Pioneer Natural Resources has reported financial and operating results for the quarter ended September 30, 2023. Pioneer reported third quarter net income attributable to common shareholders of $1.3 billion, or $5.41 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 $1.4 billion, or $5.83 per diluted share. Cash flow from operating activities for the third quarter was $2.1 billion.

Pioneer maintains a strong balance sheet, with net debt of $4.8 billion as of September 30, 2023. The Company had $2.1 billion of liquidity, comprised of $98 million of cash on hand and a $2.0 billion unsecured credit facility (undrawn) as of September 30, 2023.

During the third quarter, the Company's total capital expenditures totaled $1.1 billion.

Cash flow from operating activities during the third quarter was $2.1 billion, leading to free cash flow of $1.2 billion when adjusted for changes in operating assets and liabilities and deducting capital expenditures.

For the fourth quarter of 2023, the Company's Board of Directors has declared a quarterly base-plus-variable dividend of $3.20 per share, comprised of a $1.25 base dividend and $1.95 variable dividend. This represents a total annualized dividend yield of 5.4%3. As outlined in the recently announced merger agreement with ExxonMobil, the fourth quarter variable dividend component represents 75% of the variable dividend as calculated under Pioneer's dividend policy. Additionally, the first quarter of 2024 variable dividend component is expected to represent 50% of the variable dividend as calculated under Pioneer's dividend policy. Quarterly dividends subsequent to the first quarter of 2024 are expected to be comprised solely of the $1.25 per share base dividend component4 under Pioneer’s dividend policy until the merger closing date.

Pursuant to the merger agreement, Pioneer will not repurchase shares of its stock prior to the merger closing date.

Financial Results

For the third quarter of 2023, the average realized price for oil was $81.33 per barrel. The average realized price for natural gas liquids (NGLs) was $24.79 per barrel, and the average realized price for gas was $2.48 per thousand cubic feet. These prices exclude the effects of derivatives.

Production costs, including taxes, averaged $11.58 per barrel of oil equivalent (BOE). Depreciation, depletion and amortization (DD&A) expense averaged $10.97 per BOE. Exploration and abandonment expense was $18 million. General and administrative (G&A) expense was $87 million. Interest expense was $44 million. The net cash flow impact related to purchases and sales of oil and gas, including firm transportation, was a gain of $19 million. Other expense was $25 million. Current income tax provision was $248 million. The Company's effective tax rate was 22% for the quarter.

Operations Update

Pioneer's continued operational excellence in the Midland Basin enabled the Company to place 95 horizontal wells on production during the third quarter of 2023. More than 100 wells with lateral lengths of 15,000 feet or greater were placed on production during the first three quarters of 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 third quarter, Pioneer benefited from its utilization of three simulfrac fleets and two localized sand mines. Additionally, 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.

Pioneer’s strong operational results support the Company’s annual production growth framework of approximately 5% and 8% for oil and total production, respectively.

KeyFacts Energy: Pioneer Natural Resources US onshore country profile