Business Wire | Aug 4, 2020 04:05PM EDT

Pioneer Natural Resources Company Reports Second Quarter 2020 Financial and Operating Results

Aug. 04, 2020

DALLAS--(BUSINESS WIRE)--Aug. 04, 2020--Pioneer Natural Resources Company (NYSE:PXD) ("Pioneer" or "the Company") today reported financial and operating results for the quarter ended June 30, 2020. Pioneer reported a second quarter net loss attributable to common stockholders of $439 million, or $2.66 per diluted share. These results include the effects of noncash mark-to-market adjustments and certain other unusual items. Excluding these items, the non-GAAP adjusted loss for the second quarter was $54 million, or $0.32 per diluted share. Cash flow from operating activities for the second quarter was $328 million.

Highlights

* Delivered strong second quarter free cash flow1 of $165 million

* Averaged second quarter oil production of 215 thousand barrels of oil per day (MBOPD)

* Averaged second quarter production of 375 thousand barrels of oil equivalent per day (MBOEPD)

* Reported capital expenditures2 of $235 million during the second quarter, underspending revised capital budget

* Reduced second quarter lease operating expense (LOE) per barrel oil equivalent (BOE) by 16% from the first quarter

* Maintained 2020 capital expenditure guidance, while increasing 2020 oil production guidance by approximately 2.5%; continuing the trend of improved capital efficiency

President and CEO Scott D. Sheffield stated, "Although the macroeconomic environment presented challenges, Pioneer delivered another excellent quarter, with continued strong operational execution. The Company generated $165 million of free cash flow1 through significant cost reductions and operational efficiency improvements. The improvements in capital efficiency during the second quarter led to a 2.5% increase in our full-year oil production guidance, while maintaining our previous capital spending range.

Pioneer is also initiating a long-term investment framework that is underpinned by a cash flow reinvestment rate between 70% to 80%, prioritizing free cash flow generation and return of capital, while maintaining a strong balance sheet. Based on current strip pricing, this framework targets a total return to shareholders of 10% or greater, consisting of a competitive and growing base dividend, a variable dividend and oil growth of five percent plus. I am confident this framework will allow us to return a significant amount of capital to shareholders, while providing the flexibility to manage through commodity price cycles, strengthening Pioneer's investment proposition."

Financial Highlights

Pioneer maintains a strong balance sheet, with unrestricted cash on hand at the end of the second quarter of $180 million and net debt of $2.0 billion. The Company had $1.7 billion of liquidity as of June 30, 2020, comprised of $180 million of unrestricted cash and a $1.5 billion unsecured credit facility (undrawn as of June 30, 2020).

During the second quarter, the Company's drilling, completion and facilities capital expenditures totaled $211 million. The Company's total capital expenditures2, including water infrastructure, totaled $235 million.

Cash flow from operating activities during the second quarter was $328 million, leading to free cash flow1 of $165 million for the quarter.

Financial Results

For the second quarter, the average realized price for oil was $23.16 per barrel. The average realized price for natural gas liquids (NGLs) was $12.65 per barrel, and the average realized price for gas was $1.15 per thousand cubic feet. These prices exclude the effects of derivatives.

Production costs, including taxes, averaged $6.27 per BOE. Depreciation, depletion and amortization (DD&A) expense averaged $12.21 per BOE. Exploration and abandonment costs were $10 million. General and administrative (G&A) expense was $60 million. Interest expense was $33 million. Other expense was $90 million, or $12 million excluding unusual items3.

Operations Update

Pioneer continued to see strong efficiency gains during the second quarter, enabling the Company to place 75 horizontal wells on production. During the first half of 2020, drilling operations averaged approximately 1,125 drilled feet per day and completion operations averaged approximately 1,775 completed feet per day, continuing to surpass original full-year 2020 expectations.

Pioneer's well costs continue to benefit from these efficiency gains and service cost deflation, leading to cost reductions of approximately $1.8 million per well, or approximately 20%, when compared to the Company's original 2020 budget. The trend of reducing well costs continues to significantly improve capital efficiency. Pioneer expects approximately 60% of the achieved well cost savings this year to be sustainable through commodity price cycles.

The Company's production costs also remain a focus and continue to trend lower. Horizontal LOE was $2.17 per BOE during the second quarter, a 13% decrease when compared to the first quarter of 2020 and a 27% decrease from the first quarter of 2019. The improved cost structure continues to drive strong margins and provide incremental cash flow for Pioneer.

The Company continues to proactively curtail lower-margin, higher-cost vertical well production in the current commodity price environment, benefiting operating costs. Pioneer curtailed approximately 7 MBOPD of net production during the second quarter and expects approximately 6 MBOPD to remain curtailed in the current commodity price environment. Decisions to bring curtailed production back online are economically driven and evaluated on a well-by-well basis.

Full-Year 2020 Update

The Company is maintaining its 2020 drilling, completions and facilities capital budget range of $1.3 billion to $1.5 billion, with an additional approximately $100 million budgeted for Pioneer's differentiated water infrastructure, resulting in a total 2020 capital budget2 range of $1.4 billion to $1.6 billion.

Pioneer is increasing its guidance for 2020 oil production to a range of 203 to 213 MBOPD and total production range of 356 to 371 MBOEPD. The revised production guidance reflects the current voluntary curtailments that are expected to average approximately 6 MBOPD in the current commodity price environment. The Company continues to monitor the fluid macroeconomic environment and will remain flexible and responsive to changing market conditions to preserve its strong balance sheet.

The Company's previous activity guidance remains unchanged. From April through December 2020, the Company expects to operate an average of five to eight horizontal drilling rigs in the Midland Basin, including one horizontal drilling rig in the southern joint venture area, and operate an average of two to three frac fleets. Pioneer will continue to evaluate drilling and completion activity on an economic basis, with future activity levels assessed regularly.

Pioneer is redefining its investment proposition to prioritize free cash flow generation and return of capital. This capital allocation framework is intended to create long-term value for shareholders by optimizing the reinvestment of cash flow to a rate of 70% to 80%, which accelerates the Company's free cash flow profile, while continuing to generate strong corporate returns. The Company is targeting a 10% or greater total annual return to shareholders, inclusive of a strong and growing base dividend4, a variable dividend4 and high-return oil growth. The Company believes this differentiated strategy will position Pioneer to be competitive across sectors.

Pioneer continues to maintain substantial oil derivative coverage in order to protect the balance sheet, providing the Company with operational and financial flexibility throughout this period. The Company's financial and derivative mark-to-market results and open derivatives positions are outlined in the attached schedules.

Third Quarter 2020 Guidance

Third quarter 2020 oil production is forecasted to average between 191 to 201 MBOPD and total production is expected to average between 341 to 356 MBOEPD. Production costs are expected to average $6.25 per BOE to $7.75 per BOE. DD&A expense is expected to average $12.00 per BOE to $14.00 per BOE. Total exploration and abandonment expense is forecasted to be $5 million to $15 million. G&A expense is expected to be $58 million to $68 million. Interest expense is expected to be $31 million to $36 million. Other expense is forecasted to be $20 million to $30 million, excluding stacked drilling rig fees, idle frac fleet fees and other fees associated with reduced activity levels. Accretion of discount on asset retirement obligations is expected to be $2 million to $5 million. The cash flow impact related to purchases and sales of oil and gas, including firm transportation, is expected to be a loss of $20 million to $60 million, based on forward oil price estimates for the quarter. The Company's effective income tax rate is expected to be less than 21%. Current income taxes are expected to be nominal.

Environmental, Social & Governance

Pioneer views sustainability as a multidisciplinary focus 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.

Pioneer is focused on reducing emissions and emission intensities. Between 2016 and 2018, the Company's greenhouse gas (GHG) emissions have been reduced by 24%, total GHG emission intensity has decreased by 38% and methane intensity has declined by 41%. Additionally, between January 2018 and July 2019, the Company was able to limit Permian flaring to less than 2% of its produced gas, one of the lowest flaring percentages in the Permian Basin. The Company's proactive measures, including monitoring 100% of its Permian facilities aerially for leak detection and repair (LDAR) and only producing a well once it is fully connected to a gas line, help to make Pioneer a leader in environmental stewardship.

Socially, Pioneer maintains a proactive safety culture, supports a diverse workforce and inspires teamwork to drive innovation. The Board of Directors has a Health, Safety and Environment Committee and a Nominating and Corporate Governance Committee to provide director-level oversight of these activities. These committees help to promote a culture of continuous improvement in safety and environmental practices.

For more details, see Pioneer's 2019 Sustainability Report at pxd.com/sustainability.

Earnings Conference Call

On Wednesday, August 5, 2020, at 9:00 a.m. Central Time, Pioneer will discuss its financial and operating results for the quarter ended June 30, 2020, with an accompanying presentation. Instructions for listening to the call and viewing the accompanying presentation are shown below.

Internet: www.pxd.comSelect "Investors," then "Earnings & Webcasts" to listen to the discussion, view the presentation and see other related material.

Telephone: Dial (800) 353-6461 and enter confirmation code 9285881 five minutes before the call.

A replay of the webcast will be archived on Pioneer's website. This replay will be available through August 31, 2020. Click here to register for the call-in audio replay and you will receive the dial-in information.

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 Pioneer are subject to a number of risks and uncertainties that may cause Pioneer'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 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, natural gas liquids and gas production, uncertainties about estimates of reserves and resource potential, identification of drilling locations and the ability to add proved reserves in the future, the assumptions underlying forecasts, including forecasts of production, cash flow, well costs, capital expenditures, rates of return to shareholders, expenses, cash flows from purchases and sales of oil and gas net of firm transportation commitments, 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 Pioneer's Annual Report on Form 10-K for the year ended December 31, 2019, Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, and other filings with the Securities and Exchange Commission. In addition, Pioneer may be subject to currently unforeseen risks that may have a materially adverse impact 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. Pioneer undertakes no duty to publicly update these statements except as required by law.

Footnote 1: Free cash flow is a non-GAAP measure. See reconciliation to comparable GAAP number in supplemental schedules.

Footnote 2: Excludes acquisitions, asset retirement obligations, capitalized interest, geological and geophysical G&A and corporate facilities.

Footnote 3: Unusual items include the following: (i) COVID-19 operational plan changes of (a) $41 million related to idle frac fleet fees, stacked drilling rig charges and drilling rig early termination charges, (b) $6 million of underutilization and restructuring charges associated with the Company's well services business and (c) $4 million in sand take-or-pay deficiencies and (ii) $27 million of early extinguishment of debt charges associated with the Company's second quarter of 2020 debt refinancing activities. See reconciliation in supplemental schedules.

Footnote 4: The declaration and payment of future dividends is at the discretion of the Company's board of directors and will depend on, among other things, the Company's earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that the board of directors deems relevant.

PIONEER NATURAL RESOURCES COMPANY

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

June 30, December 31, 2020 2019

ASSETS

Current assets:

Cash and cash equivalents $ 180 $ 631

Restricted cash 69 74

Accounts receivable, net 566 1,035

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, successful efforts method 23,794 23,028 of accounting

Accumulated depletion, depreciation and (9,349) (8,583) amortization

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



LIABILITIES AND EQUITY

Current liabilities:

Accounts payable $ 852 $ 1,411

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 11,740 12,119

$ 17,906 $ 19,067



PIONEER NATURAL RESOURCES COMPANY

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

Three Months Ended June Six Months Ended June 30, 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), 48 (11) (158) 181 net

Derivative gain (loss), net (336) 43 117 29

Gain (loss) on disposition of 6 (488) 6 (498) assets, net

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 416 412 850 833 amortization

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 assetretirement 2 2 5 5 obligations

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) attributed tocommon $ (439) $ (169) $ (150) $ 181 stockholders



Net income per share attributableto common stockholders:

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



Weighted average shares outstanding:

Basic 165 168 165 168

Diluted 165 168 165 169



PIONEER NATURAL RESOURCES COMPANY

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

Three Months Ended Six Months Ended June June 30, 30,

2020 2019 2020 2019

Cash flows from operating activities:

Net income (loss) $ (439) $ (169) $ (150) $ 181

Adjustments to reconcile netincome (loss) to net cash provided by operatingactivities:

Depletion, depreciation and 416 412 850 833 amortization

Impairment of inventory and otherproperty - 2 1 31 and equipment

Exploration expenses, including 1 3 3 4 dry holes

Deferred income taxes (88) (47) (11) 56

(Gain) loss on disposition of (6) 488 (6) 498 assets, net

Loss on early extinguishment of 27 - 27 - debt

Accretion of discount on assetretirement 2 2 5 5 obligations

Interest expense 13 2 18 3

Derivative-related activity 464 (37) 52 (20)

Amortization of stock-based 17 38 33 62 compensation

Investment in affiliate valuation (44) 3 101 (171) adjustment

South Texas contingentconsideration valuation 1 13 64 13 adjustment

South Texas deficiency fee - - 69 - obligation

Other 36 25 64 76

Change in operating assets and liabilities:

Accounts receivable (11) 86 468 17

Inventories 18 (22) 34 (58)

Other assets 8 (1) 26 (16)

Accounts payable (29) (8) (313) (69)

Interest payable 8 29 (27) -

Other liabilities (66) (30) (154) (52)

Net cash provided by operating 328 789 1,154 1,393 activities

Net cash used in investing (423) (325) (1,106) (1,020) activities

Net cash used in financing (514) (257) (504) (480) activities

Net increase (decrease) in cash,cash equivalents (609) 207 (456) (107) and restricted cash

Cash, cash equivalents andrestricted cash, 858 511 705 825 beginning of period

Cash, cash equivalents andrestricted cash, end of $ 249 $ 718 $ 249 $ 718 period



PIONEER NATURAL RESOURCES COMPANY

UNAUDITED SUMMARY PRODUCTION, PRICE AND MARGIN DATA

Three Months Ended June Six Months Ended June 30, 30,

2020 2019 2020 2019

Average Daily Sales Volume:

Oil (Bbls) 214,959 207,438 218,808 206,850

Natural gas liquids ("NGLs") 90,184 67,076 87,271 67,073 (Bbls)

Gas (Mcf) 416,516 357,917 412,704 359,261

Total (BOE) 374,563 334,167 374,863 333,800



Average Price:

Oil per Bbl $ 23.16 $ 55.50 $ 34.58 $ 52.47

NGLs per Bbl $ 12.65 $ 19.63 $ 13.55 $ 21.20

Gas per Mcf $ 1.15 $ 0.89 $ 1.38 $ 1.69

Total per BOE $ 17.61 $ 39.35 $ 24.85 $ 38.60



Three Months Ended June 30, 2020

(in $ per BOE)

Margin Data:

Average price $ 17.61

Production costs (4.92)

Production and ad valorem taxes (1.35)

$ 11.34



PIONEER NATURAL RESOURCES COMPANY UNAUDITED SUPPLEMENTARY EARNINGS PER SHARE INFORMATION (in millions)

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 acceptable 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 stockholders, (ii) less participating share-based basic earnings (iii) divided by weighted average basic shares outstanding. The Company's diluted net income per share attributable to common stockholders is computed as (i) basic net income attributable to common stockholders, (ii) plus the reallocation of participating earnings, if any, (iii) divided by weighted average diluted shares outstanding. During periods in which the Company realizes a net loss attributable to common stockholders, securities or other contracts to issue common stock would be dilutive to loss per share; therefore, conversion into common stock is assumed not to occur.

The Company's net income (loss) attributable to common stockholders is reconciled to basic and diluted net income (loss) attributable to common stockholders as follows:

Three Months Ended Six Months Ended June 30, June 30,

2020 2019 2020 2019

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

Participating share-based basic - - - (1) earnings

Basic and diluted net income (loss)attributable to $ (439) $ (169) $ (150) $ 180 common stockholders



Basic weighted average shares 165 168 165 168 outstanding

Dilution attributable to stock-basedcompensation - - - 1 awards

Diluted weighted average shares 165 168 165 169 outstanding



PIONEER NATURAL RESOURCES COMPANY UNAUDITED SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (in millions)

EBITDAX, discretionary cash flow ("DCF") (as defined below) and net debt to trailing twelve months EBITDAX 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, DCF and net debt to trailing twelve months EBITDAX 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 Six Months Ended June June 30, 30,

2020 2019 2020 2019

Net income (loss) $ (439) $ (169) $ (150) $ 181

Depletion, depreciation and 416 412 850 833 amortization

Exploration and abandonments 10 15 19 35

Impairment of inventory and otherproperty and - 2 1 31 equipment

Accretion of discount on assetretirement 2 2 5 5 obligations

Interest expense 33 29 60 59

Income tax (benefit) provision (99) (47) (22) 56

(Gain) loss on disposition of (6) 488 (6) 498 assets

Loss on early extinguishment of 27 - 27 - debt

Derivative-related activity 464 (37) 52 (20)

Amortization of stock-based 17 16 33 37 compensation

Investment in affiliate valuation (44) 3 101 (171) adjustment

South Texas contingentconsideration valuation 1 13 64 13 adjustment

Restructuring charge - 154 - 166

South Texas deficiency fee - - 69 - obligation

Other 36 25 64 76

EBITDAX before restructuring 418 906 1,167 1,799 charge

Restructuring charge - (132) - (141)

EBITDAX (a) 418 774 1,167 1,658

Cash interest expense (20) (27) (42) (56)

Current income tax benefit 11 - 11 -

Discretionary cash flow (b) 409 747 1,136 1,602

Cash exploration expense (9) (12) (16) (31)

Changes in operating assets and (72) 54 34 (178) liabilities

Net cash provided by operating $ 328 $ 789 $ 1,154 $ 1,393 activities



_____________ "EBITDAX" represents earnings before depletion, depreciation and amortization expense; exploration and abandonments; impairment of inventory and other property and equipment; accretion of discount on asset retirement obligations; interest expense; income taxes; net (gain) loss on(a) the disposition of assets; loss on early extinguishment of debt; noncash derivative related activity; amortization of stock-based compensation; noncash valuation adjustments on investments, contingent consideration and deficiency fee obligations; restructuring charges; 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

UNAUDITED SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES

(in millions, except ratios)

Trailing Twelve Months Ended June 30, 2020

Net income $ 425

Depletion, depreciation and amortization 1,728

Exploration and abandonments 42

Impairment of inventory and other property and equipment 8

Accretion of discount on asset retirement obligations 10

Interest expense 122

Income tax provision 153

Gain on disposition of assets (27)

Loss on early extinguishment of debt 27

Derivative-related activity 85

Amortization of stock-based compensation 70

Investment in affiliate valuation adjustment 257

South Texas contingent consideration valuation 96 adjustment

South Texas deficiency fee obligation 69

Other 94

EBITDAX (a) 3,159

Cash interest expense (98)

Current income tax benefit 16

Discretionary cash flow (b) 3,077

Cash exploration expense (35)

Changes in operating assets and liabilities (166)

Net cash provided by operating activities $ 2,876

_____________ "EBITDAX" represents earnings before depletion, depreciation and amortization expense; exploration and abandonments; impairment of inventory and other property and equipment; accretion of discount on asset retirement obligations; interest expense; income taxes; net gain on(a) the disposition of assets; loss on early extinguishment of debt; noncash derivative related activity; amortization of stock-based compensation; noncash valuation adjustments on investments, contingent consideration and deficiency fee obligations; and other noncash items.

Discretionary cash flow equals cash flows from operating activities(b) before changes in operating assets and liabilities and cash exploration expense.



The Company's net debt to trailing twelve months EBITDAX is calculated as follows:

June 30, 2020

Current and long-term portion of long-term debt $ 2,193

Less: Cash and cash equivalents (180)

Net debt $ 2,013



Net debt to trailing twelve months EBITDAX 0.6



PIONEER NATURAL RESOURCES COMPANY UNAUDITED SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (continued) (in millions, except per share data)

Adjusted loss attributable to common stockholders excluding noncash mark-to-market ("MTM") adjustments and loss attributable to common stockholders excluding noncash MTM adjustments and unusual items are presented in this earnings release and reconciled to the Company's net loss attributable to common stockholders (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 loss attributable to common stockholders as determined in accordance with GAAP is reconciled to loss adjusted for noncash MTM adjustments including (i) the Company's derivative positions, (ii) contingent consideration attributable to the 2019 South Texas divestiture and (iii) the Company's equity investment in ProPetro Holding Corp. ("ProPetro"), and unusual items is as follows:

Three Months Ended June 30, 2020

After-tax Per Ref Amounts Diluted Share

Net loss attributable to common stockholders $ (439) $ (2.66)

Noncash MTM adjustments:

Derivative loss, net ($464 pretax) 362 2.20

South Texas contingent consideration loss ($1 1 0.01 pretax)

ProPetro stock gain ($44 pretax) (34) (0.21)

Adjusted loss excluding noncash MTM adjustments (110) (0.66)

Unusual items:

COVID-19 related charges ($51 pretax) (a) 40 0.24

Early extinguishment of debt charges ($27 (b) 21 0.13 pretax)

Gain on disposition of assets ($6 pretax) (c) (5) (0.03)

Adjusted loss excluding noncash MTM adjustments $ (54) $ (0.32) and unusual items

_____________ As a result of changes to the Company's drilling plans caused by the COVID-19 pandemic, the Company recognized (i) a $41 million charge associated with idle frac fleet fees, stacked drilling rig charges and(a) drilling rig early termination charges, (ii) a $6 million charge related to underutilization and restructuring of the Company's well services business and (iii) $4 million in charges related to sand take-or-pay deficiencies and other payments.

As a result of refinancing of the Company's near-term debt maturities, the Company recognized (i) a $25 million charge associated with partial extinguishment of certain of its senior notes prior to their scheduled(b) maturities, which included a pro-rata charge for deferred financing costs and unamortized debt discounts and (ii) a $2 million charge for financing costs associated with terminating its 364-day credit agreement.

Primarily represents a gain on the sale of certain vertical wells and(c) approximately 1,500 net acres.



PIONEER NATURAL RESOURCES COMPANY UNAUDITED 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, 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 Six Months Ended Ended June 30, 2020 June 30, 2020

Net cash provided by operating activities $ 328 $ 1,154

Changes in operating assets and 72 (34) liabilities

Less: Capital expenditures (a) (235) (856)

Free cash flow $ 165 $ 264

_____________^(a) Capital expenditures are calculated as follows:

Three Six Months Months Ended Ended June 30, June 30, 2020 2020

Costs incurred $ 220 $ 816

Less: Excluded items (a) (9) (15)

Plus: Other property, plant and equipment capital (b) 24 55

Capital expenditures $ 235 $ 856

_____________(a) Comprised of acquisition costs, asset retirement obligations and geologicaland geophysical general and administrative costs.

(b) Includes other property plant and equipment additions related to waterinfrastructure, well services and vehicles.



PIONEER NATURAL RESOURCES COMPANY

UNAUDITED SUPPLEMENTAL INFORMATION

Open Commodity Derivative Positions as of August 3, 2020

(Volumes are average daily amounts)

2020 Year Ending December Third Fourth 31, Quarter Quarter 2021

Average daily oil production associated with derivatives (Bbl):

Brent collar contracts with short puts: (a)

Volume 115,500 115,500 -

Price:

Ceiling $ 69.78 $ 69.78 $ -

Floor $ 62.06 $ 62.06 $ -

Short put $ 53.56 $ 53.56 $ -

Brent swap contracts:

Volume 172,200 155,200 -

Price $ 35.70 $ 36.47 $ -

Brent call contracts sold:

Volume (b) - - 20,000

Price $ - $ - $ 69.74

Brent collar contracts with short puts:

Volume 30,000 30,000 107,000

Price:

Ceiling $ 43.09 $ 43.09 $ 49.22

Floor $ 34.83 $ 34.83 $ 43.74

Short put $ 24.83 $ 24.83 $ 33.78

Average daily gas production associated with Derivatives (MMBtu):

NYMEX swap contracts:

Volume 30,000 16,739 132,466

Price $ 2.41 $ 2.43 $ 2.64

NYMEX collar contracts:

Volume - - 80,000

Price:

Ceiling $ - $ - $ 3.15

Floor $ - $ - $ 2.50

Basis swap contracts:

Permian Basin index swap volume (c) 30,000 16,739 2,466

Price differential $ (1.68) $ (1.59) $ (1.46)



_____________ Represents collar contracts with short puts that were entered into prior to the March 2020 oil price decline. During and subsequent to March 2020,(a) the Company entered into incremental swap contracts and collar contracts with short puts to provide additional downside protection for its remaining 2020 volumes.

(b) The referenced call contracts were sold in exchange for higher ceiling prices on certain 2020 collar contracts.

The referenced basis swap contracts fix the basis differentials between(c) the index price at which the Company sells its Permian Basin gas and the NYMEX index price used in swap contracts.



PIONEER NATURAL RESOURCES COMPANY

UNAUDITED SUPPLEMENTAL INFORMATION (continued)

Derivative Gain (Loss) , Net

(in millions)

Three Months Six Months Ended Ended June 30, 2020 June 30, 2020

Noncash changes in fair value:

Oil derivative loss, net $ (466) $ (52)

Gas derivative gain, net 2 -

Total noncash derivative loss, net (464) (52)



Net cash receipts on settled derivative instruments:

Oil derivative receipts 128 191

Interest rate derivative payments - (22)

Total cash receipts on settled derivative 128 169 instruments, net

Total derivative gain (loss), net $ (336) $ 117

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CONTACT: Pioneer Natural Resources Company Contacts: Investors Neal Shah - 972-969-3900 Tom Fitter - 972-969-1821 Michael McNamara - 972-969-3592 Media and Public Affairs Tadd Owens - 972-969-5760