XML 46 R25.htm IDEA: XBRL DOCUMENT v3.22.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company and its eligible subsidiaries file a consolidated U.S. federal income tax return. Certain subsidiaries are not eligible to be included in the consolidated U.S. federal income tax return and separate provisions for income taxes have been determined for these entities or groups of entities. The tax returns and the amount of taxable income or loss are subject to examination by U.S. federal, state, local and foreign taxing authorities.
The Company continually assesses both positive and negative evidence to determine whether it is more likely than not that deferred tax assets can be realized prior to their expiration. Pioneer monitors Company-specific, oil and gas industry and worldwide economic factors and based on that information, along with other data, reassesses the likelihood that the Company's net operating loss carryforwards ("NOLs") and other deferred tax attributes in the U.S. federal, state, local and foreign tax jurisdictions will be utilized prior to their expiration.
DoublePoint Acquisition. The Company purchased all the membership interests of DoublePoint, a disregarded entity for federal income tax purposes. As a result, for tax purposes, the Company recorded the cost basis in the assets acquired equal to its purchase price (i.e. stepped-up basis).
Parsley Acquisition. For federal income tax purposes, the Parsley Acquisition qualified as a tax-free merger whereby the Company acquired carryover tax basis in Parsley's assets and liabilities. The Company recorded a deferred tax liability of $133 million associated with the acquired assets. Included in the deferred tax liability are deferred tax asset attributes acquired from Parsley, which primarily consisted of net operating loss carryforwards of $2.3 billion that are subject to an annual limitation under Internal Revenue Code Section 382. The Company believes it is more likely than not that the acquired net operating loss carryforwards will be utilized before they expire. Offsetting the deferred tax assets attributes are deferred tax liability attributes, primarily related to the cost basis in oil and gas properties for tax purposes being less than the recorded book amounts.
Enactment of the Consolidated Appropriations Act, 2021. On December 27, 2020, President Trump signed into law the Consolidated Appropriations Act, 2021 ("the Act"). The Act includes many tax provisions, including the extension of various expiring provisions, extensions and expansions of certain earlier pandemic tax relief provisions, among other things. The Act did not have a material impact on the Company's current year tax provision or the Company's consolidated financial statements.
Enactment of the Coronavirus Aid, Relief and Economic Security Act. On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act did not have a material impact on the Company's current year tax provision or the Company's consolidated financial statements.
Uncertain tax positions. As of December 31, 2021, the Company has state unrecognized tax benefits ("UTBs") for tax years 2013 and 2015 through 2018 resulting from research and experimental expenditures related to horizontal drilling and completion innovations. The issues related to the claims are complex and uncertain, and the Company cannot conclude that it is more likely than not that it will sustain the claims. Accordingly, no tax benefit has been recognized for the filed claims. The Company believes it will substantially resolve the uncertainties associated with the state UTBs within the next twelve months.
Unrecognized tax benefit activity is as follows:
Year Ended December 31,
202120202019
(in millions)
Beginning unrecognized tax benefits$— $39 $141 
Current year additions27 — — 
Effectively settled tax positions— (39)(102)
Ending unrecognized tax benefits$27 $— $39 
Other tax matters.
Net tax refunds (payments) related to filed tax returns are as follows:
Year Ended December 31,
202120202019
(in millions)
Tax refunds (payments), net (a)$(1)$13 $5 
____________________
(a)Represents net state tax payments of $3 million, $3 million and $2 million for the years ended December 31, 2021, 2020 and 2019, respectively, and net federal tax refunds of $2 million, $16 million and $7 million for the years ended December 31, 2021, 2020 and 2019, respectively.
The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. As of December 31, 2021, there are no proposed adjustments in any jurisdiction that would have a significant effect on the Company's future results of operations or financial position.
The earliest open years in the Company's key jurisdictions are as follows:
U.S. federal2020
Various U.S. states2013
Income tax benefit (provision) is as follows:
 Year Ended December 31,
 202120202019
 (in millions)
Current:
U.S. federal$(1)$12 $8 
U.S. state(44)(3)(3)
Current income tax benefit (provision)(45)9 5 
Deferred:
U.S. federal(585)55 (228)
U.S. state2 (3)(12)
Deferred income tax benefit (provision)(583)52 (240)
Income tax benefit (provision)$(628)$61 $(235)
The effective tax rate for income (loss) is reconciled to the United States federal statutory rate as follows:
 Year Ended December 31,
 202120202019
 (in millions, except percentages)
Income (loss) before income taxes$2,746 $(261)$1,008 
Federal statutory income tax rate21 %21 %21 %
Benefit (provision) for federal income taxes at the statutory rate(577)55 (212)
State income tax provision (net of federal tax)(33)(5)(12)
Transaction costs(6)— — 
Other(12)11 (11)
Income tax benefit (provision)$(628)$61 $(235)
Effective tax rate23 %23 %23 %

Significant components of deferred tax assets and deferred tax liabilities are as follows:
 As of December 31,
 20212020
 (in millions)
Deferred tax assets:
Net operating loss carryforward (a)$1,263 $1,111 
Credit carryforwards (b)110 110 
Asset retirement obligations77 61 
Incentive plans27 29 
Net deferred hedge losses167 68 
South Texas Divestiture41 62 
Lease deferred tax assets196 167 
Convertible debt17 — 
Other60 47 
Deferred tax assets1,958 1,655 
Deferred tax liabilities:
Oil and gas properties, principally due to differences in basis, depletion and the deduction of intangible drilling costs for tax purposes
(3,664)(2,741)
Other property and equipment, principally due to the deduction of bonus depreciation for tax purposes
(235)(196)
South Texas Divestiture(18)(16)
Lease deferred tax liabilities(76)(43)
Convertible Notes— (23)
Other(3)(2)
Deferred tax liabilities(3,996)(3,021)
Net deferred tax liability$(2,038)$(1,366)
____________________
(a)Net operating loss carryforwards as of December 31, 2021 consist of $6.0 billion of U.S. federal NOLs. Of the NOLs, $2.2 billion were incurred prior to January 1, 2018 and will begin to expire, if unused, in 2032, and $3.8 billion were incurred on or after January 1, 2018 and will not expire and will be carried forward indefinitely under current tax law. Additionally, the net operating loss carryforwards consist of $177 million of Colorado NOLs that begin to expire in 2027, all of which have a fully offsetting valuation allowance.
(b)Credit carryforwards as of December 31, 2021, consist of $110 million of U.S. federal credits for increasing research and development activities that expire between 2032 and 2038.