Income Taxes

12 Months Ended

Dec. 31, 2023

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.

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. During the year ended December 31, 2021, 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 NOLs of $2.3 billion that are subject to an annual limitation under Internal Revenue Code Section 382. As of December 31, 2023, $1.5 billion of the acquired NOLs have been realized. The Company believes it is more likely than not that the remaining acquired NOLs will be utilized before they expire. Offsetting the deferred tax asset 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 Inflation Reduction Act of 2022. On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (the "IRA"), which includes, among other things, a corporate alternative minimum tax (the "CAMT"). Under the CAMT, a 15 percent minimum tax is imposed on certain adjusted financial statement income of "applicable corporations." The CAMT generally treats a corporation as an "applicable corporation" in any taxable year in which the "average annual adjusted financial statement income" of the corporation and certain of its subsidiaries and affiliates for a three-taxable-year period ending prior to such taxable year exceeds $1 billion. The U.S. Department of the Treasury and the Internal Revenue Service have issued guidance on the application of the CAMT, which may be relied upon until final regulations are released. If the Company's CAMT liability is greater than its regular U.S. federal income tax liability for any particular tax year, the CAMT liability would effectively accelerate its future U.S. federal income tax obligations, reducing its cash flows in that year, but provide an offsetting credit against its regular U.S. federal income tax liability in future tax years. Based on the Company's interpretation of the IRA, CAMT and related guidance, the Company does not expect the CAMT to materially increase its tax obligations for the 2023 taxable year. The IRA also established a one percent, non-deductible excise tax on certain share repurchases made by publicly traded U.S. corporations after December 31, 2022. The value of share repurchases subject to the excise tax is reduced by the fair market value of any shares issued during the tax year, including the fair market value of any shares issued or provided to employees or specified affiliates. During the year ended December 31, 2023, the Company recorded $5 million related to the IRA excise tax payable on share repurchases.

Uncertain tax positions. The Company had state unrecognized tax benefits ("UTBs") for the 2013 tax year and for the tax years of 2015 through 2018 resulting from research and experimental expenditures related to horizontal drilling and completion innovations. In July 2022, the Company and the state taxing authorities effectively settled the uncertain tax positions for all years. As of December 31, 2022, the Company no longer had any UTBs.

Unrecognized tax benefit activity is as follows:

	Year Ended December 31,
	2023		2022		2021
	(in millions)
Beginning unrecognized tax benefits	$	—	$	27	$	—
Current year additions	—		—		27
Effectively settled tax positions	—		(27)		—
Ending unrecognized tax benefits	$	—	$	—	$	27

Other tax matters.

Net tax payments related to filed tax returns are as follows:

	Year Ended December 31,
	2023		2022		2021
	(in millions)
U.S. state tax payments, net	$	63	$	21	$	3
U.S. federal payments (refunds), net	692		424		(2)
Tax payments, net (a)	$	755	$	445	$	1

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. As of December 31, 2023, there are no proposed adjustments in any jurisdiction that would have a material 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. federal	2021
Various U.S. states	2017

Income tax provision is as follows:

	Year Ended December 31,
	2023		2022		2021
	(in millions)
Current:
U.S. federal	$	(807)	$	(260)	$	(1)
U.S. state	(40)		(39)		(44)
Current income tax provision	(847)		(299)		(45)
Deferred:
U.S. federal	(493)		(1,788)		(585)
U.S. state	(13)		(19)		2
Deferred income tax provision	(506)		(1,807)		(583)
Income tax provision	$	(1,353)	$	(2,106)	$	(628)

The effective tax rate for income is reconciled to the United States federal statutory rate as follows:

	Year Ended December 31,
	2023			2022			2021
	(in millions, except tax rates)
Income before income taxes	$	6,247		$	9,951		$	2,746
Federal statutory income tax rate	21		%	21		%	21		%
Provision for federal income taxes at the statutory rate	(1,312)			(2,090)			(577)
State income tax provision (net of federal tax)	(43)			(45)			(33)
Transaction costs	—			—			(6)
Other	2			29			(12)
Income tax provision	$	(1,353)		$	(2,106)		$	(628)
Effective tax rate	22		%	21		%	23		%

Significant components of deferred tax assets and deferred tax liabilities are as follows:

	As of December 31,
	2023		2022
	(in millions)
Deferred tax assets:
Lease deferred tax assets	$	201	$	190
Net operating loss carryforward (a)	164		225
Asset retirement obligations	100		104
Net deferred hedge losses	30		33
Incentive plans	24		25
Credit carryforwards (b)	4		—
Convertible debt	—		2
Other	52		54
Deferred tax assets	575		633
Deferred tax liabilities:
Oil and gas properties, principally due to differences in basis, depletion and the deduction of intangible drilling costs for tax purposes	(4,627)		(4,186)
Other property and equipment, principally due to the deduction of bonus depreciation for tax purposes	(246)		(233)
Lease deferred tax liabilities	(87)		(72)
Convertible debt	(6)		—
Other	(11)		(9)
Deferred tax liabilities	(4,977)		(4,500)
Net deferred tax liability	$	(4,402)	$	(3,867)

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(a)Net operating loss carryforwards as of December 31, 2023 consist of $779 million of U.S. federal NOLs that can be carried forward indefinitely. 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, 2023, consist of $4 million of U.S. federal minimum tax credits.