Pioneer Natural Resources Reports Fourth Quarter and Full Year 2020 Financial and Operating Results; Provides 2021 Outlook
Highlights
-
Delivered strong fourth quarter and full year 2020 free cash flow1 of
$294 million and$689 million , respectively - Achieved a reinvestment rate of 69% in 2020, while maintaining full year Permian oil production at 211 thousand barrels of oil per day (MBOPD)
-
Returned
$521 million of capital to shareholders during 2020, or 76% of full year free cash flow - Averaged fourth quarter oil production of 204 MBOPD, in the upper half of guidance
- Averaged fourth quarter production of 364 thousand barrels of oil equivalent per day (MBOEPD), in the upper half of guidance
- Initiating a long-term variable dividend2 policy that allows for the distribution of up to 75% of free cash flow, after the base dividend is paid, while maintaining a strong balance sheet
CEO
Pioneer's 2021 plan builds on this success, with a program that is capital efficient and is underpinned by our premier acreage position and scale in the
Our compelling investment proposition, coupled with our strong focus on environmental, social and governance initiatives, ensures Pioneer will continue to provide low-cost, environmentally friendly energy to the world, while enhancing value for shareholders."
Financial Highlights
Pioneer continues to maintain a strong balance sheet, with unrestricted cash on hand at the end of the fourth quarter of
During the fourth quarter, the Company’s drilling, completion and facilities capital expenditures totaled
Cash flow from operating activities during the fourth quarter and full year 2020 was
The Company's Board of Directors approved an increase to the Company's quarterly cash dividend to
In addition to Pioneer's increase in its quarterly cash dividend to
Pioneer continues to capture synergies from the acquisition of Parsley Energy, Inc. (Parsley) and is increasing the Company's synergy target by
Financial Results
For the fourth quarter of 2020, the average realized price for oil was
Production costs, including taxes, averaged
The Company recently identified two marketing contracts that should have been accounted for as derivatives in the Company’s historical consolidated financial statements. The contracts provided for the transportation and sale of purchased oil at lower transport and storage costs as compared to similar costs in the Company’s other contracts. The contracts were executed during the fourth quarter of 2019, but transactions under the contract did not begin until
Operations Update
Pioneer continued to deliver strong operational efficiency gains that enabled the Company to place 58 horizontal wells on production during the fourth quarter and 255 wells on production for the full year. During 2020, drilling operations averaged approximately 1,150 drilled feet per day and completion operations averaged approximately 1,850 completed feet per day, an increase 15% and 16%, respectively, when compared to 2019. Pioneer's fully burdened facilities costs per well also continued to decrease as the Company makes further progress on its facilities optimization program that began in 2019. When compared to 2018, Pioneer's facilities cost per well has decreased approximately 40%, from over
The Company's controllable cash costs, inclusive of lease operating expense, G&A and interest expense, continue to trend lower and represent a combined 23% reduction per BOE in 2020 when compared to 2019. As the Company realizes the expected synergies associated with the acquisition of Parsley, controllable cash costs are forecasted to decrease an additional 8% in 2021.
During 2021, the Company plans to operate an average of 18 to 20 horizontal drilling rigs in the
2021 Outlook
The Company expects its 2021 drilling, completions and facilities capital budget to range between
Pioneer expects 2021 oil production of 307 to 322 MBOPD and total production of 528 to 554 MBOEPD, which excludes Parsley production prior to the Parsley acquisition close date of
Pioneer has redefined its investment framework to prioritize free cash flow generation and return of capital to shareholders. This capital allocation strategy is intended to create long-term value by optimizing the reinvestment of cash flow to accelerate the Company's free cash flow profile. At current strip pricing, the Company expects its reinvestment rate to be between 50% to 60%, generating increased free cash flow. Pioneer is targeting a 10% total annual return, inclusive of a strong and growing base dividend, a variable dividend and high-return oil growth. The Company believes this differentiated strategy positions Pioneer to be competitive across industries.
Pioneer continues to maintain substantial oil and gas derivative coverage in order to protect the balance sheet, providing the Company with operational and financial flexibility. The Company’s financial and derivative mark-to-market results and open derivatives positions are outlined in the attached schedules.
First Quarter 2021 Guidance
First quarter 2021 oil production is forecasted to average between 259 to 274 MBOPD and total production is expected to average between 444 to 470 MBOEPD, which excludes Parsley production prior to the Parsley acquisition close date of
Proved Reserves
The Company added proved reserves totaling 357 million barrels of oil equivalent (MMBOE) during 2020, excluding acquisitions and price revisions. These proved reserve additions equate to a drillbit reserve replacement ratio of 263% when compared to Pioneer's full-year 2020 production of 136 MMBOE, including field fuel. The drillbit finding and development (F&D) cost was
As of
Environmental, Social & Governance (ESG)
Pioneer views sustainability as a multidisciplinary focus that balances economic growth, environmental stewardship and social responsibility. The Company emphasizes developing natural resources in a manner that protects surrounding communities and preserves the environment.
Consistent with Pioneer's sustainable practices, the Company has incorporated greenhouse gas (GHG) and methane emission intensity reduction goals into its ESG strategy, with goals to reduce the Company's GHG emissions intensity by 25% and methane emissions intensity by 40% by 2030, inclusive of the assets Pioneer acquired from Parsley. These emission intensity reduction targets are aligned with the
In addition, the Company is building on its leadership position related to minimizing flaring and has formally adopted a goal to maintain the Company's flaring intensity to less than 1% of natural gas produced. Pioneer also plans to end routine flaring, as defined by the
Socially, Pioneer maintains a proactive safety culture, supports a diverse workforce and inspires teamwork to drive innovation. The Board of Directors has a
In addition to the increased weighting towards HSE and ESG metrics, Pioneer's executive incentive compensation continues to be aligned with shareholder interests. Beginning in 2021, return on capital employed (ROCE) has been included along with cash return on capital invested (CROCI), which was added in 2020, with a combined weighting of 20%, while production and reserves goals previously included as incentive compensation metrics have been removed.
Pioneer has amended executive equity compensation as well, with the S&P 500 index being added into the total stockholder return (TSR) peer group for performance awards beginning in 2021, and for the second consecutive year the long-term equity compensation for the Company’s Chief Executive Officer will be 100% in performance awards, with 100% of such awards at risk based on performance relative to the TSR peer group. These updates to Pioneer’s executive incentive and equity compensation programs demonstrate the Company’s continuing commitment to aligning total executive compensation with the interests of our shareholders.
For more details, see Pioneer’s 2020 Sustainability Report at pxd.com/sustainability.
Earnings Conference Call
On
Internet: www.pxd.com
Select "Investors," then "Earnings & Webcasts" to listen to the discussion, view the presentation and see other related material.
Telephone: Dial (800) 458-4121 and enter confirmation code 7134307 five minutes before the call.
A replay of the webcast will be archived on Pioneer’s website. This replay will be available through
Pioneer is a large independent oil and gas exploration and production company, headquartered in
Except for historical information contained herein, the statements in this news release are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements and the business prospects of Pioneer are subject to a number of risks and uncertainties that may cause Pioneer’s actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties include, among other things, volatility of commodity prices; product supply and demand; the impact of a widespread outbreak of an illness, such as the COVID-19 pandemic, on global and
“Drillbit finding and development cost per BOE,” or “drillbit F&D cost per BOE,” means the summation of exploration and development costs incurred divided by the summation of annual proved reserves, on a BOE basis, attributable to discoveries, extensions and revisions of previous estimates. Revisions of previous estimates exclude price revisions. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred.
“Drillbit reserve replacement” is the summation of annual proved reserves, on a BOE basis, attributable to discoveries, extensions and revisions of previous estimates divided by annual production of oil, NGLs and gas, on a BOE basis. Revisions of previous estimates exclude price revisions.
“Proved developed finding and development cost per BOE,” or “proved developed F&D cost per BOE,” means the summation of exploration and development costs incurred (excluding asset retirement obligations) divided by the summation of annual proved reserves, on a BOE basis, attributable to proved developed reserve additions, including (i) discoveries and extensions placed on production during 2020, (ii) transfers from proved undeveloped reserves at year-end 2019 and (iii) technical revisions of previous estimates for proved developed reserves during 2020. Revisions of previous estimates exclude price revisions.
Footnote 1: Free cash flow is a non-GAAP measure. See reconciliation to comparable GAAP number in supplemental schedules.
Footnote 2: The declaration and payment of future dividends is at the discretion of the Company's Board of Directors and will depend on, among other things, the Company's earnings, financial condition and outlook, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that the Board of Directors deems relevant.
Footnote 3: Excludes acquisitions, asset retirement obligations, capitalized interest, geological and geophysical G&A, information technology and corporate facilities.
Footnote 4: Unusual items include the following: (i) a noncash
Footnote 5: The 2021 estimated cash flow number is a non-GAAP financial measure, representing forecasted cash flow (before working capital changes) assuming a WTI oil price of
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in millions) |
|||||||
|
|
|
|
||||
ASSETS |
|||||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
1,442 |
|
|
$ |
631 |
|
Restricted cash |
59 |
|
|
74 |
|
||
Accounts receivable, net |
695 |
|
|
1,035 |
|
||
Income taxes receivable |
4 |
|
|
7 |
|
||
Inventories |
224 |
|
|
205 |
|
||
Derivatives |
5 |
|
|
32 |
|
||
Investment in affiliate |
123 |
|
|
187 |
|
||
Other |
43 |
|
|
20 |
|
||
Total current assets |
2,595 |
|
|
2,191 |
|
||
Oil and gas properties, successful efforts method of accounting |
24,510 |
|
|
23,028 |
|
||
Accumulated depletion, depreciation and amortization |
(10,071 |
) |
|
(8,583 |
) |
||
Total oil and gas properties, net |
14,439 |
|
|
14,445 |
|
||
Other property and equipment, net |
1,584 |
|
|
1,632 |
|
||
Operating lease right of use assets |
197 |
|
|
280 |
|
||
|
261 |
|
|
261 |
|
||
Derivatives |
3 |
|
|
21 |
|
||
Other assets |
150 |
|
|
258 |
|
||
|
$ |
19,229 |
|
|
$ |
19,088 |
|
|
|
|
|
||||
LIABILITIES AND EQUITY |
|||||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
1,030 |
|
|
$ |
1,411 |
|
Interest payable |
35 |
|
|
53 |
|
||
Income taxes payable |
4 |
|
|
3 |
|
||
Current portion of long-term debt |
140 |
|
|
450 |
|
||
Derivatives |
234 |
|
|
12 |
|
||
Operating leases |
100 |
|
|
136 |
|
||
Other |
363 |
|
|
431 |
|
||
Total current liabilities |
1,906 |
|
|
2,496 |
|
||
Long-term debt |
3,160 |
|
|
1,839 |
|
||
Derivatives |
66 |
|
|
8 |
|
||
Deferred income taxes |
1,366 |
|
|
1,393 |
|
||
Operating leases |
110 |
|
|
170 |
|
||
Other liabilities |
1,052 |
|
|
1,046 |
|
||
Equity |
11,569 |
|
|
12,136 |
|
||
|
$ |
19,229 |
|
|
$ |
19,088 |
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) |
|||||||||||||||
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Revenues and other income: |
|
|
|
|
|
|
|
||||||||
Oil and gas |
$ |
1,013 |
|
|
$ |
1,349 |
|
|
$ |
3,630 |
|
|
$ |
4,916 |
|
Sales of purchased commodities |
1,003 |
|
|
1,292 |
|
|
3,394 |
|
|
4,755 |
|
||||
Interest and other income (loss), net |
78 |
|
|
118 |
|
|
(67 |
) |
|
76 |
|
||||
Derivative gain (loss), net |
(240 |
) |
|
(95 |
) |
|
(281 |
) |
|
55 |
|
||||
Gain (loss) on disposition of assets, net |
2 |
|
|
— |
|
|
9 |
|
|
(477 |
) |
||||
|
1,856 |
|
|
2,664 |
|
|
6,685 |
|
|
9,325 |
|
||||
Costs and expenses: |
|
|
|
|
|
|
|
||||||||
Oil and gas production |
175 |
|
|
207 |
|
|
682 |
|
|
874 |
|
||||
Production and ad valorem taxes |
60 |
|
|
76 |
|
|
242 |
|
|
299 |
|
||||
Depletion, depreciation and amortization |
396 |
|
|
440 |
|
|
1,639 |
|
|
1,711 |
|
||||
Purchased commodities |
1,035 |
|
|
1,288 |
|
|
3,633 |
|
|
4,472 |
|
||||
Exploration and abandonments |
12 |
|
|
11 |
|
|
47 |
|
|
58 |
|
||||
General and administrative |
64 |
|
|
78 |
|
|
244 |
|
|
324 |
|
||||
Accretion of discount on asset retirement obligations |
2 |
|
|
3 |
|
|
9 |
|
|
10 |
|
||||
Interest |
36 |
|
|
34 |
|
|
129 |
|
|
121 |
|
||||
Other |
48 |
|
|
58 |
|
|
321 |
|
|
448 |
|
||||
|
1,828 |
|
|
2,195 |
|
|
6,946 |
|
|
8,317 |
|
||||
Income (loss) before income taxes |
28 |
|
|
469 |
|
|
(261 |
) |
|
1,008 |
|
||||
Income tax benefit (provision) |
15 |
|
|
(108 |
) |
|
61 |
|
|
(235 |
) |
||||
Net income (loss) attributable to common stockholders |
$ |
43 |
|
|
$ |
361 |
|
|
$ |
(200 |
) |
|
$ |
773 |
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share attributable to common
|
|
|
|
|
|
|
|
||||||||
Basic |
$ |
0.26 |
|
|
$ |
2.16 |
|
|
$ |
(1.21 |
) |
|
$ |
4.60 |
|
Diluted |
$ |
0.26 |
|
|
$ |
2.16 |
|
|
$ |
(1.21 |
) |
|
$ |
4.59 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic and diluted weighted average shares outstanding |
165 |
|
|
166 |
|
|
165 |
|
|
167 |
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) |
|||||||||||||||
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
||||||||
Net income (loss) |
$ |
43 |
|
|
$ |
361 |
|
|
$ |
(200 |
) |
|
$ |
773 |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
||||||||
Depletion, depreciation and amortization |
396 |
|
|
440 |
|
|
1,639 |
|
|
1,711 |
|
||||
Impairment of inventory and other property and equipment |
2 |
|
|
3 |
|
|
3 |
|
|
38 |
|
||||
Exploration expenses, including dry holes |
2 |
|
|
3 |
|
|
11 |
|
|
8 |
|
||||
Deferred income taxes |
(16 |
) |
|
113 |
|
|
(52 |
) |
|
240 |
|
||||
(Gain) loss on disposition of assets, net |
(2 |
) |
|
— |
|
|
(9 |
) |
|
477 |
|
||||
Loss on early extinguishment of debt |
— |
|
|
— |
|
|
27 |
|
|
— |
|
||||
Accretion of discount on asset retirement obligations |
2 |
|
|
3 |
|
|
9 |
|
|
10 |
|
||||
Interest expense |
17 |
|
|
5 |
|
|
51 |
|
|
9 |
|
||||
Derivative-related activity |
196 |
|
|
108 |
|
|
325 |
|
|
(8 |
) |
||||
Amortization of stock-based compensation |
18 |
|
|
19 |
|
|
72 |
|
|
100 |
|
||||
Investment in affiliate valuation adjustment |
(55 |
) |
|
(37 |
) |
|
64 |
|
|
(15 |
) |
||||
|
— |
|
|
(16 |
) |
|
42 |
|
|
45 |
|
||||
|
11 |
|
|
— |
|
|
80 |
|
|
— |
|
||||
Other |
31 |
|
|
9 |
|
|
125 |
|
|
105 |
|
||||
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
||||||||
Accounts receivable |
(62 |
) |
|
(180 |
) |
|
309 |
|
|
(227 |
) |
||||
Inventories |
(34 |
) |
|
35 |
|
|
(20 |
) |
|
(20 |
) |
||||
Other assets |
3 |
|
|
(18 |
) |
|
24 |
|
|
(33 |
) |
||||
Accounts payable |
(15 |
) |
|
(8 |
) |
|
(179 |
) |
|
(7 |
) |
||||
Interest payable |
18 |
|
|
29 |
|
|
(19 |
) |
|
— |
|
||||
Other liabilities |
(18 |
) |
|
(41 |
) |
|
(219 |
) |
|
(91 |
) |
||||
Net cash provided by operating activities |
537 |
|
|
828 |
|
|
2,083 |
|
|
3,115 |
|
||||
Net cash used in investing activities |
(326 |
) |
|
(533 |
) |
|
(1,668 |
) |
|
(2,447 |
) |
||||
Net cash provided by (used in) financing activities |
(101 |
) |
|
(103 |
) |
|
381 |
|
|
(788 |
) |
||||
Net increase (decrease) in cash, cash equivalents and restricted cash |
110 |
|
|
192 |
|
|
796 |
|
|
(120 |
) |
||||
Cash, cash equivalents and restricted cash, beginning of period |
1,391 |
|
|
513 |
|
|
705 |
|
|
825 |
|
||||
Cash, cash equivalents and restricted cash, end of period |
$ |
1,501 |
|
|
$ |
705 |
|
|
$ |
1,501 |
|
|
$ |
705 |
|
UNAUDITED SUMMARY PRODUCTION, PRICE AND MARGIN DATA |
|||||||||||||||
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Average Daily Sales Volume: |
|
|
|
|
|
|
|
||||||||
Oil (Bbls) |
204,455 |
|
|
220,326 |
|
|
210,641 |
|
|
212,353 |
|
||||
Natural gas liquids ("NGLs") (Bbls) |
85,788 |
|
|
80,159 |
|
|
85,728 |
|
|
72,323 |
|
||||
Gas (Mcf) |
445,439 |
|
|
377,268 |
|
|
425,307 |
|
|
365,055 |
|
||||
Total (BOE) |
364,482 |
|
|
363,364 |
|
|
367,253 |
|
|
345,518 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Average Price: |
|
|
|
|
|
|
|
||||||||
Oil per Bbl |
$ |
40.94 |
|
|
$ |
56.01 |
|
|
$ |
37.24 |
|
|
$ |
53.77 |
|
NGLs per Bbl |
$ |
18.51 |
|
|
$ |
18.60 |
|
|
$ |
15.62 |
|
|
$ |
19.33 |
|
Gas per Mcf |
$ |
2.37 |
|
|
$ |
2.21 |
|
|
$ |
1.73 |
|
|
$ |
1.79 |
|
Total per BOE |
$ |
30.22 |
|
|
$ |
40.36 |
|
|
$ |
27.01 |
|
|
$ |
38.98 |
|
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Margin Data ($ per BOE): |
|
|
|
|
|
|
|
||||||||
Average price |
$ |
30.22 |
|
|
$ |
40.36 |
|
|
$ |
27.01 |
|
|
$ |
38.98 |
|
Production costs |
(5.22 |
) |
|
(6.20 |
) |
|
(5.07 |
) |
|
(6.93 |
) |
||||
Production and ad valorem taxes |
(1.79 |
) |
|
(2.28 |
) |
|
(1.81 |
) |
|
(2.38 |
) |
||||
|
$ |
23.21 |
|
|
$ |
31.88 |
|
|
$ |
20.13 |
|
|
$ |
29.67 |
|
UNAUDITED SUPPLEMENTARY EARNINGS PER SHARE INFORMATION
(in millions)
The Company uses the two-class method of calculating basic and diluted earnings per share. Under the two-class method of calculating earnings per share, generally acceptable accounting principles ("GAAP") provide that share-based awards with guaranteed dividend or distribution participation rights qualify as "participating securities" during their vesting periods. During periods in which the Company realizes net income attributable to common shareholders, the Company's basic net income per share attributable to common shareholders is computed as (i) net income attributable to common stockholders, (ii) less participating share-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 the reallocation of participating earnings, if any, (iii) divided by weighted average diluted shares outstanding. During periods in which the Company realizes a net loss attributable to common stockholders, securities or other contracts to issue common stock would be dilutive to loss per share; therefore, conversion into common stock is assumed not to occur.
The Company's net income (loss) attributable to common stockholders is reconciled to basic and diluted net income (loss) attributable to common stockholders as follows:
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Net income (loss) attributable to common stockholders |
$ |
43 |
|
|
$ |
361 |
|
|
$ |
(200 |
) |
|
$ |
773 |
|
Participating share-based basic earnings |
— |
|
|
(2 |
) |
|
— |
|
|
(3 |
) |
||||
Basic and diluted net income (loss) attributable to common stockholders |
$ |
43 |
|
|
$ |
359 |
|
|
$ |
(200 |
) |
|
$ |
770 |
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted weighted average shares outstanding |
165 |
|
|
166 |
|
|
165 |
|
|
167 |
|
||||
UNAUDITED SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(in millions)
EBITDAX and discretionary cash flow ("DCF") (as defined below) are presented herein, and reconciled to the GAAP measures of net income (loss) and net cash provided by operating activities, because of their wide acceptance by the investment community as financial indicators of a company's ability to internally fund exploration and development activities and to service or incur debt. The Company also views the non-GAAP measures of EBITDAX and DCF as useful tools for comparisons of the Company's financial indicators with those of peer companies that follow the full cost method of accounting. EBITDAX and DCF should not be considered as alternatives to net income (loss) or net cash provided by operating activities, as defined by GAAP.
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Net income (loss) |
$ |
43 |
|
|
$ |
361 |
|
|
$ |
(200 |
) |
|
$ |
773 |
|
Depletion, depreciation and amortization |
396 |
|
|
440 |
|
|
1,639 |
|
|
1,711 |
|
||||
Exploration and abandonments |
12 |
|
|
11 |
|
|
47 |
|
|
58 |
|
||||
Impairment of inventory and other property and equipment |
2 |
|
|
3 |
|
|
3 |
|
|
38 |
|
||||
Accretion of discount on asset retirement obligations |
2 |
|
|
3 |
|
|
9 |
|
|
10 |
|
||||
Interest expense |
36 |
|
|
34 |
|
|
129 |
|
|
121 |
|
||||
Income tax (benefit) provision |
(15 |
) |
|
108 |
|
|
(61 |
) |
|
235 |
|
||||
(Gain) loss on disposition of assets |
(2 |
) |
|
— |
|
|
(9 |
) |
|
477 |
|
||||
Loss on early extinguishment of debt |
— |
|
|
— |
|
|
27 |
|
|
— |
|
||||
Derivative-related activity |
196 |
|
|
108 |
|
|
325 |
|
|
(8 |
) |
||||
Amortization of stock-based compensation |
16 |
|
|
19 |
|
|
67 |
|
|
74 |
|
||||
Investment in affiliate valuation adjustment |
(55 |
) |
|
(37 |
) |
|
64 |
|
|
(15 |
) |
||||
|
— |
|
|
(16 |
) |
|
42 |
|
|
45 |
|
||||
|
11 |
|
|
— |
|
|
80 |
|
|
— |
|
||||
Restructuring charges (including stock-based compensation) |
4 |
|
|
— |
|
|
79 |
|
|
167 |
|
||||
Other |
31 |
|
|
9 |
|
|
125 |
|
|
105 |
|
||||
EBITDAX before restructuring charges |
677 |
|
|
1,043 |
|
|
2,366 |
|
|
3,791 |
|
||||
Restructuring charges (excluding stock-based compensation) |
(2 |
) |
|
— |
|
|
(74 |
) |
|
(141 |
) |
||||
EBITDAX (a) |
675 |
|
|
1,043 |
|
|
2,292 |
|
|
3,650 |
|
||||
Cash interest expense |
(19 |
) |
|
(29 |
) |
|
(78 |
) |
|
(112 |
) |
||||
Current income tax benefit (provision) |
(1 |
) |
|
5 |
|
|
9 |
|
|
5 |
|
||||
Discretionary cash flow (b) |
655 |
|
|
1,019 |
|
|
2,223 |
|
|
3,543 |
|
||||
Cash exploration expense |
(10 |
) |
|
(8 |
) |
|
(36 |
) |
|
(50 |
) |
||||
Changes in operating assets and liabilities |
(108 |
) |
|
(183 |
) |
|
(104 |
) |
|
(378 |
) |
||||
Net cash provided by operating activities |
$ |
537 |
|
|
$ |
828 |
|
|
$ |
2,083 |
|
|
$ |
3,115 |
|
_____________ |
|
(a) |
"EBITDAX" represents earnings before depletion, depreciation and amortization expense; exploration and abandonments; impairment of inventory and other property and equipment; accretion of discount on asset retirement obligations; interest expense; income taxes; net (gain) loss on the disposition of assets; loss on early extinguishment of debt; noncash derivative related activity; amortization of stock-based compensation; noncash valuation adjustments on investments, contingent consideration and deficiency fee obligations; noncash restructuring charges; and other noncash items. |
(b) |
Discretionary cash flow equals cash flows from operating activities before changes in operating assets and liabilities and cash exploration expense. |
UNAUDITED SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (continued)
(in millions, except per share data)
Adjusted income attributable to common stockholders excluding noncash mark-to-market ("MTM") adjustments and unusual items are presented in this earnings release and reconciled to the Company's net income attributable to common stockholders (determined in accordance with GAAP), as the Company believes these non-GAAP financial measures reflect an additional way of viewing aspects of the Company's business that, when viewed together with its GAAP financial results, provide a more complete understanding of factors and trends affecting its historical financial performance and future operating results, greater transparency of underlying trends and greater comparability of results across periods. In addition, management believes that these non-GAAP financial measures may enhance investors' ability to assess the Company's historical and future financial performance. These non-GAAP financial measures are not intended to be a substitute for the comparable GAAP financial measure and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP. Noncash MTM adjustments and unusual items may recur in future periods; however, the amount and frequency can vary significantly from period to period.
The Company's net income attributable to common stockholders as determined in accordance with GAAP is reconciled to income adjusted for noncash MTM adjustments including (i) the Company's derivative positions and (ii) the Company's equity investment in ProPetro Holding Corp. ("ProPetro"), and unusual items is as follows:
|
|
|
Three Months Ended
|
||||||
|
Ref |
|
After-tax
|
|
Per Diluted
|
||||
Net income attributable to common stockholders |
|
|
$ |
43 |
|
|
$ |
0.26 |
|
Noncash MTM adjustments: |
|
|
|
|
|
||||
Derivative loss, net ( |
|
|
153 |
|
|
0.92 |
|
||
ProPetro stock gain ( |
|
|
(43 |
) |
|
(0.26 |
) |
||
Adjusted income excluding noncash MTM adjustments |
|
|
153 |
|
|
0.92 |
|
||
Unusual items: |
|
|
|
|
|
||||
COVID-19 related charges ( |
(a) |
|
15 |
|
|
0.09 |
|
||
Parsley transaction costs ( |
(b) |
|
8 |
|
|
0.05 |
|
||
2020 corporate restructuring ( |
(c) |
|
3 |
|
|
0.02 |
|
||
Gain on disposition of assets ( |
|
|
(2 |
) |
|
(0.01 |
) |
||
Adjusted income excluding noncash MTM adjustments and unusual items |
|
|
$ |
177 |
|
|
$ |
1.07 |
|
_____________ | |
(a) |
As a result of changes to the Company's drilling plans caused by the COVID-19 pandemic during 2020, the Company recognized (i) an |
(b) |
Represents legal, accounting and other transactional costs incurred in connection with the Parsley Energy transaction. |
(c) |
Represents employee-related charges associated with the Company's 2020 corporate restructuring, including |
UNAUDITED SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (continued)
(in millions)
Free cash flow ("FCF") is a non-GAAP financial measure. As used by the Company, FCF is defined as net cash provided by operating activities, adjusted for changes in operating assets and liabilities, less capital expenditures. The Company believes this non-GAAP measure is a financial indicator of the Company’s ability to internally fund acquisitions, debt maturities, dividends and share repurchases after capital expenditures.
|
Three Months Ended
|
|
Twelve Months Ended
|
||||
Net cash provided by operating activities |
$ |
537 |
|
|
$ |
2,083 |
|
Changes in operating assets and liabilities |
108 |
|
|
104 |
|
||
Less: Capital expenditures (a) |
(351 |
) |
|
(1,498 |
) |
||
Free cash flow |
$ |
294 |
|
|
$ |
689 |
|
_____________ | |
(a) |
Capital expenditures are calculated as follows: |
|
Three Months Ended
|
|
Twelve Months Ended
|
||||
Costs incurred |
$ |
468 |
|
|
$ |
1,573 |
|
Less: Excluded items (a) |
(132 |
) |
|
(157 |
) |
||
Adjusted costs incurred |
336 |
|
|
1,416 |
|
||
Plus: Other property, plant and equipment capital (b) |
15 |
|
|
82 |
|
||
Capital expenditures |
$ |
351 |
|
|
$ |
1,498 |
|
_____________ | |
(a) |
Comprised of acquisition costs, asset retirement obligations and geological and geophysical general and administrative costs. |
(b) |
Includes other property plant and equipment additions related to water infrastructure, well services and vehicles. |
These positions include contracts assumed by the Company through the Company's merger with Parsley Energy, Inc. on |
|||||||||||||||
|
2021 |
|
Year Ending
|
||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
|||||||
Average daily oil production associated with derivatives (Bbl): |
|
|
|
|
|
|
|
|
|
||||||
Brent swap contracts: |
|
|
|
|
|
|
|
|
|
||||||
Volume |
|
88,400 |
|
|
|
102,000 |
|
|
17,000 |
|
|
17,000 |
|
|
— |
Price |
$ |
46.47 |
|
|
$ |
46.47 |
|
$ |
44.45 |
|
$ |
44.45 |
|
$ |
— |
MEH swap contracts: |
|
|
|
|
|
|
|
|
|
||||||
Volume |
|
46,800 |
|
|
|
54,000 |
|
|
43,000 |
|
|
43,000 |
|
|
4,932 |
Price |
$ |
41.85 |
|
|
$ |
41.85 |
|
$ |
40.52 |
|
$ |
40.52 |
|
$ |
43.81 |
|
|
|
|
|
|
|
|
|
|
||||||
Volume |
|
4,333 |
|
|
|
5,000 |
|
|
5,000 |
|
|
5,000 |
|
|
— |
Price |
$ |
40.50 |
|
|
$ |
40.50 |
|
$ |
40.50 |
|
$ |
40.50 |
|
$ |
— |
Brent call contracts sold: |
|
|
|
|
|
|
|
|
|
||||||
Volume (a) |
|
20,000 |
|
|
|
20,000 |
|
|
20,000 |
|
|
20,000 |
|
|
— |
Price |
$ |
69.74 |
|
|
$ |
69.74 |
|
$ |
69.74 |
|
$ |
69.74 |
|
$ |
— |
Brent collar contracts with short puts: |
|
|
|
|
|
|
|
|
|
||||||
Volume |
|
90,000 |
|
|
|
90,000 |
|
|
90,000 |
|
|
90,000 |
|
|
37,000 |
Price: |
|
|
|
|
|
|
|
|
|
||||||
Ceiling |
$ |
50.74 |
|
|
$ |
50.74 |
|
$ |
50.74 |
|
$ |
50.74 |
|
$ |
61.29 |
Floor |
$ |
45.11 |
|
|
$ |
45.11 |
|
$ |
45.11 |
|
$ |
45.11 |
|
$ |
47.57 |
Short put |
$ |
35.07 |
|
|
$ |
35.07 |
|
$ |
35.07 |
|
$ |
35.07 |
|
$ |
37.30 |
MEH collar contracts with short puts: |
|
|
|
|
|
|
|
|
|
||||||
Volume |
|
17,680 |
|
|
|
20,187 |
|
|
9,446 |
|
|
9,446 |
|
|
— |
Price: |
|
|
|
|
|
|
|
|
|
||||||
Ceiling |
$ |
59.44 |
|
|
$ |
59.39 |
|
$ |
51.29 |
|
$ |
51.29 |
|
$ |
— |
Floor |
$ |
49.34 |
|
|
$ |
49.30 |
|
$ |
41.55 |
|
$ |
41.55 |
|
$ |
— |
Short put |
$ |
39.34 |
|
|
$ |
39.30 |
|
$ |
31.55 |
|
$ |
31.55 |
|
$ |
— |
Brent collar contracts: |
|
|
|
|
|
|
|
|
|
||||||
Volume |
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
10,000 |
Price: |
|
|
|
|
|
|
|
|
|
||||||
Ceiling |
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
60.32 |
Floor |
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
50.00 |
Average daily gas production associated with derivatives (MMBtu): |
|
|
|
|
|
|
|
|
|
||||||
NYMEX swap contracts: |
|
|
|
|
|
|
|
|
|
||||||
Volume |
|
127,222 |
|
|
|
100,000 |
|
|
100,000 |
|
|
100,000 |
|
|
— |
Price |
$ |
2.66 |
|
|
$ |
2.68 |
|
$ |
2.68 |
|
$ |
2.68 |
|
$ |
— |
ICE DUTCH TTF swap contracts: |
|
|
|
|
|
|
|
|
|
||||||
Volume |
|
30,000 |
|
|
|
30,000 |
|
|
30,000 |
|
|
30,000 |
|
|
— |
Price |
$ |
5.07 |
|
|
$ |
5.07 |
|
$ |
5.07 |
|
$ |
5.07 |
|
$ |
— |
WAHA swap contracts: |
|
|
|
|
|
|
|
|
|
||||||
Volume |
|
101,183 |
|
|
|
116,484 |
|
|
116,304 |
|
|
116,304 |
|
|
4,932 |
Price |
$ |
2.36 |
|
|
$ |
2.36 |
|
$ |
2.36 |
|
$ |
2.36 |
|
$ |
2.46 |
NYMEX collar contracts: |
|
|
|
|
|
|
|
|
|
||||||
Volume |
|
150,000 |
|
|
|
200,000 |
|
|
200,000 |
|
|
200,000 |
|
|
— |
Price: |
|
|
|
|
|
|
|
|
|
||||||
Ceiling |
$ |
3.15 |
|
|
$ |
3.18 |
|
$ |
3.18 |
|
$ |
3.18 |
|
$ |
— |
Floor |
$ |
2.50 |
|
|
$ |
2.56 |
|
$ |
2.56 |
|
$ |
2.56 |
|
$ |
— |
Basis swap contracts: |
|
|
|
|
|
|
|
|
|
||||||
|
|
10,000 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Price differential |
$ |
(1.46 |
) |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
_____________ | |
(a) |
The referenced call contracts were sold in exchange for higher ceiling prices on certain 2020 collar contracts. |
(b) |
The referenced basis swap contracts locks-in the basis differential between the index price at which the Company sells its |
UNAUDITED SUPPLEMENTAL INFORMATION (continued)
Marketing derivatives. The Company's marketing derivatives reflect two long-term marketing contracts that were entered in
|
|||||||
|
Three Months Ended
|
|
Twelve Months Ended
|
||||
Noncash changes in fair value: |
|
|
|
||||
Oil derivative loss, net |
$ |
(199 |
) |
|
$ |
(204 |
) |
Gas derivative gain (loss), net |
15 |
|
|
(9 |
) |
||
Marketing derivative loss, net |
(12 |
) |
|
(112 |
) |
||
Total noncash derivative loss, net |
(196 |
) |
|
(325 |
) |
||
|
|
|
|
||||
Net cash receipts (payments) on settled derivative instruments: |
|
|
|
||||
Oil derivative receipts (payments) (a) |
(44 |
) |
|
69 |
|
||
Gas derivative payments (b) |
— |
|
|
(3 |
) |
||
Interest rate derivative payments |
— |
|
|
(22 |
) |
||
Total cash receipts (payments) on settled derivative instruments, net |
(44 |
) |
|
44 |
|
||
Total derivative loss, net |
$ |
(240 |
) |
|
$ |
(281 |
) |
_____________ | |
(a) |
Includes the effect of liquidating certain of the Company's 2020 and 2021 Brent collar contracts with short puts for cash payments of |
(b) |
Includes the effect of liquidating certain of the Company's 2021 NYMEX swap contracts for cash receipts of |
|
||
|
|
|
Oil (MBbls): |
|
|
Balance as of |
603,750 |
|
Revisions of previous estimates |
(68,300 |
) |
Purchases of minerals-in-place |
670 |
|
Discoveries and extensions |
111,239 |
|
Production |
(77,095 |
) |
Sales of minerals-in-place |
(1,480 |
) |
Balance as of |
568,784 |
|
Natural Gas Liquids (MBbls): |
|
|
Balance as of |
281,983 |
|
Revisions of previous estimates |
73,107 |
|
Purchases of minerals-in-place |
324 |
|
Discoveries and extensions |
55,952 |
|
Production |
(31,376 |
) |
Sales of minerals-in-place |
(803 |
) |
Balance as of |
379,187 |
|
Natural Gas (MMcf): |
|
|
Balance as of |
1,499,513 |
|
Revisions of previous estimates |
342,720 |
|
Purchases of minerals-in-place |
1,667 |
|
Discoveries and extensions |
267,497 |
|
Production (b) |
(166,863 |
) |
Sales of minerals-in-place |
(4,434 |
) |
Balance as of |
1,940,100 |
|
Equivalent Barrels (MBOE): |
|
|
Balance as of |
1,135,652 |
|
Revisions of previous estimates (a) |
61,927 |
|
Purchases of minerals-in-place |
1,272 |
|
Discoveries and extensions |
211,774 |
|
Production (b) |
(136,282 |
) |
Sales of minerals-in-place |
(3,022 |
) |
Balance as of |
1,271,321 |
|
_____________ | |
(a) |
Revisions of previous estimates includes 83 MMBOEs of negative price revisions and 145 MMBOEs of positive technical revisions. |
(b) |
Production includes 1.9 MMBOE related to field fuel. |
UNAUDITED SUPPLEMENTAL INFORMATION PROVED RESERVES (continued) |
|||
|
Twelve Months Ended
|
||
|
(in millions) |
||
Costs incurred for oil and gas producing activities: |
|
||
Property acquisition costs: |
|
||
Proved |
$ |
— |
|
Unproved |
14 |
|
|
|
14 |
|
|
Exploration costs |
1,172 |
|
|
Development costs |
387 |
|
|
Total costs incurred (a) |
$ |
1,573 |
|
|
|
||
Reserve replacement percentage (b) |
202 |
% |
|
|
|
||
Drillbit reserve replacement percentage (c) |
262 |
% |
|
|
|
||
Finding and development costs per BOE of proved reserves added (d) |
$ |
5.72 |
|
|
|
||
Drillbit finding and development costs per BOE of proved reserves added (e) |
$ |
4.37 |
|
_____________ | |
(a) |
Costs incurred includes |
(b) |
The summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates, purchases of minerals-in-place and discoveries and extensions divided by annual production of oil, NGLs and gas, on a BOE basis. |
(c) |
The summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates (excluding price revisions) and discoveries and extensions divided by annual production of oil, NGLs and gas, on a BOE basis. |
(d) |
Total costs incurred divided by the summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates, purchases of minerals-in-place and discoveries and extensions. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred. |
(e) |
The summation of exploration and development costs incurred divided by the summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates (excluding price revisions) and discoveries and extensions. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210223006119/en/
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