Pioneer Natural Resources Reports Fourth Quarter and Full Year 2023 Financial and Operating Results
Pioneer Natural Resources Company (PXD) reported strong financial results for Q4 and full year 2023. Net income was $1.3 billion for Q4 and $4.9 billion for the year. Full year oil production exceeded guidance at 372 MBOPD, generating free cash flow of $4.1 billion. The Company maintained a strong balance sheet with $2.2 billion liquidity. Pioneer declared a quarterly dividend of $2.56 per share and expects a 2024 capital budget of $4.2-$4.6 billion.
The reported net income of $1.3 billion for the fourth quarter and $4.9 billion for the full year by Pioneer Natural Resources Company reflects a robust financial performance, particularly noting the per-share figures which stand at $5.28 and $20.21 respectively. The exclusion of noncash mark-to-market adjustments in their non-GAAP adjusted income highlights the company's efforts to provide a clearer picture of its operational profitability, a common practice among firms to aid investors in understanding core earnings.
Furthermore, the free cash flow generation of $1.2 billion for the quarter and $4.1 billion for the year is a critical indicator of financial health, as it represents the cash a company generates after accounting for capital expenditures. This can be used for dividends, share repurchases, or debt reduction. Pioneer's declaration of a $2.56 per share dividend for the first quarter of 2024, which includes a base and variable component, is indicative of a shareholder-friendly capital return policy that can be attractive to investors seeking income in addition to capital gains.
Pioneer's operational performance, particularly in the Midland Basin, is noteworthy with the placement of 482 horizontal wells in 2023. The focus on longer-lateral wells, which yield higher internal rates of return (35% higher than shorter laterals), signifies an effective strategy to enhance resource extraction efficiency and reduce costs. This is a significant development in the oil and gas industry, where cost management and operational efficiency are paramount, especially in a volatile price environment.
The company's transition to electric or dual-fuel powered completions fleets and the addition of a fourth simulfrac fleet are progressive steps towards operational efficiency and environmental stewardship. These initiatives not only improve cost structures but also align with growing investor interest in environmental, social and governance (ESG) factors. Pioneer's 2023 Sustainability Report will likely be scrutinized for its ESG commitments, an increasingly important aspect for investors.
The capital expenditures of $4.4 billion for 2023, which is below the bottom end of the original guidance, combined with the higher than expected oil and total production, suggest Pioneer's operational excellence and cost discipline. The projected capital budget for 2024, which is expected to be funded from operating cash flow, indicates the company's confidence in maintaining a strong balance sheet and liquidity position. The emphasis on balance sheet strength is crucial in the energy sector, where companies must navigate cyclical commodity prices and invest strategically in growth and sustainability initiatives.
The reported proved reserves addition and the drillbit reserve replacement ratio of 150% are key metrics for the long-term sustainability of production. With 90% of the reserves being proved developed, the company is well-positioned to continue its production momentum. The drillbit finding and development cost of $11.48 per BOE is a competitive figure that underscores the company's cost-effective resource development capabilities.
02/22/2024 - 08:10 AM
DALLAS --(BUSINESS WIRE)--
Pioneer Natural Resources Company (NYSE:PXD) ("Pioneer" or "the Company") today reported financial and operating results for the quarter and year ended December 31, 2023. Pioneer reported fourth quarter net income attributable to common shareholders of $1.3 billion $5.28 $1.3 billion $5.26 $2.3 billion $4.9 billion $20.21 $8.4 billion
Highlights
Full year 2023 oil production averaged 372 thousand barrels of oil per day (MBOPD), at the top end of original 2023 guidance and in the upper half of the most recently updated 2023 guidance
Full year 2023 total production averaged 715 thousand barrels of oil equivalent per day (MBOEPD), above the top end of both original and most recently updated 2023 guidance
Full year 2023 drilling, completions, facilities and water infrastructure capital expenditures totaled $4.4 billion
Generated strong fourth quarter and full year 2023 free cash flow1 of $1.2 billion $4.1 billion
Generated a return on capital employed2 of 19% during 2023
Returned $3.9 billion
Declared a quarterly base-plus-variable dividend of $2.56
Financial Highlights
Pioneer maintains a strong balance sheet, with net debt of $4.6 billion $2.2 billion $240 million $2.0 billion
During the fourth quarter, the Company's total capital expenditures3 totaled $1.1 billion 3 totaled $4.6 billion
Cash flow from operating activities during the fourth quarter and full year 2023 was $2.3 billion $8.4 billion 1 of $1.2 billion $4.1 billion
For the first quarter of 2024, the Company's Board of Directors has declared a quarterly base-plus-variable dividend of $2.56 per share, comprised of a $1.25 $1.31 4.4% 4 . Pursuant to the merger agreement with Exxon Mobil Corporation ("ExxonMobil"), any quarterly dividends declared subsequent to the first quarter of 2024 are expected to be comprised solely of the $1.25 5 .
Fourth Quarter Financial Results
For the fourth quarter of 2023, the average realized price for oil was $78.47 $23.25 $2.35
Production costs, including taxes, averaged $10.54 $11.30 $24 million $202 million $102 million $39 million $105 million $37 million $183 million 22% for the quarter.
Operations Update
Pioneer continued to deliver strong operational performance in the Midland Basin, which led to the Company placing 482 horizontal wells on production during 2023, including 135 horizontal wells placed on production during the fourth quarter.
More than 125 wells with lateral lengths of 15,000 feet or greater were placed on production in 2023. These longer-lateral wells have contributed to Pioneer’s strong results. The development of wells with lateral lengths in excess of 15,000 feet provides significant capital savings on a per foot basis and is expected to generate an internal rate of return (IRR) that is on average 35% higher than a comparable 10,000-foot lateral well. In total, the Company has over 1,000 future locations with 15,000-foot lateral lengths in its drilling inventory.
During the fourth quarter, Pioneer benefited from its utilization of three simulfrac fleets and two localized sand mines. During 2023, the Company transitioned 100% of its completions fleets to either electric or dual-fuel powered and progressed its electrification efforts through the successful execution of drilling and completions trials utilizing grid-supplied electricity. Additionally, Pioneer plans to add a fourth simulfrac fleet in the first half of 2024, providing further efficiencies and cost benefits.
During 2023, Pioneer’s operational teams delivered a sixth consecutive year of improved drilling and completions efficiencies. Extended laterals, utilization of simulfrac fleets and the transition of completions fleets from diesel-only fuel are a few examples of the many continuous improvement efforts that the Company's operational teams continue to progress.
2024 Outlook
The Company expects its 2024 capital budget3 to range between $4.2 billion $4.6 billion
Pioneer expects 2024 oil production of 384 to 392 MBOPD and total production of 750 to 766 MBOEPD.
Proved Reserves
The Company added proved reserves totaling 397 million barrels of oil equivalent (MMBOE) during 2023, excluding acquisitions and price revisions. These proved reserve additions equate to a drillbit reserve replacement ratio of 150% when compared to Pioneer's full year 2023 production of 264 MMBOE, including field fuel. The drillbit finding and development (F&D) cost was $11.48 $11.01
As of December 31, 2023, the Company's total proved reserves were estimated at 2,471 MMBOE, of which 90% are proved developed.
Environmental, Social & Governance (ESG)
Pioneer views sustainability as a multidisciplinary effort 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.
For more details, see Pioneer's 2023 Sustainability Report at www.pxd.com/sustainability .
Earnings Conference Call
Due to the pending merger with ExxonMobil, Pioneer will not host a conference call or webcast to discuss its results for the fourth quarter and year ended December 31, 2023.
About Pioneer
Pioneer is a large independent oil and gas exploration and production company, headquartered in Dallas, Texas , with operations in the United States . For more information, visit www.pxd.com .
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 the Company are subject to a number of risks and uncertainties that may cause the Company'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 armed conflict (including in Ukraine and the Middle East ) and related political instability on economic activity and oil and gas supply and demand; competition; the ability to obtain drilling, environmental and other permits and the timing thereof; the effect of future regulatory or legislative actions on Pioneer or the industry in which it operates, including potential changes to tax laws; the ability to obtain approvals from third parties and negotiate agreements with third parties on mutually acceptable terms; potential liability resulting from pending or future litigation; the costs, including the potential impact of cost increases due to inflation and supply chain disruptions, and results of development and operating activities; the impact of a widespread outbreak of an illness, such as the COVID-19 pandemic, on global and U.S. economic activity, oil and gas demand, and global and U.S. supply chains; the risk of new restrictions with respect to development activities, including potential changes to regulations resulting in limitations on the Company's ability to dispose of produced water; availability of equipment, services, resources and personnel required to perform the Company's development and operating activities; access to and availability of transportation, processing, fractionation, refining, storage and export facilities; Pioneer's ability to replace reserves, implement its business plans or complete its development activities as scheduled; the risk that the transaction between Pioneer and ExxonMobil may not be completed on anticipated terms and timing, or at all, including the risk of obtaining regulatory approvals; the possibility that any of the anticipated benefits of the transaction will not be realized or will not be realized within the expected time period; the risk that disruptions from the transaction will harm Pioneer's business, including current plans and operations and that management's time and attention will be diverted on transaction-related issues; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the transaction; litigation relating to the transaction against Pioneer and its directors; the Company's ability to achieve its emissions reductions, flaring and other ESG goals; access to and cost of capital; the financial strength of (i) counterparties to Pioneer's credit facility, (ii) issuers of Pioneer's investment securities and (iii) purchasers of Pioneer's oil, NGL and gas production and downstream sales of purchased commodities; uncertainties about estimates of reserves, identification of drilling locations and the ability to add proved reserves in the future; the assumptions underlying forecasts, including forecasts of production, operating cash flow, well costs, capital expenditures, rates of return, expenses, and cash flow from downstream purchases and sales of oil and gas, net of firm transportation commitments; tax rates; quality of technical data; environmental and weather risks, including the possible impacts of climate change on the Company's operations and demand for its products; cybersecurity risks; the risks associated with the ownership and operation of the Company's water services business and acts of war or terrorism. These and other risks are described in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 and other filings with the United States Securities and Exchange Commission. In addition, the Company may be subject to currently unforeseen risks that may have a materially adverse effect on it. The Company undertakes no duty to publicly update these statements except as required by law.
"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 proved developed finding and development cost per BOE," or "drillbit 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 2023, (ii) transfers from proved undeveloped reserves at year-end 2022 and (iii) technical revisions of previous estimates for proved developed reserves during 2023. Revisions of previous estimates exclude price revisions.
"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.
Footnote 1: Free cash flow is a non-GAAP financial measure. As used by the Company, free cash flow is defined as net cash provided by operating activities, adjusted for changes in operating assets and liabilities and certain after-tax ExxonMobil merger-related costs, less capital expenditures3 . See the supplemental schedules for a reconciliation of fourth quarter and full year 2023 free cash flow to the comparable GAAP number.
Footnote 2: Return on capital employed (ROCE) is a non-GAAP financial measure. As used by the Company, ROCE is net income adjusted for tax-effected noncash mark-to-market (MTM) adjustments, unusual items and interest expense divided by the summation of average total equity (adjusted for tax-effected noncash MTM adjustments, unusual items and interest expense) and average net debt. See reconciliation to comparable GAAP number in supplemental schedules.
Footnote 3: Excludes acquisitions, asset retirement obligations, capitalized interest, geological and geophysical G&A, information technology, corporate facilities and vehicles.
Footnote 4: Calculated by dividing the Company's annualized first quarter 2024 total dividend per share by the Company's closing share price on February 16, 2024.
Footnote 5: Future dividends are authorized and determined by the Company's Board of Directors in its sole discretion. Decisions regarding the payment of dividends are subject to a number of considerations at the time, including without limitation the Company's liquidity and capital resources, the Company's results of operations and anticipated future results of operations, the level of cash reserves the Company maintains to fund future capital expenditures or other needs, and other factors that the Board of Directors deems relevant, including restrictions set forth in the merger agreement with ExxonMobil. The Company can provide no assurance that dividends will be authorized or declared in the future or the amount of any future dividends.
Note: Estimates of future results are based on the Company's internal financial model prepared by management and used to assist in the management of its business. Pioneer's financial models are not prepared with a view to public disclosure or compliance with GAAP, any guidelines of the United States Securities and Exchange Commission or any other body. The financial models reflect numerous assumptions, in addition to those noted in this news release, with respect to general business, economic, market and financial conditions and other matters. These assumptions regarding future events are difficult, if not impossible to predict, and many are beyond Pioneer's control. Accordingly, there can be no assurance that the assumptions made by management in preparing the financial models will prove accurate. It is expected that there will be differences between actual and estimated or modeled results, and actual results may be materially greater or less than those contained in the Company's financial models.
PIONEER NATURAL RESOURCES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
December 31, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
240
$
1,032
Accounts receivable, net
1,590
1,853
Inventories
476
424
Investment in affiliate
139
172
Prepaids and other
160
245
Total current assets
2,605
3,726
Oil and gas properties, using the successful efforts method of accounting
49,172
44,473
Accumulated depletion, depreciation and amortization
(17,639
)
(14,843
)
Total oil and gas properties, net
31,533
29,630
Other property and equipment, net
1,656
1,658
Operating lease right-of-use assets
398
340
Goodwill
242
243
Other assets
179
143
$
36,613
$
35,740
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
2,449
$
2,637
Interest payable
48
33
Income taxes payable
40
63
Current portion of debt
28
779
Derivatives
53
44
Operating leases
175
125
Other
181
206
Total current liabilities
2,974
3,887
Long-term debt
4,807
4,125
Derivatives
76
96
Deferred income taxes
4,402
3,867
Operating leases
248
236
Other liabilities
935
988
Equity
23,171
22,541
$
36,613
$
35,740
PIONEER NATURAL RESOURCES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
Three Months Ended
Twelve Months Ended
2023
2022
2023
2022
Revenues and other income:
Oil and gas
$
3,386
$
3,516
$
12,989
$
16,310
Sales of purchased commodities
1,691
1,658
6,385
8,074
Interest and other income (loss), net
(21
)
61
39
119
Derivative gain (loss), net
160
(128
)
(75
)
(315
)
Gain on disposition of assets, net
1
1
24
106
5,217
5,108
19,362
24,294
Costs and expenses:
Oil and gas production
536
463
2,042
1,922
Production and ad valorem taxes
187
210
785
965
Depletion, depreciation and amortization
775
655
2,862
2,530
Purchased commodities
1,796
1,734
6,585
8,235
Exploration and abandonments
24
9
80
41
General and administrative
202
83
461
334
Accretion of discount on asset retirement obligations
4
4
16
15
Interest
39
28
153
128
Other
37
54
131
173
3,600
3,240
13,115
14,343
Income before income taxes
1,617
1,868
6,247
9,951
Income tax provision
(348
)
(387
)
(1,353
)
(2,106
)
Net income attributable to common shareholders
$
1,269
$
1,481
$
4,894
$
7,845
Net income per share attributable to common shareholders:
Basic
$
5.42
$
6.23
$
20.89
$
32.61
Diluted
$
5.28
$
5.98
$
20.21
$
31.13
Weighted average shares outstanding:
Basic
233
237
234
240
Diluted
240
247
242
252
PIONEER NATURAL RESOURCES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Three Months Ended
Twelve Months Ended
2023
2022
2023
2022
Cash flows from operating activities:
Net income
$
1,269
$
1,481
$
4,894
$
7,845
Adjustments to reconcile net income to net cash provided by operating activities:
Depletion, depreciation and amortization
775
655
2,862
2,530
Exploration expenses
—
1
2
7
Deferred income taxes
165
559
506
1,807
Gain on disposition of assets, net
(1
)
(1
)
(24
)
(106
)
(Gain) loss on early extinguishment of debt, net
—
(8
)
—
39
Accretion of discount on asset retirement obligations
4
4
16
15
Interest expense
2
3
11
10
Derivative-related activity
(181
)
(1
)
(12
)
(96
)
Amortization of share-based compensation
123
19
193
78
Investment valuation adjustments
37
(38
)
33
(54
)
Other
25
58
136
126
Changes in operating assets and liabilities:
Accounts receivable
258
82
259
(171
)
Inventories
16
(4
)
(57
)
(59
)
Other assets
(55
)
(180
)
(50
)
(277
)
Accounts payable
(124
)
(14
)
(250
)
(274
)
Interest payable
32
12
15
(20
)
Income taxes payable
(3
)
18
(23
)
18
Other liabilities
6
(48
)
(63
)
(70
)
Net cash provided by operating activities
2,348
2,598
8,448
11,348
Net cash used in investing activities
(1,180
)
(675
)
(4,713
)
(3,586
)
Net cash used in financing activities
(1,026
)
(2,213
)
(4,527
)
(10,614
)
Net increase (decrease) in cash, cash equivalents and restricted cash
142
(290
)
(792
)
(2,852
)
Cash, cash equivalents and restricted cash, beginning of period
98
1,322
1,032
3,884
Cash and cash equivalents, end of period
$
240
$
1,032
$
240
$
1,032
PIONEER NATURAL RESOURCES COMPANY
SUMMARY PRODUCTION, PRICE AND MARGIN DATA
Three Months Ended
Twelve Months Ended
2023
2022
2023
2022
Average Daily Sales Volumes:
Oil (Bbls)
380,550
350,608
372,127
351,964
Natural gas liquids ("NGLs") (Bbls)
196,332
165,533
181,864
160,294
Gas (Mcf)
1,011,900
872,589
964,433
825,085
Total (BOE)
745,532
661,573
714,730
649,773
Average Prices:
Oil per Bbl
$
78.47
$
83.53
$
77.03
$
95.66
NGLs per Bbl
$
23.25
$
27.67
$
24.35
$
37.67
Gas per Mcf
$
2.35
$
4.98
$
2.59
$
6.03
Total per BOE
$
49.37
$
57.76
$
49.79
$
68.77
Three Months Ended
Twelve Months Ended
2023
2022
2023
2022
Margin Data ($ per BOE):
Average price
$
49.37
$
57.76
$
49.79
$
68.77
Production costs
(7.82
)
(7.62
)
(7.81
)
(8.09
)
Production and ad valorem taxes
(2.72
)
(3.46
)
(3.02
)
(4.08
)
$
38.83
$
46.68
$
38.96
$
56.60
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTARY EARNINGS PER SHARE INFORMATION
(in millions, except per share data)
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 accepted 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 shareholders, (ii) less participating share-based earnings (iii) divided by weighted average basic shares outstanding. The Company's diluted net income per share attributable to common shareholders is computed as (i) basic net income attributable to common shareholders, (ii) plus the reallocation of participating earnings, if any, (iii) plus the after-tax interest expense associated with the Company's convertible senior notes that are assumed to be converted into shares (iv) divided by weighted average diluted shares outstanding. During periods in which the Company realizes a net loss attributable to common shareholders, securities or other contracts to issue common shares would be dilutive to loss per share; therefore, conversion into common shares is assumed not to occur.
The Company's net income attributable to common shareholders is reconciled to basic and diluted net income attributable to common shareholders as follows:
Three Months Ended
Twelve Months Ended
2023
2022
2023
2022
Net income attributable to common shareholders
$
1,269
$
1,481
$
4,894
$
7,845
Participating share-based earnings
(2
)
(4
)
(9
)
(15
)
Basic net income attributable to common shareholders
1,267
1,477
4,885
7,830
Adjustment to after-tax interest expense to reflect the dilutive impact attributable to convertible senior notes
—
1
3
6
Diluted net income attributable to common shareholders
$
1,267
$
1,478
$
4,888
$
7,836
Basic weighted average shares outstanding
233
237
234
240
Contingently issuable share-based compensation
1
—
1
—
Convertible senior notes dilution
6
10
7
12
Diluted weighted average shares outstanding
240
247
242
252
Net income per share attributable to common shareholders:
Basic
$
5.42
$
6.23
$
20.89
$
32.61
Diluted
$
5.28
$
5.98
$
20.21
$
31.13
PIONEER NATURAL RESOURCES COMPANY
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 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 or net cash provided by operating activities, as defined by GAAP.
Three Months Ended
Twelve Months Ended
2023
2022
2023
2022
Net income
$
1,269
$
1,481
$
4,894
$
7,845
Depletion, depreciation and amortization
775
655
2,862
2,530
Exploration and abandonments
24
9
80
41
Accretion of discount on asset retirement obligations
4
4
16
15
Interest expense
39
28
153
128
Income tax provision
348
387
1,353
2,106
Gain on disposition of assets, net
(1
)
(1
)
(24
)
(106
)
(Gain) loss on early extinguishment of debt, net
—
(8
)
—
39
Derivative-related activity
(181
)
(1
)
(12
)
(96
)
Amortization of share-based compensation
123
19
193
78
Investment valuation adjustments
37
(38
)
33
(54
)
Other
25
58
136
126
EBITDAX (a)
2,462
2,593
9,684
12,652
Cash interest expense
(37
)
(25
)
(142
)
(118
)
Current income tax provision (benefit)
(183
)
172
(847
)
(299
)
Discretionary cash flow (b)
2,242
2,740
8,695
12,235
Cash exploration expense
(24
)
(8
)
(78
)
(34
)
Changes in operating assets and liabilities
130
(134
)
(169
)
(853
)
Net cash provided by operating activities
$
2,348
$
2,598
$
8,448
$
11,348
_____________
(a)
"EBITDAX" represents earnings before depletion, depreciation and amortization expense; exploration and abandonments; accretion of discount on asset retirement obligations; interest expense; income taxes; net gain or loss on the disposition of assets; net gain or loss on early extinguishment of debt; noncash derivative-related activity; amortization of noncash share-based compensation; noncash valuation adjustments on investment in affiliate and short-term investments; 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.
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (continued)
(in millions, except per share data)
Adjusted income attributable to common shareholders 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 shareholders (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 shareholders as determined in accordance with GAAP is reconciled to income adjusted for noncash MTM adjustments, including (i) the Company's equity investment in ProPetro Holding Corp. ("ProPetro") and (ii) the Company's derivative positions, and unusual items is as follows:
Three Months Ended
Ref
After-tax
Amounts
Per Diluted
Share
Net income attributable to common shareholders
$
1,269
$
5.28
Noncash MTM adjustments:
ProPetro investment loss ($37 million
29
0.12
Derivative gain, net ($181 million
(141
)
(0.59
)
Adjusted income excluding noncash MTM adjustments
1,157
4.81
Unusual items:
ExxonMobil merger-related costs ($138 million
(a)
107
0.45
Net gain on settlement of convertible debt conversion option derivatives ($1 million
(1
)
—
Adjusted income excluding noncash MTM adjustments and unusual items
$
1,263
$
5.26
_____________
(a)
Represents costs associated with entering into the merger agreement with ExxonMobil including (i) certain employment-related costs relating to employees and (ii) banker fees, lawyer fees and other merger-related costs.
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (continued)
(in millions, except per share data)
Twelve Months Ended December 31, 2023
Ref
After-tax
Amounts
Per Diluted
Share
Net income attributable to common shareholders
$
4,894
$
20.21
Noncash MTM adjustments:
ProPetro investment loss, net ($33 million
26
0.11
Derivative gain, net ($12 million
(9
)
(0.04
)
Adjusted income excluding noncash MTM adjustments
4,911
20.28
Unusual items:
ExxonMobil merger-related costs ($138 million
(a)
107
0.44
Impairment of long-lived assets ($22 million
(b)
17
0.07
Net loss on settlement of convertible debt conversion option derivatives ($13 million
10
0.04
Gain on disposition of assets, net ($20 million
(c)
(16
)
(0.07
)
Adjusted income excluding noncash MTM adjustments and unusual items
$
5,029
$
20.76
_____________
(a)
Represents costs associated with entering into the merger agreement with ExxonMobil including (i) certain employment-related costs relating to employees and (ii) banker fees, lawyer fees and other merger-related costs.
(b)
Represents impairment expense related to certain unoccupied field offices.
(c)
Represents a net gain on nonmonetary transactions in which the Company exchanged ownership interests in certain developed and undeveloped properties in the Midland Basin with unaffiliated third parties.
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (continued)
(in millions)
Return on Capital Employed ("ROCE") is a non-GAAP financial measure. As used by the Company, ROCE is net income adjusted for tax-effected noncash MTM adjustments, unusual items and interest expense divided by the summation of average total equity (adjusted for tax effected noncash MTM adjustments, unusual items and interest expense) and average net debt. The Company believes ROCE is a good indicator of long-term performance, both absolute and relative to the Company's peers. ROCE is a measure of the profitability of the Company’s capital employed in its business compared with that of its peers.
Twelve Months Ended
After-tax Amounts
Net income
$
4,894
Noncash MTM adjustments:
ProPetro investment loss, net ($33 million
26
Derivative gain, net ($12 million
(9
)
Unusual items:
ExxonMobil merger-related costs ($138 million
107
Impairment of long-lived assets ($22 million
17
Net loss on settlement of convertible debt conversion option derivatives ($13 million
10
Gain on disposition of assets, net ($20 million
(16
)
Adjusted income excluding noncash MTM adjustments and unusual items
5,029
Interest expense ($153 million
119
ROCE earnings
$
5,148
As of December 31, 2023
Average total equity (a)
$
22,983
Average net debt (b)
4,234
Capital employed
$
27,217
ROCE percentage
19
%
_____________
(a)
Average total equity is calculated as the average current year adjusted total equity and prior year total equity as follows:
As of December 31,
2023
2022
Total equity
$
23,171
$
22,541
Less: Net income
(4,894
)
Plus: ROCE earnings
5,148
Adjusted total equity
$
23,425
Average total equity
$
22,983
(b)
Average net debt is calculated as follows:
As of December 31,
2023
2022
Current portion of long-term debt
$
28
$
779
Long-term debt
4,807
4,125
Less: Cash and cash equivalents
(240
)
(1,032
)
Net debt
$
4,595
$
3,872
Average net debt
$
4,234
PIONEER NATURAL RESOURCES COMPANY
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 and after-tax ExxonMobil merger-related costs (excluding share-based compensation), 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
$
2,348
$
8,448
Changes in operating assets and liabilities
(130
)
169
ExxonMobil merger-related costs, after tax (excluding share-based compensation)
47
47
Less: Capital expenditures (a)
(1,051
)
(4,553
)
Free cash flow
$
1,214
$
4,111
_____________
(a)
Capital expenditures are calculated as follows:
Three Months Ended
Twelve Months Ended
Costs incurred
$
1,155
$
4,882
Excluded items (a)
(139
)
(412
)
Other property, plant and equipment capital (b)
35
83
Capital expenditures
$
1,051
$
4,553
_____________
(a)
Comprised of proved and unproved acquisition costs (including those related to nonmonetary transactions), asset retirement obligations and geological and geophysical general and administrative costs.
(b)
Includes other property, plant and equipment additions related to water and power infrastructure.
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL INFORMATION
(in millions)
Derivative Positions as of December 31, 2023
Marketing derivatives . The Company's marketing derivatives reflect long-term marketing contracts whereby the Company agreed to purchase and simultaneously sell, at an oil terminal in Midland, Texas , (i) 50 thousand barrels of oil per day beginning January 1, 2021 and ending December 31, 2026, (ii) 40 thousand barrels of oil per day beginning May 1, 2022 and ending April 30, 2027 and (iii) 30 thousand barrels of oil per day beginning August 1, 2022 and ending July 31, 2027.
The price the Company pays to purchase the oil volumes under the purchase contracts is based on a Midland WTI price and the price the Company receives for the oil volumes sold is a weighted average sales price 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 long-term marketing contracts, the Company accounts for the contracts as derivative instruments not designated as hedges.
Conversion option derivatives . In May 2020, the Company issued $1.3 billion $28 million
Derivative Gain (Loss), Net
Three Months Ended
Twelve Months Ended
Noncash changes in fair value:
Marketing derivative gain, net
$
181
$
11
Convertible debt conversion option derivative gain, net
—
1
Total noncash derivative gain, net
181
12
Cash receipts (payments) on settled derivative instruments:
Convertible debt conversion option derivative receipts (payments), net
1
(13
)
Marketing derivative payments
(22
)
(74
)
Total cash payments on settled derivative instruments, net
(21
)
(87
)
Total derivative gain (loss), net
$
160
$
(75
)
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL INFORMATION
PROVED RESERVES
Oil
(MBbls)
NGLs
(MBbls)
Gas
(MMcf)
Total
(MBOE) (a)
Balance as of December 31, 2022
972,018
738,445
3,996,991
2,376,628
Production (b)
(135,826
)
(66,380
)
(372,617
)
(264,309
)
Revisions of previous estimates
(98,354
)
(33,100
)
2,703
(131,003
)
Extensions and discoveries
213,510
143,422
767,116
484,785
Sales of minerals-in-place
(434
)
(234
)
(1,306
)
(886
)
Purchases of minerals-in-place
3,708
991
5,281
5,579
Balance as of December 31, 2023
954,622
783,144
4,398,168
2,470,794
_____________
(a)
Revisions of previous estimates includes 43.0 MMBOE of negative price revisions and 88.0 MMBOE of negative technical revisions.
(b)
Production includes 20,599 MMcf related to field fuel.
Twelve Months Ended
Costs incurred for oil and gas producing activities (in millions):
Property acquisition costs:
Proved
$
191
Unproved
138
329
Exploration costs
3,817
Development costs
736
Total costs incurred (a)
$
4,882
Reserve replacement percentage (b)
136
%
Drillbit reserve replacement percentage (c)
150
%
Finding and development costs per BOE of proved reserves added (d)
$
13.59
Drillbit finding and development costs per BOE of proved reserves added (e)
$
11.48
Drillbit finding and development costs per BOE of proved developed reserves added (f)
$
11.01
_____________
(a)
Costs incurred include $37 million $46 million
(b)
The summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates, purchases of minerals-in-place and extensions and discoveries 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 extensions and discoveries 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 extensions and discoveries. 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 extensions and discoveries. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred.
(f)
The summation of exploration and development costs incurred (excluding additions to asset retirement obligations) divided by the summation of annual proved developed reserves, on a BOE basis, attributable to negative technical revisions of previous estimates (56.1 MMBOE), extensions and discoveries (447.4 MMBOE) and transfers from proved undeveloped reserves (18.7 MMBOE).
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Pioneer Natural Resources Company Contacts:
Investors
Media and Public Affairs
media@pxd.com
Source: Pioneer Natural Resources Company
What was Pioneer Natural Resources Company's (PXD) net income for the fourth quarter of 2023?
Pioneer reported a net income of $1.3 billion for the fourth quarter of 2023.
What was the total oil production for Pioneer Natural Resources Company (PXD) in 2023?
Pioneer's full year oil production in 2023 averaged 372 MBOPD.
What was the total capital expenditures for Pioneer Natural Resources Company (PXD) in 2023?
The Company's total capital expenditures for 2023 totaled $4.6 billion.
What was the declared quarterly dividend per share by Pioneer Natural Resources Company (PXD) for the first quarter of 2024?
Pioneer declared a quarterly dividend of $2.56 per share for the first quarter of 2024.
What is the expected 2024 capital budget range for Pioneer Natural Resources Company (PXD)?
Pioneer expects its 2024 capital budget to range between $4.2 billion to $4.6 billion.
