Pioneer Natural Resources today reported financial and operating results for the quarter ended September 30, 2022. Pioneer reported third quarter net income attributable to common stockholders of $2.0 billion, or $7.93 per diluted share. These results include the effects of noncash mark-to-market adjustments and certain other unusual items. Excluding these items, non-GAAP adjusted income for the third quarter was $1.9 billion, or $7.48 per diluted share. Cash flow from operating activities for the third quarter was $3.0 billion.

Highlights

• Generated strong third quarter free cash flow of $1.7 billion
• Based on third quarter results, declared a quarterly base-plus-variable dividend of $5.71 per share to be paid in December 2022
• Repurchased $500 million of shares during the third quarter
• Announced participation in wind and solar generation projects to increase use of renewable energy and reduce Scope 2 emissions

Chief Executive Officer Scott D. Sheffield stated, 
"Pioneer continues to execute on our investment framework that provides best-in-class capital returns to shareholders. This framework is expected to result in $7.5 billion of cash flow being returned to shareholders during 2022, including $26 per share in dividends and continued opportunistic share repurchases.

"To further enhance our top-tier free cash flow generation and return of capital, we have increased the return thresholds for wells to be included in our future development programs, which is expected to improve our program well productivity in 2023 and subsequent years, surpassing 2021 productivity levels. Additionally, our current 15,000-foot lateral program, which we plan to expand in 2023, is delivering improved returns through lower capital costs per lateral foot. With an inventory of more than twenty years of high-return wells, our improved 2023 development program is highly repeatable and will deliver affordable energy to the world, with some of the lowest emissions as a result of the Company’s high environmental standards."

Operations Update

Pioneer continues to deliver strong operational performance in the Midland Basin, enabling the Company to place 128 and 399 horizontal wells on production during the third quarter and the first nine months of the year, respectively.

The Company is increasing the return thresholds for wells to be included in future development programs, providing a substantial improvement in expected program well productivity and returns. With these changes, Pioneer expects future well productivity to surpass 2021 levels. Future returns and well productivity reflect optimized full-stack development, drilling extended lateral lengths and a reduction in drilling of delayed targets. The Company's deep inventory of high-return locations is expected to sustain Pioneer's development program for multiple decades.

The Company continues to see significant capital savings and higher returns from the development of wells with lateral lengths in excess of 15,000 feet. Pioneer's savings of approximately 15% per lateral foot on extended laterals results in internal rates of return that are 20% higher than that of a 10,000-foot lateral.

Drilling longer laterals, reducing drilling days per well and completing more feet per day, among other operational efficiency improvements, continue to benefit capital efficiency and dampen inflationary pressures.

2022 Outlook

The Company expects its 2022 total capital budget to range between $3.6 to $3.8 billion. Pioneer expects its capital program to be fully funded from 2022 cash flow of over $12 billion.

During 2022, the Company plans to operate an average of 22 to 24 horizontal drilling rigs in the Midland Basin, including a three-rig average program in the southern Midland Basin joint venture area. The 2022 capital program is expected to place 475 to 505 wells on production. Pioneer expects 2022 oil production of 350 to 365 thousand barrels of oil per day (MBOPD) and total production of 623 to 648 thousand barrels of oil equivalent per day (MBOEPD).

KeyFacts Energy: Pioneer Natural Resources US onshore country profile