UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

______________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 1-13245

______________________________

PIONEER NATURAL RESOURCES COMPANY

(Exact name of Registrant as specified in its charter)

______________________________


Delaware						75-2702753
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

777 Hidden Ridge

Irving, Texas 75038

(Address of principal executive offices and zip code)

(972) 444-9001

(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

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

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 Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Number of shares of Common Stock outstanding as of ~~May 4,~~July 29, 2022 ~~241,958,985~~238,666,954

Table of Contents

PIONEER NATURAL RESOURCES COMPANY

TABLE OF CONTENTS


		Page
Definitions of Certain Terms and Conventions Used Herein		3

Cautionary Statement Concerning Forward-Looking Statements		5

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets as of ~~March 31,~~June 30, 2022 and December 31, 2021	6

	Consolidated Statements of Operations for the three and six months ended ~~March 31,~~June 30, 2022 and 2021	7

	Consolidated Statements of Equity for the three and six months ended ~~March 31,~~June 30, 2022 and 2021	8

	Consolidated Statements of Cash Flows for the t~~hree~~ six months ended ~~ended~~ ~~March 31,~~June 30, 2022 and 2021	10

	Notes to Consolidated Financial Statements	11

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2829

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4143

Item 4.	Controls and Procedures	4345

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	4446

Item 1A.	Risk Factors	4446

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4446

Item 6.	Exhibits	4547

Signatures		4648

Table of Contents

Definitions of Certain Terms and Conventions Used Herein

Within this Report, the following terms and conventions have specific meanings:

Measurements.

•"Bbl" means a standard barrel containing 42 United States gallons.

•"Bcf" means one billion cubic feet and is a measure of gas volume.

•"BOE" means a barrel of oil equivalent and is a standard convention used to express oil and gas volumes on a comparable oil equivalent basis. Gas equivalents are determined under the relative energy content method by using the ratio of six thousand cubic feet of gas to one Bbl of oil or natural gas liquid.

•"BOEPD" means BOE per day.

•"Btu" means British thermal unit, which is a measure of the amount of energy required to raise the temperature of one pound of water one degree Fahrenheit.

•"MBbl" means one thousand Bbls.

•"MBOE" means one thousand BOEs.

•"Mcf" means one thousand cubic feet and is a measure of gas volume.

•"MMBbl" means one million Bbls.

•"MMBOE" means one million BOEs.

•"MMBtu" means one million Btus.

•"MMcf" means one million cubic feet.

Indices.

•"Brent" means Brent oil price, a major trading classification of light sweet oil that serves as a benchmark price for oil worldwide.

•"Dutch TTF" means Dutch Title Transfer Facility, a virtual trading hub for gas in the Netherlands and the primary gas pricing hub for the European gas market.

•��"HH" means Henry Hub, a distribution hub in Louisiana that serves as the delivery location for gas futures contracts on the NYMEX.

•"Houston Ship Channel" is a benchmark pricing hub for South Texas gas.

•"MEH" means Magellan East Houston, an oil index benchmark price of WTI at Magellan East Houston.

•"SoCal" is a benchmark pricing hub for Southern California gas.

•"WAHA" is a benchmark pricing hub for West Texas gas.

•"WTI" means West Texas Intermediate, a light sweet blend of oil produced from fields in western Texas and is a grade of oil used as a benchmark in oil pricing.

General terms and conventions.

•"DD&A" means depletion, depreciation and amortization.

•"ESG" means environmental, social and governance.

•"Field fuel" means gas consumed to operate field equipment (primarily compressors) prior to the gas being delivered to a sales point.

•"GAAP" means accounting principles generally accepted in the United States of America.

•"GHG" means greenhouse gases.

•"NGLs" means natural gas liquids, which are the heavier hydrocarbon liquids that are separated from the gas stream; such liquids include ethane, propane, isobutane, normal butane and natural gasoline.

•"NYMEX" means the New York Mercantile Exchange.

•"NYSE" means the New York Stock Exchange.

•"OPEC" means the Organization of Petroleum Exporting Countries.

•"Pioneer" or the "Company" means Pioneer Natural Resources Company and its subsidiaries.

•"Proved developed reserves" means reserves that can be expected to be recovered through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well.

Table of Contents

•"Proved reserves" means those quantities of oil and gas, which, by analysis of geosciences and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations – prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i) The area of the reservoir considered as proved includes: (A) The area identified by drilling and limited by fluid contacts, if any, and (B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons ("LKH") as seen in a well penetration unless geoscience, engineering or performance data and reliable technology establishes a lower contact with reasonable certainty.

(iii) Where direct observation from well penetrations has defined a highest known oil ("HKO") elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering or performance data and reliable technology establish the higher contact with reasonable certainty.

(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: (A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (B) The project has been approved for development by all necessary parties and entities, including governmental entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

•"Proved undeveloped reserves" means reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

(i) Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

(ii) Undrilled locations can be classified as having proved undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.

(iii) Under no circumstances shall estimates for proved undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty.

•"SEC" means the United States Securities and Exchange Commission.

•"Standardized Measure" means the after-tax present value of estimated future net cash flows of proved reserves, determined in accordance with the rules and regulations of the SEC, using prices and costs employed in the determination of proved reserves and a ten percent discount rate.

•"U.S." means United States.

•With respect to information on the working interest in wells, drilling locations and acreage, "net" wells, drilling locations and acres are determined by multiplying "gross" wells, drilling locations and acres by the Company's working interest in such wells, drilling locations or acres. Unless otherwise specified, wells, drilling locations and acreage statistics quoted herein represent gross wells, drilling locations or acres.

•"WASP" means weighted average sales price.

•All currency amounts are expressed in U.S. dollars.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

The information in this Quarterly Report on Form 10-Q (this "Report") contains forward-looking statements that involve risks and uncertainties. When used in this document, the words "believes," "plans," "expects," "anticipates," "forecasts," "models," "intends," "continue," "may," "will," "could," "should," "future," "potential," "estimate," or the negative of such terms and similar expressions as they relate to the Company are intended to identify forward-looking statements, which are generally not historical in nature. The forward-looking statements are based on the Company's current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates. Although the Company believes that the expectations and assumptions reflected in the forward-looking statements are reasonable as and when made, they involve risks and uncertainties that are difficult to predict and, in many cases, beyond the Company's control. In addition, the Company may be subject to currently unforeseen risks that may have a materially adverse effect on it.

These risks and uncertainties include, among other things, volatility of commodity prices; product supply and demand; the impact of a widespread outbreak of an illness, such as the COVID-19 pandemic, on global and U.S. economic activity and oil and gas demand; the impact of armed conflict and political instability on economic activity and oil and gas supply and demand; competition; the ability to obtain drilling, environmental and other permits and the timing thereof; the effect of future regulatory or legislative actions on Pioneer or the industries in which it operates, including potential changes to tax laws; the ability to obtain approvals from third parties and negotiate agreements with third parties on mutually acceptable terms; potential liability resulting from pending or future litigation; the costs, including the potential impact of increases due to inflation and supply chain disruptions, and results of drilling and operating activities; the risk of new restrictions with respect to development activities, including potential changes to regulations resulting in limitations on the Company's ability to dispose of produced water; 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, refining, storage and export facilities; Pioneer's ability to replace reserves, implement its business plans or complete its development activities as scheduled; the Company's ability to achieve its emissions reductions, flaring and other ESG goals; access to and cost of capital; the financial strength of (i) counterparties to Pioneer's credit facility and derivative contracts, (ii) issuers toof Pioneer's investment securities and (iii) purchasers of Pioneer's oil, NGL and gas production and downstream sales of purchased oil and gas; uncertainties about estimates of reserves, identification of drilling locations and the ability to add proved reserves in the future; the assumptions underlying forecasts, including forecasts of production, operating cash flow, well costs, capital expenditures, rates of return, expenses, and cash flow from downstream purchases and sales of oil and gas, net of firm transportation commitments; tax rates; quality of technical data; environmental and weather risks, including the possible impacts of climate change on the Company's operations and demand for its products; cybersecurity risks; the risks associated with the ownership and operation of the Company's water services business and acts of war or terrorism. In addition, the Company may be subject to currently unforeseen risks that may have a materially adverse effect 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. See "Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations," "Part 1, Item 3. Quantitative and Qualitative Disclosures About Market Risk" and "Part II, Item 1A. Risk Factors" in this Report and "Part I, Item 1. Business — Competition," "Part I, Item 1. Business —Regulation," "Part I, Item 1A. Risk Factors," "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk" in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 for a description of various factors that could materially affect the ability of Pioneer to achieve the anticipated results described in the forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Pioneer undertakes no duty to publicly update these statements except as required by law.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PIONEER NATURAL RESOURCES COMPANY

CONSOLIDATED BALANCE SHEETS

(in millions, except share data)


		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	2,385	$	3,847	Cash and cash equivalents	$	2,579	$	3,847
Restricted cash	Restricted cash	9		37		Restricted cash	6		37
Accounts receivable, net	Accounts receivable, net	2,397		1,685		Accounts receivable, net	2,344		1,685
Inventories	Inventories	493		369		Inventories	606		369
Investment in affiliate	Investment in affiliate	231		135		Investment in affiliate	167		135
Short-term investments, net	Short-term investments, net	640		58		Short-term investments, net	506		58
Other	Other	94		42		Other	113		42
Total current assets	Total current assets	6,249		6,173		Total current assets	6,321		6,173
Oil and gas properties, using the successful efforts method of accounting:	Oil and gas properties, using the successful efforts method of accounting:					Oil and gas properties, using the successful efforts method of accounting:
Proved properties	Proved properties	35,272		34,454		Proved properties	36,171		34,454
Unproved properties	Unproved properties	5,924		6,063		Unproved properties	5,948		6,063
Accumulated depletion, depreciation and amortization	Accumulated depletion, depreciation and amortization	(12,971)		(12,335)		Accumulated depletion, depreciation and amortization	(13,571)		(12,335)
Total oil and gas properties, net	Total oil and gas properties, net	28,225		28,182		Total oil and gas properties, net	28,548		28,182
Other property and equipment, net	Other property and equipment, net	1,692		1,694		Other property and equipment, net	1,679		1,694
Operating lease right-of-use assets	Operating lease right-of-use assets	320		348		Operating lease right-of-use assets	330		348
Goodwill	Goodwill	243		243		Goodwill	243		243
Other assets	Other assets	131		171		Other assets	180		171
		$	36,860	$	36,811		$	37,301	$	36,811
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable:	Accounts payable:					Accounts payable:
Trade	Trade	$	2,608	$	2,380	Trade	$	2,549	$	2,380
Due to affiliates	Due to affiliates	116		179		Due to affiliates	141		179
Interest payable	Interest payable	23		53		Interest payable	40		53
Income taxes payable	Income taxes payable	62		45		Income taxes payable	37		45
Current portion of long-term debt	Current portion of long-term debt	244		244		Current portion of long-term debt	1,117		244
Derivatives	Derivatives	556		538		Derivatives	513		538
Operating leases	Operating leases	113		121		Operating leases	123		121
Other	Other	334		513		Other	229		513
Total current liabilities	Total current liabilities	4,056		4,073		Total current liabilities	4,749		4,073
Long-term debt	Long-term debt	5,446		6,688		Long-term debt	4,576		6,688
Derivatives	Derivatives	1		25		Derivatives	—		25
Deferred income taxes	Deferred income taxes	2,571		2,038		Deferred income taxes	3,089		2,038
Operating leases	Operating leases	222		243		Operating leases	222		243
Other liabilities	Other liabilities	896		907		Other liabilities	875		907
Equity:	Equity:					Equity:
Common stock, $.01 par value; 500,000,000 shares authorized; 244,494,327 and 244,144,444 shares issued as of March 31, 2022 and December 31, 2021, respectively		2		2
Common stock, $.01 par value; 500,000,000 shares authorized; 244,499,957 and 244,144,444 shares issued as of June 30, 2022 and December 31, 2021, respectively						Common stock, $.01 par value; 500,000,000 shares authorized; 244,499,957 and 244,144,444 shares issued as of June 30, 2022 and December 31, 2021, respectively	2		2
Additional paid-in capital	Additional paid-in capital	19,142		19,123		Additional paid-in capital	19,180		19,123
Treasury stock, at cost; 2,535,342 and 1,366,610 shares as of March 31, 2022 and December 31, 2021, respectively		(523)		(248)
Treasury stock, at cost; 4,661,658 and 1,366,610 shares as of June 30, 2022 and December 31, 2021, respectively						Treasury stock, at cost; 4,661,658 and 1,366,610 shares as of June 30, 2022 and December 31, 2021, respectively	(1,022)		(248)
Retained earnings	Retained earnings	5,047		3,960		Retained earnings	5,630		3,960
Total equity	Total equity	23,668		22,837		Total equity	23,790		22,837
Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies	0		0
		$	36,860	$	36,811		$	37,301	$	36,811

The financial information included as of ~~March 31,~~June 30, 2022 has been prepared by management

without audit by independent registered public accountants.

The accompanying notes are an integral part of these consolidated financial statements.

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PIONEER NATURAL RESOURCES COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(Unaudited)


		Three Months Ended March 31,			Three Months Ended June 30,				Six Months Ended June 30, 2022
			2022			2021			2022		2021		2022		2021
Revenues and other income:	Revenues and other income:							Revenues and other income:
Oil and gas	Oil and gas		$	3,930		$	1,824	Oil and gas	$	4,639	$	2,682	$	8,570	$	4,505
Sales of purchased commodities	Sales of purchased commodities		2,217			1,240		Sales of purchased commodities	2,366		1,587		4,583		2,828
Interest and other income, net			126			60
Interest and other income (loss), net								Interest and other income (loss), net	(56)		(20)		69		40
Derivative loss, net	Derivative loss, net		(135)			(691)		Derivative loss, net	(65)		(832)		(200)		(1,523)
Gain on disposition of assets, net	Gain on disposition of assets, net		34			11		Gain on disposition of assets, net	36		2		70		13
			6,172			2,444			6,920		3,419		13,092		5,863
Costs and expenses:	Costs and expenses:							Costs and expenses:
Oil and gas production	Oil and gas production		416			252		Oil and gas production	478		316		894		568
Production and ad valorem taxes	Production and ad valorem taxes		224			113		Production and ad valorem taxes	271		153		495		266
Depletion, depreciation and amortization	Depletion, depreciation and amortization		614			474		Depletion, depreciation and amortization	620		648		1,234		1,121
Purchased commodities	Purchased commodities		2,152			1,255		Purchased commodities	2,382		1,627		4,534		2,882

Exploration and abandonments	Exploration and abandonments		14			19		Exploration and abandonments	11		10		24		29
General and administrative	General and administrative		73			68		General and administrative	88		75		161		143
Accretion of discount on asset retirement obligations	Accretion of discount on asset retirement obligations		4			1		Accretion of discount on asset retirement obligations	4		2		8		3
Interest	Interest		37			39		Interest	33		41		70		81
Other	Other		77			304		Other	5		47		83		351
			3,611			2,525			3,892		2,919		7,503		5,444
Income (loss) before income taxes			2,561			(81)
Income tax benefit (provision)			(552)			11
Net income (loss) attributable to common stockholders			$	2,009		$	(70)
Income before income taxes								Income before income taxes	3,028		500		5,589		419
Income tax provision								Income tax provision	(657)		(120)		(1,209)		(109)
Net income attributable to common stockholders								Net income attributable to common stockholders	$	2,371	$	380	$	4,380	$	310

Net income (loss) per share attributable to common stockholders:
Net income per share attributable to common stockholders:								Net income per share attributable to common stockholders:
Basic	Basic		$	8.25		$	(0.33)	Basic	$	9.78	$	1.62	$	18.03	$	1.39
Diluted	Diluted		$	7.85		$	(0.33)	Diluted	$	9.30	$	1.54	$	17.15	$	1.33

Weighted average shares outstanding:	Weighted average shares outstanding:							Weighted average shares outstanding:
Basic	Basic		243			210		Basic	242		234		242		222
Diluted	Diluted		256			210		Diluted	254		247		255		235

Dividends declared per share	Dividends declared per share		$	3.78		$	0.56	Dividends declared per share	$	7.38	$	0.56	$	11.16	$	1.12

The financial information included herein has been prepared by management

without audit by independent registered public accountants.

The accompanying notes are an integral part of these consolidated financial statements.

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PIONEER NATURAL RESOURCES COMPANY

CONSOLIDATED STATEMENTS OF EQUITY

(in millions, except share data and dividends per share)

(Unaudited)

Shares
Outstanding Common
Stock Additional
Paid-in
Capital Treasury
Stock Retained
Earnings Total Equity
(in thousands)
Balance as of December 31, 2021 242,778 $ 2 $ 19,123 $ (248) $ 3,960 $ 22,837
Dividends declared ($3.78 per share) — — — — (922) (922)
Exercise of long-term incentive stock options 6 — — 1 — 1
Purchases of treasury stock (1,175) — — (276) — (276)
Stock-based compensation costs:
Vested compensation awards, net 350 — — — — —
Compensation costs included in net income — — 19 — — 19
Net income — — — — 2,009 2,009
Balance as of March 31, 2022 241,959 $ 2 $ 19,142 $ (523) $ 5,047 $ 23,668


	Shares Outstanding	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Total Equity
	(in thousands)
Balance as of December 31, 2021	242,778	$	2	$	19,123	$	(248)	$	3,960	$	22,837

Dividends declared ($3.78 per share)	—	—		—		—		(922)		(922)
Exercise of long-term incentive stock options	6	—		—		1		—		1

Purchases of treasury stock	(1,175)	—		—		(276)		—		(276)
Stock-based compensation:
Vested compensation awards, net	350	—		—		—		—		—
Compensation costs included in net income	—	—		19		—		—		19
Net income	—	—		—		—		2,009		2,009
Balance as of March 31, 2022	241,959	2		19,142		(523)		5,047		23,668

Dividends declared ($7.38 per shares)	—	—		—		—		(1,788)		(1,788)



Convertible senior note conversions:
Conversion premium	—	—		(2)		—		—		(2)
Capped call proceeds	—	—		26		—		—		26
Deferred tax component	—	—		(6)		—		—		(6)


Purchases of treasury stock	(2,126)	—		—		(499)		—		(499)
Stock-based compensation:
Vested compensation awards, net	5	—		—		—		—		—
Compensation costs included in net income	—	—		20		—		—		20
Net income	—	—		—		—		2,371		2,371
Balance as of June 30, 2022	239,838	$	2	$	19,180	$	(1,022)	$	5,630	$	23,790

The financial information included herein has been prepared by management

without audit by independent registered public accountants.

The accompanying notes are an integral part of these consolidated financial statements.

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PIONEER NATURAL RESOURCES COMPANY

CONSOLIDATED STATEMENTS OF EQUITY (continued)

(in millions, except share data and dividends per share)

(Unaudited)

Shares
Outstanding Common
Stock Additional
Paid-in
Capital Treasury
Stock Retained
Earnings Total Equity
(in thousands)
Balance as of December 31, 2020 164,477 $ 2 $ 9,323 $ (1,234) $ 3,478 $ 11,569
Dividends declared ($0.56 per share) — — — — (122) (122)
Cumulative effect of accounting change on convertible senior notes:
Equity component — — (230) — 28 (202)
Deferred tax component — — 50 — (6) 44
Exercise of long-term incentive stock options 55 — (2) 8 — 6
Purchases of treasury stock (99) — — (13) — (13)
Shares issued or reissued for Parsley Energy, Inc. ("Parsley") acquisition 51,655 — 5,644 1,238 — 6,882
Stock-based compensation costs:
Vested compensation awards, net 623 — — — — —
Compensation costs included in net loss — — 19 — — 19
Compensation costs included in net loss associated with
Parsley acquisition — — 33 — — 33
Net loss — — — — (70) (70)
Balance as of March 31, 2021 216,711 $ 2 $ 14,837 $ (1) $ 3,308 $ 18,146


	Shares Outstanding	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Total Equity
	(in thousands)
Balance as of December 31, 2020	164,477	$	2	$	9,323	$	(1,234)	$	3,478	$	11,569

Dividends declared ($0.56 per share)	—	—		—		—		(122)		(122)
Cumulative effect of accounting change on convertible senior notes:
Equity component	—	—		(230)		—		28		(202)
Deferred tax component	—	—		50		—		(6)		44
Exercise of long-term incentive stock options	55	—		(2)		8		—		6

Purchases of treasury stock	(99)	—		—		(13)		—		(13)
Shares issued or reissued for Parsley Energy, Inc. ("Parsley") acquisition	51,655	—		5,644		1,238		—		6,882
Stock-based compensation:
Vested compensation awards, net	623	—		—		—		—		—
Compensation costs included in net loss	—	—		19		—		—		19
Compensation costs included in net loss associated with Parsley acquisition	—	—		33		—		—		33
Net loss	—	—		—		—		(70)		(70)
Balance as of March 31, 2021	216,711	2		14,837		(1)		3,308		18,146

Dividends declared ($0.56 per share)	—	—		—		—		(138)		(138)
Purchases of treasury stock	(2)	—		—		(1)		—		(1)
Shares issued for Double Eagle III Midco 1 LLC ("DoublePoint") acquisition	27,187	—		4,234		—		—		4,234
Stock-based compensation:
Vested compensation awards, net	63	—		—		—		—		—
Compensation costs included in net income	—	—		17		—		—		17
Net income	—	—		—		—		380		380
Balance as of June 30, 2021	243,959	$	2	$	19,088	$	(2)	$	3,550	$	22,638

The financial information included herein has been prepared by management

without audit by independent registered public accountants.

The accompanying notes are an integral part of these consolidated financial statements.

PIONEER NATURAL RESOURCES COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)


		Three Months Ended March 31,					Six Months Ended June 30,
			2022		2021				2022		2021
Cash flows from operating activities:	Cash flows from operating activities:							Cash flows from operating activities:
Net income (loss)			$	2,009	$	(70)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net income								Net income	$	4,380	$	310
Adjustments to reconcile net income to net cash provided by operating activities:								Adjustments to reconcile net income to net cash provided by operating activities:
Depletion, depreciation and amortization	Depletion, depreciation and amortization		614		474			Depletion, depreciation and amortization	1,234		1,121

Exploration expenses	Exploration expenses		5		3			Exploration expenses	6		3
Deferred income taxes	Deferred income taxes		532		(18)			Deferred income taxes	1,045		91
Gain on disposition of assets, net	Gain on disposition of assets, net		(34)		(11)			Gain on disposition of assets, net	(70)		(13)
Loss on early extinguishment of debt			47		5
Loss on early extinguishment of debt, net								Loss on early extinguishment of debt, net	47		2
Accretion of discount on asset retirement obligations	Accretion of discount on asset retirement obligations		4		1			Accretion of discount on asset retirement obligations	8		3
Interest expense	Interest expense		3		1			Interest expense	5		3
Derivative-related activity	Derivative-related activity		67		370			Derivative-related activity	40		632
Amortization of stock-based compensation	Amortization of stock-based compensation		19		52			Amortization of stock-based compensation	39		69
Investment valuation adjustments	Investment valuation adjustments		(114)		(54)			Investment valuation adjustments	(49)		(29)

Other	Other		30		45			Other	47		81
Changes in operating assets and liabilities, net of effects of acquisition:
Changes in operating assets and liabilities, net of effects of acquisitions:								Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	Accounts receivable		(697)		(330)			Accounts receivable	(659)		(593)

Inventories	Inventories		(126)		(90)			Inventories	(241)		(102)
Operating lease right-of-use assets	Operating lease right-of-use assets		28		30			Operating lease right-of-use assets	18		55
Other assets	Other assets		(28)		(14)			Other assets	(62)		(32)
Accounts payable	Accounts payable		178		265			Accounts payable	88		560
Interest payable	Interest payable		(30)		(57)			Interest payable	(13)		(54)
Income taxes payable	Income taxes payable		17		7			Income taxes payable	(8)		14
Operating leases	Operating leases		(29)		(31)			Operating leases	(19)		(56)
Other liabilities	Other liabilities		89		(201)			Other liabilities	(31)		(222)
Net cash provided by operating activities	Net cash provided by operating activities		2,584		377			Net cash provided by operating activities	5,805		1,843
Cash flows from investing activities:	Cash flows from investing activities:							Cash flows from investing activities:
Proceeds from disposition of assets	Proceeds from disposition of assets		210		23			Proceeds from disposition of assets	253		32
Proceeds from investments	Proceeds from investments		75		—			Proceeds from investments	221		—
Purchase of investments			(640)		—
Cash acquired, net of cash paid			—		117
Purchase of investments, net								Purchase of investments, net	(650)		—
Cash used in acquisitions, net of cash acquired								Cash used in acquisitions, net of cash acquired	—		(826)
Additions to oil and gas properties	Additions to oil and gas properties		(917)		(464)			Additions to oil and gas properties	(1,834)		(1,193)
Additions to other assets and other property and equipment	Additions to other assets and other property and equipment		(41)		(24)			Additions to other assets and other property and equipment	(61)		(55)
Net cash used in investing activities	Net cash used in investing activities		(1,313)		(348)			Net cash used in investing activities	(2,071)		(2,042)
Cash flows from financing activities:	Cash flows from financing activities:							Cash flows from financing activities:
Proceeds from issuance of senior notes, net of discount	Proceeds from issuance of senior notes, net of discount		—		2,497			Proceeds from issuance of senior notes, net of discount	—		3,247

Borrowings under credit facility								Borrowings under credit facility	—		650
Repayment of credit facilities	Repayment of credit facilities		—		(397)			Repayment of credit facilities	—		(1,287)
Repayment of senior notes, including tender offer premiums			(1,292)		(2,640)
Repayment of long-term debt								Repayment of long-term debt	(1,295)		(3,371)
Proceeds from capped call on convertible notes								Proceeds from capped call on convertible notes	26		—
Payments of other liabilities	Payments of other liabilities		(121)		(140)			Payments of other liabilities	(129)		(147)
Payments of financing fees	Payments of financing fees		—		(28)			Payments of financing fees	—		(31)
Purchases of treasury stock	Purchases of treasury stock		(276)		(13)			Purchases of treasury stock	(775)		(14)
Exercise of long-term incentive plan stock options	Exercise of long-term incentive plan stock options		1		6			Exercise of long-term incentive plan stock options	1		6
Dividends paid	Dividends paid		(1,073)		(91)			Dividends paid	(2,861)		(213)
Net cash used in financing activities	Net cash used in financing activities		(2,761)		(806)			Net cash used in financing activities	(5,033)		(1,160)
Net decrease in cash, cash equivalents and restricted cash	Net decrease in cash, cash equivalents and restricted cash		(1,490)		(777)			Net decrease in cash, cash equivalents and restricted cash	(1,299)		(1,359)
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period		3,884		1,501			Cash, cash equivalents and restricted cash, beginning of period	3,884		1,501
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period		$	2,394	$	724		Cash, cash equivalents and restricted cash, end of period	$	2,585	$	142

The financial information included herein has been prepared by management

without audit by independent registered public accountants.

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~June 30, 2022

(Unaudited)

NOTE 1. Organization and Nature of Operations

Pioneer is a Delaware corporation whose common stock is listed and traded on the NYSE. The Company is a large independent oil and gas exploration and production company that explores for, develops and produces oil, NGLs and gas in the Midland Basin in West Texas.

NOTE 2. Basis of Presentation

Presentation. In the opinion of management, the unaudited interim consolidated financial statements of the Company as of ~~March 31,~~June 30, 2022 and for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 include all adjustments and accruals, consisting only of normal, recurring adjustments and accruals necessary for a fair presentation of the results for the interim periods in conformity with GAAP. The operating results for the three and six months ended ~~March 31,~~June 30, 2022 are not necessarily indicative of results for a full year.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with the rules and regulations of the SEC. These unaudited interim consolidated financial statements should be read together with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

Use of estimates in the preparation of financial statements. Preparation of the Company's consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Depletion of oil and gas properties is determined using estimates of proved oil and gas reserves. There are numerous uncertainties inherent in the estimation of quantities of proved reserves and in the projection of future rates of production and the timing of development expenditures. Similarly, evaluations for impairment of proved and unproved oil and gas properties are subject to numerous uncertainties including, among others, estimates of future recoverable reserves, commodity price outlooks and estimates of development and production costs. Actual results could differ from the estimates and assumptions utilized.

NOTE 3. Acquisition and Divestiture Activities

Acquisitions. The Company regularly seeks to acquire or trade for acreage that complements its operations, provides exploration and development opportunities, increases the lateral length of future horizontal wells and provides superior returns on investment.

DoublePoint acquisition. On May 4, 2021, the Company acquired Double Eagle III Midco 1 LLC ("DoublePoint") pursuant to a definitive membership interest purchase agreement 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.

Parsley acquisition. On January 12, 2021, the Company acquired Parsley Energy, Inc., a Delaware corporation that previously traded on the NYSE under the symbol "PE" ("Parsley"), pursuant to the Agreement and Plan of Merger, dated as of October 20, 2020, among Pioneer, certain of its subsidiaries, Parsley and Parsley Energy, LLC (the "Parsley Acquisition").

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 $6.9 billion.

~~The~~Both the Parsley Acquisition ~~was~~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.

Table of Contents

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

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.

•During the six months ended June 30, 2022, the Company divested certain undeveloped acres and producing wells in the Midland Basin for (i) cash proceeds of $126 million and (ii) ownership interests in certain Midland Basin undeveloped acres and producing wells valued at $8 million. The Company recorded a gain on these sales of $76 million, which is reflected in net gain on disposition of assets in the consolidated statements of operations.

•In February 2022, the Company completed the sale of its equity interest in certain gas gathering and processing systems in northern Martin County for cash proceeds of $125 million, after normal closing adjustments ~~("Martin~~(the "Martin County Gas Processing Divestiture"). The sale was treated as a recovery of investment from a partial sale of proved property resulting in no gain or loss being recognized.

~~Table of Contents~~

~~PIONEER NATURAL RESOURCES COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022~~

~~(Unaudited)~~

•During the three months ended March 31, 2022, the Company divested certain undeveloped acres and producing wells in the Midland Basin for (i) cash proceeds of $85 million and (ii) interests in certain Midland Basin undeveloped acres and producing wells valued at $8 million. The Company recorded a gain on these sales of $41 million, which is reflected in net gain on disposition of assets in the consolidated statements of operations.

•In March 2021, the Company sold its well services business 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 through March 2024. The Company recorded a gain on the sale of $9 million, which is reflected in net gain on disposition of assets in the consolidated statements of operations.

NOTE 4. Fair Value Measurements

The Company determines fair value based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based upon inputs that market participants use in pricing an asset or liability, which are characterized according to a hierarchy that prioritizes those inputs based on the degree to which they are observable. Observable inputs represent market data obtained from independent sources, whereas unobservable inputs reflect a company's own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort. The fair value input hierarchy level to which an asset or liability measurement in its entirety falls is determined based on the lowest level input that is significant to the measurement in its entirety.

The three input levels of the fair value hierarchy are as follows:

•Level 1 – quoted prices for identical assets or liabilities in active markets.

•Level 2 – quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates) and inputs derived principally from or corroborated by observable market data by correlation or other means.

•Level 3 – unobservable inputs for the asset or liability, typically reflecting management's estimate of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including discounted cash flow models.

Table of Contents

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~June 30, 2022

(Unaudited)

Assets and liabilities measured at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows:


		As of March 31, 2022									As of June 30, 2022
		Fair Value Measurements									Fair Value Measurements
		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
		(in millions)									(in millions)
Assets:	Assets:									Assets:

Investment in affiliate	Investment in affiliate	$	231	$	—	$	—	$	231	Investment in affiliate	$	167	$	—	$	—	$	167
Deferred compensation plan assets	Deferred compensation plan assets	68		—		—		68		Deferred compensation plan assets	65		—		—		65
Conversion option derivatives										Conversion option derivatives	—		23		—		23
Marketing derivatives	Marketing derivatives	—		—		5		5		Marketing derivatives	—		—		48		48

		$	299	$	—	$	5	$	304		$	232	$	23	$	48	$	303
Liabilities:	Liabilities:									Liabilities:
Commodity price derivatives (a)	Commodity price derivatives (a)	$	—	$	519	$	—	$	519	Commodity price derivatives (a)	$	—	$	364	$	—	$	364

Marketing derivatives	Marketing derivatives	—		—		38		38		Marketing derivatives	—		—		149		149
		$	—	$	519	$	38	$	557		$	—	$	364	$	149	$	513


	As of December 31, 2021
	Fair Value Measurements
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in millions)
Assets:

Investment in affiliate	$	135	$	—	$	—	$	135
Deferred compensation plan assets	74		—		—		74
Short-term investment	58		—		—		58
	$	267	$	—	$	—	$	267
Liabilities:
Commodity price derivatives (a)	$	—	$	486	$	—	$	486
Marketing derivatives	—		—		77		77
	$	—	$	486	$	77	$	563

______________________

(a)Includes ~~$250~~$167 million and $328 million as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively, of liabilities recorded in the fourth quarter of 2021 related to entering into equal and offsetting oil and gas commodity derivative trades that had the net effect of eliminating certain of the Company's 2022 derivative obligations.

Investment in affiliate. The Company elected the fair value option for measuring its equity method investment in ProPetro Holding Corp. ("ProPetro"). The fair value of the Company's investment in ProPetro common stock is determined using Level 1 inputs based on observable prices on a major exchange. See Note 11 and Note 13 for additional information.

Deferred compensation plan assets. The Company's deferred compensation plan assets include investments in equity and mutual fund securities that are actively traded on major exchanges. The fair value of these investments is determined using Level 1 inputs based on observable prices on major exchanges.

Short-term investment. In October 2021, the Company acquired 960 thousand shares of Laredo Petroleum, Inc. ("Laredo") as partial consideration for its divestiture of certain acreage in western Glasscock County to Laredo. The shares were treated as an investment in equity securities measured at fair value. The fair value of the Company's investment in Laredo

Table of Contents

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

common stock was determined using Level 1 inputs based on observable prices on a major exchange, resulting in the fair value of the Laredo shares being based on the trading value of the shares as of December 31, 2022. During the six months ended June 30, 2022, the Company sold the 960 thousand shares of Laredo common stock. See Note 13 for additional information.

Conversion option derivatives. Certain holders of the Company's 0.250% Convertible Notes due 2025 exercised their conversion option during the six months ended June 30, 2022. Per the terms of the notes indenture, the Company elected to settle the conversions in cash, with settlement occurring 25 trading days from the notice of conversion (the "Settlement Period"). The Company's election to settle an exercised conversion option in cash results in a forward contract during the Settlement Period that is accounted for as a derivative instrument not designated as a hedge. The change in fair value of the conversion option derivatives during the Settlement Periods is primarily determined based on Level 2 inputs related to the daily volumetric weighted average prices ("VWAP") of the Company's common stock during the Settlement Period. See Note 5 and Note 7 for additional information.

Commodity price derivatives. The Company's commodity price derivatives primarily represent oil and gas swap contracts, collar contracts, collar contracts with short puts, option contracts and basis swap contracts. The asset and liability measurements for the Company's commodity price derivative contracts are determined using Level 2 inputs. The Company utilizes discounted cash flow and option-pricing models for valuing its commodity price derivatives.

The asset and liability values attributable to the Company's commodity price derivatives were determined based on inputs that include (i) the contracted notional volumes, (ii) independent active market price quotes, (iii) the applicable estimated credit-adjusted risk-free rate yield curve and (iv) the implied rate of volatility inherent in the collar contracts and collar contracts with short puts, which is based on active and independent market-quoted volatility factors.

Marketing derivatives. ~~Under the contract terms of the~~The Company's marketing derivatives reflect long-term marketing contracts whereby the Company agreed to purchase and simultaneously sell ~~50 thousand~~ barrels of oil ~~per day~~ at an oil terminal in Midland, ~~Texas for a six-year term that ends on~~

~~Table of Contents~~

~~PIONEER NATURAL RESOURCES COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022~~

~~(Unaudited)~~

~~December 31, 2026.~~Texas. The price the Company pays to purchase the oil volumes under the purchase contract is based on a Midland oil price and the price the Company receives for the oil volumes sold is a WASP that the non-affiliated counterparty receives for selling oil through a Gulf Coast storage and export facility at prices that are highly correlated with Brent oil prices during the same month of the purchase. Based on the form of the long-term marketing contracts, the Company ~~determined that~~accounts for the ~~marketing~~ contracts ~~should be accounted for~~ as derivative instruments not designated as hedges. The asset and liability measurements for the ~~Company's~~long-term marketing ~~derivative~~ contracts are determined using both Level 2 and 3 inputs. The Company utilizes a discounted cash flow model for valuing ~~its~~the marketing derivatives.

The asset and liability values attributable to the Company's marketing ~~derivative were~~derivatives are determined based on Level 2 inputs that include (i) the contracted notional volumes, (ii) independent active market price quotes, (iii) the applicable estimated credit-adjusted risk-free rate yield curve and (iv) stated contractual rates. The Level 3 inputs attributable to the Company's marketing derivatives include the historical monthly differential between Brent oil prices and the corresponding WASP of the counterparty to the marketing derivatives ("WASP Differential Deduction") and, to a lesser extent, an estimated annual cost inflation rate. The average WASP Differential Deduction used in the fair value determination as of ~~March 31,~~June 30, 2022 and 2021 was ~~$2.03~~$1.86 per barrel and ~~$2.06~~$2.01 per barrel, respectively. The WASP Differential Deduction and the estimated annual cost inflation rate reflects management's best estimate of future results utilizing historical performance, but these estimates are not observable inputs by a market participant and contain a high degree of uncertainty. The Company could experience significant mark-to-market fluctuations in the fair value of its marketing derivatives based on changes in the WASP Differential Deduction if it deviates from historical levels. For example, a 10 percent increase or decrease in the WASP Differential Deduction would impact the fair value of the Company's marketing derivatives recorded by approximately ~~$20~~$35 million as of ~~March 31,~~June 30, 2022.

~~Deferred compensation plan assets.~~ The Company's deferred compensation plan assets include investments in equity and mutual fund securities that are actively traded on major exchanges. The fair value of these investments is determined using Level 1 inputs based on observable prices on major exchanges.

~~Investment in affiliate~~. The Company elected the fair value option for measuring its equity method investment in ProPetro Holding Corp. ("ProPetro"). The fair value of the Company's investment in ProPetro common stock is determined using Level 1 inputs based on observable prices on a major exchange. See ~~Note 11~~ ~~and~~ ~~Note 13~~ ~~for additional information.~~

~~Short-term investment.~~ In October 2021, the Company acquired 960 thousand shares of Laredo Petroleum, Inc. ("Laredo") as partial consideration for its divestiture of certain acreage in western Glasscock County to Laredo. During the three months ended March 31, 2022, the Company sold the 960 thousand shares of Laredo common stock held by the Company. The shares were treated as an investment in equity securities measured at fair value. The fair value of the Company's investment in Laredo common stock was determined using Level 1 inputs based on observable prices on a major exchange. See ~~Note 13~~ ~~for additional information.~~

Assets and liabilities measured at fair value on a nonrecurring basis. Certain assets and liabilities are measured at fair value on a nonrecurring basis. These assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances. These assets and liabilities can include inventories, proved and unproved oil and gas properties, assets acquired and liabilities assumed in business combinations, goodwill and other long-lived assets that are written down to fair value when they are determined to be impaired or held for sale.

Table of Contents

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~June 30, 2022

(Unaudited)

Financial instruments not carried at fair value. Carrying values and fair values of financial instruments that are not carried at fair value in the consolidated balance sheets are as follows:


		As of March 31, 2022				As of December 31, 2021					As of June 30, 2022				As of December 31, 2021
		Carrying Value		Fair Value		Carrying Value		Fair Value			Carrying Value		Fair Value		Carrying Value		Fair Value
		(in millions)									(in millions)
Assets:	Assets:									Assets:
Cash and cash equivalents (a)	Cash and cash equivalents (a)	$	2,385	$	2,385	$	3,847	$	3,847	Cash and cash equivalents (a)	$	2,579	$	2,579	$	3,847	$	3,847
Restricted cash (a) (b)	Restricted cash (a) (b)	$	9	$	9	$	37	$	37	Restricted cash (a) (b)	$	6	$	6	$	37	$	37
Short-term investments, net (c)	Short-term investments, net (c)	$	640	$	640	$	—	$	—	Short-term investments, net (c)	$	506	$	506	$	—	$	—
Liabilities:	Liabilities:									Liabilities:
Current portion of long-term debt:	Current portion of long-term debt:									Current portion of long-term debt:
Convertible senior notes (d)										Convertible senior notes (d)	$	124	$	272	$	—	$	—
Senior notes (d)	Senior notes (d)	$	244	$	245	$	244	$	247	Senior notes (d)	$	993	$	975	$	244	$	247
Long-term debt:	Long-term debt:									Long-term debt:
Convertible senior notes (d)	Convertible senior notes (d)	$	1,308	$	3,142	$	1,307	$	2,359	Convertible senior notes (d)	$	1,184	$	2,604	$	1,307	$	2,359
Senior notes (d)	Senior notes (d)	$	4,138	$	3,895	$	5,381	$	5,390	Senior notes (d)	$	3,392	$	2,954	$	5,381	$	5,390

______________________

(a)Fair value approximates carrying value due to the short-term nature of the instruments.

(b)Represents funds in escrow for use in future deficiency fee payments associated with the Company's 2019 sale of its Eagle Ford assets and other remaining assets in South Texas (the "South Texas Divestiture"). Any remaining balance after the payment of the deficiency fees will revert to the Company on March 31, 2023. See Note 10 for additional information.

(c)~~Represents~~The carrying value as of June 30, 2022, represents commercial paper investments that are carried at amortized cost and classified as held-to-maturity as the Company has the intent and ability to hold them until they mature. Commercial paper is included in cash and cash equivalents if it has maturity dates that are less than 90 days at the date of purchase; otherwise, investments are reflected in short-term investments in the accompanying consolidated balance sheets based on their maturity dates. Fair value for the Company's commercial paper investments is determined using Level 2 inputs.

(d)Fair value is determined using Level 2 inputs. The Company's senior notes are quoted, but not actively traded on major exchanges; therefore, fair value is based on periodic values as quoted on major exchanges. See Note 7 for additional information.

The Company has other financial instruments consisting primarily of receivables, payables and other current assets and liabilities that approximate fair value due to the nature of the instrument and their relatively short maturities. Non-financial assets and liabilities initially measured at fair value include assets acquired and liabilities assumed in business combinations, goodwill and asset retirement obligations.

NOTE 5. Derivative Financial Instruments

The Company's derivatives are accounted for as non-hedge derivatives and all changes in the fair values of its derivative contracts are recognized as gains or losses in the earnings of the periods in which they occur.

Oil production derivatives. The Company sells its oil production at the lease and the sales contracts governing such oil production are tied directly to, or are correlated with, WTI oil prices. As a result, the Company periodically enters into basis swap contracts to reduce basis risk between WTI index prices and Midland index prices at which the oil is sold.

Table of Contents

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~June 30, 2022

(Unaudited)

Volumes per day associated with outstanding oil basis derivative contracts as of ~~March 31,~~June 30, 2022 and the weighted average oil price differential for those contracts are as follows:


		2022							2022
		Second Quarter		Third Quarter		Fourth Quarter			Third Quarter		Fourth Quarter

Midland/WTI basis swap contracts:	Midland/WTI basis swap contracts:							Midland/WTI basis swap contracts:
Volume per day (Bbl) (a)	Volume per day (Bbl) (a)	26,000		26,000		26,000		Volume per day (Bbl) (a)	26,000		26,000
Price differential per Bbl	Price differential per Bbl	$	0.50	$	0.50	$	0.50	Price differential per Bbl	$	0.50	$	0.50

______________________

(a)The referenced basis swap contracts fix the basis differentials between the index price at which the Company sells a portion of its Midland Basin oil and the WTI index price.

Additionally, as of ~~March 31,~~June 30, 2022, the Company has outstanding oil derivative contracts for 3,000 Bbls per day of Brent/WTI basis swaps for January 2024 through December ~~2024 production.~~2024. The basis swap contracts fix the basis differential between the WTI index price (the price at which the Company buys Midland Basin oil for transport to the Gulf Coast) and the Brent index price (the price at which a portion of the Midland Basin purchased oil is sold in the Gulf Coast market) at a weighted average differential of $4.33.

Gas production derivatives. All material physical sales contracts governing the Company's gas production are tied directly or indirectly to NYMEX HH gas prices or regional index prices (e.g. WAHA, SoCal and Houston Ship Channel) where the gas is sold. To diversify the gas prices it receives to international market prices, the Company sells a portion of its gas production at a price correlated to the Dutch TTF index price. The Company uses derivative contracts to manage gas price volatility and basis swap contracts to reduce basis risk between HH prices and actual index prices at which the gas is sold.

Volumes per day associated with outstanding gas derivative contracts as of ~~March 31,~~June 30, 2022 and the weighted average gas prices for those contracts are as follows:


		2022							2022
		Second Quarter		Third Quarter		Fourth Quarter			Third Quarter		Fourth Quarter

Dutch TTF swap contracts:	Dutch TTF swap contracts:							Dutch TTF swap contracts:
Volume per day (MMBtu)	Volume per day (MMBtu)	30,000		30,000		30,000		Volume per day (MMBtu)	30,000		30,000
Price per MMBtu	Price per MMBtu	$	7.80	$	7.80	$	7.80	Price per MMBtu	$	7.80	$	7.80

Marketing derivatives. The Company uses marketing derivatives to diversify its oil pricing to Gulf Coast and international markets. ~~The~~As of June 30, 2022, the Company's marketing derivatives reflect ~~two~~ long-term marketing contracts ~~that were entered~~whereby the Company agreed to purchase and simultaneously sell barrels of oil at an oil terminal in Midland, Texas.

In October 2019, ~~whereby~~ the Company agreed to purchase and simultaneously sell 50 thousand barrels of oil per day ~~at an oil terminal in Midland, Texas for a six-year term that began on~~beginning January 1, 2021 and ~~ends on~~ending December 31, 2026.

In April 2022, the Company agreed to purchase and simultaneously sell (i) 40 thousand barrels of oil per day beginning May 1, 2022 and ending April 30, 2027 and (ii) 30 thousand barrels of oil per day beginning August 1, 2022 and ending July 31, 2027.

The price the Company pays to purchase the oil volumes under the purchase ~~contract~~contracts is based on a Midland WTI price and the price the Company receives for the oil volumes sold is a WASP that a non-affiliated counterparty receives for selling oil through a Gulf Coast storage and export facility at prices that are highly correlated with Brent oil prices during the same month of the purchase. Based on the form of the long-term marketing contracts, the Company ~~determined~~accounts for the contracts as derivative instruments not designated as hedges.

Conversion option derivatives. The Company's conversion option derivatives represent the change in the cash settlement obligation that occurs during the ~~marketing contracts should be~~Settlement Periods related to conversion options exercised by certain holders of the Company's 0.250% Convertible Notes due 2025. The Company's election to settle an exercised conversion option in cash results in a forward contract during the Settlement Period that is accounted for as a derivative ~~instruments.~~instrument not designated as a hedge. For the

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PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~June 30, 2022

(Unaudited)

six months ended June 30, 2022, the conversion options attributable to $126 million of the Company's carrying value of the 0.250% Convertible Notes due 2025 were exercised by the holders of the notes. See Note 4 and Note 7 for additional information.

Fair value. The fair value of derivative financial instruments not designated as hedging instruments is as follows:
As of March 31, 2022
Type Consolidated
Balance Sheet
Location Fair
Value Gross Amounts
Offset in the
Consolidated
Balance Sheet Net Fair Value
Presented in the
Consolidated
Balance Sheet
(in millions)
Assets:
Marketing derivatives Other assets - noncurrent $ 5 $ — $ 5
Liabilities:
Commodity price derivatives Derivatives - current $ 518 $ — $ 518
Marketing derivatives Derivatives - current $ 38 $ — $ 38
Commodity price derivatives Derivatives - noncurrent $ 1 $ — $ 1


As of June 30, 2022
Type	Consolidated Balance Sheet Location	Fair Value		Gross Amounts Offset in the Consolidated Balance Sheet		Net Fair Value Presented in the Consolidated Balance Sheet
		(in millions)
Assets:

Conversion option derivatives	Other - current	$	23	$	—	$	23


Marketing derivatives	Other assets - noncurrent	$	48	$	—	$	48
Liabilities:
Commodity price derivatives	Derivatives - current	$	364	$	—	$	364
Marketing derivatives	Derivatives - current	$	149	$	—	$	149


As of December 31, 2021
Type	Consolidated Balance Sheet Location	Fair Value		Gross Amounts Offset in the Consolidated Balance Sheet		Net Fair Value Presented in the Consolidated Balance Sheet
		(in millions)



Liabilities:
Commodity price derivatives	Derivatives - current	$	486	$	—	$	486
Marketing derivatives	Derivatives - current	$	52	$	—	$	52

Marketing derivatives	Derivatives - noncurrent	$	25	$	—	$	25

Fair value. Gains and losses recorded to net derivative loss in the consolidated statements of operations related to derivative financial instruments not designated as hedging instruments are as follows:


		Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
			2022		2021				2022		2021		2022		2021
			(in millions)				(in millions)
Commodity price derivatives:	Commodity price derivatives:							Commodity price derivatives:
Noncash derivative loss, net			$	(111)	$	(350)
Noncash derivative gain (loss), net								Noncash derivative gain (loss), net	$	72	$	(279)	$	(39)	$	(629)
Cash payments on settled derivatives, net (a)	Cash payments on settled derivatives, net (a)		(57)		(314)			Cash payments on settled derivatives, net (a)	(75)		(557)		(131)		(871)
Total commodity derivative loss, net	Total commodity derivative loss, net		(168)		(664)			Total commodity derivative loss, net	(3)		(836)		(170)		(1,500)
Marketing derivatives:	Marketing derivatives:							Marketing derivatives:
Noncash derivative gain (loss), net	Noncash derivative gain (loss), net		44		(20)			Noncash derivative gain (loss), net	(68)		17		(24)		(3)
Cash payments on settled derivatives, net	Cash payments on settled derivatives, net		(11)		(7)			Cash payments on settled derivatives, net	(17)		(13)		(29)		(20)
Total marketing derivative gain (loss), net	Total marketing derivative gain (loss), net		33		(27)			Total marketing derivative gain (loss), net	(85)		4		(53)		(23)
Conversion option derivatives:								Conversion option derivatives:
Noncash derivative gain, net								Noncash derivative gain, net	23		—		23		—

Derivative loss, net	Derivative loss, net		$	(135)	$	(691)		Derivative loss, net	$	(65)	$	(832)	$	(200)	$	(1,523)

_____________________

(a)Excludes cash payments of ~~$78~~$83 million and $161 million, during the three and six months ended ~~March 31,~~June 30, 2022, respectively, related to entering into equal and offsetting oil and gas commodity derivative trades in the fourth quarter of 2021, which had the net effect of eliminating certain of the Company's 2022 derivative obligations. Includes the ~~effect from~~ early settlement of certain of the Company's commodity derivative contracts for cash payments of $13 million during the ~~three~~six months ended ~~March 31,~~June 30, 2021.

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PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

The Company uses credit and other financial criteria to evaluate the credit standing of, and to select, counterparties to its derivative instruments. Although the Company does not obtain collateral or otherwise secure the fair value of its derivative instruments, associated credit risk is mitigated by the Company's credit risk policies and procedures.

~~Table of Contents~~

~~PIONEER NATURAL RESOURCES COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022~~

~~(Unaudited)~~

NOTE 6. Exploratory Well and Project Costs

The Company capitalizes exploratory well and project costs until a determination is made that the well or project has either found proved reserves, is impaired or is sold. The Company's capitalized exploratory well and project costs are included in proved properties in the consolidated balance sheets. If the exploratory well or project is determined to be impaired, the impaired costs are recorded in exploration and abandonments in the consolidated statements of operations.

The changes in capitalized exploratory well and project costs are as follows:

~~Three~~Six Months Ended ~~March 31,~~June 30, 2022

(in millions)

Beginning capitalized exploratory well and project costs

632

Additions to exploratory well and project costs pending the determination of proved reserves

~~819~~1,580

Reclassification due to determination of proved reserves

~~(728)~~(1,491)

Ending capitalized exploratory well and project costs

~~723~~721

Aging of capitalized exploratory costs and the number of projects for which exploratory well costs have been capitalized for a period greater than one year, based on the date of drilling was completed, are as follows:


		As of March 31, 2022		As of December 31, 2021		As of June 30, 2022	As of December 31, 2021

		(in millions, except well counts)				(in millions, except well counts)
Capitalized exploratory well costs that have been suspended:	Capitalized exploratory well costs that have been suspended:							Capitalized exploratory well costs that have been suspended:
One year or less	One year or less	$	723	$	621			One year or less	$	721	$	621
More than one year	More than one year	—		11				More than one year	—		11
		$	723	$	632				$	721	$	632
Number of projects with exploratory well costs that have been suspended for a period greater than one year (a)	Number of projects with exploratory well costs that have been suspended for a period greater than one year (a)	—		3				Number of projects with exploratory well costs that have been suspended for a period greater than one year (a)	—		3

______________________

(a)The 3 exploratory wells that were suspended for a period greater than one year as of December 31, 2021 were completed during the first quarter of 2022.

Table of Contents

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~June 30, 2022

(Unaudited)

NOTE 7. Long-term Debt and Interest Expense

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


		As of March 31, 2022		As of December 31, 2021			As of June 30, 2022		As of December 31, 2021
		(in millions)					(in millions)
Outstanding debt principal balances:	Outstanding debt principal balances:					Outstanding debt principal balances:

3.950% senior notes due 2022	3.950% senior notes due 2022	$	244	$	244	3.950% senior notes due 2022	$	244	$	244
0.550% senior notes due 2023	0.550% senior notes due 2023	750		750		0.550% senior notes due 2023	750		750
0.750% senior callable notes due 2024	0.750% senior callable notes due 2024	—		750		0.750% senior callable notes due 2024	—		750
0.250% convertible senior notes due 2025	0.250% convertible senior notes due 2025	1,323		1,323		0.250% convertible senior notes due 2025	1,322		1,323
1.125% senior notes due 2026	1.125% senior notes due 2026	750		750		1.125% senior notes due 2026	750		750
4.450% senior notes due 2026	4.450% senior notes due 2026	—		500		4.450% senior notes due 2026	—		500
5.625% senior notes due 2027	5.625% senior notes due 2027	179		179		5.625% senior notes due 2027	179		179
7.200% senior notes due 2028	7.200% senior notes due 2028	241		241		7.200% senior notes due 2028	241		241
4.125% senior notes due 2028	4.125% senior notes due 2028	138		138		4.125% senior notes due 2028	138		138
1.900% senior notes due 2030	1.900% senior notes due 2030	1,100		1,100		1.900% senior notes due 2030	1,100		1,100
2.150% senior notes due 2031	2.150% senior notes due 2031	1,000		1,000		2.150% senior notes due 2031	1,000		1,000
		5,725		6,975			5,724		6,975
Issuance costs and discounts, net	Issuance costs and discounts, net	(35)		(43)		Issuance costs and discounts, net	(31)		(43)
Total debt	Total debt	5,690		6,932		Total debt	5,693		6,932
Less current portion of long-term debt	Less current portion of long-term debt	244		244		Less current portion of long-term debt	1,117		244
Long-term debt	Long-term debt	$	5,446	$	6,688	Long-term debt	$	4,576	$	6,688

Credit facility. The Company maintains a revolving corporate credit facility (the "Credit Facility") with a syndicate of financial institutions and has aggregate loan commitments of $2.0 billion. The Credit Facility has a maturity date inof January 12, 2026. As of ~~March 31,~~June 30, 2022, the Company had no outstanding borrowings under the Credit Facility. 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 June 30, 2022, the Company was in compliance with its debt covenants.

Senior ~~Notes.~~notes. In February 2022, the Company paid ~~$1.29~~$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 to other expense associated with the early redemptions. See Note 14 for additional information.

The Company's 3.950% senior notes and 0.550% senior notes, with a debt principal ~~balance~~balances of $244 million and $750 million, respectively, will mature in July ~~2022.~~2022 and May 2023, respectively. The 3.950% senior notes and 0.550% senior notes are recorded in the current portion of long-term debt in the consolidated balance sheets as of ~~March 31,~~June 30, 2022. See Note 17 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. In May 2020, the Company issued $1.3 billion principal amount of convertible senior notes due 2025 (the "Convertible Notes"). The Convertible Notes bear a fixed interest rate of 0.250% per year, with interest payable on May 15 and November 15 of each year. 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.

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PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

~~Table of Contents~~

~~PIONEER NATURAL RESOURCES COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022~~

~~(Unaudited)~~

conversion, the Convertible Notes will be settled in cash, shares of the Company's common stock 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 stock for at least 20 of the last 30 consecutive trading days of such quarter exceeds 130 percent of the Conversion Price;

•during the ~~five-day~~5-business day period following any ~~five~~5 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 stock ~~times~~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. The Company may not redeem the Convertible Notes prior to May 20, 2023, and after such date, may redeem the Convertible Notes only if the last reported sale price of the Company's common stock 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.

During the last 30 consecutive trading days of the first quarter of 2022, the last reported sale price of the Company's common stock exceeded 130 percent of the Conversion Price for at least 20 trading days, causing the Convertible Notes to become convertible at the option of the holders during the three month period ending June 30, 2022. The Company reserves its right under the notes indenture to elect to settle the Convertible Notes in cash, shares of the Company's common stock or a combination of cash and common stock.

As of March 31, 2022, the Convertible Notes had an outstanding principal balance of $1.3 billion and unamortized issuance costs of $15 million. The effective annual interest rate of the Convertible Notes is 0.6 percent.

~~Interest expense recognized on the Convertible Notes is as follows:~~

Three Months Ended March 31,
2022 2021
(in millions)
Contractual coupon interest $ 1 $ 1
Amortization of capitalized loan fees 1 1
$ 2 $ 2

~~Capped call transactions.~~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 stock 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. The Capped Call transactions have an adjusted strike price of ~~$105.25~~$102.68 per share of common stock and an adjusted capped price of ~~$149.78~~$146.11 per share of common stock. The net costs of $113 million incurred to purchase the Capped Call transactions were recorded as a reduction to additional paid-in capital in the accompanying consolidated balance sheets.

As of June 30, 2022, the Convertible Notes had an outstanding principal balance of $1.3 billion and unamortized issuance costs of $13 million. The effective annual interest rate of the Convertible Notes is 0.6 percent.

Interest expense recognized on the Convertible Notes is as follows:


	Three Months Ended June 30,				Six Months Ended June 30, 2022
	2022		2021		2022		2021
	(in millions)				(in millions)
Contractual coupon interest	$	1	$	1	$	2	$	2

Amortization of capitalized loan fees	1		1		2		2
	$	2	$	2	$	4	$	4

Convertible Note conversions.During the last 30 consecutive trading days of the fourth quarter of 2021 and the first and second quarters of 2022, the last reported sale price of the Company's common stock exceeded 130 percent of the Conversion Price for at least 20 trading days, causing the Convertible Notes to become convertible at the option of the holders from January 1, 2022 through September 30, 2022. During the three and six months ended June 30, 2022, certain holders of the Company's Convertible Notes exercised their conversion option resulting in the Company recording the following:

•a $124 million reclassification of outstanding principal, net of unamortized issuance costs, to the current portion of long-term debt in the consolidated balance sheets. The current portion of Convertible Notes will be cash settled during the third quarter of 2022 once the final obligation is determined based on the 25-day VWAP from the date the Company notified the converting holders that it intended to settle the notes in cash;

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PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

•cash payments of $3 million, which were recorded as (i) a $1 million repayment of the principal balance and (ii) a $2 million decrease to additional paid-in capital related to the early conversion premium;

•Capped Call proceeds of $26 million were received and recorded to additional paid-in capital; and

•a $23 million noncash derivative gain, representing the estimated change in the conversion value during the Settlement Periods.

See Note 4, Note 5 and Note 17 for additional information.

NOTE 8. Incentive Plans

Long-Term Incentive Plan. The Company's Amended and Restated 2006 Long-Term Incentive Plan ("LTIP") provides for the granting of various forms of awards, including stock options, stock appreciation rights, performance units, restricted stock and restricted stock units to directors, officers and employees of the Company.

In connection with the Parsley Acquisition, the Company assumed all rights and obligations under the Amended and Restated Parsley Energy, Inc. 2014 Long-Term Incentive Plan (the "2014 Parsley Plan") and the Jagged Peak Energy Inc. 2017 Long-Term Incentive Plan (the "Jagged Peak Plan") and together with the 2014 Parsley Plan, (the "Parsley Plans"). The awards outstanding under the Parsley Plans were assumed by the Company and were automatically converted into an award with the

~~Table of Contents~~

~~PIONEER NATURAL RESOURCES COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022~~

~~(Unaudited)~~

right to receive a number of shares of Pioneer common stock that is equal to the product of the number of shares of Parsley common stock subject to such award under the Parsley Plans as of the acquisition date and the Exchange Ratio (0.1252).

Shares available for future grant pursuant to awards under the LTIP are as follows:


			As of ~~March 31,~~June 30, 2022
Approved and authorized awards			12,600,000
2014 Parsley Plan awards available to the LTIP (a)			879,575
Awards issued under plan			~~(9,552,217)~~(9,553,773)
			~~3,927,358~~3,925,802

______________________

(a)Under New York Stock Exchange rules, the Company added the shares that were available under the 2014 Parsley Plan to the LTIP. These shares can only be used for grants to employees who were not employed or engaged by Pioneer or any of its subsidiaries immediately before the Parsley Acquisition and such awards may only be granted through May 22, 2024, the date that the 2014 Parsley Plan would have otherwise expired.

Stock-based compensation expense is as follows:


		Three Months Ended March 31,			Three Months Ended June 30,					Six Months Ended June 30,
			2022			2021				2022		2021		2022		2021
			(in millions)					(in millions)
Restricted stock - equity awards	Restricted stock - equity awards		$	11		$	11		Restricted stock - equity awards	$	11	$	10	$	21	$	21
Restricted stock - liability awards (a)	Restricted stock - liability awards (a)		9			6			Restricted stock - liability awards (a)	3		4		11		9
Restricted stock and performance units - Parsley awards (b)	Restricted stock and performance units - Parsley awards (b)		—			33			Restricted stock and performance units - Parsley awards (b)	—		—		—		33

Performance unit awards	Performance unit awards		7			7			Performance unit awards	8		6		16		14
Employee Stock Purchase Plan	Employee Stock Purchase Plan		1			1			Employee Stock Purchase Plan	1		1		2		1

			$	28		$	58			$	23	$	21	$	50	$	78

______________________

(a)Liability Awards are expected to be settled on their vesting date in cash. As of ~~March 31,~~June 30, 2022 and December 31, 2021, accounts payable – due to affiliates included ~~$12~~$15 million and $9 million, respectively, of liabilities attributable to Liability Awards.

(b)Represents the accelerated vesting of Parsley restricted stock equity awards and performance units upon completion of the Parsley Acquisition, which was recorded to other expense in the consolidated statements of operations.

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PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

As of ~~March 31,~~June 30, 2022, there is ~~$126~~$103 million of unrecognized stock-based compensation expense related to unvested share-based compensation awards, including ~~$26~~$18 million attributable to stock-based awards that are expected to be settled on their vesting date in cash, rather than in ~~equity shares.~~common stock. The unrecognized compensation expense will be recognized on a straight-line basis over the remaining vesting periods of the awards, which is a period of less than three years on a weighted average basis.

Activity for restricted stock awards, performance units and stock options is as follows:


		Three Months Ended March 31, 2022				Six Months Ended June 30, 2022
		Restricted Stock Equity Awards	Restricted Stock Liability Awards	Performance Units	Stock Options	Restricted Stock Equity Awards	Restricted Stock Liability Awards			Performance Units	Stock Options

Beginning incentive compensation awards	Beginning incentive compensation awards	741,892		182,278	304,686			6,039	Beginning incentive compensation awards	741,892		182,278	304,686	6,039
Awards granted	Awards granted	99,577		2,724	114,066			—	Awards granted	111,315		2,724	114,066	—
Awards forfeited	Awards forfeited	(22,502)		(4,370)	(1,607)			—	Awards forfeited	(28,732)		(6,552)	(2,185)	—
Awards vested (a)	Awards vested (a)	(244,379)		(23,402)	—			—	Awards vested (a)	(253,614)		(23,702)	—	—
Options exercised	Options exercised	—		—	—			(6,039)	Options exercised	—		—	—	(6,039)

Ending incentive compensation awards	Ending incentive compensation awards	574,588		157,230	417,145			—	Ending incentive compensation awards	570,861		154,748	416,567	—

______________________

(a)Per the terms of award agreements and elections, the issuance of common stock may be deferred for certain restricted stock equity awards that vest during the period.

~~Table of Contents~~

~~PIONEER NATURAL RESOURCES COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022~~

~~(Unaudited)~~

NOTE 9. Asset Retirement Obligations

The Company's asset retirement obligations primarily relate to the future plugging and abandonment of wells and related facilities. Market risk premiums associated with asset retirement obligations are estimated to represent a component of the Company's credit-adjusted risk-free rate that is utilized in the calculations of asset retirement obligations.

Asset retirement obligations activity is as follows:

~~Three~~Six Months Ended ~~March 31,~~June 30, 2022

(in millions)

Beginning asset retirement obligations

354

New wells placed on production

Changes in estimates

(1)

Liabilities settled

~~(15)~~(31)

Accretion of discount

Ending asset retirement obligations

~~345~~335

Less current portion of asset retirement obligations

~~(50)~~(57)

Asset retirement obligations, long-term

~~295~~278

NOTE 10. Commitments and Contingencies

Indemnifications. The Company has agreed to indemnify its directors and certain of its officers, employees and agents with respect to claims and damages arising from acts or omissions taken in such capacity, as well as with respect to certain litigation.

Legal actions. The Company is party to various proceedings and claims incidental to its business. While many of these matters involve inherent uncertainty, the Company believes that the amount of the liability, if any, ultimately incurred with respect to these proceedings and claims will not have a material adverse effect on the Company's consolidated financial position as a whole or on its liquidity, capital resources or future annual results of operations. The Company records reserves for contingencies when information available indicates that a loss is probable and the amount of the loss can be reasonably estimated. Significant judgement is required in making these estimates and the Company's final liabilities may ultimately be materially different.

Table of Contents

PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

Environmental. Environmental expenditures that relate to an existing condition caused by past operations and that have no future economic benefits are expensed. Environmental expenditures that extend the life of the related property or mitigate or prevent future environmental contamination are capitalized. Liabilities for expenditures that will not qualify for capitalization are recorded when environmental assessment and/or remediation is probable and the costs can be reasonably estimated. Such liabilities are undiscounted unless the timing of cash payments for the liability is fixed or reliably determinable. Environmental liabilities normally involve estimates that are subject to revision until settlement or remediation occurs.

Obligations following divestitures. In connection with its divestiture transactions, the Company may retain certain liabilities and provide the purchaser certain indemnifications, subject to defined limitations, which may apply to identified pre-closing matters, including matters of litigation, environmental contingencies, ~~royalty~~royalties and income taxes. Also associated with its divestiture transactions, the Company has issued and received guarantees to facilitate the transfer of contractual obligations, such as firm transportation agreements or gathering and processing arrangements. The Company does not recognize a liability if the fair value of the obligation is immaterial and the likelihood of making payments under these guarantees is remote.

South Texas Divestiture. In conjunction with the South Texas Divestiture, the Company transferred its long-term midstream agreements and associated minimum volume commitments ("MVC") to the buyer. 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 buyer is required to reimburse the Company for 18 percent of the deficiency fees paid by the Company from January 2019 through July 2022; such reimbursement will be paid by the buyer in installments beginning in 2023 through 2025. ~~Assuming 100 percent of the MVC are paid as deficiency fees, the maximum amount of future payments for this obligation would be approximately $92 million as of March 31, 2022.~~ The Company's estimated deficiency fee obligation as of ~~March 31,~~June 30, 2022 of ~~$72~~$53 million is included in other current liabilities in the consolidated balance sheets. The corresponding estimated deficiency fee receivable from the buyer is included in current and noncurrent other assets in the consolidated balance sheets in the

~~Table of Contents~~

~~PIONEER NATURAL RESOURCES COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022~~

~~(Unaudited)~~

amounts of ~~$43~~$44 million and ~~$41~~$42 million, respectively, as of ~~March 31,~~June 30, 2022. The Company has received credit support for the deficiency fee receivable of up to $100 million.

Certain contractual obligations were retained by the Company after ~~certain divestitures, primarily the South Texas Divestiture.~~some of its divestitures. These contractual obligations are primarily related to firm transportation and storage agreements in which the Company is unlikely to realize any benefit. The estimated obligations are included in other current or noncurrent liabilities in the consolidated balance sheets and changes are as follows:

~~Three~~Six Months Ended ~~March 31,~~June 30, 2022

(in millions)

Beginning contractual obligations

199

Liabilities settled

~~(118)~~(121)

Accretion of discount

Changes in estimate (a)

~~(4)~~(21)

Ending contractual obligations

7858

______________________

(a)Primarily represents differences between estimated and actual liabilities settled.

NOTE 11. Related Party Transactions

In December 2018, the Company completed the sale of its pressure pumping assets to ProPetro in exchange for 16.6 million shares of ProPetro common stock and $110 million of cash that was received during the first quarter of 2019. ProPetro is considered a related party as the shares received represent 16 percent of ProPetro's outstanding common stock. In addition to the sale of equipment and related facilities, the Company entered into a long-term agreement with ProPetro for it to provide pressure pumping and related services. In March 2022, the Company amended its agreement with ProPetro. The amended agreement provides for updated performance standards, operating procedures ~~pricing~~ and ~~term.~~pricing. The agreement covers the Company's 2022 pressure pumping and related services requirements. The costs of these services will be capitalized in oil and gas properties as incurred.

Phillip A. Gobe, a nonemployee member of the Company's board of directors, was appointed by the board of directors of ProPetro to serve as its Executive Chairman in October 2019 and Chief Executive Officer in March 2020, and served as Chief Executive Officer and Chairman of the board of directors of ProPetro through August 31, 2021, at which point he continued as ProPetro's Executive Chairman. In March 2022, Mr. Gobe transitioned to non-executive Chairman of the board of directors of ProPetro. Mark S. Berg, the Company's Executive Vice President, Corporate Operations, serves as a member of the ProPetro

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PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

board of directors under the Company's right to designate a director to the board of directors of ProPetro so long as the Company owns 5 percent or more of ProPetro's outstanding common stock.

Based on the Company's ownership in ProPetro and representation on the ProPetro board of directors, ProPetro is considered an affiliate and deemed to be a related party.

~~Table of Contents~~

~~PIONEER NATURAL RESOURCES COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022~~

~~(Unaudited)~~

Transactions and balances with ProPetro ~~representing~~for pressure pumping and related services ~~as part of a long-term agreement~~ are as follows:
Three Months Ended March 31,
2022 2021
(in millions)
Pressure pumping related services charges $ 112 $ 56


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in millions)
Pressure pumping related services charges	$	95	$	111	$	207	$	167

As of March 31, 2022 As of December 31, 2021
(in millions)
Accounts payable - due to affiliate $ 74 $ 66




	As of June 30, 2022		As of December 31, 2021
	(in millions)

Accounts payable - due to affiliate	$	71	$	66

The Company discloses ProPetro's summarized financial information on a one-quarter lag as it enables the Company to report its quarterly results independent from the timing of when ProPetro reports its results. Summarized financial information for ProPetro is as follows:


		Year Ended December 31,					Three Months Ended March 31,
		2021		2020			2022		2021
		(in millions)					(in millions)
Revenue - service revenue	Revenue - service revenue	$	875	$	789	Revenue - service revenue	$	283	$	161
Cost of services (exclusive of depreciation and amortization)	Cost of services (exclusive of depreciation and amortization)	$	662	$	584	Cost of services (exclusive of depreciation and amortization)	$	197	$	123
Net loss		$	(54)	$	(107)
Net income (loss)						Net income (loss)	$	12	$	(20)

NOTE 12. Revenue Recognition

Disaggregated revenue from contracts with purchasers. Revenues on sales of oil, NGL, gas and purchased oil, gas and diesel are recognized when control of the product is transferred to the purchaser and payment can be reasonably assured. Sales prices for oil, NGL, gas and diesel are negotiated based on factors normally considered in the industry, such as an index or spot price, distance from the well to the pipeline or market, commodity quality and prevailing supply and demand conditions. Accordingly, the prices received by the Company for oil, NGL, gas and diesel generally fluctuate similar to changes in the relevant market index prices.

Disaggregated revenue from contracts with purchasers by product type is as follows:


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2022			2021			2022		2021		2022		2021
			(in millions)						(in millions)
Oil sales	Oil sales		$	3,025		$	1,435	Oil sales	$	3,501	$	2,133	$	6,525	$	3,567
NGL sales	NGL sales		569			246		NGL sales	644		374		1,214		620
Gas sales	Gas sales		336			143		Gas sales	494		175		831		318
Total oil and gas revenues	Total oil and gas revenues		3,930			1,824		Total oil and gas revenues	4,639		2,682		8,570		4,505
Sales of purchased oil	Sales of purchased oil		2,215			1,221		Sales of purchased oil	2,337		1,559		4,551		2,780
Sales of purchased gas	Sales of purchased gas		2			4		Sales of purchased gas	29		11		32		16
Sales of purchased diesel	Sales of purchased diesel		—			15		Sales of purchased diesel	—		17		—		32
Total sales of purchased commodities	Total sales of purchased commodities		2,217			1,240		Total sales of purchased commodities	2,366		1,587		4,583		2,828
			$	6,147		$	3,064		$	7,005	$	4,269	$	13,153	$	7,333

Performance obligations and contract balances. The majority of the Company's product sale commitments are short-term in nature with a contract term of one year or less. The Company typically satisfies its performance obligations upon

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PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

transfer of control as described above in Disaggregated revenue from contracts with purchasers and records the related revenue in the month production is delivered to the purchaser. Settlement statements for sales of oil, NGL, gas and sales of purchased oil, gas and diesel may not be received for 30 to 60 days after the date the volumes are delivered, and as a result, the Company is required to estimate the amount of volumes delivered to the purchaser and the price that will be received for the sale of the product. The Company records the differences between estimates and the actual amounts received for product sales in the

~~Table of Contents~~

~~PIONEER NATURAL RESOURCES COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022~~

~~(Unaudited)~~

month that payment is received from the purchaser. As of ~~March 31,~~June 30, 2022 and December 31, 2021, the accounts receivable balance representing amounts due or billable under the terms of contracts with purchasers is ~~$2.3~~$2.2 billion and $1.6 billion, respectively.

NOTE 13. Interest and Other Income, Net

The components of interest and other income are as follows:


		Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
			2022		2021				2022		2021		2022		2021
			(in millions)				(in millions)
Investment in affiliate valuation adjustment (Note 4)	Investment in affiliate valuation adjustment (Note 4)		$	96	$	54		Investment in affiliate valuation adjustment (Note 4)	$	(65)	$	(25)	$	32	$	29
Short-term investment valuation adjustment (Note 4)			18		—
Investment in Laredo valuation adjustment (Note 4)								Investment in Laredo valuation adjustment (Note 4)	—		—		17		—
Deferred compensation plan income (loss), net (Note 4)	Deferred compensation plan income (loss), net (Note 4)		(3)		4			Deferred compensation plan income (loss), net (Note 4)	(4)		4		(6)		8
Other	Other		15		2			Other	13		1		26		3
			$	126	$	60			$	(56)	$	(20)	$	69	$	40

NOTE 14. Other Expense

The components of other expense are as follows:


		Three Months Ended March 31,					Three Months Ended June 30,		Six Months Ended June 30,
		2022		2021					2022		2021		2022		2021
		(in millions)				(in millions)
Loss on early extinguishment of debt (Note 7)		$	47	$	5
(Gain) loss on early extinguishment of debt, net (Note 7)								(Gain) loss on early extinguishment of debt, net (Note 7)	$	—	$	(3)	$	47	$	2
Unoccupied facility expense (a)	Unoccupied facility expense (a)	16		10				Unoccupied facility expense (a)	4		7		19		17

Idle frac equipment charges (b)	Idle frac equipment charges (b)	6		4				Idle frac equipment charges (b)	7		1		13		5
Transportation commitment charges (c)	Transportation commitment charges (c)	3		7				Transportation commitment charges (c)	3		3		5		10
Parsley Acquisition transaction costs (d)	Parsley Acquisition transaction costs (d)	—		197				Parsley Acquisition transaction costs (d)	—		9		—		206
DoublePoint Acquisition transaction costs (e)								DoublePoint Acquisition transaction costs (e)	—		27		—		27
Winter Storm Uri gas commitments ~~(e)~~(f)	Winter Storm Uri gas commitments ~~(e)~~(f)	—		80				Winter Storm Uri gas commitments ~~(e)~~(f)	—		—		—		80
Vertical integration services (income) loss ~~(f)~~(g)	Vertical integration services (income) loss ~~(f)~~(g)	—		(4)				Vertical integration services (income) loss ~~(f)~~(g)	(5)		(1)		(5)		(5)
South Texas deficiency fee obligation (h)								South Texas deficiency fee obligation (h)	(16)		—		(16)		—
Other	Other	5		5				Other	12		4		20		9
		$	77	$	304				$	5	$	47	$	83	$	351

____________________

(a)Primarily represents facilities expense associated with certain acquired Parsley offices that are no longer ~~occupied.~~occupied by the Company.

(b)Includes idle frac equipment fees and frac reservation fees.

(c)Primarily represents firm transportation charges on excess pipeline capacity commitments.

(d)Represents costs associated with the Parsley Acquisition, which includes ~~$88~~$90 million of employee-related costs and ~~$109~~$116 million of transaction-related fees during the six months ended June 30, 2021 and $9 million of transaction-related fees during the three months ended ~~March 31,~~June 30, 2021. See Note 3 for additional information.

(e)Represents transaction costs associated with the DoublePoint Acquisition.

(f)Represents costs related to the Company's fulfillment of certain firm gas commitments during Winter Storm Uri in February 2021.

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PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

(g)Represents net margins (attributable to third party working interest owners) that result from Company-provided vertically integrated services, which are ancillary to and supportive of the Company's oil and gas joint operating activities, and do not represent intercompany transactions. ~~For the three months ended March 31, 2022 and 2021,~~The components of the vertical integration services net margins ~~included $8~~are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in millions)
Gross revenues	$	15	$	11	$	23	$	23
Gross costs and expenses	$	10	$	10	$	18	$	18

(h)Represents a decrease of $15 million in the Company's 2022 forecasted MVC deficiency fee obligation associated with the South Texas Divestiture and ~~$12~~a $1 million ~~of gross vertical integration revenues, respectively, and $8 million and $8 million of total vertical integration costs and expenses, respectively. During~~increase in the ~~three months ended March 31, 2021, the Company divested its well services business and continues to operate its water services business.~~associated 2022 forecasted MVC deficiency fee receivable. See Note 310 for additional information.

~~Table of Contents~~

~~PIONEER NATURAL RESOURCES COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022~~

~~(Unaudited)~~

NOTE 15. Income Taxes

Income tax ~~benefit (provision)~~provision and effective tax rate are as follows:


		Three Months Ended March 31,				Three Months Ended June 30,								Six Months Ended June 30,
			2022				2021				2022			2021			2022			2021
			(in millions)								(in millions)
Current tax provision	Current tax provision		$	(20)			$	(7)		Current tax provision	$	(144)		$	(11)		$	(164)		$	(18)
Deferred tax benefit (provision)			(532)				18
Income tax benefit (provision)			$	(552)			$	11
Deferred tax provision										Deferred tax provision	(513)			(109)			(1,045)			(91)
Income tax provision										Income tax provision	$	(657)		$	(120)		$	(1,209)		$	(109)
Effective tax rate	Effective tax rate		22		%		14		%	Effective tax rate	22		%	24		%	22		%	26		%

The Company evaluates and updates its annual effective income tax rate on an interim basis based on current and forecasted earnings and tax laws. The mix and timing of the Company's actual earnings compared to annual projections can cause interim effective tax rate fluctuations. The Company's interim effective tax rate for the three and six months ended ~~March 31,~~June 30, 2022 differed from the U.S. statutory rate of 21 percent primarily due to forecasted state income taxes.

The Company files income tax returns in the U.S. federal and various state and foreign jurisdictions. The Internal Revenue Service has closed examinations of the ~~2019~~2020 and prior tax years and, with few exceptions, the Company believes that it is no longer subject to examinations by state and foreign tax authorities for years before 2013. As of ~~March 31,~~June 30, 2022, no adjustments had been proposed in any jurisdiction that would have a significant effect on the Company's liquidity, future results of operations or financial position.

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PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

NOTE 16. Net Income ~~(Loss)~~ Per Share and Stockholders' Equity

Net income per share.The components of basic and diluted net income ~~(loss)~~ per share attributable to common stockholders are as follows:


		Three Months Ended March 31,			Three Months Ended June 30,					Six Months Ended June 30,
			2022			2021				2022		2021		2022		2021
			(in millions)					(in millions)
Net income (loss) attributable to common stockholders			$	2,009		$	(70)
Net income attributable to common stockholders									Net income attributable to common stockholders	$	2,371	$	380	$	4,380	$	310
Participating share-based earnings (a)	Participating share-based earnings (a)		(5)			—			Participating share-based earnings (a)	(6)		(1)		(11)		(1)
Basic net income (loss) attributable to common stockholders			2,004			(70)
Basic net income attributable to common stockholders									Basic net income attributable to common stockholders	2,365		379		4,369		309

Adjustment to after-tax interest expense to reflect the dilutive impact attributable to Convertible Notes	Adjustment to after-tax interest expense to reflect the dilutive impact attributable to Convertible Notes		1			—			Adjustment to after-tax interest expense to reflect the dilutive impact attributable to Convertible Notes	1		1		3		3
Diluted net income (loss) attributable to common stockholders			$	2,005		$	(70)
Diluted net income attributable to common stockholders									Diluted net income attributable to common stockholders	$	2,366	$	380	$	4,372	$	312

Basic weighted average shares outstanding	Basic weighted average shares outstanding		243			210			Basic weighted average shares outstanding	242		234		242		222

Contingently issuable stock-based compensation									Contingently issuable stock-based compensation	—		1		—		1
Convertible Notes (b)	Convertible Notes (b)		13			—			Convertible Notes (b)	12		12		13		12
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding		256			210			Diluted weighted average shares outstanding	254		247		255		235

Net income per share attributable to common stockholders:									Net income per share attributable to common stockholders:
Basic									Basic	$	9.78	$	1.62	$	18.03	$	1.39
Diluted									Diluted	$	9.30	$	1.54	$	17.15	$	1.33

______________________

(a)Unvested restricted stock awards represent participating securities because they participate in non-forfeitable dividends with the common equity owners of the Company. Participating share-based earnings represent the distributed and undistributed earnings of the Company attributable to the participating securities. Unvested restricted stock awards do not participate in undistributed net losses as they are not contractually obligated to do so. The dilutive effect of the reallocation of participating share-based earnings to diluted net income (loss) attributable to common stockholders was negligible.

(b)Diluted weighted average common shares outstanding includes the dilutive effect had the Company's Convertible Notes been converted as of the beginning of the three and six months ended ~~March 31, 2022.~~June 30, 2022, respectively. If converted by the holder, the Company may settle in cash, shares of the Company's common stock or a combination thereof, at the Company's election. See Note 7 for additional information.

Stockholders' equity. The Company's return of capital strategies include a base and variable dividend policy and a stock repurchase program. The Company's board of directors, at its sole discretion, may change its dividend policy and/or the Company's stock repurchase program based on the Company's outlook for commodity prices, liquidity, debt levels, capital resources, quarterly operating cash flows or other factors. Dividends declared by the board of directors and stock repurchased during the period are presented in the Company's consolidated statements of equity as dividends declared and purchases of treasury stock, respectively. Dividends paid and stock repurchased during the period are presented as cash used in financing activities in the Company's consolidated statements of cash flows. Dividends that are declared and have not been paid, if any, are included in other current liabilities in the consolidated balance sheets. Stock repurchased as part of a stock repurchase program are included as treasury stock in the consolidated balance sheets.

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PIONEER NATURAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

Dividends. Base and variable dividends declared by the board of directors for the three and six months ended June 30, 2022 and 2021 are as follows:


	Base		Variable		Total		Total
	(per share)		(per share)		(per share)		(in millions)
2022:
First quarter	$	0.78	$	3.00	$	3.78	$	922
Second quarter	0.78		6.60		7.38		1,788


	$	1.56	$	9.60	$	11.16	$	2,710
2021:
First quarter	$	0.56	$	—	$	0.56	$	122
Second quarter	0.56		—		0.56		138


	$	1.12	$	—	$	1.12	$	260

The Company can provide no assurance that dividends will be authorized or declared in the future or as to the amount of any future dividends. See Note 17 for additional information.

Stock repurchase program. In February 2022, the Company's board of directors authorized a $4 billion common stock repurchase program. This authorization replaced the previously authorized $2 billion common stock repurchase program that had $841 million remaining in the program before ~~bring~~being replaced with the $4 billion common stock repurchase program. Under

~~Table of Contents~~

~~PIONEER NATURAL RESOURCES COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022~~

~~(Unaudited)~~

this stock repurchase program, the Company may repurchase shares in accordance with applicable securities laws or pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Securities Act of 1934, which would permit the Company to repurchase shares at times that may otherwise be prohibited under the Company's insider trading policy. ~~The stock repurchase program has no time limit and may be modified, suspended or terminated at any time by the board of directors.~~

Expenditures to acquire shares under the ~~share~~stock repurchase program are as follows:

Three Months Ended March 31,
2022 2021
(in millions)
Shares repurchased (a) $ 250 $ —


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in millions)
Shares repurchased (a)	$	499	$	—	$	750	$	—

______________________

(a)During the three and six months ended ~~March 31,~~June 30, 2022, ~~1,052,822~~2.1 million and 3.2 million shares were repurchased under the ~~share~~stock repurchase ~~program.~~program, respectively. No shares were repurchased under the ~~share~~stock repurchase program during the three and six months ended ~~March 31,~~June 30, 2021.

As of ~~March 31,~~June 30, 2022, ~~$3.8~~$3.3 billion remained available for use to repurchase shares under the Company's common stock repurchase program.

NOTE 17. Subsequent Events

Dividends. On ~~May 4,~~August 2, 2022, the board of directors declared a quarterly base dividend of ~~$0.78~~$1.10 per share and a quarterly variable dividend of ~~$6.60~~$7.47 per share on the Company's outstanding common stock, payable ~~June 14,~~September 16, 2022 to shareholders of record at the close of business on ~~May 31,~~September 6, 2022.

~~Marketing derivatives.~~Share repurchases. In July 2022, pursuant to a Rule 10b5-1 plan, the Company repurchased 1.2 million shares for $250 million under its stock repurchase program.

Senior notes. The Company's outstanding 3.950% Senior Notes due 2022 matured on July 15, 2022. The Company paid the $244 million principal balance with cash on hand. See Note 7 for additional information.

Convertible Note conversions.Subsequent to ~~March 31,~~June 30, 2022, the Company ~~entered into 2 long-term marketing contracts~~settled certain conversion options that ~~will be accounted for as derivative instruments. The terms~~were exercised by the holders of the ~~2 marketing contracts commit~~Company's Convertible Notes. The Company settled the conversion options in cash, resulting in total cash payments of $314 million, of which $145 million was a repayment of the Convertible Notes principal balance. Associated with the conversions, the Company ~~to purchase and simultaneously sell 40 thousand barrels~~received Capped Call proceeds of oil per day beginning May 1, 2022 and ending April 30, 2027 and 30 thousand barrels of oil per day beginning August 1, 2022 and ending July 31, 2027. The price the Company pays to purchase the oil volumes under these marketing contracts is based on a Midland oil price and the price the Company receives$39 million. See Note 7 for the oil volumes sold is a WASP that a non-affiliated counterparty receives for selling oil through a Gulf Coast storage and export facility at prices that are highly correlated with Brent oil prices during the same month of the purchase.additional information.

2728

PIONEER NATURAL RESOURCES COMPANY

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

DoublePoint Acquisition and Parsley Acquisition

The Company regularly seeks to acquire or trade for acreage that complements its operations, provides exploration and development opportunities, increases the lateral length of future horizontal wells and provides superior returns on investment.

In May 2021, the Company acquired Double Eagle III Midco 1 LLC (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.

In January 2021, the Company acquired Parsley Energy Inc. (the "Parsley Acquisition") in exchange for 52 million shares of Pioneer common stock. The Pioneer stock consideration transferred had a fair value of $6.9 billion.

Delaware Divestiture and Glasscock Divestiture

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's Delaware Basin assets were acquired as part of the Parsley Acquisition.

In October 2021, the Company completed the sale of 20,000 net acres in western Glasscock County to Laredo Petroleum, Inc. ("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.

Financial and Operating Performance

The Company's financial and operating performance for the three months ended ~~March 31,~~June 30, 2022 included the following highlights:

•Net income attributable to common stockholders for the three months ended ~~March 31,~~June 30, 2022 was ~~$2.0~~$2.4 billion ($~~7.85~~9.30 per diluted share), as compared to a net ~~loss~~income of ~~$70~~$380 million ($~~0.33~~1.54 per diluted share) for the same period in 2021. The primary components of the ~~$2.1~~$2.0 billion increase in earnings attributable to common stockholders include:

•a ~~$2.1~~$2.0 billion increase in oil and gas revenues, primarily due to (i) a 6069 percent increase in average realized commodity prices per BOE as a result of higher commodity prices in 2022 due to the continued recovery in oil, NGL and gas demand, low worldwide inventory levels, OPEC supplies being below agreed quotas and the ~~expected~~ impact to global oil and gas supplies resulting from sanctions against Russia related to their ~~unprovoked~~ invasion of Ukraine and (ii) a 35two percent increase in daily sales volumes due to additional production from the Company's successful horizontal drilling program in the Midland Basin ~~combined with~~and the incremental production added from the assets acquired in the DoublePoint Acquisition in May 2021, partially offset by the reduced production associated with the assets divested as part of the Delaware Divestiture in December 2021; and

•a ~~$556~~$767 million decrease in derivative losses, primarily due to a reduction in the Company's commodity derivative positions;

•a $227 million decrease in other expense, primarily due to $197 million of transaction costs related to the Parsley Acquisition and $80 million of costs related to covering firm gas commitments due to Winter Storm Uri during the three months ended March 31, 2021, partially offset by $47 million in losses on early extinguishment of the Company's 0.750% Senior Notes due 2024 and the 4.450% Senior Notes due 2026 for the three months ended March 31, 2022;

•an $80 million increase in net sales of purchased commodities primarily attributable to increasing oil prices during the three months ended March 31, 2022, which resulted in purchased oil in transit or stored at the end of December 2021, January 2022 and February 2022 being sold in January 2022, February 2022 and March 2022, respectively, at higher prices; and

•a $66 million increase in net interest and other income, primarily due to noncash gains attributable to the increases in the fair value of (i) the Company's investment in affiliate of $96 million during the three months ended March 31, 2022 as compared to a noncash gain of $54 million for the same period in 2021 and (ii) the Company's short-term investment of $18 million during the three months ended March 31, 2022;

~~PIONEER NATURAL RESOURCES COMPANY~~

partially offset by:

•a ~~$563~~$537 million increase in income taxes, primarily due to the increase in earnings in 2022 compared to 2021; and

•a ~~$275~~$280 million increase in production costs, including taxes, primarily attributable to (i) increased lease operating expenses attributable primarily to inflationary pressures on power, fuel and chemical costs, ~~attributable to the Company's successful horizontal drilling program in the Midland Basin~~(ii) increased workover activity and ~~production added from the DoublePoint Acquisition and (ii)~~(iii) an increase in production taxes, ~~and~~ ad valorem taxes ~~as a result of~~and gathering processing and transportation costs that are directly related to the increase in commodity prices, partially offset by a decrease in costs ~~attributable to~~as a result of the Delaware ~~Divestiture; and~~

•~~a $140 million increase in DD&A expense, primarily due to the aforementioned increase in daily sales volumes.~~Divestiture.

•During the three months ended ~~March 31,~~June 30, 2022, average daily sales volumes increased on a BOE basis by 35two percent to ~~637,756~~642,844 BOEPD, as compared to ~~473,937~~629,468 BOEPD during the same period in 2021, primarily due to the Company's successful horizontal drilling program and the incremental production added from the assets acquired in the DoublePoint Acquisition, partially offset by the reduced production associated with the assets divested as part of the Company's Delaware Divestiture.

PIONEER NATURAL RESOURCES COMPANY

•Average oil and NGL prices per Bbl and average gas prices per Mcf increased to ~~$94.60, $41.37~~$110.56, $44.21 and ~~$4.81,~~$6.72, respectively, during the three months ended ~~March 31,~~June 30, 2022, as compared to ~~$56.71, $25.90~~$64.55, $27.95 and ~~$3.04,~~$2.69, respectively, for the same period in 2021.

•~~Cash~~Net cash provided by operating activities increased during the three months ended ~~March 31,~~June 30, 2022 to ~~$2.6~~$3.2 billion, as compared to ~~$377 million~~$1.5 billion for the same period in 2021. The increase in net cash ~~flow~~ provided by operating activities during the three months ended ~~March 31,~~June 30, 2022, as compared to the same period in 2021, is primarily due to (i) the aforementioned increase in oil and gas revenues as a result of higher commodity prices and sales volumes and (ii) a decrease in cash used in derivative activities, partially offset by an increase in production costs, including taxes.

•During the three months ended June 30, 2022, the Company paid a base dividend of $189 million, or $0.78 per share, and a variable dividend of $1.6 billion, or $6.60 per share, as compared to a base dividend of $138 million, or $0.56 per share, and no variable dividend for the same period in 2021.

•During the three months ended June 30, 2022, the Company repurchased 2.1 million shares for $499 million under the Company's stock repurchase program. The Company did not repurchase any shares under a stock repurchase program during the three months ended June 30, 2021.

•As of ~~March 31,~~June 30, 2022 and December 31, 2021, the Company's net debt to book capitalization was 12 percent.

Oil and Gas Industry Considerations

The COVID-19 pandemic resulted in a severe worldwide economic downturn, significantly disrupting the demand for oil throughout the world, and created significant volatility, uncertainty and turmoil in the oil and gas industry. The decrease in demand for oil, combined with excess supply of oil and related products, resulted in oil prices declining significantly beginning in late February 2020. Since mid-2020, oil prices have improved, with demand steadily increasing despite the uncertainties surrounding the COVID-19 variants that have continued to inhibit a full global demand recovery. In addition, worldwide oil inventories are, from a historical perspective, very low and supply increases from OPEC and other oil producing nations are not expected to be sufficient to meet forecasted oil demand growth in 2022 and 2023, with many OPEC countries not able to produce at their OPEC agreed upon quota levels due to their lack of capital investments over the past few years in developing incremental oil supplies. Furthermore, sanctions and import bans on Russia have been implemented by various countries in response to the war in Ukraine, further impacting global oil supply. As a result of global supply and demand imbalances, oil and ~~natural~~ gas prices have increased significantly, with average NYMEX oil and NYMEX gas prices for the three months ended ~~March 31,~~June 30, 2022 being ~~$94.29~~$108.41 per Bbl and ~~$4.95~~$6.76 per Mcf, respectively, as compared to ~~$57.84~~$66.07 per Bbl and ~~$2.71~~$2.83 per Mcf, respectively, for the same period in 2021. In addition, the ongoing pandemic, combined with the Russia/Ukraine conflict, has resulted in ~~response to continued~~global supply chain disruptions, ~~attributable~~which has led to ~~the pandemic and the Russia/Ukraine conflict,~~significant cost ~~inflation is occurring.~~inflation. Specifically, the Company's 2022 capital program is ~~primarily~~ being impacted by higher than expected inflation in steel, diesel and chemical ~~prices.~~prices, among other items.

Global oil price levels and inflationary pressures will ultimately depend on various factors that are beyond the Company's control, such as (i) the effectiveness of responses to combat the COVID-19 virus and their impact on domestic and worldwide demand, (ii) the ability of OPEC and other oil producing nations to manage the global oil supply, (iii) the impact of sanctions and import bans on production from Russia, (iv) the timing and supply impact of any Iranian sanction relief on Iran's ability to export oil, (v) additional actions by businesses and governments in response to the pandemic, (vi) the global supply chain constraints associated with manufacturing and distribution delays, (vii) oilfield service demand and cost inflation, ~~and~~ (viii) political stability of oil consuming ~~countries.~~countries and (ix) increasing expectations that the world may be heading into a global recession. The Company continues to assess and monitor the impact of these factors and consequences on the Company and its operations.

2930

PIONEER NATURAL RESOURCES COMPANY

~~Second~~Third Quarter 2022 Outlook

Based on current estimates, the Company expects the following operating and financial results for the ~~second~~third quarter of 2022:


			Three Months Ending ~~June~~September 30, 2022
			Guidance
			($ in millions, except per BOE amounts)
Average daily production (MBOE) ~~(a)~~			~~623~~635 - ~~648~~660
Average daily oil production (MBbls) ~~(a)~~			~~342~~345 - ~~357~~360
Production costs per BOE			$~~11.00~~12.00 - ~~$12.50~~$13.50
DD&A per BOE			$10.50 - $12.00
Exploration and abandonments expense			$10 - $20
General and administrative expense			$7075 - ~~$80~~$85
Accretion of discount on asset retirement obligations			$23 - $5$6
Interest expense			$3230 - ~~$37~~$35
Other expense			$20 - $40
Cash flow impact from firm transportation ~~(b)~~(a)			$~~(55)~~(100) - ~~$(25)~~$(60)
Current income tax provision ~~(c)~~(b)			$~~120~~300 - ~~$140~~$350
Effective tax rate			22% - 27%

_____________________

(a)During the first quarter of 2022, the Company's contracted sand supply was disrupted by a third-party sand mine outage, impacting forecasted second quarter production. The sand mine outage was fully restored in late March 2022. The Company has temporarily added a frac fleet during the second quarter of 2022 to mitigate the impact to the Company's full-year production forecast.

~~(b)~~The cash flow impact from firm transportation is primarily based on (i) the forecasted differential between WTI oil prices and Brent oil prices less the costs to transport purchased oil from the areas of the Company's production to the Gulf ~~Coast.~~Coast and (ii) oil price fluctuations between the time the Company purchases the oil from its areas of operation and when the oil is delivered and sold to Gulf Coast refineries or exported to international markets. To the extent that the Company's Gulf Coast sales of purchased oil does not cover the purchase price and associated firm transport costs, the Company's results of operations will reflect the negative cash flow impact attributable to the shortfall.

~~(c)~~(b)Reflects estimated state and federal cash taxes that will be paid during the ~~second~~third quarter based on full-year 2022 forecasted taxable earnings.

Operations and Drilling Highlights

Average daily oil, NGL and gas sales volumes are as follows:


			~~Three~~Six Months Ended ~~March 31,~~June 30, 2022
Oil (Bbls)			~~355,270~~351,597
NGL (Bbls)			~~152,929~~156,576
Gas (Mcf)			~~777,343~~792,847
Total (BOE)			~~637,756~~640,314

The Company's liquids production was 8079 percent of total production, on a BOE basis, for the ~~three~~six months ended ~~March 31,~~June 30, 2022.

3031

PIONEER NATURAL RESOURCES COMPANY

Costs incurred are as follows:


	~~Three~~Six Months Ended ~~March 31,~~June 30, 2022
	( in millions)
Proved property acquisition costs	$	3
Unproved property acquisitions (a)	~~(19)~~23
Exploration/extension costs	~~730~~1,480
Development costs	~~109~~250
Asset retirement obligations	24
	$	~~825~~1,760

_____________________

(a)Includes DoublePoint Acquisition measurement period adjustments that resulted in a ~~$28~~$21 million decrease in unproved property acquisition costs incurred.

Development and exploration/extension drilling activity is as follows:


		Three Months Ended March 31, 2022			Six Months Ended June 30, 2022
		Development	Exploration/Extension		Development	Exploration/Extension
Beginning wells in progress	Beginning wells in progress	26	270	Beginning wells in progress	26	270
Wells spud	Wells spud	3	121	Wells spud	17	234

Successful wells	Successful wells	(22)	(122)	Successful wells	(25)	(253)

Ending wells in progress	Ending wells in progress	7	269	Ending wells in progress	18	251

As of ~~March 31,~~June 30, 2022, the Company's drilling and completions program ~~was~~included operating 2321 drilling rigs and six frac fleets in the Midland Basin. The Company will continue to evaluate its drilling and completions program with future activity levels assessed regularly.

During the ~~three~~six months ended ~~March 31,~~June 30, 2022, the Company successfully completed ~~106~~214 horizontal wells and 6seven vertical wells in the northern portion of the Midland Basin and 3257 horizontal wells in the southern portion of the Midland Basin. In the northern portion of the Midland Basin, 3051 percent of the horizontal wells placed on production were ~~Wolfcamp B~~Spraberry interval wells, 2325 percent were Wolfcamp A interval wells and the remaining 4724 percent were ~~Spraberry~~Wolfcamp B interval wells. In the southern portion of the Midland Basin, all of the wells placed on production were Wolfcamp A ~~and~~or B interval wells.

Results of Operations

Oil and gas revenues. The Company's revenues are derived from sales of oil, NGL and gas production. Increases or decreases in the Company's revenues, profitability and future production are highly dependent on commodity prices. Prices are market driven and future prices will fluctuate due to supply and demand factors, availability of transportation, seasonality, geopolitical developments and economic factors, among other items.

Three Months Ended March 31,
2022 2021 Change
(in millions)
Oil and gas revenues $ 3,930 $ 1,824 $ 2,106


	Three Months Ended June 30,						Six Months Ended June 30,
	2022		2021		Change		2022		2021		Change
	(in millions)						(in millions)
Oil and gas revenues	$	4,639	$	2,682	$	1,957	$	8,570	$	4,505	$	4,065

Average daily sales volumes are as follows:


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2022	2021		% Change			2022	2021	% Change		2022	2021	% Change
Oil (Bbls)	Oil (Bbls)		355,270	281,017		26	%	Oil (Bbls)	347,964	363,046	(4	%)	351,597	322,258	9	%
NGLs (Bbls)	NGLs (Bbls)		152,929	105,675		45	%	NGLs (Bbls)	160,183	147,135	9	%	156,576	126,520	24	%
Gas (Mcf)	Gas (Mcf)		777,343	523,467		48	%	Gas (Mcf)	808,181	715,719	13	%	792,847	620,124	28	%
Total (BOE)	Total (BOE)		637,756	473,937		35	%	Total (BOE)	642,844	629,468	2	%	640,314	552,132	16	%

Average daily BOE sales volumes ~~per BOE~~ increased for the three and six months ended ~~March 31,~~June 30, 2022, as compared to the same ~~period~~periods in 2021, primarily due to the Company's successful Spraberry/Wolfcamp horizontal drilling program and ~~the~~ incremental

~~PIONEER NATURAL RESOURCES COMPANY~~

production added from the ~~assets acquired~~DoublePoint Acquisition in ~~the DoublePoint Acquisition,~~May 2021, partially offset by the reduced production associated with the

PIONEER NATURAL RESOURCES COMPANY

assets divested as part of the Company's Delaware ~~Divestiture.~~Divestiture in December 2021. Average daily oil sales volumes decreased for the three months ended June 30, 2022 primarily due to the Delaware Divestiture, with the divested assets having a higher oil production ratio than the Company's Midland Basin assets.

The oil, NGL and gas prices reported by the Company are based on the market prices received for each commodity. Commodity prices for the three and six months ended ~~March 31,~~June 30, 2022, as compared to the same ~~period~~respective periods in 2021, increased due to the continued recovery in oil, NGL and gas demand, low worldwide inventory levels, OPEC supplies being below agreed quotas and the ~~expected~~ impact to global oil and gas supplies resulting from sanctions against Russia related to their ~~unprovoked~~ invasion of Ukraine. The average prices are as follows:


		Three Months Ended March 31,					Three Months Ended June 30,										Six Months Ended June 30,
			2022		2021			% Change			2022		2021		% Change			2022		2021		% Change
Oil per Bbl	Oil per Bbl		$	94.60	$	56.71		67	%	Oil per Bbl	$	110.56	$	64.55	71	%		$	102.54	$	61.15	68	%
NGLs per Bbl	NGLs per Bbl		$	41.37	$	25.90		60	%	NGLs per Bbl	$	44.21	$	27.95	58	%		$	42.83	$	27.10	58	%
Gas per Mcf	Gas per Mcf		$	4.81	$	3.04		58	%	Gas per Mcf	$	6.72	$	2.69	150	%		$	5.79	$	2.83	105	%
Total per BOE	Total per BOE		$	68.48	$	42.75		60	%	Total per BOE	$	79.31	$	46.82	69	%		$	73.94	$	45.08	64	%

Net sales of purchased commodities. The Company enters into pipeline capacity commitments in order to secure available oil, NGLs and gas transportation capacity from the Company's areas of production and secure diesel supply from the Gulf Coast to the Company's operations in the Midland Basin. 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 (i) Gulf Coast refineries, (ii) Gulf Coast and West Coast gas markets and (iii) international oil markets, and to satisfy unused gas pipeline capacity commitments. Revenues and expenses from these transactions are generally presented on a gross basis in sales of purchased commodities and purchased commodities expense in the accompanying consolidated statements of operations as the Company acts as a principal in the transaction by assuming both the risks and rewards of ownership, including credit risk, of the commodities purchased and the responsibility to deliver the commodities sold. In conjunction with the Company's downstream sales, the Company also enters into pipeline capacity and storage commitments in order to secure available oil, NGL and gas transportation capacity from the Company's areas of production to downstream sales points and storage capacity at downstream sales points. The transportation and storage costs associated with these transactions are included in purchased commodities expense.

The net effect of third party purchases and sales of commodities is as follows:


		Three Months Ended March 31,							Three Months Ended June 30,						Six Months Ended June 30,
			2022		2021		Change				2022		2021		Change		2022		2021		Change
			(in millions)								(in millions)
Sales of purchased commodities	Sales of purchased commodities		$	2,217	$	1,240	$	977		Sales of purchased commodities	$	2,366	$	1,587	$	779	$	4,583	$	2,828	$	1,755
Purchased commodities	Purchased commodities		2,152		1,255		897			Purchased commodities	2,382		1,627		755		4,534		2,882		1,652
			$	65	$	(15)	$	80			$	(16)	$	(40)	$	24	$	49	$	(54)	$	103

The ~~increase~~change in net sales of purchased commodities for the three and six months ended ~~March 31,~~June 30, 2022, as compared to the same ~~period~~periods in 2021 is attributable to increases in oil prices, which resulted in oil that was purchased and in transit via pipeline to the Gulf Coast or in Gulf Coast storage ~~at the end of December 2021, January 2022 and February 2022. This oil inventory is~~being sold in the following month at ~~contracted prices that are generally tied to monthly average index~~higher oil ~~prices (typically Brent~~prices. The change was also impacted by improved margins on the Company's downstream Gulf Coast refinery and export oil ~~prices). As a result of increasing oil prices during~~sales for the three and six months ended ~~March 31,~~June 30, 2022 as compared to the ~~oil inventory~~same periods in ~~transit or stored at the end of December 2021, January 2022 and February 2022 was sold in January 2022, February 2022 and March 2022, respectively, at higher prices.~~2021.

Firm transportation payments on excess pipeline capacity are included in other expense in the accompanying consolidated statements of operations. See Note 14 of Notes to Consolidated Financial Statements included in "Item 1. Financial Statements" for additional information.

Interest and other income (loss), net.


	Three Months Ended June 30,						Six Months Ended June 30,
	2022		2021		Change		2022		2021		Change
	(in millions)
Interest and other income (loss), net	$	(56)	$	(20)	$	(36)	$	69	$	40	$	29

PIONEER NATURAL RESOURCES COMPANY

~~Interest and other income, net.~~
Three Months Ended March 31,
2022 2021 Change
(in millions)
Interest and other income, net $ 126 $ 60 $ 66

The ~~increase~~change in interest and other income for the three and six months ended ~~March 31,~~June 30, 2022, as compared to the same ~~period~~periods in 2021, is primarily due to ~~noncash gains attributable to the increases~~changes in the fair value of (i) the Company's investment in affiliate resulting in a noncash loss of ~~$96~~$65 million and a noncash gain of $32 million, during the three and six months ended ~~March 31,~~June 30, 2022, respectively, as compared to a noncash loss of $25 million and a noncash gain of ~~$54~~$29 million for the same ~~period~~periods in 2021, respectively, and (ii) a noncash gain on the Company's short-term investment in Laredo of ~~$18~~$17 million during the ~~three~~six months ended ~~March 31,~~June 30, 2022.

SeeNote 4 and Note 13 of Notes to Consolidated Financial Statements included in "Item 1. Financial Statements" for additional information.

Derivative loss, net.
Three Months Ended March 31,
2022 2021 Change
(in millions)
Commodity price derivatives:
Noncash derivative loss, net $ (111) $ (350) $ 239
Cash payments on settled derivatives, net (57) (314) 257
Total commodity derivative loss, net (168) (664) 496
Marketing derivatives:
Noncash derivative gain (loss), net 44 (20) 64
Cash payments on settled derivatives, net (11) (7) (4)
Total marketing derivative gain (loss), net 33 (27) 60
Derivative loss, net $ (135) $ (691) $ 556

The Company primarily utilizes derivative contracts to reduce the effect of price volatility on the commodities the Company produces and sells or consumes. The Company uses marketing derivatives to diversify its oil pricing to Gulf Coast and international markets.


	Three Months Ended June 30,						Six Months Ended June 30,
	2022		2021		Change		2022		2021		Change
	(in millions)
Commodity price derivatives:
Noncash derivative gain (loss), net	$	72	$	(279)	$	351	$	(39)	$	(629)	$	590
Cash payments on settled derivatives, net (a)	(75)		(557)		482		(131)		(871)		740
Total commodity derivative loss, net	(3)		(836)		833		(170)		(1,500)		1,330
Marketing derivatives:
Noncash derivative gain (loss), net	(68)		17		(85)		(24)		(3)		(21)
Cash payments on settled derivatives, net	(17)		(13)		(4)		(29)		(20)		(9)
Total marketing derivative gain (loss), net	(85)		4		(89)		(53)		(23)		(30)
Conversion option derivatives:
Noncash derivative gain, net	23		—		23		23		—		23


Derivative loss, net	$	(65)	$	(832)	$	767	$	(200)	$	(1,523)	$	1,323

Commodity price ~~derivatives and the~~derivatives. The relative price impact for the Company's commodity price derivatives are as follows:
Three Months Ended March 31,
2022 2021
Net Cash Payments Price Impact Net Cash Payments Price Impact
(in millions) (in millions)
Oil derivative payments, net (a) $ (1) $ (0.04) per Bbl $ (293) $ (11.58) per Bbl
Gas derivative payments, net (56) $ (0.79) per Mcf (8) $ (0.16) per Mcf
$ (57) $ (301)


	Three Months Ended June 30, 2022					Six Months Ended June 30, 2022

	Net Cash Payments		Price Impact			Net Cash Payments		Price Impact
	(in millions)					(in millions)
Oil derivative payments (a)	$	(1)	$	(0.04)	per Bbl	$	(2)	$	(0.04)	per Bbl

Gas derivative payments, net (a)	(74)		$	(1.00)	per Mcf	(129)		$	(0.90)	per Mcf
	$	(75)				$	(131)


	Three Months Ended June 30, 2021					Six Months Ended June 30, 2021
	Net cash payments		Price impact			Net cash payments		Price impact
	(in millions)					(in millions)
Oil derivative payments (b)	$	(548)	$	(16.60)	per Bbl	$	(841)	$	(14.42)	per Bbl

Gas derivative payments	(9)		$	(0.13)	per Mcf	(17)		$	(0.14)	per Mcf
	$	(557)				$	(858)

_____________________

(a)Excludes cash payments of ~~$78~~$83 million and $161 million during the three and six months ended ~~March 31,~~June 30, 2022, respectively, related to entering into equal and offsetting oil and gas commodity derivative trades in the fourth quarter of 2021, that had the net effect of eliminating certain of the Company's 2022 derivative obligations.

(b)Excludes the effect from early settlement of certain of the Company's commodity derivative contracts, which resulted in cash payments of $13 million for the ~~three~~six months ended ~~ended March~~June 30, 2021.

PIONEER NATURAL RESOURCES COMPANY

Marketing derivatives. In April 2022, the Company entered into two new long-term marketing contracts whereby the Company agreed to purchase and simultaneously sell (i) 40 thousand barrels of oil per day beginning May 1, 2022 and ending April 30, 2027 and (ii) 30 thousand barrels of oil per day beginning August 1, 2022 and ending July 31, ~~2021.~~2027 at an oil terminal in Midland, Texas.

The price the Company pays to purchase the oil volumes under the purchase contract is based on a Midland WTI price and the price the Company receives for the oil volumes sold is a WASP that a non-affiliated counterparty receives for selling oil through a Gulf Coast storage and export facility at prices that are highly correlated with Brent oil prices during the same month of the purchase. Based on the form of the long-term marketing contracts, the Company determined the contracts should be accounted for as derivative instruments.

Conversion option derivatives. The Company's conversion option derivatives represent the change in the cash settlement obligation that occurs during the Settlement Periods related to conversion options exercised by certain holders of the Company's 0.250% Convertible Notes due 2025. The Company's election to settle an exercised conversion option in cash results in a forward contract during the Settlement Period that is accounted for as a derivative instrument not designated as a hedge.

The Company's open derivative contracts are subject to continuing market risk. See "Item 3. Quantitative and Qualitative Disclosures About Market Risk" and Note 5 of Notes to Consolidated Financial Statements included in "Item 1. Financial Statements" for additional information.

~~PIONEER NATURAL RESOURCES COMPANY~~

Gain on disposition of assets, net.
Three Months Ended March 31,
2022 2021 Change
(in millions)
Gain on disposition of assets, net $ 34 $ 11 $ 23


	Three Months Ended June 30,						Six Months Ended June 30,
	2022		2021		Change		2022		2021		Change
	(in millions)
Gain on disposition of assets, net	$	36	$	2	$	34	$	70	$	13	$	57

The increase in net gain on disposition of assets for the three and six months ended ~~March 31,~~June 30, 2022, as compared to the same ~~period~~periods in 2021, was primarily due to the divestment of certain undeveloped acres and producing wells in the Midland Basin for cash proceeds of ~~$85~~$39 million and $126 million, respectively, resulting in a gain on the sales of ~~$41~~$35 million and $76 million, respectively, as compared to a $9 million gain onassociated with the sale of the Company's well services business ~~during~~ for the ~~three~~six months ended ~~March 31,~~June 30, 2021.

See Note 3 of Notes to Consolidated Financial Statements included in "Item 1. Financial Statements" for additional information.

Oil and gas production costs.
Three Months Ended March 31,
2022 2021 Change
(in millions)
Oil and gas production costs $ 416 $ 252 $ 164


	Three Months Ended June 30,						Six Months Ended June 30,
	2022		2021		Change		2022		2021		Change
	(in millions)
Oil and gas production costs	$	478	$	316	$	162	$	894	$	568	$	326

The increase in oil and gas production costs for the three and six months ended ~~March 31,~~June 30, 2022, as compared to the same ~~period~~periods in 2021, was primarily due to (i) increased costs related to production increases from the Company's successful horizontal drilling program in the Midland Basin, ~~and production added from the assets acquired in the DoublePoint Acquisition,~~ partially offset by the reduced production associated with assets divested as part of the Delaware Divestiture, (ii) increased lease operating costs related primarily to increases in power, fuel and chemical costs, (iii) increased gas and NGL prices during the three and six months ended ~~March 31,~~June 30, 2022 that resulted in increased gas processing costs for those contractual volumes retained by the processor as payment for their services ~~(iii) increased labor, maintenance and fuel costs~~ and (iv) increased workover activity as a result of improved commodity prices being realized in 2022, which increased the economic benefit of repairing certain of the Company's oil and gas ~~wells.~~wells, partially offset by an increase in net natural gas plant income due to the aforementioned improvement in gas and NGL prices, partially offset by the loss of net natural gas plant income associated with the Company's Martin County Gas Processing Divestiture in February 2022.

PIONEER NATURAL RESOURCES COMPANY

Total production costs per BOE are as follows:


		Three Months Ended March 31,							Three Months Ended June 30,						Six Months Ended June 30,
			2022		2021		% Change				2022		2021			% Change		2022		2021		% Change
Lease operating expense (a)	Lease operating expense (a)		$	3.46	$	3.47	—	%		Lease operating expense (a)	$	3.71	$	3.05		22	%	$	3.59	$	3.23	11	%
Gathering, processing and transportation expense (b)	Gathering, processing and transportation expense (b)		3.85		3.05		26	%		Gathering, processing and transportation expense (b)	4.53		2.66			70	%	4.20		2.83		48	%
Workover costs (a)	Workover costs (a)		0.79		0.43		84	%		Workover costs (a)	1.02		0.39			162	%	0.90		0.40		125	%
Net natural gas plant income (c)	Net natural gas plant income (c)		(0.86)		(1.05)		(18	%)		Net natural gas plant income (c)	(1.08)		(0.59)			83	%	(0.97)		(0.79)		23	%
			$	7.24	$	5.90	23	%			$	8.18	$	5.51		48	%	$	7.72	$	5.67	36	%

~~_____________________~~____________________

(a)Lease operating expense and workover costs represent the components of oil and gas production costs over which the Company has management control.

(b)Gathering, processing and transportation expense represents the costs to (i) gather, process, transport and fractionate the Company's gas and NGLs to a point of sale and, to a lesser extent, (ii) gather and transport certain of the Company's oil production to a point of sale.

(c)Net natural gas plant income represents the earnings from the Company's ownership share of gas processing facilities that gather and process the Company's and third party gas.

The change in the Company's production costs per BOE ~~for~~during the three and six months ended ~~March 31,~~June 30, 2022, as compared to the same ~~period~~periods in 2021, is due to the following:

•Lease operating expense per BOE increased during the three and six months ended June 30, 2022, as compared to the same periods in 2021, primarily due to increased power, fuel and chemical costs;

•Gathering, processing and transportation expense per BOE increased ~~for~~during the three and six months ended ~~March 31,~~June 30, 2022, as compared to the same ~~period~~periods in 2021, primarily due to ~~(i)~~ increased gas processing costs, as a result of an increase in gas and NGL prices ~~during~~attributable to the ~~three months ended March 31, 2022 that resulted in increased gas processing costs for those~~ contractual volumes retained by the processor as payment for their ~~services and (ii) the assumption of the DoublePoint Acquisition contracts that had higher gathering, processing and transportation costs on a per BOE basis;~~services;

~~PIONEER NATURAL RESOURCES COMPANY~~

•Workover costs per BOE increased for ~~the~~ three and six months ended ~~March 31,~~June 30, 2022, as compared to the same ~~period~~periods in 2021, due to an increase in workover activity as a result of improved commodity prices being realized in 2022, which increased the economic benefit of repairing certain of the Company's oil and gas wells; and

•Net natural gas plant income per BOE ~~decreased for~~increased during the three and six months ended ~~March 31,~~June 30, 2022, as compared to the same ~~period~~periods in 2021, primarily due to improved gas and NGL prices, partially offset by the loss of net natural gas plant income associated with the Company's Martin County Gas Processing Divestiture ~~partially offset by improved gas and NGL prices.~~in February 2022.

Production and ad valorem taxes.

Three Months Ended March 31,
2022 2021 Change
(in millions)
Production and ad valorem taxes $ 224 $ 113 $ 111


	Three Months Ended June 30,						Six Months Ended June 30,
	2022		2021		Change		2022		2021		Change
	(in millions)
Production and ad valorem taxes	$	271	$	153	$	118	$	495	$	266	$	229

In general, production taxes and ad valorem taxes are directly related to commodity price changes; however, Texas ad valorem taxes are based upon prior year commodity prices, whereas production taxes are based upon current year commodity prices.

Production and ad valorem taxes per BOE are as follows:


		Three Months Ended March 31,						Three Months Ended June 30,								Six Months Ended June 30,
			2022		2021		% Change			2022		2021		% Change			2022		2021		% Change
Production taxes per BOE	Production taxes per BOE		$	3.25	$	1.98	64	%	Production taxes per BOE	$	3.75	$	2.15	74	%		$	3.50	$	2.07	69	%
Ad valorem taxes per BOE	Ad valorem taxes per BOE		0.65		0.66		(2	%)	Ad valorem taxes per BOE	0.88		0.52		69	%		0.77		0.58		33	%
			$	3.90	$	2.64	48	%		$	4.63	$	2.67	73	%		$	4.27	$	2.65	61	%

Production taxes per BOE increased for the three and six months ended ~~March 31,~~June 30, 2022, as compared to the same ~~period~~periods in 2021, ~~primarily~~ due to the aforementioned increase in oil, NGL and gas commodity prices. The increase in ad valorem taxes per BOE for the three and six months ended June 30, 2022, as compared to the same periods in 2021, was primarily due to an increase in prior year commodity prices that are used to determine current year ad valorem taxes.

PIONEER NATURAL RESOURCES COMPANY

Depletion, depreciation and amortization expense.

Three Months Ended March 31,
2022 2021 Change
(in millions)
Depletion, depreciation and amortization $ 614 $ 474 $ 140


	Three Months Ended June 30,						Six Months Ended June 30,
	2022		2021		Change		2022		2021		Change
	(in millions)
Depletion, depreciation and amortization	$	620	$	648	$	(28)	$	1,234	$	1,121	$	113

Total DD&A expense per BOE is as follows:


		Three Months Ended March 31,							Three Months Ended June 30,								Six Months Ended June 30,
			2022		2021		% Change				2022		2021		% Change			2022		2021		% Change
DD&A per BOE	DD&A per BOE		$	10.69	$	11.11	(4	%)		DD&A per BOE	$	10.60	$	11.31	(6	%)		$	10.64	$	11.22	(5	%)
Depletion expense per BOE	Depletion expense per BOE		$	10.48	$	10.54	(1	%)		Depletion expense per BOE	$	10.40	$	11.04	(6	%)		$	10.44	$	10.83	(4	%)

The decrease in DD&A per BOE for the three and six months ended ~~March 31,~~June 30, 2022, as compared to the same ~~period~~periods in 2021, is primarily due to additions of proved reserves attributable to the aforementioned successful Spraberry/Wolfcamp drilling program and improved commodity prices (which has the effect of extending the economic life of producing wells).

Exploration and abandonments expense.


		Three Months Ended March 31,							Three Months Ended June 30,								Six Months Ended June 30,
			2022		2021		Change				2022		2021		Change			2022		2021		Change
			(in millions)								(in millions)
Geological and geophysical	Geological and geophysical		$	9	$	16	$	(7)		Geological and geophysical	$	10	$	10	$	—		$	18	$	26	$	(8)

Leasehold abandonments and other	Leasehold abandonments and other		5		3		2			Leasehold abandonments and other	1		—		1			6		3		3
			$	14	$	19	$	(5)			$	11	$	10	$	1		$	24	$	29	$	(5)

The decrease in geological and geophysical costs for the ~~three~~six months ended ~~March 31,~~June 30, 2022, as compared to the same period in 2021, was primarily due to the relicensing of certain Parsley seismic data in connection with the Parsley Acquisition during 2021.

~~PIONEER NATURAL RESOURCES COMPANY~~

The increase in leasehold abandonments costs for the three and six months ended ~~March 31,~~June 30, 2022, as compared to the same ~~period~~periods in 2021, was primarily due to the abandonment of certain unproved properties during 2022 that the Company no longer planned to drill before the leases expired.

During the ~~three~~six months ended ~~March 31,~~June 30, 2022 and ~~the same period in~~ 2021, the Company drilled and evaluated ~~122~~253 and ~~106~~252 exploratory/extension wells, respectively, with 100 percent successfully completed as discoveries.

See Note 6 of Notes to Consolidated Financial Statements included in "Item 1. Financial Statements" for additional information.

General and administrative expense.


		Three Months Ended March 31,							Three Months Ended June 30,						Six Months Ended June 30,
			2022		2021		Change				2022		2021			Change		2022		2021		Change
			(in millions)						(in millions)
Cash general and administrative expense										Cash general and administrative expense	$	78	$	63		$	15	$	144	$	119	$	25
Noncash general and administrative expense	Noncash general and administrative expense		$	7	$	12	$	(5)		Noncash general and administrative expense	10		12			(2)		17		24		(7)
Cash general and administrative expense			66		56		10
			$	73	$	68	$	5			$	88	$	75		$	13	$	161	$	143	$	18

The change in cash general and administrative expense for the three and six months ended June 30, 2022, as compared to the same periods in 2021, was primarily due to (i) $10 million of charitable contributions to various Ukraine humanitarian aid organizations in response to the Russia/Ukraine conflict and (ii) incremental general and administrative costs associated with an increase in headcount due to the Parsley Acquisition and DoublePoint Acquisition.

PIONEER NATURAL RESOURCES COMPANY

The change in noncash general and administrative expense for the three and six months ended ~~March 31,~~June 30, 2022, as compared to the same periods in 2021, was primarily due to adjustments to the Company's deferred compensation obligation as a result of mark-to-market valuation changes attributable to the Company's deferred compensation plan assets.

Total general and administrative expense per BOE is as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2022		2021		% Change		2022		2021		% Change
Cash general and administrative expense	$	1.33	$	1.10	21	%	$	1.25	$	1.19	5	%
Noncash general and administrative expense	0.17		0.21		(19	%)	0.14		0.24		(42	%)
	$	1.50	$	1.31	15	%	$	1.39	$	1.43	(3	%)

The increase in cash general and administrative expense per BOE for the three and six months ended June 30, 2022, as compared to the same period in 2021, ~~was~~is primarily due to ~~market fluctuations~~(i) the aforementioned charitable contributions and (ii) incremental general and administrative costs associated with an increase in headcount due to the Parsley Acquisition and DoublePoint Acquisition. The decrease in noncash general and administrative expense per BOE for the three and six months ended June 30, 2022, as compared to the same period in 2021, is due to changes in the Company's deferred compensation obligation as a result of mark-to-market valuation changes attributable to the Company's deferred compensation plan assets.

The change in cash general and administrative expense for the three months ended March 31, 2022, as compared to the same period in 2021, was primarily due to incremental general and administrative costs associated with an increase in headcount due to the Parsley Acquisition and DoublePoint Acquisition.

~~Total general and administrative expense per BOE is as follows:~~
Three Months Ended March 31,
2022 2021 % Change
Noncash general and administrative expense $ 0.12 $ 0.28 (57 %)
Cash general and administrative expense 1.16 1.32 (12 %)
$ 1.28 $ 1.60 (20 %)

The decrease in general and administrative expense per BOE for the three months ended March 31, 2022, as compared to the same period in 2021, reflects the general and administrative synergies achieved from the Parsley Acquisition and the DoublePoint Acquisition. The Company added significant sales volumes from the acquisitions with limited associated incremental general and administrative costs being added.

See Note 3 of Notes to Consolidated Financial Statements included in "Item 1. Financial Statements" for additional information.

Interest expense.
Three Months Ended March 31,
2022 2021 Change
(in millions)
Noncash interest expense $ 3 $ 1 $ 2
Cash interest expense 34 38 (4)
$ 37 $ 39 $ (2)


	Three Months Ended June 30,						Six Months Ended June 30,
	2022		2021		Change		2022		2021		Change
	(in millions)
Cash interest expense	$	31	$	39	$	(8)	$	65	$	78	$	(13)
Noncash interest expense	2		2		—		5		3		2
	$	33	$	41	$	(8)	$	70	$	81	$	(11)

The decrease in cash interest expense for the three and six months ended June 30, 2022, as compared to the same periods in 2021, is primarily due to the early extinguishment of the Company's 0.750% Senior Notes due 2024 and the 4.450% Senior Notes due 2026 during February 2022, having aggregate principal amounts of $750 million and $500 million, respectively, partially offset by the issuance in May 2021 of $750 million of 0.550% Senior Notes due 2023.

The weighted average cash interest rate on the Company's indebtedness for the ~~three~~six months ended ~~March 31,~~June 30, 2022 decreased to 1.8 percent, as compared to ~~2.0~~1.9 percent for the same period in 2021.

~~PIONEER NATURAL RESOURCES COMPANY~~

See Note 7 of Notes to Consolidated Financial Statements included in "Item 1. Financial Statements" for additional information.

Other expense.
Three Months Ended March 31,
2022 2021 Change
(in millions)
Other expense $ 77 $ 304 $ (227)


	Three Months Ended June 30,						Six Months Ended June 30,
	2022		2021		Change		2022		2021		Change
	(in millions)
Other expense	$	5	$	47	$	(42)	$	83	$	351	$	(268)

The decrease in other expense for the three months ended ~~March 31,~~June 30, 2022, as compared to the same period in 2021, is primarily ~~related~~due to ~~$197~~$36 million of transaction costs related to the Parsley Acquisition and DoublePoint Acquisition. The decrease in other expense for the six months ended June 30, 2022, as compared to the same period in 2021, is primarily due to $233 million of transaction costs related to the Parsley Acquisition and DoublePoint Acquisition and $80 million of costs related to covering firm gas commitments due to Winter Storm Uri during ~~the three months ended March 31,~~ 2021, partially offset by $47 million in losses onattributable to the early extinguishment of the Company's 0.750% Senior Notes due 2024 and ~~the~~ 4.450% Senior Notes due 2026 ~~for the three months ended March 31,~~during February 2022.

PIONEER NATURAL RESOURCES COMPANY

See Note 14 of Notes to Consolidated Financial Statements included in "Item 1. Financial Statements" for additional information.

Income tax ~~benefit (provision).~~provision.


		Three Months Ended March 31,										Three Months Ended June 30,								Six Months Ended June 30,
			2022			2021			Change					2022			2021				Change			2022			2021			Change
			(in millions)																	(in millions)
Income tax benefit (provision)			$	(552)		$	11		$	(563)
Income tax provision													Income tax provision	$	(657)		$	(120)			$	(537)		$	(1,209)		$	(109)		$	(1,100)
Effective tax rate	Effective tax rate		22		%	14		%	8		%		Effective tax rate	22		%	24		%		(2		%)	22		%	26		%	(4		%)

The increase in income tax provision for the three and six months ended ~~March 31,~~June 30, 2022, as compared to the same ~~period~~periods in 2021, is primarily due to an increase of ~~$2.6~~$2.5 billion and $5.2 billion, respectively, in income before income taxes. The Company evaluates and updates its annual effective income tax rate on an interim basis based on current and forecasted earnings and tax laws. The mix and timing of the Company's actual earnings compared to annual projections can cause interim effective tax rate fluctuations. The Company's interim effective tax rate for the three and six months ended ~~March 31,~~June 30, 2022 differed from the U.S. statutory rate of 21 percent primarily due to forecasted state income taxes.

Based on the Company's forecasted earnings, the Company currently expects that its available tax attributes will not be sufficient to offset taxable U.S. federal income in 2022. As a result, the Company ~~expects to start paying~~has started making quarterly estimated U.S. federal cash ~~taxes~~payments in 2022. Forecasted cash taxes are expected to be paid from operating cash flows and cash on hand.

See Note 15 of Notes to Consolidated Financial Statements included in "Item 1. Financial Statements" for additional information.

Liquidity and Capital Resources

Liquidity. The Company's primary sources of short-term liquidity are (i) cash and cash equivalents, (ii) net cash provided by operating activities, (iii) sales of investments, (iv) unused borrowing capacity under its Credit Facility, (v) issuances of debt or equity securities and (vi) other sources, such as sales of nonstrategic assets.

The Company's short-term and long-term liquidity requirements consist primarily of (i) capital expenditures, (ii) acquisitions of oil and gas properties, (iii) payments of contractual obligations, including debt maturities, (iv) dividends and share repurchases, (v) income taxes and (vi) working capital obligations. Funding for these requirements may be provided by any combination of the Company's sources of liquidity. Although the Company expects that its sources of funding will be adequate to fund its 2022 liquidity requirements, no assurance can be given that such funding sources will be adequate to meet the Company's future needs.

~~PIONEER NATURAL RESOURCES COMPANY~~

2022 revised capital budget. ~~Including the effects from the aforementioned temporary additional frac fleet during the second quarter of 2022 and~~Based on the Company's current inflation estimates, that are being impacted primarily by inflation in steel, diesel and chemical prices, the Company's capital budget for 2022 iswas revised from an expected ~~to remain in the~~ range of $3.3 billion to $3.6 billion ~~consisting~~to an expected range of $3.6 billion to $3.8 billion. The Company's capital budget for 2022 consists of drilling and completion related activities, including additional tank batteries and saltwater disposal facilities, and $85 million for water infrastructure and vehicles. The 2022 capital budget excludes acquisitions, asset retirement obligations, capitalized interest, geological and geophysical general and administrative expense, information technology and corporate facilities.

The 2022 capital budget is expected to be funded from operating cash flow, and, if necessary, from cash and cash equivalents on hand or borrowings under the Company's Credit Facility.

Capital resources. As of ~~March 31,~~June 30, 2022, the Company had no outstanding borrowings under its Credit Facility, leaving $2.0 billion of unused borrowing capacity. 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. The Company was in compliance with all of its debt covenants as of ~~March 31,~~June 30, 2022. The Company also had unrestricted cash on hand of ~~$2.4~~$2.6 billion as of ~~March 31,~~June 30, 2022.

PIONEER NATURAL RESOURCES COMPANY

Sources and uses of cash during the ~~three~~six months ended ~~March 31,~~June 30, 2022, as compared to the same period in 2021, are as follows:
Three Months Ended March 31,
2022 2021 Change
(in millions)
Net cash provided by operating activities $ 2,584 $ 377 $ 2,207
Net cash used in investing activities $ (1,313) $ (348) $ 965
Net cash used in financing activities $ (2,761) $ (806) $ 1,955


	Six Months Ended June 30,
	2022		2021		Change
	(in millions)
Net cash provided by operating activities	$	5,805	$	1,843	$	3,962
Net cash used in investing activities	$	(2,071)	$	(2,042)	$	29
Net cash used in financing activities	$	(5,033)	$	(1,160)	$	3,873

Operating activities. The increase in net cash flow provided by operating activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022, as compared to the same period in 2021, is primarily due to (i) an increase in oil and gas revenues as a result of higher commodity prices and sales volumes attributable to the Company's successful Spraberry/Wolfcamp horizontal drilling program and ~~the~~ incremental ~~production added~~sales volumes from ~~the assets acquired in~~ the DoublePoint Acquisition and (ii) a decrease in cash used in derivative activities, partially offset by (i) an increase in production costs, including taxes and (ii) a reduction in cash flow associated with the assets divested as part of the Delaware Divestiture.

Investing activities. The increase in net cash flow used in investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022, as compared to the same period in 2021, was primarily due to (i) the Company's purchase of commercial paper for ~~$640~~$650 million, net of $2 million of discounts, ~~and~~ (ii) an increase in additions to oil and gas properties of ~~$453~~$641 million and (iii) $117 million of cash acquired in the Parsley Acquisition in 2021, partially offset by (i) $943 million of net cash used in the DoublePoint Acquisition in 2021, (ii) an increase in proceeds from the disposition of assets of ~~$187~~$221 million and (iii) proceeds from the maturity of commercial paper investments of $146 million and proceeds from the sale of the Company's short-term investment in Laredo common stock ~~for~~of $75 ~~million and (ii) $117 million of cash acquired in the Parsley Acquisition during the three months ended March 31, 2021.~~million.

Financing activities. The Company's significant financing activities for the six months ended June 30, 2022 and 2021 are as follows:

•2022: The Company (i) paid dividends of $2.9 billion, (ii) redeemed $1.3 billion of 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, ~~(ii) paid dividends of $1.1 billion,~~ (iii) ~~paid $121 million of other liabilities and (iv)~~ repurchased ~~$276~~$775 million of its common ~~stock.~~stock and (iv) paid $129 million of other liabilities.

•2021: The Company (i) received proceeds from the May 2021 Senior Notes Offering, net of $4 million of issuance costs and discounts, of $746 million, (ii) received proceeds from the January 2021 Senior Notes Offering, net of $24 million of issuance costs and discounts, of $2.5 billion, ~~(ii)~~(iii) borrowed and repaid $650 million on the Company's Credit Facility, (iv) repaid the Parsley and DoublePoint credit facilities, which had outstanding balances of $397 million and $240 million, respectively, (v) repaid $140 million associated with the maturity of its ~~3.450% Senior Notes~~3.45% senior notes due in January 2021, ~~(iii)~~(vi) used ~~the~~ proceeds from athe May 2021 Senior Notes Offering to pay $731 million to redeem DoublePoint's 7.75% senior notes due 2023, (vii) used proceeds from the January 2021 ~~senior notes offering~~Senior Notes Offering to pay $1.6 billion to redeem Parsley's 5.250% ~~Senior Notes~~senior notes due 2025, Parsley's 5.375% ~~Senior Notes~~senior notes due 2025 and Jagged Peak's 5.875% ~~Senior Notes~~senior notes due 2026, ~~(iv)~~(viii) paid $852 million to purchase a portion of Parsley's 5.625% ~~Senior Notes~~senior notes due 2027 and Parsley's 4.125% ~~Senior Notes~~senior notes due 2028 pursuant to a cash tender offer, ~~(v) repaid Parsley's credit facility, which had an outstanding balance of $397 million, (vi)~~(ix) paid ~~$140~~$147 million of other liabilities and ~~(vii)~~(x) paid dividends of ~~$91~~$213 million.

Dividends/distributions. During the the ~~three~~six months ended ~~March 31,~~June 30, 2022, the ~~Company's board of directors authorized the payment of~~Company paid base dividends of ~~$341~~$530 million, or ~~$0.78~~$1.56 per common share, compared to ~~$91~~$213 million, or ~~$0.55~~$1.11 per common share, during the ~~three~~six months ended ~~March 31,~~June 30, 2021.

In addition to its base dividend program, the Company has a variable dividend strategy whereby the Company pays a quarterly variable dividend of up to 75 percent of the prior quarter's free cash flow remaining after ~~the~~its base dividend. Free cash flow is a non-GAAP financial measure. As used by the Company, free cash flow is defined as net cash provided by operating

~~PIONEER NATURAL RESOURCES COMPANY~~

activities, adjusted for changes in operating assets and liabilities, less capital expenditures. The Company believes this non-GAAP measure is a financial indicator of the Company's ability to internally fund acquisitions, debt maturities, dividends and share repurchases after capital expenditures. Capital expenditures exclude acquisitions, asset retirement obligations, capitalized interest, geological and geophysical general and administrative expenses, information technology capital investments and additions to corporate facilities. During the ~~three~~six months ended ~~March 31,~~June 30, 2022, the Company declared and paid variable dividends of ~~$731 million,~~$2.3 billion, or ~~$3.00~~$9.60 per common share.

PIONEER NATURAL RESOURCES COMPANY

On ~~May 4,~~August 2, 2022, the board of directors of the Company declared a quarterly base dividend of ~~$0.78~~$1.10 per share and a quarterly variable dividend of ~~$6.60~~$7.47 per share for shareholders of record on ~~May 31,~~September 6, 2022, with a payment date of ~~June 14,~~September 16, 2022. Future base and variable dividends are at the discretion of the Company's board of directors, and, if declared, the board of directors may change the dividend amount based on the Company's outlook for commodity prices, liquidity, debt levels, capital resources, free cash flow or other factors. The Company can provide no assurance that dividends will be authorized or declared in the future or as to the amount of any future dividends. Any future variable dividends, if declared and paid, will fluctuate based on the Company's free cash flow, which will depend on a number of factors beyond the Company's control, including commodity prices.

Off-balance sheet arrangements. From time to time, the Company enters into arrangements and transactions that can give rise to material off-balance sheet obligations of the Company. As of ~~March 31,~~June 30, 2022, the material off-balance sheet arrangements and transactions that the Company had entered into included (i) firm purchase, transportation, storage and fractionation commitments, (ii) open purchase commitments and (iii) contractual obligations for which the ultimate settlement amounts are not fixed and determinable. The contractual obligations for which the ultimate settlement amounts are not fixed and determinable include (a) derivative contracts that are sensitive to future changes in commodity prices, or the Company's share price or interest rates, (b) gathering, processing and transportation commitments on uncertain volumes of future throughput and (c) indemnification obligations following certain divestitures.

In connection with its divestiture transactions, the Company may retain certain liabilities and provide the purchaser certain indemnifications, subject to defined limitations, which may apply to identified pre-closing matters, including matters of litigation, environmental contingencies, ~~royalty~~royalties and income taxes. Also associated with its divestiture transactions, the Company has issued and received guarantees to facilitate the transfer of contractual obligations, such as firm transportation agreements or gathering and processing arrangements. The Company does not recognize a liability if the fair value of the obligation is immaterial or the likelihood of making payments under these guarantees is remote.

Other than the off-balance sheet arrangements described above, the Company has no transactions, arrangements or other relationships with unconsolidated entities or other persons that are reasonably likely to materially affect the Company's liquidity or availability of or requirements for capital resources. The Company expects to enter into similar contractual arrangements in the future and additional firm purchase, transportation, storage and fractionation arrangements, in order to support the Company's business plans. See Note 10 of Notes to Consolidated Financial Statements included in "Item 1. Financial Statements" for additional information.

Convertible senior notes. In May 2020, the Company issued $1.3 billion principal amount of convertible senior notes due 2025. The Convertible Notes bear a fixed interest rate of 0.250% per year, with interest payable on May 15 and November 15 of each year. 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.

The Convertible Notes are convertible into shares of the Company's common stock at an adjusted conversion rate of ~~9.5009~~9.7389 shares of the Company's common stock per $1,000 principal amount of the Convertible Notes (subject to further adjustment pursuant to the terms of the notes indenture), which represents an adjusted conversion price of ~~$105.25~~$102.68 per share (subject to further adjustment pursuant to the terms of the notes indenture) as of ~~March 31,~~June 30, 2022. As a result of the quarterly base and variable dividends declared through ~~March 31,~~June 30, 2022, the Conversion Rate increased from the initial rate of 9.1098 shares of the Company's common stock per $1,000 principal amount of the Convertible Notes and the Conversion Price decreased from $109.77. Future declarations of quarterly base dividends in excess of $0.55 per common share and declarations of future variable dividends, as previously described, will cause further adjustments to the Conversion Rate and the Conversion Price pursuant to the terms of the notes indenture. Upon conversion, the Convertible Notes may be settled in cash, shares of the Company's common stock or a combination thereof, at the Company's election.

~~PIONEER NATURAL RESOURCES COMPANY~~

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

•during the five-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 stock ~~times~~and the Conversion Rate;

•upon notice of redemption by the Company; or

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

PIONEER NATURAL RESOURCES COMPANY

During the last 30 consecutive trading days of the ~~first~~second quarter of 2022, the last reported sales prices of the Company's common stock exceeded 130 percent of the Conversion Price for at least 20 trading days, causing the Convertible Notes to become convertible at the option of the holders during the three month period ending ~~June~~September 30, 2022. The Company reserves its right under the notes indenture to elect to settle the Convertible Notes in cash, shares of the Company's common stock or a combination of cash and common stock. See Note 7 and Note 17 of Notes to Consolidated Financial Statements included in "Item 1. Financial Statements" for additional information.

Contractual obligations. The Company's contractual obligations include long-term debt, leases (primarily related to contracted drilling rigs, equipment and office facilities), capital funding obligations, derivative obligations, firm transportation, storage and fractionation commitments, minimum annual gathering, processing and transportation commitments and other liabilities (including retained obligations associated with divestitures and postretirement benefit obligations). Other joint owners in the properties operated by the Company could incur portions of the costs represented by these commitments.

Firm commitments. The Company has short-term and long-term firm purchase, gathering, processing, transportation, fractionation and storage commitments representing take-or-pay agreements, which include contractual commitments (i) to purchase sand, water and diesel for use in the Company's drilling and completion operations, (ii) with midstream service companies and pipeline carriers for future gathering, processing, transportation, fractionation and storage and (iii) with oilfield services companies that provide drilling and pressure pumping services. The Company does not expect to be able to fulfill all of its short-term and long-term firm transportation volume obligations from projected production of available reserves; consequently, the Company plans to purchase third party volumes to satisfy its firm transportation commitments if it is economic to do so; otherwise, it will pay demand fees for any commitment shortfalls. The Company also has open purchase commitments for inventories, materials and other property and equipment ordered, but not received, as of ~~March 31,~~June 30, 2022. See Note 10 of Notes to Consolidated Financial Statements included in "Item 1. Financial Statements" for additional information.

Derivative obligations. The Company's commodity, marketing and ~~marketing derivative contracts~~conversion option derivatives are periodically measured and recorded at fair value and continue to be subject to market ~~and~~and/or credit risk. As of ~~March 31,~~June 30, 2022, these contracts represented net liabilities of ~~$552~~$442 million, which includes ~~$250~~$167 million of obligations related to entering into equal and offsetting oil and gas commodity derivative trades during the fourth quarter of 2021 that had the net effect of eliminating future market risk related to certain of its 2022 derivatives. The ultimate liquidation value of the Company's commodity price derivatives will be dependent upon actual future commodity prices, which may differ materially from the inputs used to determine the derivatives' fair values as of ~~March 31,~~June 30, 2022. See Note 4 and Note 5 of Notes to Consolidated Financial Statements included in "Item 1. Financial Statements" and "Item 3. Quantitative and Qualitative Disclosures About Market Risk" for additional information.

4042

PIONEER NATURAL RESOURCES COMPANY

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business, the Company's financial position is routinely subject to a variety of risks, including market risks associated with changes in commodity prices, interest rate movements on outstanding debt and credit risks. The following quantitative and qualitative information is provided about financial instruments to which the Company was a party as of ~~March 31,~~June 30, 2022, and from which the Company may incur future gains or losses from changes in commodity prices or interest rates. The Company does not enter into any financial instruments, including derivatives, for speculative or trading purposes.

Interest rate risk. As of ~~March 31,~~June 30, 2022, the Company had no variable rate debt outstanding under the Credit Facility and, consequently, no related exposure to interest rate risk. As of ~~March 31,~~June 30, 2022, the Company had $5.7 billion of fixed rate long-term debt outstanding with a weighted average cash interest rate of 1.8 percent. Although changes in interest rates may affect the fair value of the Company's fixed rate long-term debt, any changes would not expose the Company to the risk of earnings or cash flow losses. The Company has no interest rate derivative instruments outstanding; however, it may enter into derivative instruments in the future to mitigate interest rate risk. See Note 4 and Note 7 of Notes to Consolidated Financial Statements included in "Item 1. Financial Statements" for additional information.

Commodity price risk. The Company's primary market risk exposure is related to the price it receives from the sale of its oil, NGL and gas production. Realized pricing is volatile and is determined by market prices that fluctuate with changes in supply and demand for these products throughout the world. The price the Company receives for its production depends on many factors outside of the control of the Company, including differences in commodity pricing at the point of sale versus market index prices. Reducing the Company's exposure to price volatility helps secure funds to be used in its capital program and to fund general working capital needs, debt obligations, dividends and share repurchases, among other uses. The Company mitigates its commodity price risk by (i) maintaining financial flexibility with a strong balance sheet, (ii) using derivative financial instruments and (iii) sales of purchased oil and gas.

Derivative financial instruments. The Company's decision on the quantity and price at which it executes commodity derivative contracts, if it so chooses, is based in part on its view of current and future market conditions. The Company may choose not to enter into derivative positions for expected production if the commodity price forecast for certain time periods is deemed to be unfavorable. Additionally, the Company may choose to liquidate existing derivative positions prior to the expiration of their contractual maturity in order to monetize gain positions or minimize loss positions if it is anticipated that the commodity price forecast is expected to improve. Proceeds, if any, can be used for the purpose of funding the Company's capital program, general working capital needs, debt obligations, dividends and share repurchases, among other uses. While derivative positions limit the downside risk of adverse price movements, they also limit future revenues from upward price movements.

The average forward prices based on June 30, 2022 market quotes are as follows:


	2022				Year Ending December 31, 2023		Year Ending December 31, 2024
	Third Quarter		Fourth Quarter
Average forward Midland oil price	$	101.42	$	94.49	$	86.50	$	78.79
Average forward NYMEX WTI oil price	$	100.37	$	93.76	$	85.89	$	78.40
Average forward Brent oil price	$	105.81	$	98.71	$	91.21	$	83.99
Average forward DUTCH TTF gas price	$	44.83	$	46.28	$	33.58	$	21.73
Permian Basin index swap contracts:
Average Brent/NYMEX WTI forward basis oil price differential (a)	$	5.44	$	4.95	$	5.32	$	5.59
Average Midland/NYMEX WTI forward basis oil price differential (b)	$	1.05	$	0.73	$	0.61	$	0.39

PIONEER NATURAL RESOURCES COMPANY

The average forward prices based on ~~March 31,~~July 29, 2022 market quotes are as follows:

2022 Year Ending December 31, 2023 Year Ending December 31, 2024
Second Quarter Third Quarter Fourth Quarter
Average forward Midland oil price $ 97.68 $ 92.78 $ 89.42 $ 83.92 $ 77.78
Average forward Brent oil price $ 102.81 $ 98.07 $ 94.40 $ 88.95 $ 82.77
Average forward NYMEX WTI oil price $ 96.83 $ 91.93 $ 88.64 $ 83.16 $ 76.98
Average forward DUTCH TTF gas price $ 41.07 $ 40.81 $ 38.81 $ 24.20 $ 16.08
Permian Basin index swap contracts:
Average Midland/Brent forward basis oil price differential (a) $ (5.13) $ (5.29) $ (4.98) $ (5.03) $ (4.99)
Average Midland/NYMEX WTI forward basis oil price differential (b) $ 0.85 $ 0.85 $ 0.78 $ 0.76 $ 0.80

~~The average forward prices based on May 3, 2022 market quotes are as follows:~~


		2022						Year Ending December 31, 2023				Year Ending December 31, 2024							2022				Year Ending December 31, 2023		Year Ending December 31, 2024
		Second Quarter		Third Quarter		Fourth Quarter												Third Quarter	Fourth Quarter
Average forward Midland oil price	Average forward Midland oil price	$	96.56	$	91.89	$	88.22			$	84.42				$	76.44	Average forward Midland oil price				$	98.37	$	93.64	$	86.87	$	79.56
Average forward NYMEX WTI oil price														Average forward NYMEX WTI oil price					$	96.89	$	92.56	$	85.99	$	79.05
Average forward Brent oil price	Average forward Brent oil price	$	100.56	$	96.07	$	92.60	$	88.92			$	80.95	Average forward Brent oil price					$	105.14	$	98.13	$	91.72	$	85.08
Average forward NYMEX WTI oil price		$	95.86	$	91.32	$	87.72	$	83.94			$	76.05
Average forward DUTCH TTF gas price	Average forward DUTCH TTF gas price	$	30.81	$	30.06	$	29.12	$	24.70			$	20.35	Average forward DUTCH TTF gas price					$	57.30	$	57.95	$	45.85	$	28.52
Permian Basin index swap contracts:	Permian Basin index swap contracts:													Permian Basin index swap contracts:
Average Midland/Brent forward basis oil price differential (a)		$	(4.00)	$	(4.18)	$	(4.38)	$	(4.50)			$	(4.51)
Average Brent/NYMEX WTI forward basis oil price differential (a)														Average Brent/NYMEX WTI forward basis oil price differential (a)					$	8.25	$	5.57	$	5.73	$	6.03
Average Midland/NYMEX WTI forward basis oil price differential (b)	Average Midland/NYMEX WTI forward basis oil price differential (b)	$	0.70	$	0.57	$	0.50	$	0.48			$	0.39	Average Midland/NYMEX WTI forward basis oil price differential (b)					$	1.48	$	1.08	$	0.88	$	0.51

___________________

(a)Based on market quotes for basis differentials between ~~the Midland~~Brent oil index ~~price~~prices and ~~Brent~~NYMEX WTI oil index prices.

(b)Based on market quotes for basis differentials between ~~the~~ Midland oil index ~~price~~prices and NYMEX WTI oil index prices.

See Note 4 and Note 5 of Notes to Consolidated Financial Statements included in "Item 1. Financial Statements" for a description of the Company's open derivative positions and additional information.

Sales of purchased commodities. 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 (i) Gulf Coast refineries, (ii) Gulf Coast and West Coast gas markets and (iii) international oil markets, and to satisfy unused gas pipeline capacity commitments. The Company also enters into pipeline capacity commitments to secure diesel supply from the Gulf Coast to the Company's operations in the Midland Basin. The Company periodically enters into separate sales transactions with third parties related to diesel volumes that exceed the Company's operational needs.

Marketing derivatives. The Company uses marketing derivatives to diversify its oil pricing to Gulf Coast and international markets.As of June 30, 2022, the Company's marketing derivatives reflect ~~two~~ long-term marketing contracts ~~that were entered~~whereby the Company agreed to purchase and simultaneously sell barrels of oil at an oil terminal in Midland, Texas.

The price the Company pays to purchase the oil volumes under ~~these marketing~~the purchase contracts is based on a Midland ~~oil~~WTI price and the price the Company receives for the oil volumes sold is a WASP that a non-affiliated counterparty receives for selling oil through a Gulf Coast storage and export facility at prices that are highly correlated with Brent oil prices during the same month of the purchase. Based on the form of the long-term marketing contracts, the Company ~~determined that~~accounts for the ~~marketing~~ contracts ~~should be accounted for~~ as derivative instruments. Similar to sales of purchased commodities, marketing derivatives allow the Company to diversify a portion of its oil sales from its area of production to Gulf Coast and international markets.instruments not designated as hedges.

~~Subsequent to March 31, 2022, the Company entered into two additional long-term marketing contracts that will be accounted for as derivative instruments.~~ The terms of the two marketing contracts commit the Company to purchase and simultaneously sell 40 thousand barrels of oil per day beginning May 1, 2022 and ending April 30, 2027 and 30 thousand barrels of oil per day beginning August 1, 2022 and ending July 31, 2027. The price the Company pays to purchase the oil volumes under these marketing contracts isaverage forward prices based on a Midland oil price and the price the Company receives for the oil volumes sold is a WASP that a non-affiliated counterparty receives for selling oil through a Gulf Coast storage and export facility at prices thatJune 30, 2022 market quotes are ~~highly correlated with Brent oil prices during the same month of the purchase.~~as follows:


	Year Ending
	December 31, 2022		December 31, 2023		December 31, 2024		December 31, 2025		December 31, 2026		December 31, 2027
Average forward Brent oil price	$	104.05	$	91.21	$	83.99	$	79.00	$	75.73	$	73.18
Average forward Midland oil price	$	99.25	$	86.50	$	78.79	$	73.30	$	69.57	$	66.92
Average forward basis oil price differential (a)	$	4.80	$	4.71	$	5.20	$	5.70	$	6.16	$	6.26

4244

PIONEER NATURAL RESOURCES COMPANY

The average forward prices based on ~~March 31,~~July 29, 2022 market quotes are as follows:

Year Ending
December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2025 December 31, 2026
Average forward Brent oil price $ 99.37 $ 88.95 $ 82.77 $ 78.79 $ 76.17
Average forward Midland oil price $ 94.10 $ 83.92 $ 77.78 $ 73.44 $ 70.40
Average forward basis oil price differential (a) $ (5.27) $ (5.03) $ (4.99) $ (5.35) $ (5.77)

~~The average forward prices based on May 3, 2022 market quotes are as follows:~~


		Year Ending											Year Ending
		December 31, 2022		December 31, 2023		December 31, 2024		December 31, 2025		December 31, 2026			December 31, 2022		December 31, 2023		December 31, 2024		December 31, 2025		December 31, 2026		December 31, 2027
Average forward Brent oil price	Average forward Brent oil price	$	99.82	$	88.92	$	80.95	$	75.80	$	72.64	Average forward Brent oil price	$	101.63	$	91.72	$	85.08	$	80.61	$	77.64	$	75.89
Average forward Midland oil price	Average forward Midland oil price	$	95.87	$	84.42	$	76.44	$	70.95	$	67.33	Average forward Midland oil price	$	96.01	$	86.87	$	79.56	$	74.54	$	71.16	$	68.99
Average forward basis oil price differential (a)	Average forward basis oil price differential (a)	$	(3.95)	$	(4.50)	$	(4.51)	$	(4.85)	$	(5.31)	Average forward basis oil price differential (a)	$	5.62	$	4.85	$	5.52	$	6.07	$	6.48	$	6.90

___________________

(a)Based on market quotes for basis differentials between ~~Midland~~Brent oil index prices and ~~the Brent~~Midland oil index ~~price.~~prices.

Conversion option derivatives. The Company's conversion option derivatives represent the change in the cash settlement obligation that occurs during the Settlement Periods related to conversion options exercised by certain holders of the Company's 0.250% Convertible Notes due 2025. The conversion option derivatives are subject to market risks related to the change in the Company's share price that occurs during the 25 trading day Settlement Period. See Note 4,Note 5 and Note 7 of Notes to Consolidated Financial Statements included in "Item 1. Financial Statements" for a description of the Company's open derivative positions and additional information.

Credit risk. The Company's primary concentration of credit risks are associated with the collection of receivables resulting from the sale of oil and gas production and purchased oil and gas, and the risk of a counterparty's failure to meet its obligations under derivative contracts with the Company.

The Company's commodities are sold to various purchasers who must be prequalified under the Company's credit risk policies and procedures. The Company monitors exposure to counterparties primarily by reviewing credit ratings, financial criteria and payment history. Where appropriate, the Company obtains assurances of payment, such as a guarantee by the parent company of the counterparty, a letter of credit or other credit support. Historically, the Company's credit losses on commodity receivables have not been material.

The Company has entered into International Swap Dealers Association Master Agreements ("ISDA Agreements") with each of its commodity derivative counterparties. The terms of the ISDA Agreements provide the Company and the counterparties with right of set off upon the occurrence of defined acts of default by either the Company or a counterparty to a derivative contract, whereby the party not in default may set off all derivative liabilities owed to the defaulting party against all derivative asset receivables from the defaulting party. See Note 5 of Notes to Consolidated Financial Statements included in "Item 1. Financial Statements" for additional information.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. The Company's management, with the participation of its principal executive officer and principal financial officer, have evaluated, as required by Rule 13a-15(b) under the Exchange Act, the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Report. Based on that evaluation, the principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective, as of the end of the period covered by this Report, in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, including that such information is accumulated and communicated to the Company's management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting. There have been no changes to the Company's internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the three months ended ~~March 31,~~June 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

4345

PIONEER NATURAL RESOURCES COMPANY

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is party to various proceedings and claims incidental to its business. While many of these matters involve inherent uncertainty, the Company believes that the amount of the liability, if any, ultimately incurred with respect to these proceedings and claims will not have a material adverse effect on the Company's consolidated financial position as a whole or on its liquidity, capital resources or future annual results of operations.

ITEM 1A. RISK FACTORS

In addition to the information set forth in this Report, the risks that are discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, under the headings "Part I, Item 1. Business – Competition," "Part I. Item 1. Business - Regulation," "Part I, Item 1A. Risk Factors," "Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk" should be carefully considered, as such risks could materially affect the Company's business, financial condition or future results. There has been no material change in the Company's risk factors that were described in the Company's 2021 Annual Report on Form 10-K.

These risks are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that it currently deems to be immaterial also may have a material adverse effect on the Company's business, financial condition or future results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Purchases of the Company's common stock are as follows:
Three Months Ended March 31, 2022
Period Total Number of
Shares Purchased (a) Average Price Paid per Share Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs Approximate Dollar
Amount of Shares
that May Yet Be
Purchased under
Plans or Programs (b)
January 1-31, 2022 44,675 $ 181.93 — $ 840,702,938
February 1-28, 2022 308,136 $ 228.67 230,864 $ 3,947,533,077
March 1-31, 2022 821,960 $ 240.30 821,958 $ 3,750,018,375
1,174,771 1,052,822


	Three Months Ended June 30, 2022
Period	Total Number of Shares Purchased (a)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Amount of Shares that May Yet Be Purchased under Plans or Programs (b)
April 1-30, 2022	—	$	—	—	$	3,750,018,375
May 1-31, 2022	260,664	$	268.71	260,291	$	3,680,070,597
June 1-30, 2022	1,865,652	$	230.34	1,865,454	$	3,250,393,163
	2,126,316			2,125,745

__________________

(a)Includes shares purchased from employees in order for employees to satisfy income tax withholding payments related to share-based awards that vested during the period.

(b)In February 2022, the Company's board of directors authorized a $4 billion common stock repurchase program. This authorization replaced the previously authorized $2 billion common stock repurchase program that had $841 million remaining in the program before being replaced with the $4 billion common stock repurchase program. The stock repurchase program has no time limit and may be modified, suspended or terminated at any time by the board of directors.

4446

PIONEER NATURAL RESOURCES COMPANY

ITEM 6. EXHIBITS

Exhibit
Number

Description

10.1 (a)

~~Eighth Amendment to Pioneer Natural Resources USA, Inc. 401 (k)~~Indemnification Agreement, dated July 14, 2022, between the Company and ~~Matching Plan.~~Christopher L. Washburn .

10.2 (a)

Indemnification Agreement, dated July 18, 2022, between the Company and Jacinto J. Hernandez.

31.1 (a)

Chief Executive Officer certification under Section 302 of Sarbanes-Oxley Act of 2002.

31.2 (a)

Chief Financial Officer certification under Section 302 of Sarbanes-Oxley Act of 2002.

32.1 (b)

Chief Executive Officer certification under Section 906 of Sarbanes-Oxley Act of 2002.

32.2 (b)

Chief Financial Officer certification under Section 906 of Sarbanes-Oxley Act of 2002.

101.INS (a)

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH (a)

Inline XBRL Taxonomy Extension Schema Document.

101.CAL (a)

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF (a)

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB (a)

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE (a)

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

____________________

(a)Filed herewith.

(b)Furnished herewith.

* Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish to the SEC a copy of any omitted schedule upon request.

4547

PIONEER NATURAL RESOURCES COMPANY

SIGNATURES

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 hereto duly authorized.

PIONEER NATURAL RESOURCES COMPANY

~~May 5,~~August 2, 2022

By:

/s/ Neal H. Shah

Neal H. Shah

Senior Vice President and Chief Financial Officer

~~May 5,~~August 2, 2022

By:

/s/ ~~Margaret M. Montemayor~~Christopher L. Washburn

~~Margaret M. Montemayor~~Christopher L. Washburn

~~Vice President and~~Interim Chief Accounting Officer

4648