Pioneer Natural Resources Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

pxd-20200630

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________

FORM 10-Q

______________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 1-13245

______________________________

PIONEER NATURAL RESOURCES COMPANY

(Exact name of Registrant as specified in its charter)

______________________________


Delaware						75-2702753
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

777 Hidden Ridge

Irving, Texas 75038

(Address of principal executive offices and zip code)

(972) 444-9001

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $.01 per share

PXD

New York Stock Exchange

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

______________________________

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Number of shares of Common Stock outstanding as of August 4, 2020 164,276,170

Table of Contents

PIONEER NATURAL RESOURCES COMPANY

TABLE OF CONTENTS

Page

Cautionary Statement Concerning Forward-Looking Statements

Definitions of Certain Terms and Conventions Used Herein

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019

Consolidated Statements of Operations for the three and six months ended June 30, 2020 and 2019

Consolidated Statements of Equity for the three and six months ended June 30, 2020 and 2019

Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019

Notes to Consolidated Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II. OTHER INFORMATION

Unregistered Sales of Equity Securities and Use of Proceeds

PIONEER NATURAL RESOURCES COMPANY

Cautionary Statement Concerning Forward-Looking Statements

The information in this Quarterly Report on Form 10-Q (this "Report") contains forward-looking statements that involve risks and uncertainties. When used in this document, the words "believes," "plans," "expects," "anticipates," "forecasts," "intends," "continue," "may," "will," "could," "should," "future," "potential," "estimate" or the negative of such terms and similar expressions as they relate to Pioneer Natural Resources Company ("Pioneer" or the "Company") are intended to identify forward-looking statements, which are generally not historical in nature. The forward-looking statements are based on the Company's current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates. Although the Company believes that the expectations and assumptions reflected in the forward-looking statements are reasonable as and when made, they involve risks and uncertainties that are difficult to predict and, in many cases, beyond the Company's control.

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 U.S. economic activity, competition, the ability to obtain environmental and other permits and the timing thereof, other government regulation or action, the ability to obtain approvals from third parties and negotiate agreements with third parties on mutually acceptable terms, litigation, the costs and results of drilling and operations, availability of equipment, services, resources and personnel required to perform the Company's drilling 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, access to and cost of capital, the financial strength of counterparties to Pioneer's credit facility, investment instruments and derivative contracts and purchasers of Pioneer's oil, NGL and gas production, 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, expenses, cash flow from purchases and sales of oil and gas, net of firm transportation commitments, and tax rates, quality of technical data, environmental and weather risks, including the possible impacts of climate change, cybersecurity risks, ability to implement stock repurchases, the risks associated with the ownership and operation of the Company's oilfield services businesses and acts of war or terrorism. These and other risks are described in the Company's Annual Report on Form 10-K, this and other Quarterly Reports on Form 10-Q 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. Accordingly, no assurances can be given that the actual events and results will not be materially different than the anticipated results described in the forward-looking statements. See "Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations," "Part 1, Item 3. Quantitative and Qualitative Disclosures About Market Risk" and "Part II, Item 1A. Risk Factors" in this Report and "Part I, Item 1. Business — Competition, Markets and Regulations," "Part I, Item 1A. Risk Factors," "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk" in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 for a description of various factors that could materially affect the ability of Pioneer to achieve the anticipated results described in the forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The Company undertakes no duty to publicly update these statements except as required by law.

Table of Contents

PIONEER NATURAL RESOURCES COMPANY

Definitions of Certain Terms and Conventions Used Herein

Within this Report, the following terms and conventions have specific meanings:

•"Bbl" means a standard barrel containing 42 United States gallons.

•"Bcf" means one billion cubic feet and is a measure of gas volume.

•"BOE" means a barrel of oil equivalent and is a standard convention used to express oil and gas volumes on a comparable oil equivalent basis. Gas equivalents are determined under the relative energy content method by using the ratio of six thousand cubic feet of gas to one Bbl of oil or natural gas liquid.

•"BOEPD" means BOE per day.

•"Brent" means Brent oil price, a major trading classification of light sweet oil that serves as a benchmark price for oil worldwide.

•"Btu" means British thermal unit, which is a measure of the amount of energy required to raise the temperature of one pound of water one degree Fahrenheit.

•"DD&A" means depletion, depreciation and amortization.

•"GAAP" means accounting principles generally accepted in the United States of America.

•"HH" means Henry Hub, a distribution hub in Louisiana that serves as the delivery location for gas futures contracts on the NYMEX.

•"MBbl" means one thousand Bbls.

•"MBOE" means one thousand BOEs.

•"Mcf" means one thousand cubic feet and is a measure of gas volume.

•"MMBtu" means one million Btus.

•"NGLs" means natural gas liquids, which are the heavier hydrocarbon liquids that are separated from the gas stream; such liquids include ethane, propane, isobutane, normal butane and natural gasoline.

•"NYMEX" means the New York Mercantile Exchange.

•"OPEC" means the Organization of Petroleum Exporting Countries.

•"Pioneer" or the "Company" means Pioneer Natural Resources Company and its subsidiaries.

•"Proved reserves" mean those quantities of oil and gas, which, by analysis of geosciences and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations – prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i) The area of the reservoir considered as proved includes: (A) The area identified by drilling and limited by fluid contacts, if any, and (B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons ("LKH") as seen in a well penetration unless geoscience, engineering or performance data and reliable technology establishes a lower contact with reasonable certainty.

(iii) Where direct observation from well penetrations has defined a highest known oil ("HKO") elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering or performance data and reliable technology establish the higher contact with reasonable certainty.

(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: (A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (B) The project has been approved for development by all necessary parties and entities, including governmental entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month

within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

•"SEC" means the United States Securities and Exchange Commission.

•"U.S." means United States.

•"WTI" means West Texas Intermediate, a light sweet blend of oil produced from fields in western Texas and is a grade of oil used as a benchmark in oil pricing.

•With respect to information on the working interest in wells, drilling locations and acreage, "net" wells, drilling locations and acres are determined by multiplying "gross" wells, drilling locations and acres by the Company's working interest in such wells, drilling locations or acres. Unless otherwise specified, wells, drilling locations and acreage statistics quoted herein represent gross wells, drilling locations or acres.

•All currency amounts are expressed in U.S. dollars.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PIONEER NATURAL RESOURCES COMPANY

CONSOLIDATED BALANCE SHEETS

(in millions)


	June 30, 2020		December 31, 2019
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	180	$	631
Restricted cash	69		74

Accounts receivable:
Trade, net	566		1,032
Due from affiliates	—		3
Income taxes receivable	21		7
Inventories	170		205


Derivatives	72		32
Investment in affiliate	85		187
Other	32		20
Total current assets	1,195		2,191
Oil and gas properties, using the successful efforts method of accounting:
Proved properties	23,217		22,444
Unproved properties	577		584
Accumulated depletion, depreciation and amortization	(9,349)		(8,583)
Total oil and gas properties, net	14,445		14,445
Other property and equipment, net	1,622		1,632
Operating lease right-of-use assets	216		280


Goodwill	261		261
Derivatives	3		—
Other assets	164		258
	$	17,906	$	19,067

The financial information included as of June 30, 2020 has been prepared by management

without audit by independent registered public accountants.

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

PIONEER NATURAL RESOURCES COMPANY

CONSOLIDATED BALANCE SHEETS (continued)

(in millions, except share data)


	June 30, 2020		December 31, 2019
	(Unaudited)
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable:
Trade	$	787	$	1,221
Due to affiliates	65		190
Interest payable	26		53
Income taxes payable	4		3
Current portion of long-term debt	139		450

Derivatives	88		12
Operating leases	110		136
Other	365		431
Total current liabilities	1,584		2,496
Long-term debt	2,054		1,839
Derivatives	27		8
Deferred income taxes	1,403		1,389
Operating leases	124		170
Other liabilities	974		1,046
Equity:
Common stock, $0.01 par value; 500,000,000 shares authorized; 175,378,954 and 175,057,889 shares issued as of June 30, 2020 and December 31, 2019, respectively	2		2
Additional paid-in capital	9,285		9,161
Treasury stock at cost: 11,102,784 and 9,511,248 shares as of June 30, 2020 and December 31, 2019, respectively	(1,240)		(1,069)
Retained earnings	3,693		4,025


Total equity	11,740		12,119
Commitments and contingencies
	$	17,906	$	19,067

The financial information included as of June 30, 2020 has been prepared by management

without audit by independent registered public accountants.

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

PIONEER NATURAL RESOURCES COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Revenues and other income:
Oil and gas	$	600	$	1,196	$	1,695	$	2,332
Sales of purchased oil and gas	541		1,183		1,456		2,292
Interest and other income (loss), net	48		(11)		(158)		181
Derivative gain (loss), net	(336)		43		117		29
Gain (loss) on disposition of assets, net	6		(488)		6		(498)
	859		1,923		3,116		4,336
Costs and expenses:
Oil and gas production	167		219		343		440
Production and ad valorem taxes	47		69		120		136
Depletion, depreciation and amortization	416		412		850		833
Purchased oil and gas	572		1,102		1,600		2,059

Exploration and abandonments	10		15		19		35
General and administrative	60		80		116		174
Accretion of discount on asset retirement obligations	2		2		5		5
Interest	33		29		60		59
Other	90		211		175		358
	1,397		2,139		3,288		4,099
Income (loss) before income taxes	(538)		(216)		(172)		237
Income tax benefit (provision)	99		47		22		(56)


Net income (loss) attributable to common stockholders	$	(439)	$	(169)	$	(150)	$	181


Basic and diluted net income (loss) per share attributable to common stockholders	$	(2.66)	$	(1.01)	$	(0.91)	$	1.07

Weighted average shares outstanding:
Basic	165		168		165		168
Diluted	165		168		165		169

Dividends declared per share	$	0.55	$	—	$	1.10	$	0.32

The financial information included herein has been prepared by management

without audit by independent registered public accountants.

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

PIONEER NATURAL RESOURCES COMPANY

CONSOLIDATED STATEMENTS OF EQUITY

(in millions, except share data and dividends per share)

(Unaudited)


		Equity Attributable To Common Stockholders
	Shares Outstanding	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Total Equity
	(in thousands)
Balance as of December 31, 2019	165,547	$	2	$	9,161	$	(1,069)	$	4,025	$	12,119

Dividends declared ($0.55 per share)	—	—		—		—		(91)		(91)
Exercise of long-term incentive stock options	8	—		(1)		1		—		—

Purchases of treasury stock	(1,007)	—		—		(122)		—		(122)
Stock-based compensation costs:
Issued awards	316	—		—		—		—		—
Compensation costs included in net income	—	—		16		—		—		16
Net income	—	—		—		—		289		289
Balance as of March 31, 2020	164,864	2		9,176		(1,190)		4,223		12,211

Dividends declared ($0.55 per share)	—	—		—		—		(91)		(91)

Convertible senior notes:
Equity component	—	—		230		—		—		230
Capped call	—	—		(113)		—		—		(113)
Deferred tax provision	—	—		(25)		—		—		(25)

Purchases of treasury stock	(592)	—		—		(50)		—		(50)
Stock-based compensation costs:
Issued awards	4	—		—		—		—		—
Compensation costs included in net loss	—	—		17		—		—		17
Net loss	—	—		—		—		(439)		(439)
Balance as of June 30, 2020	164,276	$	2	$	9,285	$	(1,240)	$	3,693	$	11,740

The financial information included herein has been prepared by management

without audit by independent registered public accountants.

Table of Contents

The accompanying notes are an integral part of these consolidated financial statements.

PIONEER NATURAL RESOURCES COMPANY

CONSOLIDATED STATEMENTS OF EQUITY

(in millions, except share data and dividends per share)

(Unaudited)


		Equity Attributable To Common Stockholders
	Shares Outstanding	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Total Equity
	(in thousands)
Balance as of December 31, 2018	169,499	$	2	$	9,062	$	(423)	$	3,470	$	12,111
Dividends declared ($0.32 per share)	—	—		—		—		(54)		(54)
Exercise of long-term incentive stock options	10	—		(1)		1		—		—
Purchases of treasury stock	(1,594)	—		—		(222)		—		(222)
Stock-based compensation costs:
Issued awards	507	—		—		—		—		—
Compensation costs included in net income	—	—		24		—		—		24
Net income	—	—		—		—		350		350
Balance as of March 31, 2019	168,422	2		9,085		(644)		3,766		12,209

Purchases of treasury stock	(1,349)	—		—		(202)		—		(202)
Stock-based compensation costs:
Issued awards	49	—		—		—		—		—
Compensation costs included in net loss	—	—		38		—		—		38
Net loss	—	—		—		—		(169)		(169)
Balance as of June 30, 2019	167,122	$	2	$	9,123	$	(846)	$	3,597	$	11,876

The financial information included herein has been prepared by management

without audit by independent registered public accountants.

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

PIONEER NATURAL RESOURCES COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)


	Six Months Ended June 30,
	2020		2019
Cash flows from operating activities:
Net income (loss)	$	(150)	$	181
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depletion, depreciation and amortization	850		833

Impairment of inventory and other property and equipment	1		31
Exploration expenses, including dry holes	3		4
Deferred income taxes	(11)		56
(Gain) loss on disposition of assets, net	(6)		498
Loss on early extinguishment of debt	27		—
Accretion of discount on asset retirement obligations	5		5
Interest expense	18		3
Derivative-related activity	52		(20)
Amortization of stock-based compensation	33		62
Investment in affiliate valuation adjustment	101		(171)
South Texas contingent consideration valuation adjustment	64		13
South Texas deficiency fee obligation	69		—
Other	64		76
Change in operating assets and liabilities:
Accounts receivable	468		17
Inventories	34		(58)



Other assets	26		(16)
Accounts payable	(313)		(69)
Interest payable	(27)		—
Other liabilities	(154)		(52)
Net cash provided by operating activities	1,154		1,393
Cash flows from investing activities:
Proceeds from disposition of assets	7		57
Proceeds from investments	—		568
Purchase of investments	(1)		—
Additions to oil and gas properties	(1,034)		(1,510)
Additions to other assets and other property and equipment	(78)		(135)

Price	126.32	EPS	2
Shares	168	P/E	52
MCap	21,222	P/FCF	9
Net Debt	1,775	EBIT	627
TEV	22,997	TEV/EBIT	37
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-08-05
10-Q	2020-03-31	Filed 2020-05-08
10-K	2019-12-31	Filed 2020-02-24
10-Q	2019-09-30	Filed 2019-11-06
10-Q	2019-06-30	Filed 2019-08-09
10-Q	2019-03-31	Filed 2019-05-10
10-K	2018-12-31	Filed 2019-02-26
10-Q	2018-09-30	Filed 2018-11-09
10-Q	2018-06-30	Filed 2018-08-09
10-Q	2018-03-31	Filed 2018-05-04
10-K	2017-12-31	Filed 2018-02-20
10-Q	2017-09-30	Filed 2017-11-03
10-Q	2017-06-30	Filed 2017-08-01
10-Q	2017-03-31	Filed 2017-05-03
10-K	2016-12-31	Filed 2017-02-17
10-Q	2016-09-30	Filed 2016-11-02
10-Q	2016-06-30	Filed 2016-07-28
10-Q	2016-03-31	Filed 2016-04-28
10-K	2015-12-31	Filed 2016-02-19
10-Q	2015-09-30	Filed 2015-11-03
10-Q	2015-06-30	Filed 2015-08-07
10-Q	2015-05-07	Filed 2015-05-07
10-K	2014-12-31	Filed 2015-02-19
10-Q	2014-09-30	Filed 2014-11-04
10-Q	2014-06-30	Filed 2014-08-06
10-Q	2014-03-31	Filed 2014-05-09
10-K	2013-12-31	Filed 2014-02-27
10-Q	2013-09-30	Filed 2013-11-06
10-Q	2013-06-30	Filed 2013-08-06
10-Q	2013-03-31	Filed 2013-05-08
10-K	2012-12-31	Filed 2013-02-13
10-Q	2012-06-30	Filed 2012-08-07
10-Q	2012-03-31	Filed 2012-05-07
10-K	2011-12-31	Filed 2012-02-29
10-Q	2011-09-30	Filed 2011-11-04
10-Q	2011-06-30	Filed 2011-08-05
10-Q	2011-03-31	Filed 2011-05-10
10-K	2010-12-31	Filed 2011-02-25
10-Q	2010-06-30	Filed 2010-07-30
10-Q	2010-05-05	Filed 2010-05-06
10-K	2009-12-31	Filed 2010-02-26

8-K	2020-09-09	Regulation FD
8-K	2020-08-06	Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K	2020-08-04	Earnings, Exhibits
8-K	2020-07-22	Earnings, Regulation FD
8-K	2020-05-21
8-K	2020-05-11
8-K	2020-05-11
8-K	2020-05-06
8-K	2020-05-06
8-K	2020-04-24
8-K	2020-04-06
8-K	2020-04-03
8-K	2020-03-04
8-K	2020-02-19
8-K	2020-02-05
8-K	2019-11-04
8-K	2019-10-21
8-K	2019-10-16
8-K	2019-08-06
8-K	2019-07-25
8-K	2019-06-19
8-K	2019-05-16
8-K	2019-05-06
8-K	2019-04-30
8-K	2019-04-01
8-K	2019-02-21
8-K	2019-02-13
8-K	2019-01-29
8-K	2018-11-12
8-K	2018-11-06
8-K	2018-10-24
8-K	2018-10-24
8-K	2018-09-17
8-K	2018-08-07
8-K	2018-07-31
8-K	2018-07-25
8-K	2018-06-18
8-K	2018-06-01
8-K	2018-05-17
8-K	2018-05-02
8-K	2018-04-17
8-K	2018-04-09
8-K	2018-02-27
8-K	2018-02-21
8-K	2018-02-06
8-K	2018-01-16
8-K	2018-01-09

EX-10.1	pxd-exx10120200630.htm
EX-10.2	pxd-exx10220200630.htm
EX-10.3	pxd-exx10320200630.htm
EX-10.4	pxd-exx10420200630.htm
EX-31.1	pxd-exx31120200630.htm
EX-31.2	pxd-exx31220200630.htm
EX-32.1	pxd-exx32120200630.htm
EX-32.2	pxd-exx32220200630.htm

PXD 10Q Quarterly Report

Pioneer Natural Resources Earnings 2020-06-30