BY BOB CAMPBELL
Pioneer Natural Resources generated $950 million in free cash flow during the first quarter while producing 680 million barrels of oil per day and projecting $27 billion of free cash flow over the next five years.
Chief Executive Officer Scott Sheffield, who recently announced that he will retire in January 2024, said his Irving-based company “continues to focus on efficient operations, maintaining low horizontal lifting costs that support our top-tier margins and significant free cash flow generation.”
President-Chief Operating Officer Rich Dealy, who is set to succeed Sheffield, said Pioneer repurchased $500 million of stock during the quarter at an average price of $206 per share, “demonstrating our willingness to step into the market during dislocations such as we saw in March.
“In total Pioneer has repurchased $2.1 billion in equity since the beginning of 2022, reducing shares outstanding by approximately four percent, which has benefited our long-term shareholder returns and per share metrics,” Dealy said. “Our return of capital framework, which returns at least 75 percent of quarterly free cash flow, remains amongst the strongest when compared to peers.
“Our modified framework provides the flexibility to allocate capital returns after our strong base dividend between variable dividends and share repurchase based on what provides the best value for shareholders. This peer-leading return capital strategy is sustained by our disciplined reinvestment rate and our deep inventory of high rate of return wells.”
Senior Vice President-Chief Financial Officer Neal Shah said Pioneer’s “combination of low cash costs and strong realizations generated peer-leading cash margins for the full year of 2022.
“While our strong price realizations were driven by our oil-weighted production, our low operating costs are a function of our unmatched infrastructure and efficient operations,” Shah said. “These best-in-class margins underpin our strong free cash flow generation, leading to significant capital returns to shareholders.
“Pioneer continues to offer a compelling investment case for shareholders, considering the combination of strong corporate returns and an inexpensive valuation. Our projected return on capital employed continues to be one of the highest in the S&P 500 for the second consecutive year. We believe our strong corporate return profile when paired with our discounted valuation provides a highly attractive opportunity for investors.”
