pxd-20200424

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 24, 2020

PIONEER NATURAL RESOURCES COMPANY

(Exact name of registrant as specified in its charter)


Delaware	1-13245	75-2702753
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

(Address of principal executive offices and zip code)

(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

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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

Item 2.02 Results of Operations and Financial Condition

Explanatory note: Pioneer Natural Resources Company and its subsidiaries ("Pioneer" or the "Company") presents in this Item 2.02 certain information for the three months ended March 31, 2020 regarding (i) the impact of changes in the fair value of derivative instruments on its results of operations and certain other information regarding its derivative instruments, (ii) the average realized prices for oil, NGLs and gas for the three months ended March 31, 2020, (iii) the impact of the change in fair value of divestiture contingent consideration on its results of operations, (iv) the impact of the change in fair value of investment in affiliate on its results of operations and (v) the net effect of third party purchases and sales of oil and gas.

The following table summarizes the net derivative gain that the Company expects to report in its earnings for the three months ended March 31, 2020:


	Three Months Ended March 31, 2020
	(in millions)
Noncash changes in fair value:
Oil derivative gain, net	$	415

Gas derivative loss, net	(3)


Total noncash derivative gain, net	412

Net cash receipts on settled derivative instruments:
Oil derivative receipts	63



Interest rate derivative payments	(22)
Total cash receipts on settled derivative instruments, net	41
Total derivative gain, net	$	453

Commodity Price Realizations

During the three months ended March 31, 2020, the Company expects the average realized price for oil to be $45.60 per barrel, the average realized price for NGLs to be $14.52 per barrel and the average realized price for gas to be $1.61 per thousand cubic feet. These prices exclude the effects of derivatives.

Divestiture Contingent Consideration

The Company is entitled to receive contingent consideration associated with the sale in 2019 of its Eagle Ford and other remaining assets in South Texas of up to $450 million based on annual oil and NGL prices realized during each of the five years from 2020 to 2024. The divestiture contingent consideration is measured at fair value on a recurring basis. The Company expects to report a noncash divestiture contingent consideration loss of $63 million in its earnings for the three months ended March 31, 2020.

Investment in Affiliate

The Company owns 16.6 million shares of ProPetro Holding Corp. ("ProPetro"), which is measured on a recurring basis at fair value. The Company expects to report a noncash loss on its investment in ProPetro for the three months ended March 31, 2020 of $145 million.

Sales of Purchased Oil and Gas

The Company enters into pipeline capacity commitments in order to secure available oil, NGL and gas transportation capacity from the Company's areas of production. The Company enters into purchase transactions with third parties and separate sale transactions with third parties to diversify a portion of the Company's oil and gas sales to Gulf Coast refineries and Gulf Coast and West Coast gas markets, international export markets and to satisfy unused gas pipeline capacity commitments. For the three months ended March 31, 2020, the Company expects the net effect of third party purchases and sales of oil and gas to result in a loss of $113 million. The loss for the three months ended March 31, 2020 includes a $74 million loss attributable to oil that was purchased and in transit via pipeline to the Gulf Coast or in Gulf Coast storage at the end of January and February. This oil inventory is sold in the following month at contracted prices that are generally tied to monthly average

index oil prices (typically Brent oil prices). The significant decline in oil demand caused by COVID-19 pandemic combined with the oil supply increase attributable to the Russia and OPEC market share war resulted in oil prices declining during February and significantly in March 2020. As a result of the decline in oil prices, the oil inventory in transit or stored at the end of January and February was sold in February and March, respectively, at lower prices resulting in the aforementioned loss.

Item 7.01 Regulation FD Disclosure

The Company's open commodity oil and gas derivative positions as of April 17, 2020 are as follows:


	2020								Year Ending December 31, 2021
	Second Quarter		Third Quarter		Fourth Quarter
Average daily oil production associated with derivatives (Bbl)
Brent collar contracts with short puts: (a)	135,500		115,500		115,500		—
Volume
Price:	$	68.84	$	69.78	$	69.78	$	—
Ceiling	$	61.76	$	62.06	$	62.06	$	—
Floor	$	53.48	$	53.56	$	53.56	$	—
Short put
Brent swap contracts:
Volume	98,911		177,900		160,900		57,750
Price	$	37.27	$	35.68	$	36.43	$	43.29
Brent call contracts sold:
Volume per day (Bbl) (b)	—		—		—		20,000
Price per Bbl	$	—	$	—	$	—	$	69.74






Brent collar contracts with short puts:
Volume	120,000		30,000		30,000		96,000
Price:
Ceiling	$	36.53	$	43.09	$	43.09	$	47.07
Floor	$	31.08	$	34.83	$	34.83	$	42.50
Short put	$	21.28	$	24.83	$	24.83	$	31.45
Average daily gas production associated with derivatives (MMBtu)
Swap contracts:
Volume	30,000		30,000		16,739		2,466
NYMEX price	$	2.41	$	2.41	$	2.43	$	2.46






Basis swap contracts:
Permian Basin index swap volume (c)	30,000		30,000		16,739		2,466
Price differential ($/MMBtu)	$	(1.68)	$	(1.68)	$	(1.59)	$	(1.46)

____________________

(a)Represents collar contracts with short puts that were entered into prior to March 2020. During March 2020, the Company entered into incremental swap contracts and collar contracts with short puts to provide additional downside protection for the second quarter through fourth quarter 2020 volumes.

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

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

Cautionary Statement Concerning Forward-Looking Statements

Except for historical information contained herein, the statements in this Current Report on Form 8-K 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 the Company are subject to a number of risks and uncertainties that may cause the Company'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 the coronavirus outbreak on global or national 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, storage, refining 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 the purchasers of Pioneer's oil, natural gas liquid 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 production forecasts, quality of technical data, environmental and weather risks, including the possible impacts of climate change, cybersecurity risks, the ability to implement planned 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, Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission. In addition, the Company 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. The Company undertakes no duty to publicly update these statements except as required by law.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PIONEER NATURAL RESOURCES COMPANY

By:

/s/ Margaret M. Montemayor

Margaret M. Montemayor

Vice President and Chief Accounting Officer

Date:

April 24, 2020