	—	$	3.20
Short put	$	—	$	2.50
Basis swap contracts:
Permian Basin index swap volume per day (MMBtu) (a)	7,000		1,726
Price differential ($/MMBtu)	$	(0.39)	$	(0.39)

____________________

(a)The referenced basis swap contracts fix the basis differentials between the index price at which the Company sells a portion of its Permian Basin gas and the NYMEX index price used in swap contracts.

Marketing derivatives. The Company uses marketing derivatives to diversify its oil pricing to Gulf Coast and international markets. The Company's marketing derivatives reflect two long-term marketing contracts that were entered in October 2019 whereby the Company agreed to purchase and simultaneously sell 50 thousand barrels of oil per day at an oil terminal in Midland, Texas for a six-year term that began on January 1, 2022 and ends on December 31, 2026. The price the Company pays to purchase the oil volumes under the purchase contract is based on a Midland WTI price and the price the Company receives for the oil volumes sold is a WASP that a non-affiliated counterparty receives for selling oil through their Gulf Coast storage and export facility at prices that are highly correlated with Brent oil prices during the same month of the purchase. Based on the form of the marketing contracts, the Company determined that the marketing contracts should be accounted for as derivative instruments. For the three and nine months ended September 30, 2021, the Company recorded noncash marketing derivative gains of $6 million and $3 million, respectively, and cash payments of $11 million and $31 million, respectively, as compared to noncash marketing derivative losses of $85 million and $100 million, respectively, and no cash payments or receipts for the same respective periods in 2020.

Derivative accounting. The Company's derivatives are accounted for as non-hedge derivatives and therefore all changes in the fair values of its derivative contracts are recognized as gains or losses in the earnings of the periods in which they occur. The Company enters into commodity price derivatives under master netting arrangements, which, in an event of default, allows the Company to offset payables to and receivables from the defaulting counterparty.

Contingent consideration. The Company's right to receive contingent consideration in conjunction with the South Texas Divestiture was determined to be a derivative financial instrument that is not designated as a hedging instrument. Prior to its settlement in July 2020, the contingent consideration was revalued using an option pricing model each reporting period based on forecasted oil and NGL prices during each of the five years from 2020 to 2024. See Note 13 for additional information.

Noncash gains and losses associated with the Company's (i) commodity price derivatives and marketing derivatives and (ii) contingent consideration are separately presented in operating activities within the consolidated statements of cash flows.

Fair value. The fair value of derivative financial instruments not designated as hedging instruments is as follows:


As of September 30, 2021
Type	Consolidated Balance Sheet Location	Fair Value		Gross Amounts Offset in the Consolidated Balance Sheet		Net Fair Value Presented in the Consolidated Balance Sheet

		(in millions)
Assets:
Commodity price derivatives	Derivatives - current	$	4	$	—	$	4
Commodity price derivatives	Derivatives - noncurrent	$	1	$	—	$	1
Liabilities:
Commodity price derivatives	Derivatives - current	$	1,129	$	—	$	1,129
Marketing derivatives	Derivatives - current	$	47	$	—	$	47
Commodity price derivatives	Derivatives - noncurrent	$	110	$	—	$	110
Marketing derivatives	Derivatives - noncurrent	$	41	$	—	$	41


As of December 31, 2021
Type	Consolidated Balance Sheet Location	Fair Value		Gross Amounts Offset in the Consolidated Balance Sheet		Net Fair Value Presented in the Consolidated Balance Sheet

		(in millions)
Assets:
Commodity price derivatives	Derivatives - current	$	5	$	—	$	5
Commodity price derivatives	Derivatives - noncurrent	$	3	$	—	$	3
Liabilities:
Commodity price derivatives	Derivatives - current	$	198	$	—	$	198
Marketing derivatives	Derivatives - current	$	36	$	—	$	36
Commodity price derivatives	Derivatives - noncurrent	$	11	$	—	$	11
Marketing derivatives	Derivatives - noncurrent	$	55	$	—	$	55

Fair value. Gains and losses recorded on derivative financial instruments not designated as hedging instruments are as follows:


Derivatives Not Designated as Hedging Instruments	Location of Gain/(Loss) Recognized in Earnings on Derivatives	Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020

		(in millions)
Commodity price derivatives	Derivative loss, net	$	(496)	$	(56)	$	(1,996)	$	81
Marketing derivatives	Derivative loss, net	$	(5)	$	(85)	$	(28)	$	(100)
Interest rate derivatives	Derivative loss, net	$	—	$	—	$	—	$	(22)
Contingent consideration	Interest and other income (loss), net	$	—	$	22	$	—	$	(42)

The Company uses credit and other financial criteria to evaluate the credit standing of, and to select, counterparties to its derivative instruments. Although the Company does not obtain collateral or otherwise secure the fair value of its derivative instruments, associated credit risk is mitigated by the Company's credit risk policies and procedures.

Exploratory Costs

9 Months Ended

Sep. 30, 2021

Extractive Industries [Abstract]

Exploratory Costs

The Company capitalizes exploratory well and project costs until a determination is made that the well or project has either found proved reserves, is impaired or is sold. The Company's capitalized exploratory well and project costs are included in proved properties in the consolidated balance sheets. If the exploratory well or project is determined to be impaired, the impaired costs are charged to exploration and abandonments expense.

The changes in capitalized exploratory well costs are as follows:


	Nine Months Ended September 30, 2021

	(in millions)
Beginning capitalized exploratory well costs	$	498
Additions to exploratory well costs pending the determination of proved reserves	2,110
Additions to capitalized exploratory well costs from acquisitions	235


Reclassification due to determination of proved reserves	(2,093)




Ending capitalized exploratory well costs	$	750

Aging of capitalized exploratory costs and the number of projects for which exploratory well costs have been capitalized for a period greater than one year, based on the date drilling was completed, are as follows:


	As of September 30, 2021		As of December 31, 2020

	(in millions, except well counts)
Capitalized exploratory well costs that have been suspended:
One year or less	$	750	$	495
More than one year	—		3
	$	750	$	498
Number of wells or projects with exploratory well costs that have been suspended for a period greater than one year	—		1

Long-term Debt

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Long-term Debt

The components of long-term debt, including the effects of issuance costs and issuance discounts, are as follows:


	As of September 30, 2021		As of December 31, 2020

	(in millions)
Outstanding debt principal balances:

3.450% senior notes due 2021	$	—	$	140
3.950% senior notes due 2022	244		244
0.550% senior notes due 2023	750		—
0.750% senior callable notes due 2024	750		—
0.250% convertible senior notes due 2025	1,323		1,323
1.125% senior notes due 2026	750		—
4.450% senior notes due 2026	500		500
5.625% senior notes due 2027	179		—
7.200% senior notes due 2028	241		241
4.125% senior notes due 2028	138		—
1.900% senior notes due 2030	1,100		1,100
2.150% senior notes due 2031	1,000		—
	6,975		3,548
Issuance costs and discounts, net	(46)		(248)
Total debt	6,929		3,300
Less current portion of long-term debt	244		140
Long-term debt	$	6,685	$	3,160

Credit facility. The Company maintains a revolving corporate credit facility (the "Credit Facility") with a syndicate of financial institutions and has aggregate loan commitments of $2.0 billion. On January 12, 2021, Pioneer entered into the First Amendment to Credit Agreement (the "Amendment") with Wells Fargo Bank, National Association, as Administrative Agent, and the other agents and lenders party thereto. The primary changes attributable to the Amendment were to increase the aggregate loan commitments from $1.5 billion to $2.0 billion, extend the maturity of the Credit Facility to January 12, 2022 and to nominally adjust the drawn and undrawn pricing. As of September 30, 2021, the Company had no outstanding borrowings under the Credit Facility and was in compliance with its debt covenants.

Assumption of DoublePoint notes and payoff of DoublePoint credit facility. In connection with the completion of the DoublePoint Acquisition, the Company assumed DoublePoint's outstanding senior notes of $650 million in aggregate principal amount (with a fair value of $735 million) and DoublePoint's credit facility with an outstanding balance of $240 million. The Company repaid and terminated the DoublePoint credit facility agreement on May 4, 2021.

Assumption of Parsley notes and payoff of Parsley credit facility. In connection with the completion of the Parsley Acquisition, the Company assumed Parsley's outstanding senior notes of $2.7 billion in aggregate principal amount (with a fair value of $2.8 billion) and Parsley's credit facility with an outstanding balance of $397 million. The Company repaid and terminated the Parsley credit facility agreement on January 12, 2021.

Senior notes. In May 2021, the Company issued $750 million of 0.550% senior notes that will mature May 15, 2022 (the "May 2021 Senior Notes Offering"). The Company received proceeds, net of $4 million of issuance costs and discounts, of $746 million. Interest on the notes will be payable on May 15 and November 15 of each year. The senior notes are unsecured obligations ranking equally in right of payment with all other senior unsecured indebtedness of the Company.

The Company used $731 million of the proceeds from the May 2021 Senior Notes Offering to redeem DoublePoint's 7.750% senior notes due 2025. Associated with the redemption, the Company recognized a $3 million gain on the early extinguishment of debt. See Note 14 for additional information.

In January 2021, the Company issued $750 million of 0.750% senior callable notes that will mature January 15, 2024, $750 million of 1.125% senior notes that will mature January 15, 2022 and $1.0 billion of 2.150% senior notes that will mature January 15, 2022 (the "January 2021 Senior Notes Offering"). The Company received proceeds, net of $24 million of issuance costs and discounts, of $2.5 billion. Interest on each of the new notes will be payable on January 15 and July 15 of each year. The senior notes are unsecured obligations ranking equally in right of payment with all other senior unsecured indebtedness of the Company.

The Company used the proceeds from the January 2021 Senior Notes Offering to pay (i) $1.6 billion to redeem Parsley's 5.250% senior notes due 2025, Parsley's 5.375% senior notes due 2025 and Jagged Peak's 5.875% senior notes due 2026 and (ii) $852 million to purchase a portion of Parsley's 5.625% senior notes due 2027 and Parsley's 4.125% senior notes due 2028 pursuant to a cash tender offer. In connection with the tender offers, the Company also obtained the requisite consents from holders of Parsley's 5.625% senior notes due 2027 and 4.125% senior notes due 2028 to amend the indentures pursuant to which the notes were issued to, among other things, (i) eliminate substantially all of the restrictive covenants and related provisions and certain events of default contained in each indenture and (ii) shorten the minimum notice requirement for optional redemptions to three days. Associated with the redemption and tenders, the Company recognized a $5 million loss on the early extinguishment of debt. See Note 14 for additional information.

The Company's 3.450% senior notes, with a debt principal balance of $140 million, matured and were repaid in January 2021. The Company funded the repayment with cash on hand.

The Company's 3.950% senior notes, with a debt principal balance of $244 million, will mature in July 2022. The 3.950% senior notes are recorded in the current portion of long-term debt in the consolidated balance sheet as of September 30, 2021.

Convertible senior notes. In May 2020, the Company issued $1.3 billion principal amount of convertible senior notes due 2025. The Convertible Notes bear a fixed interest rate of 0.250% per year, with interest payable on May 15 and November 15 of each year. The Convertible Notes will mature on May 15, 2025, unless earlier redeemed, repurchased or converted. The Convertible Notes are unsecured obligations ranking equally in right of payment with all other senior unsecured indebtedness of the Company.

The Convertible Notes are convertible into shares of the Company's common stock at an adjusted conversion rate of 9.2055 shares of the Company's common stock per $1,000 principal amount of the Convertible Notes (subject to further adjustment pursuant to the terms of the notes indenture, the "Conversion Rate"), which represents an adjusted conversion price of $108.63 per share (subject to further adjustment pursuant to the terms of the notes indenture, the "Conversion Price"). Upon conversion, the Convertible Notes will be settled in cash, shares of the Company's common stock or a combination thereof, at the Company's election.

Holders of the Convertible Notes may convert their notes at their option prior to February 15, 2022 under the following circumstances:

•during the quarter following any quarter during which the last reported sales price of the Company's common stock for at least 20 of the last 30 consecutive trading days of such quarter exceeds 130 percent of the Conversion Price;

•during the five-day period following any five consecutive trading day period when the trading price of the Convertible Notes is less than 98 percent of the price of the Company's common stock times the Conversion Rate;

•upon notice of redemption by the Company; or

•upon the occurrence of specified corporate events, including certain consolidations or mergers.

On or after February 15, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their notes at any time. The Company may not redeem the Convertible Notes prior to May 20, 2023, and after such date, may redeem the Convertible Notes only if the last reported sale price of the Company's common stock has been at least 130 percent of the Conversion Price for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides the notice of redemption. The redemption price is equal to 100 percent of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest.

During the last 30 consecutive trading days of the third quarter of 2021, the last reported sales prices of the Company's common stock exceeded 130 percent of the Conversion Price for at least 20 trading days, causing the Convertible Notes to become convertible at the option of the holders during the three month period ending December 31, 2021. As of September 30, 2021, if converted by the holder, the Company intends to settle the Convertible Notes in cash with cash on hand or through borrowings under its Credit Facility. The Company reserves its right under the notes indenture to elect to settle the Convertible Notes in shares of the Company's common stock or a combination of cash and common stock.

The Company early adopted ASU 2020-06 on January 1, 2021. Upon issuance of the Convertible Notes in May 2020, the Company bifurcated the debt and equity components of the Convertible Notes between long-term debt and additional paid-in capital in its consolidated balance sheet. The amount recorded to additional paid-in capital represented a debt discount that was being amortized to interest expense over the life of the Convertible Notes. As part of the adoption of ASU 2020-06, the Company (i) reversed the debt discount and related deferred income tax liability recorded to additional paid-in capital of $230 million and $50 million, respectively, (ii) recorded a cumulative effect of the adoption of ASU 2020-06 of $22 million to retained earnings, representing the reversal of the $28 million debt discount that was amortized to interest expense, net of an associated deferred income tax impact of $6 million, in 2020 and (iii) recorded the respective offsets for items (i) and (ii) above, representing the unamortized debt discount attributable to the Convertible Notes of $202 million to long-term debt and the associated deferred tax impact of $44 million to deferred income tax liabilities. See Note 2 for additional information.

As of September 30, 2021, the Convertible Notes had an outstanding principal balance of $1.3 billion and unamortized issuance costs of $17 million. The effective interest rate related to interest expense to be recorded over the life of the Convertible Notes is 0.6 percent. See Note 2 for additional information regarding the effect of the early adoption of ASU 2020-06 on the debt discount on the Company's Convertible Notes.

The interest costs recognized on the Convertible Notes, are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020

	(in millions)
Contractual coupon interest	$	1	$	1	$	3	$	1
Amortization of debt discount and issuance costs	1		12		3		19
	$	2	$	13	$	6	$	20

Capped call transactions. In connection with the issuance of the Convertible Notes, the Company entered into privately negotiated capped call transactions with certain financial institution counterparties (the "Capped Call"), the purpose of which was to reduce the potential dilution to the Company's common stock upon conversion of the Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of such converted notes, with such reduction and offset subject to a capped price. The Capped Call transactions have an adjusted strike price of $108.63 per share of common stock and an adjusted capped price of $154.59 per share of common stock. The net costs of $113 million incurred to purchase the Capped Call transactions were recorded as a reduction to additional paid-in capital.

Incentive Plans

9 Months Ended

Sep. 30, 2020

Incentive Plans

Incentive PlansIn connection with the Parsley Acquisition, the Company assumed all rights and obligations under the Amended and Restated Parsley Energy, Inc. 2014 Long Term Incentive Plan (the "2014 Parsley Plan") and the Jagged Peak Energy Inc. 2017 Long Term Incentive Plan (the "Jagged Peak Plan") and together with the 2014 Parsley Plan, (the "Parsley Plans"). The awards outstanding under the Parsley Plans were assumed by the Company and were automatically converted into an award with the right to receive a number of shares of Pioneer common stock that is equal to the product of the number of shares of Parsley common stock subject to such award under the Parsley Plans as of the acquisition date and the Exchange Ratio (0.1252). As a result, 37,299 shares of Pioneer common stock are issuable by the Company upon settlement of the outstanding awards granted under the 2014 Parsley Plan and 1,166 shares of Pioneer common stock are issuable by the Company upon settlement of the outstanding awards granted under the Jagged Peak Plan.

The number of shares available for grant pursuant to the awards issued under the Company's Amended and Restated 2006 Long-Term Incentive Plan ("LTIP") is as follows:


			As of September 30, 2021
Approved and authorized awards			12,600,000
2014 Parsley Plan awards available to the LTIP (a)			879,575
Awards issued under the plan			(9,459,418)
Awards available for future grant			4,020,157

______________________

(a) Under New York Stock Exchange rules, the Company added the shares that were available under the 2014 Parsley Plan to the LTIP. These shares can only be used for grants to employees who were not employed or engaged by Pioneer or any of its subsidiaries immediately before the Parsley Acquisition and such awards may only be granted through May 22, 2024, the date that the 2014 Parsley Plan would have otherwise expired.

Stock-based compensation expense is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020

	(in millions)
Restricted stock - equity awards	$	11	$	15	$	32	$	37
Restricted stock - liability awards (a)	3		4		12		7
Restricted stock and performance units - Parsley awards (b)	—		—		33		—
Performance unit awards	6		6		20		15
Employee stock purchase plan	1		—		2		2

	$	21	$	25	$	99	$	61

______________________

(a)Liability Awards are expected to be settled on their vesting date in cash. As of September 30, 2021 and December 31, 2020, accounts payable - due to affiliates included $4 million and $7 million, respectively, of liabilities attributable to Liability Awards.

(b)Represents the accelerated vesting of Parsley restricted stock equity awards and performance units upon completion of the Parsley Acquisition, which was recorded to other expense in the consolidated statements of operations.

As of September 30, 2021, there was $105 million of unrecognized stock-based compensation expense related to unvested share-based compensation awards, including $25 million attributable to stock-based awards that are expected to be settled on their vesting date in cash, rather than in equity shares. The unrecognized compensation expense will be recognized on a straight-line basis over the remaining vesting periods of the awards, which is a period of less than three years on a weighted average basis.

Activity for restricted stock awards, performance units and stock options is as follows:


	Nine Months Ended September 30, 2021
	Restricted Stock Equity Awards	Restricted Stock Liability Awards	Performance Units	Stock Options
Beginning incentive compensation awards	765,981	221,353	207,430	86,332
Awards granted	304,142	71,870	173,423	—
Awards assumed (a) (c)	255,379	—	100,056	—
Awards forfeited	(7,329)	(5,848)	—	—
Awards vested (b) (c)	(562,752)	(100,956)	(100,056)	—
Options exercised	—	—	—	(55,173)
Options expired	—	—	—	(415)
Ending incentive compensation awards	755,421	186,419	380,853	30,744

______________________

(a)Awards assumed as a result of the Parsley Acquisition.

(b)Per the terms of award agreements and elections, the issuance of common stock may be deferred for certain restricted stock equity awards, performance units and stock options that vest during the period.

(c)The amounts presented include the assumption and accelerated vesting of 216,914 Parsley restricted stock equity awards and 100,056 of Parsley performance units, both of which vested upon completion of the Parsley Acquisition.

Asset Retirement Obligations

9 Months Ended

Sep. 30, 2021

Asset Retirement Obligation [Abstract]

Asset Retirement Obligations

The changes in asset retirement obligations are as follows:


	Nine Months Ended September 30, 2021
	(in millions)
Beginning asset retirement obligations	$	282
Liabilities assumed in the Parsley Acquisition	73
Liabilities assumed in the DoublePoint Acquisition	37
New wells placed on production	8
Changes in estimates (a)	(1)
Liabilities settled	(27)
Accretion of discount	5

Ending asset retirement obligations	377
Less current portion of asset retirement obligations	(61)
Asset retirement obligations - noncurrent	$	316

______________________

(a)Changes in estimates are determined based on several factors, including updating abandonment cost estimates using recent actual costs incurred to abandon wells, credit-adjusted risk-free discount rates, economic well life estimates and forecasted timing of abandoning wells.

Commitments and Contingencies

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and ContingenciesLegal actions. The Company is a party to various proceedings and claims incidental to its business. While many of these matters involve inherent uncertainty, the Company believes that the amount of the liability, if any, ultimately incurred with respect to these proceedings and claims will not have a material adverse effect on the Company's consolidated financial position as a whole or on its liquidity, capital resources or future annual results of operations. The Company records reserves for contingencies when information available indicates that a loss is probable and the amount of the loss can be reasonably estimated.

Indemnifications. The Company has agreed to indemnify its directors and certain of its officers, employees and agents with respect to claims and damages arising from acts or omissions taken in such capacity, as well as with respect to certain litigation.

Environmental. Environmental expenditures that relate to an existing condition caused by past operations and that have no future economic benefits are expensed. Environmental expenditures that extend the life of the related property or mitigate or prevent future environmental contamination are capitalized. Liabilities for expenditures that will not qualify for capitalization are recorded when environmental assessment and/or remediation is probable and the costs can be reasonably estimated. Such liabilities are undiscounted unless the timing of cash payments for the liability is fixed or reliably determinable. Environmental liabilities normally involve estimates that are subject to revision until settlement or the remediation occurs.

Firm purchase, gathering, processing, transportation, fractionation and storage commitments. From time to time, the Company enters into, and as of September 30, 2021 was a party to, take-or-pay agreements, which include contractual commitments (i) to purchase sand, water and diesel for use in the Company's drilling and completion operations, (ii) with midstream service companies and pipeline carriers for future gathering, processing, transportation, fractionation and storage and (iii) with oilfield services companies that provide drilling and pressure pumping services. These commitments are normal and customary for the Company's business activities.

Obligations following divestitures. In connection with its divestiture transactions, the Company may retain certain liabilities and provide the purchaser certain indemnifications, subject to defined limitations, which may apply to identified pre-closing matters, including matters of litigation, environmental contingencies, royalties and income taxes. Also associated with its divestiture transactions, the Company has issued and received guarantees to facilitate the transfer of contractual obligations, such as firm transportation agreements or gathering and processing arrangements. The Company does not recognize a liability if the fair value of the obligation is immaterial and the likelihood of making payments under these guarantees is remote.

South Texas Divestiture. In conjunction with the South Texas Divestiture, the Company transferred its long-term midstream agreements and associated minimum volume commitments ("MVC's") to the buyer. However, the Company retained the obligation to pay 100 percent of any deficiency fees associated with the MVC's from January 2019 through July 2022. The buyer is required to reimburse the Company for 18 percent of the deficiency fees paid by the Company from January 2019 through July 2022; such reimbursement will be paid by the buyer in installments beginning in 2023 through 2025. Assuming 100 percent of the MVC's are paid as deficiency fees, the maximum amount of future payments for this obligation would be approximately $260 million as of September 30, 2021. As of September 30, 2021, the Company's estimated deficiency fee obligation of $198 million is included in other current liabilities in the consolidated balance sheets. The deficiency fee receivable from the buyer of $77 million is included in noncurrent other assets in the consolidated balance sheets. The Company has credit support for the deficiency fee receivable of up to $100 million.

Raton transportation commitments. In July 2018, the Company completed the sale of its gas field assets in the Raton Basin to an unaffiliated third party and transferred certain gas transportation commitments, which extend through 2032, to the buyer for which the Company has provided a guarantee. Assuming 100 percent of the remaining commitments are paid by the Company under its guarantee, the maximum amount of future payments would be approximately $72 million as of September 30, 2021. The Company has received credit support for the commitments of up to $50 million. The Company paid $2 million in gas transportation fees associated with the transferred commitment for the nine months ended September 30, 2021 and was fully reimbursed.

West Eagle Ford Shale commitments. In April 2018, the Company completed the sale of its West Eagle Ford Shale gas and liquids field to an unaffiliated third party and transferred certain gas and liquids transportation commitments, which extend through 2022, to the buyer for which the Company has provided a guarantee. Assuming 100 percent of the remaining commitments are paid by the Company under its guarantee, the maximum amount of future payments would be approximately $16 million as of September 30, 2021. The Company has received credit support for the commitments of up to $17 million.

Certain contractual obligations were retained by the Company after some divestitures, including the aforementioned South Texas Divestiture. These contractual obligations are primarily related to firm transportation and storage agreements in which the Company is unlikely to realize any benefit. The estimated obligations are included in other current or noncurrent liabilities in the consolidated balance sheets. The changes in contract obligations are as follows:


	Nine Months Ended September 30, 2021
	(in millions)
Beginning contract obligations	$	360

Liabilities settled	(159)
Accretion of discount	6
Changes in estimate (a)	(2)
Ending contract obligations	$	205

______________________

(a)Represents differences between estimated and actual liabilities settled.