Pioneer Resources first Quarter 2021 update Summary
- Pioneer free cash flow1 of $369 million for the quarter
- Pioneer total capital expenditures3, including water infrastructure, total $605 million.
- Pioneer plans to operate an average of 22 to 24 horizontal drilling rigs in the Permian Basin
- Pioneer total production of 605 to 631 MBOEPD
Message to Shareholders
CEO Scott D. Sheffield stated, “Pioneer delivered an excellent quarter, successfully integrating Parsley’s assets, while navigating the substantial impacts of winter storm Uri that occurred in February. Our drilling, completions and operations teams continue to exceed expectations, driving a capital and operationally efficient program focused on free cash flow generation.
“In early April, we announced the highly accretive acquisition of DoublePoint, which comprises approximately 97,000 highly contiguous net acres in the core of the Midland Basin. This acquisition adds over 1,200 tier one locations that generate strong returns and are equally competitive with Pioneer’s legacy inventory. Given the hand-in-glove fit of DoublePoint’s acreage with ours, we expect to achieve synergies of approximately $175 million annually, leading to double-digit free cash flow per share and variable dividend per share accretion.
“With an incremental $5 billion in free cash flow1 expected to be generated from DoublePoint assets through 2026, Pioneer currently anticipates delivering approximately $23 billion of free cash flow1 during the same period at strip pricing. We expect to return approximately 80% of this free cash flow through our base and variable dividend structure2, strengthening our value proposition to shareholders.” Data source Pioneer Natural Resources first Quarter 2021 update
Pioneer Natural Resources Well & Facility Permits Download
During the first quarter, Pioneer continued to deliver strong operational efficiency gains that enabled the Company to place 106 horizontal wells on production. Drilling operations averaged approximately 1,250 drilled feet per day and completion operations averaged approximately 2,000 completed feet per day during the first quarter, an increase of 9% and 8%, respectively, when compared to 2020 averages Improvements in drilling and completions operations continue to benefit the Company’s overall capital efficiency.
The Company expects its 2021 drilling, completions and facilities capital budget to range between $2.95 billion to $3.25 billion, inclusive of an additional $530 million to $570 million related to the DoublePoint acquisition. An additional $100 million and $50 million is budgeted for integration expenses related to the acquisition of Parsley and DoublePoint, respectively, resulting in a total 2021 capital budget3 range of $3.1 billion to $3.4 billion. The Company expects its capital program to be fully funded from forecasted 2021 cash flow5 of approximately $5.9 billion.
During 2021, the Company plans to operate an average of 22 to 24 horizontal drilling rigs in the Permian Basin, including a one-rig average program in the Delaware Basin and a three-rig average program in the southern Midland Basin joint venture area. Pioneer plans to reduce the operated rigs on DoublePoint acreage from 7 rigs in May to 5 rigs by the end of the year, or by approximately 30%. The 2021 capital program is expected to place 470 to 510 wells on production, which includes the addition of approximately 90 wells on the acreage acquired in the DoublePoint transaction.
Pioneer expects 2021 oil production of 351 to 366 MBOPD and total production of 605 to 631 MBOEPD, which includes current production from DoublePoint of approximately 92 MBOEPD and approximately 100 MBOEPD forecasted during the second half of 2021.
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 oil 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. Data source Pioneer Natural Resources first Quarter 2021 update
Pioneer maintains a strong balance sheet, with unrestricted cash on hand at the end of the first quarter of $668 million and net debt of $5.5 billion. The Company had $2.7 billion of liquidity as of March 31, 2021, comprised of $668 million of unrestricted cash and a $2.0 billion unsecured credit facility (undrawn as of March 31, 2021).
During the first quarter, the Company’s drilling, completion and facilities capital expenditures totaled $591 million. The Company’s total capital expenditures3, including water infrastructure, totaled $605 million.
Cash flow from operating activities during the first quarter was $377 million, leading to free cash flow1 of $369 million for the quarter, excluding cash transaction costs of $172 million related to the Parsley Energy, Inc. (Parsley) acquisition. Source Pioneer Natural Resources first Quarter 2021 update
Pioneer Natural Resources Well Permits & Wells Spud
The oil and gas industry is highly regulated by Government agencies. One of the responsibilities is to approve well permits. A well permit is the intent of an oil & gas operator to drill a new well. Well permits include oil wells, gas wells, water wells and more..
Spudding is the process of beginning to drill a well in the oil and gas industry. … After the surface hole is completed, the main drill bit—which performs the task of drilling to the total depth—is inserted and this process can also be referred to as “spudding in.” Source Pioneer Natural Resources first Quarter 2021 update
Pioneer Natural Resources Drilling Locations Q1 2021
Spraberry Trend covers a large area – around 2,500 square miles. As most often defined, the Spraberry includes portions of Irion, Reagan, Upton, Glasscock, Midland, and Martin Counties. In 2007, the U.S. Department of Energy ranked The Spraberry Trend third in the United States by total proved reserves, and seventh in total production.
Source Pioneer Natural Resources first Quarter 2021 update
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About Pioneer Natural Resources
Pioneer Natural Resources Company is a company engaged in hydrocarbon exploration headquartered in Irving, Texas. It operates in the Cline Shale, which is part of the Spraberry Trend of the Permian Basin, where the company is the largest acreage holder. The company is ranked 341st on the Fortune 500.