Debt and Interest Expense

12 Months Ended

Dec. 31, 2023

The components of debt, including the effects of issuance costs and net discounts, are as follows:


	As of December 31, 2023		As of December 31, 2022
	(in millions)
Outstanding debt principal balances:

0.550% senior notes due 2023	$	—	$	750
0.250% convertible senior notes due 2025	537		962
5.100% senior notes due 2026	1,100		—
1.125% senior notes due 2026	750		750
7.200% senior notes due 2028	241		241
4.125% senior notes due 2028 (a)	138		138
1.900% senior notes due 2030	1,100		1,100
2.150% senior notes due 2031	1,000		1,000
	4,866		4,941
Issuance costs and discounts, net	(31)		(37)
Total debt	4,835		4,904
Less current portion of debt	28		779
Long-term debt	$	4,807	$	4,125

______________________

(a)Acquired upon completion of the acquisition of Parsley Energy, Inc. ("Parsley") by the Company on January 12, 2021 (the "Parsley Acquisition").

Credit facility. The Company maintains a revolving corporate credit facility (the "Credit Facility") with a syndicate of financial institutions ("Syndicate") and has aggregate loan commitments of $2.0 billion. On May 26, 2023, Pioneer entered into the Second Amendment to Credit Agreement (the "Second Amendment") with Wells Fargo Bank, National Association, as administrative agent, and the other agents and lenders party thereto. The Second Amendment replaced the London interbank offered rate with a term secured overnight financing rate as the interest rate benchmark, with all other terms, conditions and covenants remaining substantially unchanged. The Credit Facility has a maturity date of January 12, 2026. As of December 31, 2023, the Company had no outstanding borrowings under the Credit Facility. The Company had intermittent borrowings and repayments of $1.5 billion during the year ended December 31, 2023. The Credit Facility requires the maintenance of a ratio of total debt to book capitalization, subject to certain adjustments, not to exceed 0.65 to 1.0. As of December 31, 2023, the Company was in compliance with its debt covenants.

Borrowings under the Credit Facility may be in the form of revolving loans or swing line loans. Revolving loans represent loans made ratably by the Syndicate in accordance with their respective commitments under the Credit Facility and

bear interest, at the option of the Company, based on (a) a rate per annum equal to the higher of the prime rate announced from time to time by Wells Fargo Bank, National Association or the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System during the last preceding business day plus 0.5 percent plus a defined alternate base rate spread margin, which is currently 0.25 percent based upon the Company's debt rating or (b) a base Eurodollar rate, plus a margin (the "Applicable Margin"), which is currently 1.25 percent and is also determined by the Company's debt rating. Swing line loans represent loans made by a subset of the lenders in the Syndicate and may not exceed $150 million. Swing line loans under the Credit Facility bear interest at a rate per annum equal to the "ASK" rate for federal funds periodically published by the Dow Jones Market Service plus the Applicable Margin. Letters of credit outstanding under the Credit Facility are subject to a per annum fee, representing the Applicable Margin plus 0.125 percent. The Company also pays commitment fees on undrawn amounts under the Credit Facility that are determined by the Company's debt rating (currently 0.15 percent). Borrowings under the Credit Facility are general unsecured obligations.

Senior notes. In March 2023, the Company issued $1.1 billion of 5.100% senior notes that will mature March 29, 2026 (the "March 2023 Senior Notes Offering"). The Company received proceeds, net of $7 million of issuance costs and discounts, of $1.1 billion. Interest on the notes is payable semiannually on March 29 and September 29.

The Company's 0.550% senior notes, with a debt principal balance of $750 million, matured and were repaid in May 2023 with proceeds from the March 2023 Senior Notes Offering.

In September 2022, the Company delivered an irrevocable notice of call to the holders of its outstanding 5.625% senior notes due 2027. The 5.625% senior notes due 2027, with a debt principal balance of $179 million, were repaid in October 2022. The Company recorded an $8 million net gain on early extinguishment of debt in other expense associated with the debt repayment. See Note 14 for additional information.

In February 2022, the Company paid $1.3 billion to redeem its outstanding 0.750% senior notes due 2024 and 4.450% senior notes due 2026, having aggregate principal amounts of $750 million and $500 million, respectively. The Company recorded a $47 million loss on early extinguishment of debt in other expense associated with the early redemptions. See Note 14 for additional information.

The Company's senior notes are general unsecured obligations ranking equally in right of payment with all other senior unsecured indebtedness of the Company and are senior in right of payment to all existing and future subordinated indebtedness of the Company. The Company is a holding company that conducts all of its operations through subsidiaries; consequently, the senior notes are structurally subordinated to all obligations of its subsidiaries. Interest on the Company's senior notes is payable semiannually.

Convertible senior notes. The Convertible Notes bear a fixed interest rate of 0.250% per year, with interest payable semiannually on May 15 and November 15. The Convertible Notes will mature on May 15, 2025, unless earlier redeemed, repurchased or converted. The Convertible Notes are unsecured obligations ranking equally in right of payment with all other senior unsecured indebtedness of the Company.

As of December 31, 2023, the Convertible Notes are convertible at an adjusted conversion rate of 10.8601 shares of the Company's common shares per $1,000 principal amount of the Convertible Notes (subject to further adjustment pursuant to the terms of the notes indenture, the "Conversion Rate"), which represents an adjusted conversion price of $92.08 per share (subject to adjustment pursuant to the terms of the notes indenture, the "Conversion Price"). Upon conversion, the Convertible Notes may be settled in cash, the Company's common shares or a combination thereof, at the Company's election.

Holders of the Convertible Notes may convert their notes at their option prior to February 15, 2025 under the following circumstances:

•during the quarter following any quarter during which the last reported sales price of the Company's common shares for at least 20 of the last 30 consecutive trading days of such quarter exceeds 130 percent of the Conversion Price;

•during the five-business day period following any five consecutive trading day period when the trading price of the Convertible Notes is less than 98 percent of the product of the last reported sales price of the Company's common shares and the Conversion Rate;

•upon notice of redemption by the Company; or

•upon the occurrence of specified corporate events, including certain consolidations or mergers.

On or after February 15, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their notes at any time. Currently, the Company may redeem the Convertible Notes only if the last reported sale price of the Company's common shares has been at least 130 percent of the Conversion Price for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides the notice of redemption. The redemption price is equal to 100 percent of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest.

In connection with the issuance of the Convertible Notes, the Company entered into privately negotiated capped call transactions with certain financial institution counterparties (the "Capped Call"), the purpose of which was to reduce the potential dilution to the Company's common shares upon conversion of the Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of such converted notes, with such reduction and offset subject to a capped price. As of December 31, 2023, the Capped Call transactions have an adjusted strike price of $92.08 per share of common shares and an adjusted capped price of $131.04 per share of common shares.

As of December 31, 2023, the effective annual interest rate on the Convertible Notes is 0.6 percent after giving effect to deferred financing fees relating to the notes.

Convertible Note conversions. During the last 30 consecutive trading days subsequent to the fourth quarter of 2021 through the fourth quarter of 2023, the last reported sales price of the Company's common shares exceeded 130 percent of the Conversion Price for at least 20 trading days, causing the Convertible Notes to be convertible at the option of the holders during the period from January 1, 2022 through March 31, 2024.

Certain holders of the Convertible Notes exercised their conversion option resulting in the Company recognizing the following cash payments and cash receipts associated with the conversions:


	Year Ended December 31,
	2023		2022
	(in millions)
Cash payments:
Principal repayments	$	424	$	361
Conversion premiums	566		496
Conversion option derivative payments, net	13		—
Cash payments, net	$	1,003	$	857
Cash receipts:
Capped Call proceeds	$	132	$	103
Conversion option derivative receipts, net	—		13
Cash receipts, net	$	132	$	116

The Company recorded the conversion premiums paid, Capped Call proceeds and associated issuance fees and deferred taxes attributable to the principal amount of the Convertible Notes converted in additional paid-in-capital.

As of December 31, 2023 and December 31, 2022, $28 million and $29 million, respectively, of the principal amount of the Convertible Notes remained in the Settlement Period and are recorded in the current portion of debt in the consolidated balance sheets for each respective period. The current portion of Convertible Notes, as of December 31, 2023, will be cash settled at the end of their respective Settlement Periods during the first quarter of 2024.

Principal payments scheduled to be made on the Company's long-term debt are as follows (in millions):


2024	$	28
2025	$	509
2026	$	1,850
2027	$	—
2028	$	379
Thereafter	$	2,100

See Note 4 and Note 15 for additional information.

Interest expense activity is as follows:


	Year Ended December 31,
	2023		2022		2021
	(in millions)
Cash payments for interest	$	127	$	138	$	136
Amortization of issuance premiums, net	—		(2)		(4)
Amortization of capitalized loan fees	11		12		14
Net changes in accruals	15		(20)		17
Interest incurred	153		128		163
Less capitalized interest	—		—		(2)
	$	153	$	128	$	161