0001038357-22-000039 | 10-K | XBRL Viewer | Pioneer Natural Resources CO

Print Document View Excel Document

Consolidated Balance Sheets - USD ($) $ in Millions	Dec. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 3,847	$ 1,442
Restricted cash	37	59
Accounts receivable, net	1,685	695
Inventories	369	224
Investment in affiliate	135	123
Short-term investment	58	0
Other	42	52
Total current assets	6,173	2,595
Oil and gas properties, using the successful efforts method of accounting:
Proved properties	34,454	23,934
Unproved properties	6,063	576
Accumulated depletion, depreciation and amortization	(12,335)	(10,071)
Total oil and gas properties, net	28,182	14,439
Other property and equipment, net	1,694	1,584
Operating lease right-of-use assets	348	197
Goodwill	243	261
Other assets	171	153
Total Assets	36,811	19,229
Accounts payable:
Trade	2,380	928
Due to affiliates	179	102
Interest payable	53	35
Income taxes payable	45	4
Current portion of long-term debt	244	140
Derivatives	538	234
Operating leases	121	100
Other	513	363
Total current liabilities	4,073	1,906
Long-term debt	6,688	3,160
Derivatives	25	66
Deferred income taxes	2,038	1,366
Operating leases	243	110
Other liabilities	907	1,052
Equity:
Common stock, $.01 par value; 500,000,000 shares authorized; 244,144,444 and 175,525,268 shares issued as of December 31, 2021 and 2020, respectively	2	2
Additional paid-in capital	19,123	9,323
Treasury stock, at cost; 1,366,610 and 11,047,856 shares as of December 31, 2021 and 2020, respectively	(248)	(1,234)
Retained earnings	3,960	3,478
Total equity	22,837	11,569
Commitments and contingencies
Total Liabilities and Stockholders' Equity	$ 36,811	$ 19,229

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 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)	244,144,444	175,525,268
Treasury stock, shares (in shares)	1,366,610	11,047,856

Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Revenues and other income:
Revenue	$ 17,870	$ 7,024
Interest and other income (loss), net	23	(67)	$ 76
Derivative gain (loss), net	(2,183)	(281)	55
Gain (loss) on disposition of assets, net	(1,067)	9	(477)
Revenues	14,643	6,685	9,325
Costs and expenses:
Production and ad valorem taxes	651	242	299
Depletion, depreciation and amortization	2,498	1,639	1,711
Exploration and abandonments	51	47	58
General and administrative	292	244	324
Accretion of discount on asset retirement obligations	7	9	10
Interest	161	129	121
Other	410	321	448
Total costs and expenses	11,897	6,946	8,317
Income (loss) before income taxes	2,746	(261)	1,008
Income tax benefit (provision)	(628)	61	(235)
Net income (loss) attributable to common stockholders	$ 2,118	$ (200)	$ 773
Net income (loss) per share attributable to common stockholders:
Basic (usd per share)	$ 9.06	$ (1.21)	$ 4.60
Diluted (usd per share)	$ 8.61	$ (1.21)	$ 4.59
Weighted average shares outstanding:
Basic weighted average shares outstanding (in shares)	233	165	167
Diluted weighted average shares outstanding (in shares)	246	165	167
Dividends declared (usd per share)	$ 6.83	$ 2.20	$ 1.20
Oil and gas
Revenues and other income:
Revenue	$ 11,503	$ 3,630	$ 4,916
Costs and expenses:
Costs and expenses	1,267	682	874
Sales of purchased commodities
Revenues and other income:
Revenue	6,367	3,394	4,755
Costs and expenses:
Costs and expenses	$ 6,560	$ 3,633	$ 4,472

Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Millions	Total	Common Stock	Additional Paid-in Capital	Treasury Stock	Retained Earnings
Beginning balance (in shares) at Dec. 31, 2018		169,499
Beginning balance at Dec. 31, 2018	$ 12,111	$ 2	$ 9,062	$ (423)	$ 3,470
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared	(201)				(201)
Cumulative effect of accounting change on convertible senior notes:
Exercise of long-term incentive stock options (in shares)		64
Exercise of long-term incentive plan stock options and employee stock purchases	6		(1)	7
Purchases of treasury stock (in shares)		(4,753)
Purchases of treasury stock	(653)			(653)
Compensation costs:
Vested compensation awards, net or issued awards (in shares)		737
Vested compensation awards, net	0
Compensation costs included in net loss	100		100
Net income (loss)	773				773
Ending balance (in shares) at Dec. 31, 2019		165,547
Ending balance at Dec. 31, 2019	12,136	$ 2	9,161	(1,069)	4,042
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared	(364)				(364)
Cumulative effect of accounting change on convertible senior notes:
Equity component	230		230
Capped call	(113)		(113)
Deferred tax provision	(25)		(25)
Exercise of long-term incentive stock options (in shares)		98
Exercise of long-term incentive plan stock options and employee stock purchases	9		(2)	11
Purchases of treasury stock (in shares)		(1,634)
Purchases of treasury stock	(176)			(176)
Compensation costs:
Vested compensation awards, net or issued awards (in shares)		466
Vested compensation awards, net	0
Compensation costs included in net loss	72		72
Net income (loss)	(200)				(200)
Ending balance (in shares) at Dec. 31, 2020		164,477
Ending balance at Dec. 31, 2020	11,569	$ 2	9,323	(1,234)	3,478
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared	(1,658)				(1,658)
Cumulative effect of accounting change on convertible senior notes:
Equity component	(202)		(230)		28
Deferred tax provision	44		50		(6)
Exercise of long-term incentive stock options (in shares)		134
Exercise of long-term incentive plan stock options and employee stock purchases	13		(4)	17
Purchases of treasury stock (in shares)		(1,517)
Purchases of treasury stock	(269)			(269)
Shares issued or reissued for acquisition (in shares)		78,842
Shares issued or reissued for acquisitions	11,116		9,878	1,238
Compensation costs:
Vested compensation awards, net or issued awards (in shares)		842
Vested compensation awards, net	0
Compensation costs included in net loss	73		73
Compensation costs included in net income associated with acquisitions	33		33
Net income (loss)	2,118				2,118
Ending balance (in shares) at Dec. 31, 2021		242,778
Ending balance at Dec. 31, 2021	$ 22,837	$ 2	$ 19,123	$ (248)	$ 3,960

Consolidated Statements of Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Statement of Stockholders' Equity [Abstract]
Dividends declared (usd per share)	$ 6.83	$ 2.20	$ 1.20

Consolidated Statements of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Cash flows from operating activities:
Net income (loss)	$ 2,118	$ (200)	$ 773
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depletion, depreciation and amortization	2,498	1,639	1,711
Exploration expenses	4	11	8
Deferred income taxes	583	(52)	240
(Gain) loss on disposition of assets, net	1,067	(9)	477
Loss on early extinguishment of debt	2	27	0
Accretion of discount on asset retirement obligations	7	9	10
Interest expense	10	34	5
Derivative-related activity	(451)	325	(8)
Amortization of stock-based compensation	106	72	100
Investment valuation adjustments	(1)	64	(15)
South Texas contingent consideration valuation adjustment	0	42	45
South Texas deficiency fee obligation, net	(10)	80	0
Other	163	128	143
Change in operating assets and liabilities:
Accounts receivable	(607)	309	(227)
Inventories	(125)	(20)	(20)
Operating lease right-of-use assets	52	64	0
Other assets	(73)	(40)	(33)
Accounts payable	1,059	(179)	(7)
Interest payable	(53)	(19)	0
Income taxes payable	41	1	(1)
Operating leases	(55)	(95)	0
Other liabilities	(276)	(108)	(86)
Net cash provided by operating activities	6,059	2,083	3,115
Cash flows from investing activities:
Proceeds from disposition of assets	3,244	60	149
Cash used in acquisitions, net of cash acquired	(826)	0	0
Proceeds from investments	0	0	624
Additions to oil and gas properties	(3,169)	(1,602)	(2,988)
Additions to other assets and other property and equipment	(118)	(126)	(232)
Net cash used in investing activities	(869)	(1,668)	(2,447)
Cash flows from financing activities:
Proceeds from issuance of senior notes, net of discount	3,247	1,091	0
Proceeds from issuance of convertible senior notes	0	1,323	0
Purchase of derivatives related to issuance of convertible senior notes	0	(113)	0
Borrowings under credit facility	650	800	0
Repayment of credit facilities	(1,287)	(800)	0
Repayment of senior notes, including tender offer premiums	(3,371)	(1,198)	0
Payments of other liabilities	(164)	(173)	(14)
Payments of financing fees	(32)	(36)	0
Purchases of treasury stock	(269)	(176)	(653)
Exercise of long-term incentive plan stock options	13	9	6
Dividends paid	(1,594)	(346)	(127)
Net cash provided by (used in) financing activities	(2,807)	381	(788)
Net increase (decrease) in cash, cash equivalents and restricted cash	2,383	796	(120)
Cash, cash equivalents and restricted cash, beginning of period	1,501	705	825
Cash, cash equivalents and restricted cash, end of period	$ 3,884	$ 1,501	$ 705

Organization and Nature Of Operations	12 Months Ended
Organization and Nature Of Operations	Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Nature of Operations	Organization and Nature of Operations Pioneer is a Delaware corporation whose common stock is listed and traded on the NYSE. The Company is a large independent oil and gas exploration and production company that explores for, develops and produces oil, NGLs and gas in the Midland Basin in West Texas. Impact of the COVID-19 Pandemic. The COVID-19 pandemic resulted in a severe worldwide economic downturn, significantly disrupting the demand for oil, throughout the world, and created significant volatility, uncertainty and turmoil in the oil and gas industry. The decrease in demand for oil combined with pressures on the global supply-demand balance for oil and related products, resulted in oil prices declining significantly beginning in late February 2020. Since mid-2020, oil prices improved, with demand steadily increasing despite the uncertainties surrounding the COVID-19 variants, which have continued to inhibit a full global demand recovery. In addition, worldwide oil inventories are, from a historical perspective, very low and supply increases from OPEC, Russia and other oil producing nations are not expected to be sufficient to meet forecasted oil demand growth in 2022 and 2023, with many OPEC countries not able to produce at their OPEC agreed upon quota levels due to their lack of capital investments over the past few years in developing incremental oil supplies. Global oil price levels will ultimately depend on various factors and consequences beyond the Company's control, such as (i) the effectiveness of responses to combat the COVID-19 virus and their impact on domestic and worldwide demand, (ii) the ability of OPEC, Russia and other oil producing nations to manage the global oil supply, (iii) the timing and supply impact of any Iranian sanction relief on Iran's ability to export oil, (iv) additional actions by businesses and governments in response to the pandemic, (v) the global supply chain constraints associated with manufacturing delays, and (vi) political stability of oil consuming countries. The Company continues to assess the impact of the COVID-19 pandemic on the Company and may modify its response as the impact of COVID-19 continues to evolve.

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Principles of consolidation. The consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries since their acquisition or formation. All material intercompany balances and transactions have been eliminated.

Use of estimates in the preparation of financial statements. Preparation of the Company's 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 at 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 determined using estimates of proved oil and gas reserves. There are numerous uncertainties inherent in the estimation of quantities of proved reserves and in the projection of future rates of production and the timing of development expenditures. Similarly, evaluations for impairment of proved and unproved oil and gas properties are subject to numerous uncertainties including, among others, estimates of future recoverable reserves, commodity price outlooks and prevailing market rates of other sources of income and costs. Actual results could differ from the estimates and assumptions utilized.

Cash and cash equivalents. The Company's cash and cash equivalents include depository accounts held by banks and marketable securities (including commercial paper and time deposits) with original issuance maturities of 90 days or less.

Restricted cash. The Company's restricted cash includes funds held in escrow to cover future deficiency fee payments in connection with the Company's 2019 sale of its Eagle Ford assets and other remaining assets in South Texas (the "South Texas Divestiture"). Beginning in 2021, the required escrow balance declines and, to the extent there is any remaining balance after the payment of deficiency fees, the balance will become unrestricted and revert to the Company on March 31, 2023. Interest income related to restricted cash is recorded in interest and other income in the consolidated statements of operations.

Accounts receivable, net. The Company's net accounts receivable balance is primarily comprised of oil and gas sales receivables, joint interest receivables, accounts receivable due from affiliates and other receivables for which the Company does not require collateral security. The Company's share of oil and gas production is sold to various purchasers who must be prequalified under the Company's credit risk policies and procedures. The Company records allowances for doubtful accounts based on historical collection experience, current and future economic and market conditions, the length of time that the accounts receivables have been outstanding and the financial condition of its purchasers. The Company's credit risk related to collecting accounts receivables is mitigated by using credit and other financial criteria to evaluate the credit standing of the

entity obligated to make payment on the accounts receivable, and where appropriate, the Company obtains assurances of payment, such as a guarantee by the parent company of the counterparty, letters of credit or other credit support.

The Company considers forward-looking information to estimate expected credit losses. The Company establishes allowances for bad debts equal to the estimable portions of accounts receivable for which failure to collect is expected to occur. The Company estimates uncollectible amounts for joint interest receivables based on the length of time that the accounts receivables have been outstanding, historical collection experience and current and future economic and market conditions. Allowances for doubtful accounts are recorded as reductions to the carrying values of the receivables included in the Company's consolidated balance sheets and are recorded in other expense in the consolidated statements of operations in the accounting periods during which failure to collect an estimable portion is determined to be probable. The Company's allowance for doubtful accounts totaled $9 million and $3 million as of December 31, 2021 and 2020, respectively.

Inventories. The Company's inventories consist of materials, supplies and commodities. The Company's materials and supplies inventory is primarily comprised of oil and gas maintenance materials and repair parts, water and other operating supplies. The materials and supplies inventory is primarily acquired for use in future drilling and production operations or repair operations and is carried at the lower of cost or market, on a weighted average cost basis. Valuation allowances for materials and supplies inventories are recorded as reductions to the carrying values of the materials and supplies inventories included in the Company's consolidated balance sheets and as charges in other expense in the consolidated statements of operations.

Commodity inventories are carried at the lower of cost or market, on a first-in, first-out basis. The Company's commodity inventories consist of oil, NGLs, gas and diesel volumes held in storage or as linefill in pipelines. Any valuation allowances of commodity inventories are recorded as reductions to the carrying values of the commodity inventories included in the Company's consolidated balance sheets and as charges to other expense in the consolidated statements of operations.

The components of inventories are as follows:


	As of December 31,
	2021		2020
	(in millions)
Materials and supplies	$	99	$	75
Commodities	270		149
Total inventories	$	369	$	224

Investment in affiliate. In December 2018, the Company completed the sale of its pressure pumping assets to ProPetro Holding Corp. ("ProPetro") in exchange for $110 million of cash and 16.6 million shares of ProPetro's common stock, representing an ownership interest in ProPetro of 16 percent. Additionally, in October 2019, Phillip A. Gobe, a nonemployee member of the Company's board of directors, was appointed by the board of directors of ProPetro to serve as its Executive Chairman, and in March 2020 he was appointed as Chief Executive Officer and Chairman of the board of directors. On August 31, 2021, Mr. Gobe transitioned from ProPetro's Chairman and Chief Executive Officer to its Executive Chairman. Mark S. Berg, the Company's Executive Vice President, Corporate Operations, serves as a member of the ProPetro board of directors under the Company's right to designate a director to the board of directors of ProPetro so long as the Company owns five percent or more of ProPetro's outstanding common stock. Based on the Company's ownership in ProPetro and representation on the ProPetro board of directors, ProPetro is considered an affiliate and deemed to be a related party. The Company uses the fair value option to account for its equity method investment in ProPetro with any changes in fair value recorded in interest and other income (loss) in the consolidated statements of operations. The carrying value of the Company's investment in ProPetro is included in investment in affiliate in the consolidated balance sheets. See Note 4, Note 12 and Note 15 for additional information.

Short-term investment. In October 2021, the Company completed the sale of approximately 20,000 net acres in western Glasscock County (the "Glasscock Divestiture") to Laredo Petroleum, Inc. ("Laredo") in exchange for $137 million in cash and 960 thousand shares of Laredo's common stock. The Laredo common stock held by the Company is treated as an investment in equity securities with changes in fair value recorded in interest and other income (loss) in the consolidated statements of operations. The carrying value of the Laredo common stock held by the Company is included in short-term investments in the consolidated balance sheets. See Note 4 and Note 15 for additional information.

Oil and gas properties. The Company utilizes the successful efforts method of accounting for its oil and gas properties. Under this method, all costs associated with productive wells and nonproductive development wells are capitalized while nonproductive exploration costs and geological and geophysical expenditures are expensed.

The Company does not carry the costs of drilling an exploratory well as an asset in its consolidated balance sheets following the completion of drilling unless both of the following conditions are met: (i) the well has found a sufficient quantity of reserves to justify its completion as a producing well and (ii) the Company is making sufficient progress assessing the reserves and the economic and operating viability of the project. The Company's exploratory wells include extension wells that extend the limits of a known reservoir.

Due to the capital-intensive nature and the geographical location of certain projects, it may take an extended period of time to evaluate the future potential of an exploration project and the economics associated with making a determination on its commercial viability. In these instances, the project's feasibility is not contingent upon price improvements or advances in technology, but rather the Company's ongoing efforts and expenditures related to accurately predicting the hydrocarbon recoverability based on well information, gaining access to other companies' production data in the area, transportation or processing facilities, and/or getting partner approval to drill additional appraisal wells. These activities are ongoing and are being pursued constantly. Consequently, the Company's assessment of suspended exploratory well costs is continuous until a decision can be made that the project has found sufficient proved reserves to sanction the project or is noncommercial and is charged to exploration and abandonments expense. See Note 6 for additional information.

As of December 31, 2021, the Company owned a participating interest in 11 gas processing plants, including the related gathering systems. The Company's ownership interests in the gas processing plants are primarily to accommodate handling the Company's gas production and thus are considered a component of the capital and operating costs of the respective fields that the plants service. The operator's of the plants process the Company's and third-party gas volumes for a fee. The Company's share of revenues and expenses derived from volumes processed through the plants are reported as components of oil and gas production costs. Revenues generated from the plants for the years ended December 31, 2021, 2020 and 2019 were $271 million, $178 million and $140 million, respectively. Expenses attributable to the plants for the same respective periods were $61 million, $76 million and $65 million. The capitalized costs of the plants are included in proved oil and gas properties and are depleted using the unit-of-production method along with the other capitalized costs of the field that they service.

The capitalized costs of proved properties are depleted using the unit-of-production method based on proved reserves. Costs of significant nonproducing properties, wells in the process of being drilled and in-process development projects are excluded from depletion until the related project is completed and proved reserves are established or, if unsuccessful, abandonments expense is recognized.

Proceeds from the sales of individual properties and the capitalized costs of individual properties sold or abandoned are credited and charged, respectively, to accumulated depletion, depreciation and amortization, if doing so does not materially impact the depletion rate of an amortization base. Generally, no gain or loss is recorded until an entire amortization base is sold. However, gain or loss is recorded from the sale of less than an entire amortization base if the disposition is significant enough to materially impact the depletion rate of the remaining properties in the amortization base.

The Company performs assessments of its long-lived assets to be held and used, including proved oil and gas properties accounted for under the successful efforts method of accounting, whenever events or circumstances indicate that the carrying value of those assets may not be recoverable. An impairment loss is indicated if the sum of the expected future cash flows, including cash flows from the Company's water services business that are used in the development of the assets, is less than the carrying amount of the assets, including the carrying value of the Company's water services business. In these circumstances, the Company recognizes an impairment charge for the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. See Note 4 for additional information.

Oil and gas leasehold acquisition costs are capitalized when incurred and included as unproved oil and gas properties in the consolidated balance sheets. Unproved oil and gas properties are periodically assessed for impairment on a project-by-project basis. These impairment assessments are affected by the results of exploration activities, commodity price outlooks, planned future property sales or expiration of all or a portion of such projects. If the Company's assessment determines that a project is not expected to be developed or is unlikely to recover its costs, the Company will recognize an impairment charge at that time. Impairment charges for unproved oil and gas properties are recorded in exploration and abandonments in the consolidated statements of operations.

Other property and equipment, net. Other property and equipment is recorded at cost. The carrying values of other property and equipment, net of accumulated depreciation of $313 million and $463 million as of December 31, 2021 and 2020, respectively, are as follows:


	As of December 31,
	2021		2020
	(in millions)
Land and buildings (a)	$	889	$	849
Water infrastructure (b)	646		414
Information technology	54		71
Construction-in-progress (c)	46		174
Furniture and fixtures	24		27
Transport and field equipment (d)	21		34
Sand reserves	14		15
Total other property and equipment, net	$	1,694	$	1,584

____________________

(a)Includes land, buildings, any related improvements to land and buildings, and a finance lease entered into by the Company for its corporate headquarters in Irving, Texas. See Note 10 for additional information.

(b)Includes costs for pipeline infrastructure and water supply wells.

(c)Includes capitalized costs and capitalized interest on other property and equipment not yet placed in service.

(d)Includes vehicles and well servicing equipment, including pulling units, fracture stimulation tanks, water transport trucks, hot oilers, construction equipment and fishing tools, used on Company-operated properties. The Company sold its well servicing equipment in March 2021.

Other property and equipment is depreciated over its estimated useful life on a straight-line basis. Buildings are generally depreciated over 20 to 39 years. Water infrastructure is generally depreciated over three to 50 years, excluding capitalized costs related to the Company's effluent water contract associated with the City of Midland's water treatment facility, which are depleted on a units-of-production basis. Equipment, vehicles, furniture and fixtures and information technology assets are generally depreciated over three to 10 years. Sand reserves are depleted on a units-of-production basis.

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, the impairment to be recorded is measured by the amount by which the carrying amount of the asset exceeds its estimated fair value. The estimated fair value is determined using either a discounted future cash flow model or another appropriate fair value method.

Leases. The Company enters into leases for drilling rigs, storage tanks, equipment and buildings and recognizes lease expense on a straight-line basis over the lease term. Lease right-of-use assets and liabilities are initially recorded on the lease commencement date based on the present value of lease payments over the lease term. As most of the Company's lease contracts do not provide an implicit discount rate, the Company uses its incremental borrowing rate, which is determined based on information available at the commencement date of a lease. Leases may include renewal, purchase or termination options that can extend or shorten the term of the lease. The exercise of those options is at the Company's sole discretion and is evaluated at inception and throughout the contract to determine if a modification of the lease term is required. Leases with an initial term of 12 months or less are not recorded as a lease right-of-use asset and liability. See Note 10 for additional information.

Goodwill. Goodwill is assessed for impairment whenever it is more likely than not that events or circumstances indicate the carrying value of a reporting unit exceeds its fair value, but no less often than annually. An impairment charge is recorded for the amount by which the carrying amount exceeds the fair value of a reporting unit in the period it is determined to be impaired.

The Company performed its annual qualitative assessment of goodwill during the third quarter of 2021 to determine whether it was more likely than not that the fair value of the Company's reporting unit was less than its carrying amount. Based on the results of the assessment, the Company determined it was not likely that the carrying value of the Company's reporting unit exceeded its fair value. See Note 4 for additional information.

Capitalized interest. The Company capitalizes interest from external borrowings on expenditures for significant development projects with an expected construction period of one year or longer until such projects are ready for their intended use. Capitalized interest is added to the cost of the underlying asset and is amortized over the useful lives of the assets in the same manner as the underlying assets.

Asset retirement obligations. The Company records a liability for the fair value of an asset retirement obligation in the period in which the associated asset is acquired or placed into service, if a reasonable estimate of fair value can be made. Fair value is determined using a present value approach, incorporating assumptions about estimated amounts and timing of settlements. Asset retirement obligations are generally capitalized as part of the carrying value of the long-lived asset to which it relates. Conditional asset retirement obligations that meet the definition of liabilities are recorded when incurred and when fair value can be reasonably estimated.

The Company includes the current and noncurrent portions of asset retirement obligations in other current liabilities and other liabilities, respectively, in the consolidated balance sheets and expenditures are included as cash used in operating activities in the consolidated statements of cash flows. See Note 9 for additional information.

Treasury stock. Treasury stock purchases are recorded at cost. Upon reissuance, the cost of treasury shares held is reduced by the average purchase price per share of the aggregate treasury shares held.

Revenue recognition. The Company recognizes revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

Oil sales. Sales under the Company's oil contracts are generally considered performed when the Company sells oil production at the wellhead and receives an agreed-upon index price, net of any price differentials. The Company recognizes the sales revenue when (i) control/custody transfers to the purchaser at the wellhead and (ii) the net price is fixed and determinable. Any costs incurred prior to the transfer of control to the customer, such as gathering and transportation costs, are recognized as oil and gas production costs.

NGL and gas sales. Under the majority of the Company's gas processing contracts, gas is delivered to a midstream processing entity and the Company elects to take residue gas and NGLs in-kind at the tailgate of the gas processing plant. The Company recognizes revenue when the products are delivered (custody transfer) to the ultimate third-party purchaser at a contractually agreed-upon delivery point at a specified index price, with gathering and processing fees recognized as oil and gas production costs.

Sales of purchased commodities. The Company enters into pipeline capacity commitments in order to secure available oil, NGLs and gas transportation capacity from the Company's areas of production and secure diesel supply from the Gulf Coast to the Company's operations in the Permian Basin. The Company enters into purchase transactions with third parties and separate sale transactions with third parties to diversify a portion of the Company's oil and gas sales to (i) Gulf Coast refineries, (ii) Gulf Coast and West Coast gas markets and (iii) international oil markets, and to satisfy unused gas pipeline capacity commitments. Revenues and expenses from these transactions are generally presented on a gross basis in sales of purchased commodities and purchased commodities expense in the accompanying consolidated statements of operations as the Company acts as a principal in the transaction by assuming both the risks and rewards of ownership, including credit risk, of the commodities purchased and the responsibility to deliver the commodities sold. In conjunction with the Company's downstream sales, the Company also enters into pipeline capacity commitments in order to secure available oil, NGL and gas transportation capacity from the Company's areas of production to downstream sales points. The transportation costs associated with these transactions are included in purchased commodities expense.

See Note 14 for additional information.

Derivatives. All of the Company's derivatives are accounted for as non-hedge derivatives and are recorded at estimated fair value in the consolidated balance sheets. All changes in the fair values of its derivative contracts are recorded as gains or losses in the earnings of the periods in which they occur. The Company periodically enters into commodity price derivative positions, including oil production derivatives, NGL production derivatives and gas production derivatives. From time to time, the Company enters into contracts that contain embedded derivatives. These contracts are reviewed when they are entered into in order to identify and account for the derivative components. The Company's marketing derivatives and derivative associated with contingent consideration were deemed derivatives embedded in host contracts.

The Company enters into derivatives under master netting arrangements, which, in an event of default, allows the Company to offset payables to and receivables from the defaulting counterparty. The Company classifies the fair value amounts of derivative assets and liabilities executed under master netting arrangements as net current or noncurrent other assets or net current or noncurrent derivative liabilities, whichever the case may be, by instrument type and counterparty.

The Company has entered into International Swap Dealers Association Master Agreements ("ISDA Agreements") with each of its commodity price derivative counterparties. The terms of the ISDA Agreements provide the Company and the counterparties with rights of set off upon the occurrence of defined acts of default by either the Company or a counterparty to a derivative, whereby the party not in default may set off all derivative liabilities owed to the defaulting party against all derivative asset receivables from the defaulting party. See Note 5 for additional information.

Income taxes. The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and net operating loss and tax credit carryforwards. The amount of deferred taxes on these temporary differences is determined using the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, as applicable, based on tax rates and laws in the respective tax jurisdiction enacted as of the balance sheet date.

The Company reviews its deferred tax assets for recoverability and establishes a valuation allowance based on projected future taxable income, applicable tax strategies and the expected timing of the reversals of existing temporary differences. A valuation allowance is provided when it is more likely than not (likelihood of greater than 50 percent) that some portion or all of the deferred tax assets will not be realized.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based upon the technical merits of the position. If all or a portion of the unrecognized tax benefit is sustained upon examination by the taxing authorities, the tax benefit will be recognized as a reduction to the Company's deferred tax liability and will affect the Company's effective tax rate in the period it is recognized. See Note 17 for additional information.

The Company records any tax-related interest charges as interest expense and any tax-related penalties as other expense in the consolidated statements of operations.

Stock-based compensation. Stock-based compensation expense for restricted stock, restricted stock units and performance units expected to be settled in the Company's common stock ("Equity Awards") is measured at the grant date or modification date, as applicable, using the fair value of the award, and is recorded, net of estimated forfeitures, on a straight line basis over the requisite service period of the respective award. The fair value of Equity Awards, except performance unit awards, is determined on the grant date or modification date, as applicable, using the prior day's closing stock price. The fair value of performance unit awards is determined using the Monte Carlo simulation model.

Equity Awards are net settled by withholding shares of the Company's common stock to satisfy income tax withholding payments due upon vesting. Remaining vested shares are remitted to individual employee brokerage accounts. Shares to be delivered upon vesting of Equity Awards are made available from authorized, but unissued shares or shares held as treasury stock.

Restricted stock awards expected to be settled in cash on their vesting dates, rather than in common stock ("Liability Awards"), are included in accounts payable - due to affiliates in the consolidated balance sheets. The fair value of Liability Awards on the grant date is determined using the prior day's closing stock price. The Company recognizes the value of Liability Awards on a straight line basis over the requisite service period of the award. Liability Awards are marked to fair value as of each balance sheet date using the closing stock price on the balance sheet date. Changes in the fair value of Liability Awards are recorded as increases or decreases to stock-based compensation expense.

Equity Awards and Liability Awards participate in dividends during vesting periods and generally vest over three years.

See Note 8 for additional information.

Net income (loss) per share. The Company's basic net income per share attributable to common stockholders is computed as (i) net income attributable to common stockholders, (ii) less participating share- and unit-based basic earnings (iii) divided by weighted average basic shares outstanding. The Company's diluted net income per share attributable to common

stockholders is computed as (i) basic net income attributable to common stockholders, (ii) plus diluted adjustments to participating undistributed earnings, (iii) plus interest expense (net of income tax) associated with the Company's convertible senior notes (iv) divided by weighted average diluted shares outstanding, which assumes the Company's convertible senior notes were converted using shares of the Company's common stock at the beginning of the reporting period. Diluted net income per share attributable to common stockholders is calculated under both the two-class method and the treasury stock method and the more dilutive of the two calculations is presented. During periods in which the Company realizes a net loss attributable to common stockholders, securities or other contracts to issue common stock would be antidilutive to loss per share; therefore, conversion into common stock is assumed not to occur. See Note 18 for additional information.

Segments. Based upon how the Company is organized and managed, the Company has one reportable operating segment, which is oil and gas development, exploration and production. The Company considers its water services business and sales of purchased commodities as ancillary to its oil and gas development, exploration and producing activities and manages them to support such activities. In addition, the Company has a single, company-wide management team that allocates capital resources to maximize profitability and measures financial performance as a single enterprise.

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. Accordingly, 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 year ended December 31, 2021. See Note 18 for additional information.

Acquisitions, Divestitures, Decommissioning and Restructuring Activities

12 Months Ended

Dec. 31, 2021

Business Combinations [Abstract]

Acquisitions, Divestitures, Decommissioning and Restructuring Activities

Acquisitions. The Company regularly seeks to acquire or trade acreage that complements its operations, provides exploration and development opportunities, increases the lateral length of future horizontal wells and provides superior returns on investment.

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 approximately $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 provisional fair values assigned to assets acquired and liabilities assumed are as follows:


	Parsley Acquisition		DoublePoint Acquisition
	As of January 12, 2022		As of May 4, 2022
	(in millions)
Cash and cash equivalents (a)	$	118	$	58
Accounts receivable	251		131
Derivatives	8		—
Proved properties	5,110		3,929
Unproved properties	5,627		2,405
Other property and equipment	118		72
Operating lease right-of-use assets	201		2
Other assets	22		11
Total assets acquired	11,455		6,608

Accounts payable	338		232
Interest payable	49		22
Derivatives	317		86
Operating leases	201		2
Deferred income taxes	133		—
Long-term debt	3,238		975
Other liabilities	296		57
Total liabilities assumed	4,572		1,374
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 fractional 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.

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.


	Year Ended December 31,
		2021		2020
	(in millions)
Revenues and other income		$	14,691	$	8,962
Net income (loss)		$	1,973	$	(4,013)

Other acquisitions. During 2021, 2020 and 2019, the Company spent a total of $58 million, $14 million and $28 million, respectively, to acquire primarily undeveloped acreage for future exploration activities in the Spraberry/Wolfcamp field of the Midland Basin.

Divestitures. The Company regularly reviews its asset base to identify nonstrategic assets, the disposition of which would increase capital resources available for other activities, create organizational and operational efficiencies and further the Company's objective of maintaining a strong balance sheet to ensure financial flexibility.

The Company's notable divestitures to unaffiliated third parties are as follows:

•In December 2021, the Company completed the sale of its assets in the Delaware Basin (the "Delaware Divestiture") to Continental Resources, Inc. ("Continental") for cash proceeds of $3.1 billion, after normal closing adjustments. The Company recognized a pretax loss of $1.1 billion, which is reflected in net gain (loss) on disposition of assets in the consolidated statements of operations for the year ended December 31, 2021. See Note 11 for additional information.

•In October 2021, the Company completed the sale of approximately 20,000 net acres in western Glasscock County of the Permian Basin to Laredo in exchange for $137 million in cash and 960 thousand shares of Laredo's common stock, representing total consideration transferred of $206 million, after normal closing adjustments. The sale of these assets resulted in a pretax gain of $1 million, which is reflected in net gain (loss) on disposition of assets in the consolidated statements of operations for the year ended December 31, 2021. The Laredo common stock held by the Company as a result of the divestiture is included in short-term investments in the consolidated balance sheet as of December 31, 2021. See Note 4 and Note 15 for additional information.

•In March 2021, the Company sold its well services business (the "Well Services Divestiture") 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 (loss) on disposition of assets in the consolidated statements of operations for the year ended December 31, 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 for net cash proceeds of $6 million. The Company recorded a gain of $6 million associated with the sale.

•During 2019 the Company completed multiple sales of certain vertical and horizontal wells as well as approximately 7,800 undeveloped acres, in the Permian Basin, for net cash proceeds of $129 million. The Company recorded aggregate gains of $68 million associated with these sales.

•In May 2019, the Company completed the South Texas Divestiture in exchange for total consideration having an estimated fair value of $210 million. The fair value of the consideration included (i) net cash proceeds of $2 million, (ii) $136 million in contingent consideration and (iii) a $72 million receivable associated with estimated deficiency fees to be paid by the buyer. The Company recorded a loss of $525 million associated with the sale.

Contingent Consideration. Per the terms of the South Texas Divestiture, the Company was entitled to receive contingent consideration based on future annual oil and NGL prices during each of the five years from 2020 to 2024. The Company revalued the contingent consideration using an option pricing model each reporting period prior to the settlement of the contingent consideration in July 2020, at which time, the Company received cash proceeds of $49 million from the buyer to fully satisfy the contingent consideration. The Company recorded a noncash loss of $42 million to interest and other income during the year ended December 31, 2020, associated with the settlement. See Note 4, Note 5 and Note 15 for additional information.

Deficiency Fee Obligation. The Company transferred its long-term midstream agreements and associated minimum volume commitments ("MVC") to the buyer of its South Texas assets. However, the Company retained the obligation to pay 100 percent of any deficiency fees associated with the MVC from January 2019 through July 2022. The Company determines the fair value of the deficiency fee obligation using a probability weighted discounted cash flow model. The deficiency fee obligation is included in current or noncurrent other liabilities in the consolidated balance sheets, based on the estimated timing of payments. During the year ended December 31, 2021, the Company recorded a decrease of $3 million to the Company's estimated deficiency fee obligations in other expense in the consolidated statements of operations, as a result of lower than forecasted 2021 deficiency fee payments. During the year ended December 31, 2020, the Company recorded a charge of $84 million in other expense in the consolidated statements of operations, to increase the Company's originally forecasted deficiency fee payments as a result of a reduction in planned drilling activities by the buyer. The Company's estimated deficiency fee obligation as of December 31, 2021 of $191 million is included in other current liabilities in the consolidated balance sheets. See Note 4, Note 11 and Note 16 for additional information.

Deficiency Fee Receivable. The buyer is required to reimburse the Company for 18 percent of the deficiency fees paid under the transferred midstream agreements from January 2019 through July 2022. Such reimbursement will be paid by the buyer in installments beginning in 2023 through 2025. The Company determines the fair value of the deficiency fee receivable using a credit risk-adjusted valuation model. During the year ended December 31, 2021 and 2020, the Company recorded an increase to the Company's long-term deficiency fee receivable of $7 million and $4 million, respectively, in other expense in the consolidated statements of operations, to reflect the buyer's share of deficiency fees which were greater than originally forecasted as of the date of the sale. The deficiency fee receivable is included in noncurrent other assets in the consolidated balance sheets. See Note 4, Note 11 and Note 16 for additional information.

Restricted Cash. As a condition of the sale, the Company deposited $75 million into an escrow account to be used to fund future MVC payments. Beginning in 2021, the required escrow balance declined to $50 million and during the year ended December 31, 2021, the Company used a portion of the $50 million in the escrow account to make monthly MVC payments. Beginning in 2022, there is no required escrow balance. To the extent that there is any remaining balance after the payment of deficiency fees, the balance will become unrestricted and revert to the Company on March 31, 2023. The escrow account balance is included in restricted cash in the consolidated balance sheets.

Decommissioning. In November 2018, the Company announced plans to close its sand mine located in Brady, Texas and transition its proppant supply requirements to West Texas sand sources. As a result, the Company recorded $23 million of accelerated depreciation, $13 million of inventory and other property and equipment impairment charges and $12 million of sand mine closure-related costs in other expense in the consolidated statements of operations during the year ended December 31, 2019. See Note 16 for additional information.

Restructuring. During 2020, the Company implemented a corporate restructuring to reduce its staffing levels to correspond with a planned reduction in future activity levels (the "2020 Corporate Restructuring"). The restructuring resulted in approximately 300 employees being involuntarily separated from the Company. The Company recorded $78 million of employee-related charges, including $5 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 year ended December 31, 2020. See Note 8 and Note 16 for additional information.

During 2019, the Company implemented a corporate restructuring program to align its cost structure with the objectives of the Company (the "2019 Corporate Restructuring Program"). The restructuring occurred in three phases as follows:

•In March 2019, the Company made certain changes to its leadership and organizational structure, which included the early retirement and departure of certain officers of the Company.

•In April 2019, the Company adopted a voluntary separation program ("VSP") for certain eligible employees, and

•In May 2019, the Company implemented an involuntary separation program ("ISP").

During 2019, the Company recorded $159 million of employee-related charges, including $26 million of noncash stock-based compensation expense related to the accelerated vesting of certain equity awards, associated with the 2019 Corporate

Restructuring Program in other expense in the consolidated statements of operations. See Note 8 and Note 16 for additional information.

Employee-related obligations from asset divestitures and restructuring activities. Employee-related costs as a result of asset divestitures and restructuring activities are 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.

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


	Year Ended December 31,
	2021		2020
	(in millions)
Beginning employee-related obligations	$	3	$	6
Additions (a)	2		79
Less:
Noncash stock-based compensation	—		4
Cash payments	4		78
Ending employee-related obligations	$	1	$	3

____________________

(a)Additions for the year ended December 31, 2021 are comprised of $1 million related to the Delaware Divestiture and $1 million related to the Well Services Divestiture. Additions for the year ended December 31, 2020 are comprised of $78 million related to the 2020 Corporate Restructuring and $1 million related to a well services restructuring undertaken to more closely align the Company's well services cost structure with planned activity levels.

See Note 16 for additional information.

Fair Value Measurements

12 Months Ended

Dec. 31, 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 December 31, 2021
	Fair Value Measurements
	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:


Deferred compensation plan assets	$	74	$	—	$	—	$	74
Investment in affiliate	135		—		—		135
Short-term investment	58		—		—		58
	$	267	$	—	$	—	$	267
Liabilities:
Commodity price derivatives	$	—	$	486	$	—	$	486
Marketing derivatives	—		—		77		77
	$	—	$	486	$	77	$	563


	As of December 31, 2021
	Fair Value Measurements
	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
	$	195	$	8	$	—	$	203
Liabilities:
Commodity price derivatives	$	—	$	209	$	—	$	209
Marketing derivatives	—		—		91		91
	$	—	$	209	$	91	$	300

Commodity price derivatives. The Company's commodity price derivatives primarily represent oil 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 oil 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 a 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 derivative 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 December 31, 2021 and 2020 was $2.19 per barrel and $1.91 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 December 31, 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 and short-term investment. The Company elected the fair value option for measuring its equity method investment in ProPetro. The Laredo common stock held by the Company is treated as an investment in equity securities measured at fair value. The fair value of the Company's investments in ProPetro and Laredo common stock are determined using Level 1 inputs based on observable prices on a major exchange. See Note 3, Note 12 and Note 15 for additional information.

Contingent consideration. Per the terms of the South Texas Divestiture, the Company was entitled to receive contingent consideration based on future annual oil and NGL prices during each of the five years from 2020 to 2024. The Company revalued the contingent consideration using an option pricing model each reporting period prior to the settlement of the contingent consideration in July 2020, at which time, the Company received cash proceeds of $49 million from the buyer to fully satisfy the contingent consideration. The Company recorded a noncash loss of $42 million to interest and other income during the year ended December 31, 2020 associated with the settlement. During 2019, the Company recorded a noncash loss of $45 million to interest and other income associated with adjusting the contingent consideration to fair value. The fair value of the contingent consideration was determined using Level 2 inputs based on an option pricing model using quoted future commodity prices from active markets, implied volatility factors and counterparty credit risk assessments. See Note 3 and Note 5 and Note 15 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 inventories, proved and unproved oil and gas properties, assets acquired and liabilities assumed in business combinations, goodwill and other long-lived assets that are written down to fair value when they are determined to be 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 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 and estimated deficiency fee receivable are recorded in other

expense in the consolidated statements of operations. For the year ended December 31, 2021, the Company recorded a decrease in the deficiency fee obligation of $3 million and an increase to the deficiency fee receivable of $7 million. For the year ended December 31, 2020, the Company recorded an increase in the deficiency fee obligation of $84 million and an increase to the deficiency fee receivable of $4 million. The Company will not increase the estimated deficiency fee receivable associated with 2022 forecasted deficiencies until they are realizable. The present value of the 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 3, Note 11 and Note 16 for additional information.

Other assets. During the year ended December 31, 2019, the Company impaired the remaining $13 million of inventory and other property and equipment related to the decommissioning of the Company's Brady, Texas sand mine, as these assets had no remaining future economic value. In addition, the Company recognized a $16 million impairment charge related to pressure pumping assets that had no future benefit to the Company. See Note 16 for additional information.

Proved oil and gas properties. The Company performs assessments of its proved oil and gas properties, which are accounted for under the successful efforts method of accounting, whenever events or circumstances indicate that the carrying value of those assets may not be recoverable. An impairment loss is indicated if the sum of the expected future cash flows, including cash flows from the Company's water services business that are used in the development of the assets, is less than the carrying amount of the assets, including the carrying value of the water services business. In these circumstances, the Company recognizes an impairment charge for the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.

Based on management's commodity price outlooks as of December 31, 2021, which represent longer-term commodity price outlooks that are developed based on third party future commodity price estimates as of a measurement date ("Management's Price Outlooks"), the Company determined events and circumstances did not indicate that the carrying value of the Company's proved properties were not recoverable.

Unproved oil and gas properties. Unproved oil and gas properties are periodically assessed for impairment on a project-by-project basis. These impairment assessments are affected by the results of exploration activities, commodity price outlooks, planned future property sales or expiration of all or a portion of such projects. If the Company's assessment determines that a project is not expected to be developed or is unlikely to recover its costs, the Company will recognize an impairment charge at that time. Impairment charges for unproved oil and gas properties are recorded in exploration and abandonments in the consolidated statements of operations. During 2021, 2020 and 2019, the Company recorded $4 million, $11 million and $4 million, respectively, to exploration and abandonments in the consolidated statements of operations.

Based on the Company's annual assessment of the fair value of goodwill as of July 1, 2021, the Company determined that its goodwill was not impaired. As of December 31, 2021, there were no material changes in events or circumstances that would warrant a reassessment for impairment.

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 December 31, 2021				As of December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in millions)
Assets:
Cash and cash equivalents (a)	$	3,847	$	3,847	$	1,442	$	1,442
Restricted cash (a)(b)	$	37	$	37	$	59	$	59
Liabilities:
Current portion of long-term debt:
Senior notes (c)	$	244	$	247	$	140	$	140
Long-term debt:
Convertible senior notes (c)(d)	$	1,307	$	2,359	$	1,100	$	1,756
Senior notes (c)	$	5,381	$	5,390	$	2,060	$	2,230

______________________

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

(b)Represents 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)See Note 2 for additional information on the impact to the Company's convertible senior notes related to the early adoption of ASU 2020-06 on January 1, 2021.

The Company has other financial instruments consisting primarily of receivables, payables and 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 business combinations, 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

12 Months Ended

Dec. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

The Company's derivatives are accounted for as non-hedge derivatives and 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.

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, 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, MEH and WTI derivative contracts to manage future oil price volatility.

The Company recorded oil derivatives losses of $508 million in the consolidated statement of operations during the year ended December 31, 2021 associated with (i) the termination of certain of its 2022 oil commodity derivative positions and (ii) entering into equal and offsetting oil commodity derivative trades, which had the net effect of eliminating certain of its 2022 derivative positions.

Volumes per day associated with outstanding oil derivative contracts as of December 31, 2021 and the weighted average oil prices for those contracts are as follows:


	2022
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter






Midland/WTI basis swap contracts:
Volume per day (Bbl) (a)	26,000		26,000		26,000		26,000
Price differential per Bbl	$	0.50	$	0.50	$	0.50	$	0.50

______________________

(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 oil and the WTI index price.

The Company has also entered into derivative contracts for 3,000 Bbls per day of Brent basis swaps for January 2024 through December 2024 production. The basis swap contracts fix the basis differential between the WTI index price at which the Company sells a portion of its Permian Basin oil and the Brent index price at a weighted average of $4.33.

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 periodically uses derivative contracts to manage the volatility of NGL component product prices. As of December 31, 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 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 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 recorded derivatives losses of $13 million in the consolidated statement of operations during the year ended December 31, 2021 associated with (i) the termination of certain of its 2022 gas commodity derivative positions and (ii) entering into equal and offsetting gas commodity derivative trades, which had the net effect of eliminating certain of its 2022 derivative positions.

Volumes per day associated with outstanding gas derivative contracts as of December 31, 2021 and the weighted average gas prices for those contracts are as follows:


	2022
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter



Dutch TTF swap contracts:
Volume per day (MMBtu)	30,000		30,000		30,000		30,000
Price per MMBtu	$	12.14	$	7.80	$	7.80	$	7.80
WAHA swap contracts:
Volume per day (MMBtu)	20,000		—		—		—
Price per MMBtu	$	2.46	$	—	$	—	$	—
NYMEX collar contracts:
Volume per day (MMBtu)	7,000		—		—		—
Price per MMBtu:
Ceiling	$	3.45	$	—	$	—	$	—
Floor	$	2.75	$	—	$	—	$	—






WAHA/NYMEX basis swap contracts:
Volume per day (MMBtu) (a)	7,000		—		—		—
Price differential ($/MMBtu)	$	(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 collar 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 oil 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 a 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.

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. The Company recorded losses of $42 million and $45 million related to the revaluation of the contingent consideration to interest and other income (loss), net in the consolidated statements of operations for the years ended December 31, 2021 and 2019, respectively. See Note 3, Note 4 and Note 15 for additional information.

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


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)



Liabilities:
Commodity price derivatives	Derivatives - current	$	486	$	—	$	486
Marketing derivatives	Derivatives - current	$	52	$	—	$	52

Marketing derivatives	Derivatives - noncurrent	$	25	$	—	$	25


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	Other - current	$	5	$	—	$	5
Commodity price derivatives	Other assets - 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 to derivative gain (loss), net in the consolidated statements of operations related to derivative financial instruments not designated as hedging instruments are as follows:


	Year Ended December 31,
	2021		2020		2019
	(in millions)
Commodity price derivatives:
Noncash derivative gain (loss), net	$	437	$	(213)	$	8
Cash receipts (payments/deferred obligations) on settled derivatives, net (a)	(2,595)		66		47
Total commodity derivative gain (loss), net	(2,158)		(147)		55

Marketing derivatives:
Noncash derivative gain (loss), net	14		(112)		—
Cash payments on settled derivatives, net	(39)		—		—
Total marketing derivative loss, net	(25)		(112)		—

Interest rate derivatives:
Cash payments on settled derivatives, net	—		(22)		—


Derivative gain (loss), net	$	(2,183)	$	(281)	$	55

_____________________

(a)Includes $521 million of losses attributable to the early settlement of certain 2022 oil and gas commodity derivatives, of which the Company recognized $508 million of such in losses during the fourth quarter of 2021 related to (i) the termination of certain of its 2022 oil and gas commodity derivative positions and (ii) entering into equal and offsetting oil and gas commodity derivative trades, which had the net effect of eliminating certain of its 2022 derivative positions. The Company will make cash payments of $328 million during 2022 to settle the deferred obligations associated with the offsetting derivatives.

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.

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. Net derivative liabilities associated with the Company's open derivatives by counterparty are as follows:


	As of December 31, 2021

	(in millions)
Citibank	$	122
Morgan Stanley Capital Group	121
Occidental Petroleum Corporation	77
Scotia Bank	54
J Aron & Company	40
JP Morgan Chase	40
PNC Bank	36
CIBC	24
Macquarie Bank	23
Merrill Lynch	13
Wells Fargo Bank	9
Nextera Energy Power Marketing	4

















	$	563

See Note 2 for additional information.

Exploratory Well and Project Costs

12 Months Ended

Dec. 31, 2021

Extractive Industries [Abstract]

Exploratory Well and Project 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 recorded in exploration and abandonments in the consolidated statements of operations.

The changes in capitalized exploratory well and project costs are as follows:


	Year Ended December 31,
	2021		2020
	(in millions)
Beginning capitalized exploratory well and project costs	$	498	$	660
Additions to exploratory well and project costs pending the determination of proved reserves	2,935		1,163
Additions to capitalized exploratory well and project costs from acquisitions	235		—
Reclassification due to determination of proved reserves	(2,973)		(1,325)
Disposition of assets	(63)		—

Ending capitalized exploratory well and project costs	$	632	$	498

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 of drilling was completed, are as follows:


	Year Ended December 31,
	2021		2020		2019
	(in millions, except well counts)
Capitalized exploratory well costs that have been suspended:
One year or less	$	621	$	495	$	660
More than one year	11		3		—
	$	632	$	498	$	660
Number of projects with exploratory well costs that have been suspended for a period greater than one year (a)	3		1		—

______________________

(a)The three outstanding wells that have been suspended for a period greater than one year in 2021 are scheduled to be completed during the first half of 2022. The one exploratory well that was suspended for a period greater than one year in 2020, was completed in 2021.

Long-term Debt and Interest Expense

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Long-term Debt and Interest Expense

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


	As of December 31, 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 (a)	179		—
7.200% senior notes due 2028	241		241
4.125% senior notes due 2028 (a)	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	(43)		(248)
Total debt	6,932		3,300
Less current portion of long-term debt	244		140
Long-term debt	$	6,688	$	3,160

______________________

(a)Issued by Parsley and Parsley LLC, each a wholly owned subsidiary of the Company.

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 "Syndicate"). 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 December 31, 2021, the Company had no outstanding borrowings under the Credit Facility.

Borrowings under the Credit Facility may be in the form of revolving loans or swing line loans. Revolving loans represent loans made ratably by the Syndicate in accordance with their respective commitments under the Credit Facility and bear interest, at the option of the Company, based on (a) a rate per annum equal to the higher of the prime rate announced from time to time by Wells Fargo Bank, National Association or the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System during the last preceding business day plus 0.5 percent plus a defined alternate base rate spread margin, which is currently 0.25 percent based upon the Company's debt rating or (b) a base Eurodollar rate, plus a margin (the "Applicable Margin"), which is currently 1.25 percent and is also determined by the Company's debt rating. Swing line loans represent loans made by a subset of the lenders in the Syndicate and may not exceed $150 million. Swing line loans under the Credit Facility bear interest at a rate per annum equal to the "ASK" rate for federal funds periodically published by the Dow Jones Market Service plus the Applicable Margin. Letters of credit outstanding under the Credit Facility are subject to a per annum fee, representing the Applicable Margin plus 0.125 percent. The Company also pays commitment fees on undrawn amounts under the Credit Facility that are determined by the Company's debt rating (currently 0.15 percent). Borrowings under the Credit Facility are general unsecured obligations.

The Credit Facility requires the maintenance of a ratio of total debt to book capitalization, subject to certain adjustments, not to exceed 0.65 to 1.0. As of December 31, 2021, the Company 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 of 7.75% senior notes due 2025 (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 (the "Parsley 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's senior notes are structurally subordinated to the outstanding Parsley Notes. 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 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 16 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 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 16 for additional information.

During August 2020, the Company issued $1.1 billion of 1.900% senior notes that will mature August 15, 2030. The Company received proceeds of $1.08 billion, net of $18 million of issuance costs and discounts. Interest on the notes will be payable on February 15 and August 15 of each year.

In May 2020, the Company paid $725 million to complete a cash tender offer for certain of its outstanding senior notes. Associated with the tender offer, the Company settled $360 million of its 3.450% senior notes due 2021, $356 million of its 3.950% senior notes due 2022 and $9 million of its 7.200% senior notes due 2028. The Company expensed unamortized debt discounts and issuance costs associated with the tendered notes of $2 million and recognized a loss on the early extinguishment of debt totaling $23 million. The losses are recorded in other expense in the consolidated statements of operations. See Note 16 for additional information.

The Company's 3.450% senior notes and 7.500% senior notes, with debt principal balances of $140 million and $450 million, respectively, matured and were repaid in January 2021 and January 2020, respectively. The Company funded the repayments 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 sheets as of December 31, 2021.

The Company's senior notes are general unsecured obligations ranking equally in right of payment with all other senior unsecured indebtedness of the Company and are senior in right of payment to all existing and future subordinated indebtedness of the Company. The Company is a holding company that conducts all of its operations through subsidiaries; consequently, the senior notes are structurally subordinated to all obligations of its subsidiaries. Interest on the Company's senior notes is payable semiannually.

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 9.3647 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 $106.78 per share (subject to 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 fourth quarter of 2021, the last reported sale price 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 March 31, 2022. The Company reserves its right under the notes indenture to elect to settle the Convertible Notes in cash, 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 December 31, 2021, the Convertible Notes had an outstanding principal balance of $1.3 billion and unamortized issuance costs of $16 million. The effective interest rate related to interest expense to be recorded over the life of the Convertible Notes is 0.6 percent.

Interest expense recognized on the Convertible Notes is as follows:


	Year Ended December 31,
	2021		As of	2020
	(in millions)
Contractual coupon interest	$	3		$	2
Amortization of issuance discount (a)	—			28
Amortization of capitalized loan fees	5			2
	$	8		$	32

______________________

(a)Upon adoption of ASU 2020-06, the Company no longer amortizes the issuance discount associated with the Convertible Notes to interest expense over the life of the Convertible Notes. See Note 2 for additional information.

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 $106.78 per share of common stock and an adjusted capped price of $151.96 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 in the accompanying consolidated balance sheets.

Principal payments scheduled to be made on the Company's long-term debt are as follows (in millions):


2022	$	244
2023	$	750
2024	$	750
2025	$	1,323
2026	$	1,250
Thereafter	$	2,658

Interest expense activity is as follows:


	Year Ended December 31,
	2021		2020		2019
	(in millions)
Cash payments for interest	$	136	$	119	$	121
Amortization of issuance discounts (premiums), net	(4)		29		1
Amortization of capitalized loan fees	14		5		4
Net changes in accruals	17		(19)		—
Interest incurred	163		134		126
Less capitalized interest	(2)		(5)		(5)
	$	161	$	129	$	121

Incentive Plans

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Incentive Plans

Deferred compensation retirement plan. The Company's deferred compensation retirement plan allows for qualified officers and certain key employees of the Company to contribute up to 50 percent of their base salary and 100 percent of their annual bonus. The Company provides a matching contribution of 100 percent of the officer's and key employee's contribution limited up to the first ten percent of their salary. The Company's matching contribution vests immediately. A trust fund has been established by the Company to accumulate the contributions made under this retirement plan.

The Company match for the deferred compensation plan is as follows:


	Year Ended December 31,
	2021		2020		2019
	(in millions)
Deferred compensation plan	$	2	$	1	$	2

401(k) plan. The Pioneer Natural Resources USA, Inc. ("Pioneer USA," a wholly-owned subsidiary of the Company) 401(k) and Matching Plan (the "401(k) Plan") is a defined contribution plan established under the Internal Revenue Code Section 401. All regular full-time and part-time employees of Pioneer USA are eligible to participate in the 401(k) Plan on the first day of the month following their date of hire. Participants may contribute up to 80 percent of their annual base salary into the 401(k) Plan. Matching contributions are made to the 401(k) Plan in cash by Pioneer USA in amounts equal to 100 percent of a participant's contributions to the 401(k) Plan that are not in excess of ten percent of the participant's annual base salary (the "Matching Contribution"). Each participant's account is credited with the participant's contributions, Matching Contributions and allocations of the 401(k) Plan's earnings. Participants are fully vested in their account balances except for Matching Contributions and their proportionate share of 401(k) Plan earnings attributable to Matching Contributions, which proportionately vest over a four-year period that begins on the participant's date of hire. Eligible employees are automatically enrolled in the 401(k) Plan at a contribution rate of five percent of the employee's annual base salary, unless the employee opts out of participation or makes an alternate election within 30 days of becoming eligible for participation.

The Company match for the 401(k) plan is as follows:


	Year Ended December 31,
	2021		2020		2019
	(in millions)
401(k) plan	$	17	$	18	$	27

Long-Term Incentive Plan. The Company's Amended and Restated 2006 Long-Term Incentive Plan ("LTIP") provides for the granting of various forms of awards, including stock options, stock appreciation rights, performance units, restricted stock and restricted stock units to directors, officers and employees of the Company.

In 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.

Shares available for future grant pursuant to awards under the LTIP are as follows:


			As of December 31, 2021
Approved and authorized awards			12,600,000
2014 Parsley Plan awards available to the LTIP (a)			879,575
Awards issued under plan			(9,369,570)
			4,110,005

______________________

(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.

Employee Stock Purchase Plan. The Company's Employee Stock Purchase Plan ("ESPP") allows eligible employees to annually purchase the Company's common stock at a discounted price. Officers of the Company are not eligible to participate in the ESPP. Contributions to the ESPP are limited to 15 percent of an employee's base salary (subject to certain ESPP limits) during the eight-month offering period (January 1 to August 31). Participants in the ESPP purchase the Company's common stock at a price that is 15 percent below the closing sales price of the Company's common stock on either the first day or the last day of each offering period, whichever closing sales price is lower.

Shares available for future issuance under the ESPP are as follows:


			As of December 31, 2021
Approved and authorized shares (a)			2,500,000
Shares issued			(1,172,763)
			1,327,237

Stock-based compensation expense and the associated income tax benefit for awards issued under both the LTIP and ESPP are as follows:


	Year Ended December 31,
	2021		2020		2019
	(in millions)
Restricted stock - equity awards	$	44	$	49	$	79
Restricted stock - liability awards (a)	17		12		19
Restricted stock and performance units - Parsley awards (b)	33		—		—

Performance unit awards	27		21		19
Employee Stock Purchase Plan	2		2		2

Total stock-based compensation expense	$	123	$	84	$	119
Income tax benefit	$	14	$	7	$	18

______________________

(a)Liability Awards are expected to be settled on their vesting date in cash. As of December 31, 2021 and December 31, 2020, accounts payable - due to affiliates included $9 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 December 31, 2021, there is $85 million of unrecognized stock-based compensation expense related to unvested share-based compensation awards, including $23 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.

Restricted stock awards. The Company routinely awards restricted shares or units of the Company's common stock as compensation to directors, officers and employees of the Company.

Restricted stock award activity is as follows:


	Year Ended December 31, 2021
	Equity Awards			Liability Awards
	Number of Shares	Weighted Average Grant- Date Fair Value		Number of shares
Beginning incentive compensation awards	765,981	$	130.72	221,353
Awards granted	304,142	$	141.82	71,870
Awards assumed (a)	38,465	$	133.25	—
Awards forfeited	(8,598)	$	124.33	(9,455)
Awards vested (b)	(358,098)	$	138.28	(101,490)
Ending incentive compensation awards	741,892	$	131.83	182,278

______________________

(a)Awards assumed as a result of the Parsley Acquisition that will settle in Company shares upon vesting.

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

In addition to the aforementioned, during the year ended December 31, 2021, the Company assumed 216,914 Parsley restricted stock equity awards that immediately vested upon completion of the Parsley Acquisition.

The weighted average grant-date fair value per unit of restricted stock Equity Awards awarded during 2021, 2020 and 2019 was $141.82, $108.24 and $137.23, respectively. The grant-date fair value of restricted stock Equity Awards that vested during 2021, 2020 and 2019 was $50 million, $59 million and $99 million, respectively. The total fair value of restricted stock Equity Awards that vested during 2021, 2020 and 2019 was $51 million, $47 million and $91 million, respectively.


	Year Ended December 31,
	2021		2020		2019
	(in millions)
Cash paid for vested Liability Awards	$	14	$	16	$	20

Performance unit awards. Each year, at its discretion, the board of directors of the Company awards performance units to certain of the Company's officers under the LTIP. The number of shares of common stock to be issued is determined by comparing the Company's total shareholder return to the total shareholder return of a predetermined group of peer companies over the performance period. The performance unit awards vest over a 34-month service period.

The grant-date fair value per unit of the 2021, 2020 and 2019 performance unit awards were $165.32, $184.06 and $165.84, respectively, and are being recorded as stock-based compensation expense ratably over the performance period. The fair value of the performance unit awards was determined using the Monte Carlo simulation model that utilizes multiple input variables to determine the probability of satisfying the market condition stipulated in the award grant and calculates the fair value of the award. Expected volatilities utilized in the model were estimated using a historical period consistent with the performance period of approximately three years. The risk-free interest rate was based on the United States Treasury rate for a term commensurate with the expected life of the grant.

Assumptions used to estimate the fair value of performance unit awards granted in each of the following years are as follows:


	2021			2020			2019
Risk-free interest rate	0.18%			0.68%			2.49%
Range of volatilities	25%	-	104%	31%	-	45%	28%	-	43%

Performance unit activity is as follows:


	Year Ended December 31, 2021
	Number of Units (a)	Weighted Average Grant- Date Fair Value
Beginning performance unit awards	207,430	$	177.37
Units granted	173,423	$	165.32

Units vested (b)	(76,167)	$	165.84
Ending performance unit awards	304,686	$	173.39

_____________________

(a)Amount reflects the number of performance units initially granted. The actual payout of shares upon vesting may be between zero and 250 percent of the performance units included in this table depending upon the total shareholder return ranking of the Company compared to peer companies at the vesting date.

(b)Units vested reflects the number of performance units that vest upon retirement or departure of eligible officers or when the service period