DoublePoint acquisition. On May 4, 2021, the Company acquired Double Eagle III Midco 1 LLC ("DoublePoint") pursuant to a definitive membership interest purchase agreement to acquire DoublePoint dated April 1, 2021 (the "DoublePoint Acquisition") in exchange for 27 million shares of Pioneer common stock and $1.0 billion of cash. The Pioneer stock consideration transferred had a fair value of $4.2 billion.

October 20, 2020, among Pioneer, certain of its subsidiaries, Parsley and Parsley's subsidiary, Parsley Energy, LLC (the "Parsley Acquisition"). On the closing date of the Parsley Acquisition, Parsley merged into a newly formed wholly-owned subsidiary of the Company, and the subsidiaries of Parsley, including Jagged Peak Energy LLC ("Jagged Peak"), became indirect subsidiaries of the Company.

As part of the Parsley Acquisition, each eligible share of Parsley Class A common stock and each membership interest unit of Parsley Energy, LLC were automatically converted into the right to receive 0.1252 (the "Exchange Ratio") shares of Pioneer common stock. As a result, the Company issued 52 million shares of Pioneer common stock upon the consummation of the Parsley Acquisition, representing total stock consideration transferred of approximately $6.9 billion.

Both the Parsley Acquisition and the DoublePoint Acquisition were accounted for using the acquisition method under ASC Topic 805, Business Combinations, which requires all assets acquired and liabilities assumed to be recorded at fair value at the acquisition date. Provisional fair value measurements were made for acquired assets and liabilities, and adjustments to those measurements may be made in subsequent periods (up to one year from the acquisition date) as information necessary to complete the fair value analysis is obtained.


	Parsley Acquisition		DoublePoint Acquisition
	As of January 12, 2021		As of May 4, 2021
	(in millions)
Cash and cash equivalents (a)	$	118	$	58
Accounts receivable	251		131
Derivatives	8		—
Proved properties	5,110		3,929
Unproved properties	5,627		2,405
Other property and equipment	118		72
Operating lease right-of-use assets	201		2
Other assets	22		11
Total assets acquired	11,455		6,608

Accounts payable	338		232
Interest payable	49		22
Derivatives	317		86
Operating leases	201		2
Deferred income taxes	133		—
Long-term debt	3,238		975
Other liabilities	296		57
Total liabilities assumed	4,572		1,374
Net assets acquired	$	6,883	$	5,234

(a)Cash used in investing activities as a result of the Parsley Acquisition and DoublePoint Acquisition includes (i) $2 million of cash used in the settlement of fractional shares related to the conversion of Parsley Class A common stock at the Exchange Ratio and (ii) $1 billion of cash used to acquire DoublePoint.

The following unaudited pro forma summary presents the results of operations as if the Parsley Acquisition and DoublePoint Acquisition had occurred on January 1, 2020. The pro forma summary uses estimates and assumptions based on information available at the time. Management believes the estimates and assumptions to be reasonable; however, actual results may have differed significantly from this pro forma financial information. The pro forma information does not reflect any synergy savings that might have been achieved from combining the operations and is not intended to reflect the actual results that would have occurred had the companies actually been combined during the periods presented.

Divestitures. The Company regularly reviews its asset base to identify nonstrategic assets, the disposition of which would increase capital resources available for other activities, create organizational and operational efficiencies and further the Company's objective of maintaining a strong balance sheet to ensure financial flexibility.

•In December 2021, the Company completed the sale of its assets in the Delaware Basin (the "Delaware Divestiture") to Continental Resources, Inc. ("Continental") for cash proceeds of $3.1 billion, after normal closing adjustments. The Company recognized a pretax loss of $1.1 billion, which is reflected in net gain (loss) on disposition of assets in the consolidated statements of operations for the year ended December 31, 2021. See Note 11 for additional information.

•In October 2021, the Company completed the sale of approximately 20,000 net acres in western Glasscock County of the Permian Basin to Laredo in exchange for $137 million in cash and 960 thousand shares of Laredo's common stock, representing total consideration transferred of $206 million, after normal closing adjustments. The sale of these assets resulted in a pretax gain of $1 million, which is reflected in net gain (loss) on disposition of assets in the consolidated statements of operations for the year ended December 31, 2021. The Laredo common stock held by the Company as a result of the divestiture is included in short-term investments in the consolidated balance sheet as of December 31, 2021. See Note 4 and Note 15 for additional information.

•In March 2021, the Company sold its well services business (the "Well Services Divestiture") to a third party for (i) net cash proceeds of $20 million and (ii) up to $4 million of additional cash proceeds to be earned over the next three years. The Company recorded a gain on sale of $9 million, which is reflected in net gain (loss) on disposition of assets in the consolidated statements of operations for the year ended December 31, 2021.

•During 2019 the Company completed multiple sales of certain vertical and horizontal wells as well as approximately 7,800 undeveloped acres, in the Permian Basin, for net cash proceeds of $129 million. The Company recorded aggregate gains of $68 million associated with these sales.

•In May 2019, the Company completed the South Texas Divestiture in exchange for total consideration having an estimated fair value of $210 million. The fair value of the consideration included (i) net cash proceeds of $2 million, (ii) $136 million in contingent consideration and (iii) a $72 million receivable associated with estimated deficiency fees to be paid by the buyer. The Company recorded a loss of $525 million associated with the sale.

Contingent Consideration. Per the terms of the South Texas Divestiture, the Company was entitled to receive contingent consideration based on future annual oil and NGL prices during each of the five years from 2020 to 2024. The Company revalued the contingent consideration using an option pricing model each reporting period prior to the settlement of the contingent consideration in July 2020, at which time, the Company received cash proceeds of $49 million from the buyer to fully satisfy the contingent consideration. The Company recorded a noncash loss of $42 million to interest and other income during the year ended December 31, 2020, associated with the settlement. See Note 4, Note 5 and Note 15 for additional information.

Deficiency Fee Obligation. The Company transferred its long-term midstream agreements and associated minimum volume commitments ("MVC") to the buyer of its South Texas assets. However, the Company retained the obligation to pay 100 percent of any deficiency fees associated with the MVC from January 2019 through July 2022. The Company determines the fair value of the deficiency fee obligation using a probability weighted discounted cash flow model. The deficiency fee obligation is included in current or noncurrent other liabilities in the consolidated balance sheets, based on the estimated timing of payments. During the year ended December 31, 2021, the Company recorded a decrease of $3 million to the Company's estimated deficiency fee obligations in other expense in the consolidated statements of operations, as a result of lower than forecasted 2021 deficiency fee payments. During the year ended December 31, 2020, the Company recorded a charge of $84 million in other expense in the consolidated statements of operations, to increase the Company's originally forecasted deficiency fee payments as a result of a reduction in planned drilling activities by the buyer. The Company's estimated deficiency fee obligation as of December 31, 2021 of $191 million is included in other current liabilities in the consolidated balance sheets. See Note 4, Note 11 and Note 16 for additional information.

Deficiency Fee Receivable. The buyer is required to reimburse the Company for 18 percent of the deficiency fees paid under the transferred midstream agreements from January 2019 through July 2022. Such reimbursement will be paid by the buyer in installments beginning in 2023 through 2025. The Company determines the fair value of the deficiency fee receivable using a credit risk-adjusted valuation model. During the year ended December 31, 2021 and 2020, the Company recorded an increase to the Company's long-term deficiency fee receivable of $7 million and $4 million, respectively, in other expense in the consolidated statements of operations, to reflect the buyer's share of deficiency fees which were greater than originally forecasted as of the date of the sale. The deficiency fee receivable is included in noncurrent other assets in the consolidated balance sheets. See Note 4, Note 11 and Note 16 for additional information.

Restricted Cash. As a condition of the sale, the Company deposited $75 million into an escrow account to be used to fund future MVC payments. Beginning in 2021, the required escrow balance declined to $50 million and during the year ended December 31, 2021, the Company used a portion of the $50 million in the escrow account to make monthly MVC payments. Beginning in 2022, there is no required escrow balance. To the extent that there is any remaining balance after the payment of deficiency fees, the balance will become unrestricted and revert to the Company on March 31, 2023. The escrow account balance is included in restricted cash in the consolidated balance sheets.

Decommissioning. In November 2018, the Company announced plans to close its sand mine located in Brady, Texas and transition its proppant supply requirements to West Texas sand sources. As a result, the Company recorded $23 million of accelerated depreciation, $13 million of inventory and other property and equipment impairment charges and $12 million of sand mine closure-related costs in other expense in the consolidated statements of operations during the year ended December 31, 2019. See Note 16 for additional information.

Restructuring. During 2020, the Company implemented a corporate restructuring to reduce its staffing levels to correspond with a planned reduction in future activity levels (the "2020 Corporate Restructuring"). The restructuring resulted in approximately 300 employees being involuntarily separated from the Company. The Company recorded $78 million of employee-related charges, including $5 million of noncash stock-based compensation expense related to the accelerated vesting of certain equity awards, in other expense in the consolidated statements of operations during the year ended December 31, 2020. See Note 8 and Note 16 for additional information.

Employee-related obligations from asset divestitures and restructuring activities. Employee-related costs as a result of asset divestitures and restructuring activities are primarily recorded in other expense in the consolidated statements of operations. Obligations associated with employee-related charges are included in accounts payable - due to affiliates in the consolidated balance sheets.

(a)Additions for the year ended December 31, 2021 are comprised of $1 million related to the Delaware Divestiture and $1 million related to the Well Services Divestiture. Additions for the year ended December 31, 2020 are comprised of $78 million related to the 2020 Corporate Restructuring and $1 million related to a well services restructuring undertaken to more closely align the Company's well services cost structure with planned activity levels.