Pioneer Natural Resources Company Annual Report 2022

Plain-text annual report

. MIDLAND BASIN >850K Net Acres No Federal Land Except for historical information contained herein, the statements in this document are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements and the business prospects of Pioneer Natural Resources Company are subject to several risks and uncertainties that may cause Pioneer’s actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties are described in Items 1, 1A and 7 and on page 5 of Pioneer’s Form 10-K included with this report. Pioneer undertakes no duty to publicly update these statements except as required by law. LE T TE R TO S HAR E H O LD E R S Scott D. Sheffield | Chief Executive Officer FELL OW S HAR EH OLD ERS After celebrating our 25th anniversary last year, we are looking ahead with optimism to our next quarter- century in business. We will continue to build on the many milestones we achieved in 2022. During the year, we were the most active driller and largest oil producer in the state of Texas, achieved our ﬁfth consecutive year of drilling and completions efficiency gains and delivered a record year of production, all while remaining operationally and ﬁnancially disciplined, which enabled us to deliver strong returns. Despite the current global, geopolitical and economic challenges, and the associated impact on the energy industry, we see a future with opportunities, not roadblocks. As part of our ongoing and strong commitment to return capital to shareholders, we returned $8 billion to investors in 2022 through dividends and opportunistic share repurchases, representing 95% of Pioneer’s cash ﬂow after deducting capital expenditures. Our ﬁnancial discipline and strong balance sheet enabled us to navigate the signiﬁcant market volatility and inﬂationary pressures experienced in 2022, while generating peer- leading corporate returns. These tremendous results are underpinned by our world-class employees and industry-leading acreage position in the Permian Basin. Our unmatched asset base and inventory depth enables our mission to be America’s leading independent energy company, producing reliable, affordable and responsibly sourced oil and gas to supply the world’s demand. That responsibility has never been more urgent than now, as shifts in the financial and geopolitical landscape continue to disrupt global supply chains and upend even the strongest economies. Russia’s unprovoked invasion of Ukraine last February continues to impact global energy markets a year later. Plus, global demand is expected to grow, with meaningful oil demand growth coming from China’s economic reemergence onto the world stage as it eases strict pandemic lockdown policies. 2022 ANNUAL REPORT 01 “ Pioneer takes pride in our longtime commitment to sustainability and protecting precious natural resources – which we proudly carry as part of our name. - Scott Sheffield, Chief Executive Officer 02 2022 ANNUAL REPORT Pioneer takes pride in our longtime commitment to sustainability and protecting precious natural resources – which we proudly carry as part of our name. We are working to produce our hydrocarbons in the most sustainable fashion possible, striving to be one of the lowest-cost, lowest-carbon oil and gas producers. We remain committed to minimizing emissions from our operations and increasing our transparency in environmental, social and governance (ESG) reporting. We believe our industry has a role to play in the energy transition, and that is why our focus on providing an efficient and sustainable supply of energy to the world is at all times paired with a commitment to doing so in a safe and environmentally responsible manner. Our peer-leading ESG efforts include our participation in two renewable energy projects that aim to provide renewable, competitively priced energy to support our vast Permian Basin operations. Associated with these projects, we plan to purchase the electricity generated from a 51-turbine, 140-megawatt wind farm to be built on surface acreage Pioneer owns in southeast Midland County. A subsidiary of NextEra Energy Resources, LLC is currently constructing the wind farm, with commencement of electric service expected in early 2024. Additionally, we, along with Houston- based Targa Resources, announced power purchase agreements in the 160-megawatt Concho Valley Solar project, which began delivering electricity to certain of our jointly owned gas processing facilities last October. Targa operates the gas processing facilities and is one of the largest independent midstream infrastructure companies in North America. Among U.S. operators, we were proud to be one of the ﬁrst oil and gas operators to commit to the Oil and Gas Methane Partnership 2.0 (OGMP), a voluntary private/public coalition with leadership and oversight from the United Nations. We plan to establish a new methane reduction target this year that will place us on a path to achieving the OGMP “Gold Standard” designation by 2025. Our company has always believed in the importance of making an impact in the communities where we live and work. In 2022, we made nearly $8 million in donations, grants and sponsorships to hundreds of charities in the Permian Basin and the Dallas-Fort Worth area. The vast majority of this giving was directed to Texas-based organizations. Additionally, we gave $20 million last year to assist with humanitarian efforts in war-torn Ukraine. Regionally, we continue to work closely with other operators in leading the Permian Strategic Partnership, an unprecedented coalition of oil and gas companies that was formed in 2017 to improve the quality of life for Permian Basin residents in the areas of healthcare, education, infrastructure/roads, affordable housing and workforce development. Since its inception, the partnership has leveraged $93 million in member funds into nearly $1 billion of collaborative community enhancement investments with other stakeholders. I am highly conﬁdent that Pioneer is well positioned for the future as we enter our next quarter-century of doing business. I would like to extend my thanks to our Board of Directors for continuing to actively engage with our shareholders, senior leadership and employees, and especially to our more than 2,000 employees for their hard work, commitment and dedication to ensuring Pioneer continues to lead the way in our industry. Sincerely, Scott D. Sheffield Chief Executive Officer 2022 ANNUAL REPORT 03 - ScSccScototott tt ShhShhefefefeffifielele d,d,d CChihihhhh efef EEExexexexecucucutiitit vevevevvv OOOOOOfffffficicicicccerererr 04 2022 ANNUAL REPORT Peer-Leading Return Of Capital 2022E Capital Returned as Percent of Free Cash Flow1 Dividends Share Repurchases 100% 95% Returned 80% 60% 40% 20% 0% Pioneer returned highest percentage of free cash flow Pioneer returned >95% of free cash flow2 generated during 2022 Best-in-class capital returns supported by strong balance sheet Deep inventory of high-return wells provide durability of returns PXD Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 1) Source: FactSet as of 2/6/2023 and Q3 2022 company ﬁlings. Includes base and special dividends paid in 2022 and 2022 share repurchases as of Q3 2022 company ﬁlings. Peers include: APA, COP, CTRA, DVN, EOG, FANG, HES, MRO, OVV and OXY. 2) Free cash ﬂow is a non-GAAP ﬁnancial measure; see back cover for more information. Industry-Leading Acreage Quality And Depth Of Inventory $35 1 E O B / F C F E 2 2 0 2 $30 $25 $20 $15 8 Pioneer Bubble sizes represent market capitalization 12 16 20 Acreage Quality (Years of U.S. Inventory)2 Largest inventory of highly economic wells drives sustainable and peer-leading free cash flow per BOE Oil weighted production generates strong margins through high realized pricing Low leverage provides financial flexibility for share repurchases to supplement dividends 1) Source: FactSet consensus estimates as of 2/7/2023. Peers Include: APA, CTRA, DVN, EOG, FANG, MRO, OVV and OXY. Free cash ﬂow (FCF) is a non-GAAP ﬁnancial measure; see back cover for more information. 2) Enverus Prism Corporate Level Inventory Life <$50 WTI and 20:1 WTI:HH, as of 2/7/2023. ANNUAL REPORT 05 S R O T C E R I D F O D R A O B J. Kenneth Thompson 2,3,5 Chairman of the Board, President and CEO, Paciﬁc Star Energy LLC A.R. Alameddine 2,3 Former Lead Director, Parsley Energy Inc. Lori George Billingsley 2,4 Retired Global Chief Diversity, Equity & Inclusion Officer, The Coca-Cola Company Edison Buchanan 1,3 Former Managing Director, Credit Suisse First Boston Maria Jelescu Dreyfus1, 4, 5 CEO and Founder, Ardinall Investment Management Matthew Gallagher 4 President, Greenlake Energy Ventures LLC Phillip Gobe 4,5 Chairman, ProPetro Holding Corp. Jacinto Hernandez1,4 Retired Partner, Capital Group Stacy Methvin 2,3,5 Retired Vice President, Shell Oil Company Royce Mitchell 1,4,5 Executive Consultant Frank Risch 1,3 Retired Vice President and Treasurer, Exxon Mobil Corporation Scott Sheffield Chief Executive Officer COMMITTEE MEMBERSHIP: 1 Audit Committee 2 Compensation and Leadership Development Committee 3 Nominating and Corporate Governance Committee 4 Health, Safety and Environment Committee 5 Sustainability and Climate Oversight Committee Phoebe Wood 2,3,5 Retired Vice Chairman and Chief Financial Officer, Brown-Forman Corporation 06 2022 ANNUAL REPORT S R E C I F F O Scott Sheffield Chief Executive Officer Richard Dealy President and Chief Operating Officer Mark Berg Executive Vice President, Corporate Operations Bonnie Black Senior Vice President, Technology and Operations Support John Distaso Senior Vice President, Marketing J.D. Hall Executive Vice President, Operations Mark Kleinman Executive Vice President and General Counsel Craig Kuiper Vice President, Production Operations Elizabeth McDonald Senior Vice President, Strategic Planning, Field Development and Marketing Thaddeus Owens Vice President, Government Relations Akshar Patel Vice President, Legal, Corporate and Securities and Corporate Secretary Christopher Paulsen Vice President, Business Development and Strategy Neal Shah Senior Vice President and Chief Financial Officer Tyson Taylor Senior Vice President, Human Resources and Communications Gerardo Torres Vice President, Permian Completions Christopher Washburn Vice President and Chief Accounting Officer 2022 ANNUAL REPORT 07 Winds of Change Aiming to curb emissions, Pioneer developing Midland County wind farm. Pioneer Natural Resources recognizes we have an important role to play in helping the energy industry mitigate global climate change. Our strong commitment to sustainability and environmental responsibility is something our company has valued for decades, and it’s woven into the fabric of our corporate culture. That’s why we made another bold move last fall supporting our steadfast commitment to environmental stewardship by announcing an ambitious renewable energy project that aims to provide renewable, low-cost energy to our Permian Basin operations. Pioneer is working with a subsidiary of NextEra Energy Resources, LLC to develop a 51-turbine, 140-megawatt wind farm to be built on surface acreage Pioneer owns on the Hutt Ranch in southeast Midland County. Known formally as the Pioneer Hutt Wind Energy project, the facility is slated to go online in early 2024 to help power our oil and gas operations over a 25,000- acre swath of property. NextEra is the world’s largest producer of wind and solar projects and operates 119 wind projects throughout North America. Pioneer negotiated a power purchase agreement (PPA) with NextEra in December 2021. Houston-based Targa Resources – one of the largest independent midstream infrastructure companies in North America – is the third company participating in the PPA. The Hutt project again demonstrates the emphasis we’ve put on environmental stewardship and our ambitions to reaching net zero emissions by 2050. We’ve set goals to reduce Scope 1 and Scope 2 greenhouse gas (GHG) emissions intensity by 50% by 2030*, reduce methane emissions intensity by 75% by 2030* and limit annual ﬂaring intensity to less than 1%. We’ve already made signiﬁcant progress towards achieving all those targets. As one of the largest operators in the Permian Basin with a strategy to increase electriﬁcation of our operations, this project will serve as an additional source of power in the coming years. 08 2022 ANNUAL REPORT *Using 2019 as a baseline UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ☐ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 TRARR NSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiff scal year ended December 31, 2022 or For the transition period frff om to Commission File Number: 1-13245 PIONEER NATURAR L RESOURCES COMPANY (Exact name of registrant as specififf ed in its charter) Delaware (State or other jurisdiction of incorporation) 75-2702753 (I.R.S. Employer Identififf cation No.) 777 Hidden Ridge Irving, Texas 75038 (Address of principal executive offff iff ces 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 Common Stock, par value $.01 per share Trading Symbol PXD Name of each exchange on which registered New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defiff ned in RulRR e 405 of the Securities Act. Yes ☒ No ☐ Indicate by check mark if the registrant is not required to fiff le reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has fiff led all reports required to be fiff led by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or forff days. Yes ☒ No ☐ such shorter period that the registrant was required to fiff le such reports), and (2) has been subject to such fiff ling requirements forff the past 90 Indicate by check mark whether the registrant has submitted electronically everyrr (§ 232.405 of this chapta er) during the preceding 12 months (or forff Interactive Data File required to be submitted pursuant to RulRR e 405 of Regulation S-T such shorter period that the registrant was required to submit and post such fiff les). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated fiff ler, an accelerated fiff ler, a non-accelerated fiff ler, a smaller reporting company, or an emerging growth company. See the defiff nitions of "large accelerated fiff ler," "accelerated fiff ler," "smaller reporting company," and "emerging growth company" in RulRR e 12b-2 of the Exchange Act. Large accelerated fiff ler Non-accelerated fiff ler ☒ ☐ Accelerated fiff ler 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 forff fiff nancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ complying with any new or revised Indicate by check mark whether the registrant has fiff led a report on and attestation to its management's assessment of the effff eff ctiveness of its internal control over fiff nancial reporting under Section 404(b) of the Sarbar nes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting fiff rm that prepared or issued its audit report. ☒ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the fiff nancial statements of the registrant included in the fiff ling reflff ect the correction of an error to previously issued fiff nancial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recoveryrr analysis of incentive-based compensation received by any of the registrant's executive offff iff cers during the relevant recoveryrr period pursuant to §240.1D-1(b) ☐ Indicate by check mark whether the registrant is a shell company (as defiff ned in RulRR e 12b-2 of the Act). Yes ☐ No ☒ Aggregate market value of the voting and non-voting common equity held by non-affff iff liates computed by refeff rence to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiff scal quarter Number of shares of Common Stock outstanding as of February 21, 2023 $ 53,223,207,626 235,004,153 (1) Portions of the Defiff nitive Proxy Statement forff the Company's Annual Meeting of Shareholders to be held in May 2023 are incorpor rr ated into Part III of this DOCUMENTS INCORPORARR TED BY REFERENCE: Report. TABLE OF CONTENTS Defiff nitions of Certain Terms and Conventions Used Herein Cautionaryrr Statement Concerning Forward-Looking Statements PART I Item 1. Business General Availabla e Inforff mation Mission and Strategies Competition Oil and Gas Industryrr Considerations Divestiturt e Activities Marketing of Production Sustainabia lity and Environmental Compliance Costs Human Capia tal Regulation Item 1A. Risk Factors Risk Factors Summaryrr General Business and Industryrr Risks Operational Risks Financial Risks Health, Safeff ty and Environmental Risks Regulatoryrr Risks Item 1B. Unresolved Staffff Comments Item 2. Properties Reserve Estimation Procedures and Audits Proved Reserves Description of Properties Selected Oil and Gas Inforff mation Item 3. Item 4. Mine Safeff ty Disclosures Legal Proceedings Inforff mation About our Executive Offff iff cers PART II Item 5. Market forff Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Purchases of Equity Securities by the Issuer and Affff iff liated Purchasers Perforff mance Grapha Item 6. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Reserved Financial and Operating Perforff mance First Quarter 2023 Outlook 2023 Capia tal Budget Results of Operations Liquidity and Capia tal Resources Critical Accounting Estimates New Accounting Pronouncements Item 7A. Quantitative and Qualitative Disclosures About Market Risk Item 8. Financial Statements and Supu plementaryrr Data Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm Consolidated Financial Statements Notes to Consolidated Financial Statements Unaudited Supplementaryrr Inforff mation Page 4 6 7 7 7 7 7 8 8 8 9 10 12 15 15 17 23 26 30 34 38 38 38 40 40 41 43 44 44 47 47 48 48 49 49 50 51 51 58 62 63 63 66 66 67 69 74 109 2 116 116 116 117 118 118 118 118 118 118 118 119 119 126 127 TABLE OF CONTENTS Item 9. Item 9A. Controls and Procedures Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Management's Report on Internal Control Over Financial Reporting Report of Independent Registered Public Accounting Firm Item 9B. Other Inforff mation Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection Item 10. Directors, Executive Offff iff cers and Corpor Item 11. Executive Compensation Item 12. Security Ownership of Certain Benefiff cial Owners and Management and Related Stockholder Matters rr PART III ate Governance Securities Authorized forff Issuance Under Equity Compensation Plans Item 13. Certain Relationships and Related Transactions, and Director Independence Item 14. Principal Accountant Fees and Services PART IV Item 15. Exhibits and Financial Statement Schedules Item 16. Form 10-K Summaryrr Signaturt es 3 Defiff nitions of Certain Terms and Conventions Used Herein Within this Report, the folff lowing terms and conventions have specififf c meanings: MeMM asurementstt . • • • • • • • • • • • • • "B" bl" means a standard barrel containing 42 United States gallons. "B" cfc "ff means one billion cubic feff et and is a measure of gas volume. "B" OEOO " means a barrel of oil equivalent and is a standard convention used to express oil and gas volumes on a comparabla e oil equivalent basis. Gas equivalents are determined under the relative energy content method by using the ratio of six thousand cubic feff et of gas to one Bbl of oil or naturt al gas liquid. "B" OEOO PEE DPP " means BOE per day. "M" MMM BMM OPOO DPP " means one million barrels of oil per day. "B" tu" means British thermal unit, which is a measure of the amount of energy required to raise the temperaturt e of one pound of water one degree Fahrenheit. "M" BMM bl" means one thousand Bbls. "M" BMM OEOO " means one thousand BOEs. "M" cMM fc "ff means one thousand cubic feff et and is a measure of gas volume. "M" MMM BMM bl" means one million Bbls. "M" MMM BMM OEOO " means one million BOEs. "M" MMM BMM tu" means one million Btust . "M" MMM cMM fc "ff means one million cubic feff et. InII dices. • • "B" rent" means Brent oil price, a maja or trading classififf cation of light sweet oil that serves as a benchmark price forff worldwide. "WTWW ITT " means West Texas Intermediate, a light sweet blend of oil produced frff om fiff elds in western Texas and is a grade of oil used as a benchmark in oil pricing. oil GeG neral tett rmrr s and conventitt ons. • • • • • • • • • • • • • "D" DDD &A" means depletion, depreciation and amortization. "E" SEE G" means environmental, social and governance. "FiFF eldll a sales point. fuff el" means gas consumed to operate fiff eld equipment (primarily compressors) prior to the gas being delivered to "GAGG AP" means accounting principles generally accepted in the United States of America. "GHGG GHH " means greenhouse gases. "L" NGNN " means liquefiff ed naturt al gas. "N" GNN LGG s" means naturt al gas liquids, which are the heavier hydrocarbon such liquids include ethane, propane, isobutane, normal butane and naturt al gasoline. r liquids that are separated frff om the gas stream; "N" YMYY EMM XEE " means the New York Mercantile Exchange. "N" YSYY ESS " means the New York Stock Exchange. "OPOO EPP C" means the Organization of Petroleum Exporting Countries. "P" iPP oneer" or the "ComCC panm yn " means Pioneer Naturt al Resources Company and its subsidiaries. ll d reserves" means reserves that can be expected to be recovered through existing wells with existing "P" rPP oved develope equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well. "P" rPP oved reserves" means those quantities of oil and gas, which, by analysis of geosciences and engineering data, can be estimated with reasonabla e certainty to be economically producible – frff om a given date forff ward, frff om 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 reasonabla y certain, regardless of whether deterministic or probabia listic methods are used forff must have commenced or the operator must be reasonabla y certain that it will commence the project within a reasonabla e time. the estimation. The project to extract the hydrocarbons r (i) The area of the reservoir considered as proved includes: (A) The area identififf ed by drilling and limited by flff uid contacts, if any, and (B) Adjacent undrilled portions of the reservoir that can, with reasonabla e certainty, be judged to be 4 continuous with it and to contain economically producible oil or gas on the basis of availabla e geoscience and engineering data. ence of data on flff uid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (ii) In the absa as seen in a well penetration unless geoscience, engineering or perforff mance data and reliabla e technology establa ishes a lower contact with reasonabla e certainty. r an associated gas cap,a (iii) Where direct observation frff om well penetrations has defiff ned a highest known oil elevation and the potential exists turt ally higher portions of the reservoir only if forff geoscience, engineering or perforff mance data and reliabla e technology establa ish the higher contact with reasonabla e certainty. proved oil reserves may be assigned in the strucrr (iv) Reserves which can be producd ed economically through appl ication of improved recoveryrr techniques (including, but testing by a pilot project in not limited to, flff uid injection) are included in the proved classififf cation when: (A) Successfulff an area of the reservoir with properties no more faff vorabla e than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliabla e technology establa ishes the reasonabla e certainty of the engineering analysis on which the project or program was based; and (B) The project has been appr oved forff development by all necessaryrr parties and entities, including governmental entities. a a (v) Existing economic conditions include prices and costs at which economic producibility frff om 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 fiff rst-day-of-ff the-month price forff each month within such period, unless prices are defiff ned by contractuat l arrangements, excluding escalations based upon futff urt e conditions. "P" rPP oved undevelope or frff om existing wells where a relatively maja or expenditurt e is required forff ll d reserves" means reserves that are expected to be recovered frff om new wells on undrilled acreage, recompletion. (i) Reserves on undrilled acreage shall be limited to those directly offff sff etting development spacing areas that are reasonabla y certain of production when drilled, unless evidence using reliabla e technology exists that establa ishes reasonabla e certainty of economic producibility at greater distances. (ii) Undrilled locations can be classififf ed as having proved undeveloped reserves only if a development plan has been a adopted indicating that they are scheduled to be drilled within fiff ve years, unless the specififf c circumstances, justifyff longer time. ication of flff uid injection or other improved recoveryrr (iii) Under no circumstances shall estimates forff appl a proved effff eff ctive by actuat technology establa ishing reasonabla e certainty. proved undeveloped reserves be attributabla e to any acreage forff which an technique is contemplated, unless such techniques have been l projects in the same reservoir or an analogous reservoir, or by other evidence using reliabla e "S" ESS C" means the United States Securities and Exchange Commission. "S" tSS antt dardizii ed MeMM asure" means the aftff er-tax present value of estimated futff urt e net cash flff ows of proved reserves, determined in accordance with the rulr es and regulations of the SEC, using prices and costs employed in the determination of proved reserves and a 10 percent discount rate. "U.SUU ."SS means United States. With respect to inforff mation on the working interest in wells, drilling locations and acreage, "net" wells, drilling locations and acres are determined by multiplying "gr" oss" wells, drilling locations and acres by the Company's working interest in such wells, drilling locations or acres. Unless otherwise specififf ed, wells, drilling locations and acreage statistics quoted herein represent gross wells, drilling locations or acres. "WAWW SPSS " means weighted average sales price. All currency amounts are expressed in U.S. dollars. 5 • • • • • • • CAUTIONARYR STATEMENT CONCERNING FORWAR RD-LOOKING STATEMENTS t on ForFF m 10-K (t(( hitt sii exee prx "w"" ill,"l essions as thett ThiTT sii Annual Repor e uncertainties. WheWW n used in thitt sii document,t "intends," "c" ontinue," "m" ay,"yy similarl hisii torical in nature. TheTT and projections about thett ComCC pany exee pex and uncertainties that be subject to currentlyll unforff and thett ctations and assumptm ions refe lff ected in thett m tt tt "c" ould,"l t")" e "R" epor ential,"l "f" utff ure," "pot thett "s" hould,"ll contains forff ward-looking statementstt ctstt ," "ant " "e" stimate," or thett words "believes," "pl" ans," "e" xee pex " involve risii kskk and tt that ecaststt ," "m" odelsll ," es," "f" orff ive of such terms and e negat forff ward-looking statementstt , which are generallyll not ctations, assumptm ions, estimates m thett tt believes that industrtt yr in which thett ComCC pany ye involve risii kskk forff ward-looking statementstt are reasonable as and when made, thett may m 's' current exee pex operates. Although 's' contrt ol. InII addition, thett ComCC pany m thett ComCC pany i icipat m m tt are difi fff iff cult to predict and, in many cases, beye ond thett ComCC pany may have a materiallyll adversrr e efe fff eff ct on it. eseen risii kskk that ye relate to thett ComCC pany forff ward-looking statementstt are based on thett ComCC pany are intended to identifi yff m i thett reof;ff timing thett r permitstt and thett coststt , including thett iate agreementstt withtt ss, such as thett COVIVV DII frff om thitt rd parties and negot to obtain drilling, environmental and othett TheTT se risii kskk and uncertainties include, among othett risii k of new restrt ictions withtt 's' abilitytt m r thitt ngs, volatilitytt of commoditytt prices; product supplyll and demand; impacm t of armed conflff ict (i(( ncluding thett war in UkUU rkk aine)e and political instabilitytt on economic activitytt and oil and gas supplyll thett efe fff eff ct of abilitytt and demand; compem tition; thett industrt yr in which it operates, including potential changes to tax lawsww ; atoryr or legie sii lative actions on Pioneer or thett e futff ure regul thitt rd parties on mutuallyll accepte able terms; e thett to obtain approvalsll abilitytt potential impacm t of cost increases due to potential liabilitytt resulting frff om pending or futff ure litigat ion; thett inflff ation and supplyll ead chain disii ruptions, and resultstt of development and operating activities; thett -19 pandemic, on global and U.S.UU economic activitytt ,yy oil and gas demand, and global outbreak of an illnell ct to development activities, including potential changes to respes and U.S.UU supplyll chains; thett regul ent,t services, oduced water; availabilitytt of equipmi s to disii pos ations resulting in limitations on thett ComCC pany e 's' development and operating activities; access to and availabilitytt of resources and persrr onnel required to perfr orff m thett ComCC pany to reple ace reserves, ilities; Pioneer's' abilitytt s trtt anspor to achieve itstt emisii sions implm ement itstt business plans or complm ete itstt development activities as scheduled; thett ComCC pany reductions, flff aring and othett ties to Pioneer's' credit facff investmtt ent securities and (i(( ii)i purchasersrr of Pioneer's' oil,l NGNN LGG and gas production and downstrtt eam sales of purchased commodities; uncertainties about estimates of reserves, identifi iff cation ecaststt , including of drilling locations and thett ecaststt of production, operating cash flff ow,w well coststt , capital exee pex nditures, rates of return, exee pex nses, and cash flff ow frff om forff tation commitmtt entstt ; tax rates; qualitytt of technical data; downstrt eam purchases and sales of oil and gas, net of fff s 's' operations and demand environmental and weathett 's' water services forff business and actstt of war or terrorisii m. InII addition, thett ComCC pany may have a tt materiallyll adversrr e efe fff eff ct on it. goalsll ; access to and cost of capital;l isii suersrr of Pioneer's' possible impacm tstt of climate change on thett ComCC pany r risii kskk , including thett risii kskk ; thett frff actionation, refe iff ning, storage and exee por ownersrr hipi and operation of thett ComCC pany fiff nancial strt engthtt of (i(( )i counterpar may be subject to currentlyll unforff ilitytt and derivative contrtt actstt , (i(( i)i to add proved reserves in thett assumptm ions underlyll ing forff itstt productstt ; cyc bersrr ecuritytt impacm t of a widesprs risii kskk associated withtt tation, processing, eseen risii kskk that iff rm trt anspor futff ure; thett 's' abilitytt ff e of pr abilitytt r ESGEE thett facff thett m m m m m x r t ed resultstt described in thett Accordinglyll ,yy no assurances can be given that tt thett actual eventstt and resultstt will not be materiallyll difi fff eff rent thantt forff ward-looking statementstt . See "I" tII em 1. Business — ComCC pem tition, Oil and Gas Indus i anticipat ConsCC iderations, MarMM krr ekk ting of Production, Sustainabilitytt and EnvEE ironmental ComCC plm iance CosCC tstt and Regul FacFF torsrr ," "I" tII em 7. Manage Quantitative and Qualitative Disii closures About MarMM krr ekk t Risii k" forff thett to placl dutytt thett trtt yr ation," "I" tII em 1A. Risii k tion and Resultstt of OpeO rations" and "I" tII em 7A. couldl materiallyll affff eff ct tt torsrr that forff ward-looking statementstt . Readersrr are cautioned not undertakekk s no date hereofff TheTT ComCC pany e undue reliance on forff ward-looking statementstt , which spes ak onlyll as of thett ment's' Disii cussion and Analyll syy isii of FiFF nancial Condi abilitytt of Pioneer to achieve thett ed resultstt described in thett to publiclyll update thett se statementstt exee cepte as required by law. ion of various facff a descripti i anticipat MM m CC e II 6 PIONEER NATURARR L RESOURCES COMPANY PART I ITEM 1. BUSINESS General Pioneer is a Delaware corpor rr ation whose common stock is listed and traded on the NYSE. The Company is a large , develops and produces oil, NGLs and gas in the independent oil and gas exploration and production company that explores forff Midland Basin in West Texas. The Company's principal executive offff iff ce is located at 777 Hidden Ridge, Irving, Texas, 75038. The Company also maintains an offff iff ce in Midland, Texas and fiff eld offff iff ces in the Midland Basin. Available Inforff mation Pioneer fiff les or furff nishes annual, quarterly and current reports, proxy statements and other documents with the SEC under the Securities Exchange Act of 1934 (the "Exchange Act"). The SEC maintains a website (www.sec.gov) that contains reports, proxy and inforff mation statements, and other inforff mation regarding issuers, including Pioneer, that fiff le electronically with the SEC. The Company makes availabla e, frff ee of charge, through its website (www.pxd.com ) its Annual Reports on Form 10-K, p Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and, if appl icabla e, amendments to those reports fiff led or furff nished pursuant to Section 13(a) of the Exchange Act as soon as reasonabla y practicabla e aftff er it electronically fiff les such material with, or furff nishes it to, the SEC. In addition to the reports fiff led or furff nished with the SEC, Pioneer publicly discloses inforff mation frff om time to time in its press releases and investor presentations that are posted on its website or during publicly accessible investor confeff rences. Such inforff mation, including inforff mation posted on or connected to the Company's website, is not a part of,ff or incorpor ated by refeff rence in, this Report or any other document the Company fiff les with or furff nishes to the SEC. a rr Mission and Strategies The Company's mission is to be America's leading independent energy company, focff used on value, safeff ty, the lowing strategic technology and its people. The Company's long-term strategy is centered around the folff environment, objectives: • maintaining a strong balance sheet and fiff nancial flff exibility; • • • returt ning frff ee cash flff ow to shareholders via a stabla e and growing base dividend, a variabla e dividend and share repurchases; utilizing the Company's scale and technological advancements to reduce costs and improve effff iff ciency; delivering economic production and reserve growth through drilling, completion and production improvement activities; setting high expectations forff employees and contractors to perforff m their jobs in a safeff manner; and leading sustainabla e development and environmental stewardship effff orff ts. • • maintaining industry-rr The Company's long-term strategy is anchored by the Company's interests in the long-lived Sprabea rry/rr Wolfcff amp oil fiff eld located in the Midland Basin in West Texas, which has an estimated remaining productive lifeff in excess of 55 years. Competition forff The oil and gas industryrr is highly competitive in the exploration forff and acquisition of reserves, the acquisition of oil and gas leases, marketing of oil, NGL and gas production, the obtaining of equipment and services and the hiring and retention of staffff necessaryrr the identififf cation, evaluation, operation and acquisition and development of oil and gas properties. The Company's competitors include maja or integrated oil and gas companies, other independent oil and gas companies and individuals engaged in the exploration forff and development of oil and gas properties. The Company also faff ces competition frff om companies that supply alternative sources of energy, such as wind, solar and other renewabla es. Competition will increase as alternative energy technology becomes more reliabla e and governments throughout the world support or mandate the use of such alternative energy. Competitive advantage is gained in the oil and gas exploration and development industryrr by employing well-trained and experienced personnel who make prude nt capia tal investment decisions based on management direction, embrace technological innovation and are focff used on price and cost management. The Company has a team of dedicated employees who represent the rr 7 PIONEER NATURARR L RESOURCES COMPANY profeff ssional disciplines and sciences that the Company believes are necessaryrr profiff tabia lity inherent in its physical assets. to allow Pioneer to maximize the long-term See "Item 1A. Risk Factors - The Company faff ces signififf cant competition and some of its competitors have resources in excess of the Company's availabla e resources." forff additional inforff mation. Oil and Gas Industry Considerations rr ing the demand forff The COVID-19 pandemic resulted in a severe worldwide economic downturtt n, signififf cantly disrupt oil throughout the world, and created signififf cant volatility, uncertainty and turt moil in the oil and gas industry.rr The decrease in demand forff oil, combined with excess supply of oil and related products, resulted in oil prices declining signififf cantly beginning ryrr 2020. Since mid-2020, oil prices have improved, with demand steadily increasing despite the uncertainties in late Februarr surrounding the COVID-19 variants, and related responses by governments worldwide with regards to travel restrictions, business closures and other restrictions, which have continued to inhibit a fulff In addition, worldwide oil inventories, frff om a historical perspective, remain low and concerns exist with the abia lity of OPEC and other oil producing nations to meet forff ecasted futff urtt e oil demand growth, with many OPEC countries not abla e to produce at their OPEC agreed upon quota levels due to their limited capia tal investments directed towards developing incremental oil supplies over the past feff w years. Furthermore, sanctions, import bans and price capsa on RusRR sia have been implemented by various countries in response to the war in Ukraine, furff ther impacting global oil supply. As a result of these and other oil and gas supply constraints, the world has experienced signififf cant increases in energy costs. During December 2022, OPEC announced a continuation of its 2 MMBOPD production cut that started in November 2022 related to the uncertainty surrounding the global economy and futff urt e oil demand. As a result of the current global supply and demand imbalances, oil and gas prices have remained strong the three months ended December 31, 2022 being $82.64 per Bbl and with average NYMEX oil and NYMEX gas prices forff the same period in 2021. In $6.26 per Mcf,ff respectively, as compared to $77.19 per Bbl and $5.84 per Mcf,ff respectively, forff ions, addition, the ongoing pandemic, combined with the RusRR sia/Ukraine conflff ict, has resulted in global supply chain disrupt which has led to signififf cant cost inflff ation and the potential forff a global recession. Specififf cally, the Company's 2022 capia tal program was impacted by higher than expected inflff ation in steel, diesel and chemical prices, among other items. l global demand recovery.rr rr Global oil price levels and inflff ationaryrr pressures will ultimately depend on various faff ctors that are beyond the Company's control, such as (i) the abia lity of OPEC and other oil producing nations to manage the global oil supply, (ii) the impact of sanctions and import bans on production frff om RusRR sia, (iii) the timing and supply impact of any Iranian sanction relief on their abia lity to export oil, (iv) the effff eff ctiveness of responses by businesses and governments to combat any additional outbrt eaks of the COVID-19 virurr s and their impact on domestic and worldwide demand, (v) the global supply chain constraints associated with manufaff cturt ing and distribution delays, (vi) oilfiff eld service demand and cost inflff ation, (vii) political stabia lity of oil consuming countries and (viii) increasing expectations that the world may be heading into a global recession. The Company continues to assess and monitor the impact of these faff ctors and consequences on the Company and its operations. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" forff additional inforff mation. Divestiture Activities The Company regularly reviews its asset base to identifyff nonstrategic assets, the disposition of which would increase ther the Company's other activities, create organizational and operational effff iff ciencies and furff capia tal resources availabla e forff objective of maintaining a strong balance sheet to ensure fiff nancial flff exibility. In Februarr ryrr 2022, the Company completed the sale of its equity interest in certain gas gathering and processing systems cash proceeds of $125 million (the "Martin County Gas Processing Divestiturt e"). The sale was in northern Martin County forff treated as a recoveryrr of investment frff om a partial sale of proved property resulting in no gain or loss being recognized. See Note 3 and Note 4 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. Marketing of Production GeG neral.ll Production frff om the Company's properties is marketed using methods that are consistent with industryrr practices. Sales prices forff oil, NGL and gas production are negotiated based on faff ctors normally considered in the industry,rr such as an index or spot price, distance frff om the well to a maja or pipeline, commodity quality and prevailing supply and demand conditions. See "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" forff additional inforff mation. 8 PIONEER NATURARR L RESOURCES COMPANY SeSS asonal nature of businii ess. Generally, but not always, the demand forff gas decreases during the summer months and increases during the winter months. Seasonal anomalies such as mild winters or hot summers may impact general seasonal changes in gas demand. Delill veryr commitii mtt entstt . The Company has committed certain volumes of oil, NGLs and gas to customers under a variety of contracts, some of which have volumetric fiff rm transportation or frff actionation requirements that could require monetaryrr shortfaff ll penalties if the Company's transported or frff actionation volumes are insuffff iff cient to satisfyff associated commitments. See Note 11 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. SiSS gni ifi iff cant purchasersrr . During 2022, the Company's oil, NGL and gas sales to Energy Transfeff r Crude rr Marketing LLC, 23 percent, 14 percent, Shell Trading US Company, Occidental Energy Marketing Inc. and Plains Marketing Inc. accounted forff 12 percent and 10 percent of the Company's oil, NGL and gas revenues, respectively. The loss of one of these signififf cant purchasers or an inabia lity to secure adequate pipeline, gas plant and NGL frff actionation infrff astrucrr production could have a material adverse effff eff ct on the Company's abia lity to produce and sell its oil, NGL and gas production. turt e forff Revenues frff om sales of purchased oil to Occidental Energy Marketing Inc. accounted forff 14 percent of the Company's sales of purchased commodities. No other sales customer exceeded 10 percent of the Company's sales of purchased commodities during 2022. The loss of the Company's signififf cant purchaser of purchased commodities would not be expected to have a material adverse effff eff ct on the Company's abia lity to sell commodities it purchases frff om third parties. See Note 13 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. Sustainability and Environmental Compliance Costs Since 2019, the Company has annually published a Sustainabia lity Report that folff lows the guidance provided by the Global Reporting Initiative frff amework and the Sustainabia lity Accounting Standards Board to address its ESG perforff mance. Since 2021, the Company has annually published a Climate Risk Report that is strucrr turt ed in accordance with the Task Force on Climate-related Financial Disclosures frff amework. The Climate Risk Report is used to increase the transparency of Pioneer's turtt e, business strategy progress toward integrating climate-related risks and opportuni ties into the Company's governance strucrr and planning processes, and its risk management practice. For more inforff mation on the Company's appr oach to sustainabia lity management, refeff r to its Sustainabia lity Report and Climate Risk Report, which are availabla e on Pioneer's website ated (www.pxd.com). Inforff mation contained in the Company's Sustainabia lity Reports and Climate Risk Reports is not incorpor by refeff rence into, and does not constitutt e a part of,ff this Report. While the Company believes that the disclosures contained in the Company's Sustainabia lity Reports, Climate Risk Reports, and other voluntaryrr disclosures regarding ESG matters are responsive to various areas of investor interest, the Company believes that certain of these disclosures do not currently address matters that are material to the Company's operations, strategy, fiff nancial condition, or fiff nancial results, although this view may change in the futff urt e based on new inforff mation that could materially alter the estimates, assumptions, or timelines used to create these disclosures. Given the estimates, assumptions and timelines used to create the Company's Sustainabia lity Reports, Climate Risk Reports, and other voluntaryrr disclosures, the materiality of these disclosures is inherently diffff iff cult to assess in advance. a rr t The trend in environmental regulation has been to place more restrictions and limitations on activities that may affff eff ct the environment and thus, there can be no assurance as to the amount or timing of futff urt e expenditurtt es forff environmental compliance or remediation and actuat l futff urt e expenditurt es may be diffff eff rent frff om the amounts the Company currently anticipates. As with the upstream industryrr in general, complying with current and anticipated environmental laws and t and operate faff cilities. While these laws and regulations can increase the Company's capia tal costs to drill, complete and construcrr regulations may affff eff ct the Company's capia tal expenditurtt es and net income, the Company does not believe they will have a material adverse effff eff ct on its business, fiff nancial position, results of operations or cash flff ows, nor does the Company believe that they will affff eff ct its competitive position since the operations of its competitors are generally similarly affff eff cted. Futurt e events, such as changes in existing laws or enforff cement policies, the promulgation of new laws or regulations or the development or discoveryrr of new faff cts or conditions may cause the Company to incur signififf cant costs. See "Health, Safeff ty and Environmental Risks" in "Item 1A. Risk Factors" forff additional inforff mation. ,ll EnEE virii onmentaltt social,ll and governance lell adersrr hip.ii The Company's ESG Task Force comprises a subset of the Company's executive committee (which is comprised of its Chief Executive Offff iff cer, Chief Operating Offff iff cer, Chief Financial Offff iff cer and other executive offff iff cers ("Executive Committee") and other key offff iff cers, leaders and subject matter experts frff om various disciplines across the Company. The ESG Task Force shapea s the Company's long-term ESG strategy and oversees the implementation of corpor ate ESG goals and related reporting. The ESG Task Force works to provide strategic direction and expert advice to the broader organization and through its leadership, the Company has improved its ESG governance processes, including: (i) aiding the Company's Board of Directors (the "Board") in forff malizing its oversight of ESG goals and the rr 9 PIONEER NATURARR L RESOURCES COMPANY forff mation of the Sustainabia lity and Climate Oversight Committee; (ii) establa ishing and progressing the Company's long-term net zero (Scope 1 and Scope 2) emissions ambition; (iii) aligning risk management and decision-making processes with frff ameworks, including the Task Force on Climate-related Financial Disclosure and the Sustainabia lity Accounting voluntaryrr Standards Board; (iv) driving strategic and operational activities to implement ESG goals; (v) sanctioning a third-party audit to provide limited data assurance; and (vi) progressing the Company's supply chain perforff mance. The priority of the ESG Task Force is to continue to assess, develop and progress ESG activities at the Company. Human Capital As of December 31, 2022, the Company had 2,076 employees, 900 of whom were employed in fiff eld operations. ValVV ues and governrr ance. Pioneer's appr oach to human capia tal management is guided by its core RESPECT values. These values - Respect and inclusion, Ethics and honesty, Safeff ty and stewardship, Personal accountabia lity, Entrepreneurship and innovation, Communication and transparency and Teamwork - appl y to all employees, suppliers and contractors and guide how a Pioneer interacts with partner companies, communities, the environment and all other stakeholders. Pioneer aims to conduct all aspects of its business in accordance with these core values, which serve as the culturt al founda tion of the Company. a ff The Company's Executive Committee and its Board set the Company's human capia tal management philosophies and tion, which oversees and goals. They routinely engage on workforff ce-related topics with the support of the human resources func administers the Company's human capia tal management programs. ff The Company understands that employee recruirr ting, retention and development play a critical role in the Company's abia lity to conduct its business activities and achieve its long-term strategy. As a result, the Company's Executive Committee and Board take a holistic view of human capia tal management and have establa ished policies and development programs with the goal of creating an equitabla e and inclusive environment to allow all employees to feff el respected, valued and connected to the business. The key aspects of the Company's human capia tal management include the Company's compensation and benefiff ts program, diversity and inclusion initiatives, recruirr tment, talent management and development, community involvement and Health, Safeff ty and Environment ("HSE") programs. t to adjust compensation levels forff ComCC pem nsatitt on and benefe iff tii stt progro am. The Company annually reviews its compensation levels forff all employees in an changing market conditions, allowing the Company to attract and retain a highly skilled effff orff l advantage of the workforff ce. The Company considers its employees to be its greatest asset and encourages them to take fulff benefiff ts and programs the Company offff eff rs. To ensure Pioneer attracts and retains top talent, the Company maintains an above - average benefiff ts package. Pioneer's employees participate in incentive plans that take into consideration individual and Company perforff mance through a traditional cash bonus plan and a variabla e compensation plan denominated in Company stock. These plans align employee compensation with the Company's success on critical perforff mance metrics and goals, while also recognizing individual perforff mance. The variabla e compensation plan denominated in Company stock is designed to attract and retain employees, reward perforff mance and align the interest of employees with stockholders through the encouragement of stock ownership. In addition to cash and equity compensation, the Company also offff eff rs other employee benefiff ts such as Company paid premiums forff lifeff and health (medical, dental and vision) insurance, paid time offff ,ff paid parental leave, flff exible work schedules and a 401(k) plan that includes employer matching contributions. a The Company routinely benchmarks its compensation and benefiff ts program to ensure that the programs remain competitive, continue to align with the Company's RESPECT values and meet the needs of employees and their faff milies. As part of the Company's benefiff ts program, it offff eff rs flff exible work schedules, including a hybrid remote work program, compressed workweeks and allowances forff the the secondaryrr caregiver. The Company's wellness programs include on-site primaryrr caregiver and two weeks of paid leave forff health centers, daycare centers, fiff tness centers, a range of healthy eating options at employee cafeff terias and an employee assistance program to support the mental well-being of employees. time offff ,ff including a parental leave policy that includes up to twelve weeks of paid leave forff Diversrr itii ytt ,yy equitii ytt and inii clusion. The Company is committed to creating an inclusive environment where all employees feff el respected, valued and connected to the business — a workplace to which individuals bring their authentic selves and can be in achieving their goals. The Company's dedicated Diversity, Equity and Inclusion ("DEI") program is focff used on successfulff having long-term DEI goals everyrr aspect of the Company's business. The Company's Executive Committee is accountabla e forff forff progress on these goals. In addition, DEI plans and progress are reviewed regularly with the Board. The Company has establa ished a variety of DEI initiatives, such as OnePioneer, an employee-led Company organization whose goal is to advance DEI across the entire Company. their respective departments as the Company believes that senior leadership involvement is crucrr ial forff The Company actively monitors diversity metrics across its entire workforff ce. Currently, 31 percent of the Board and 33 percent of the Executive Committee are women and 23 percent of the Board and 11 percent of the Executive Committee 10 PIONEER NATURARR L RESOURCES COMPANY identifyff (www.pxd.com) aftff er submission of the report to the U.S. Equal Employment Opportuni additional transparency into the Company's effff orff as ethnic minorities. The Company intends to disclose its 2022 Consolidated EEO-1 Report on its website t to provide ts to increase under-represented populations in its workforff ce. ty Commission in an effff orff t their responsibilities and forff TalTT ell nt management and developmll ent.tt The Company's talent planning involves a comprehensive appr oach to adequately prepare employees forff futff urtt e advancement. The Company's perforff mance management process occurs annually and, in accordance with the Company's RESPECT values, encourages and reinforff ces ongoing feff edback and coaching between employees and managers, employee growth and development forff their current role and futff urtt e success and alignment of individual goals with company-wide goals and team objectives. Pioneer strives to build a more skilled and engaged workforff ce with skill-building and competency-based training and development opportuni ties. The Company's competency model comprises profeff ssional, leadership and technical competencies and complements each employee's individual development planning process. In furff therance of each employee's individual development plan, the Company's workforff ce is trained in accordance with Pioneer's 70/20/10 learning model (70 percent on-the-j- ob and experience-based, 20 percent collabor ation and coaching, 10 percent forff mal training). Employees are offff eff red a variety of development options including in- a person profeff ssional trainings, technical trainings, consultation services, vendor partnerships and more. a tt a The Company's talent planning appr oach also identififf es and targets development of critical talent. The Company identififf es critical roles based on several faff ctors, including strategic importance, scope and impact, and unique skills. Successor candidates forff those critical roles are then identififf ed as those who have the interest, abia lity and experience to succeed in the critical role within fiff ve years. Talent planning enabla es Pioneer to proactively advance succession planning and offff eff r targeted development forff tional view of talent to increase visibility and mobility. high potential employees and successors, while enabla ing a cross-func ff ComCC munitii ytt inii volvll ement.tt Pioneer's dedication to community well-being and success shows in the many ways the Company seeks to be a good neighbor in its operating areas. The Company's employees continually seek out events, organizations, initiatives and partnerships to support the communities where they work and live, and the Company is honored to support their ongoing effff orff ts to enrich the communities where they live and work, including through a charitabla e matching program. HeHH altll htt , safeff tytt and envirii onment.tt The Company's HSE organization, with oversight frff om the Health, Safeff ty and Environment Committee (the "HSE Committee") of the Board, supports the Company's business teams to provide an organized oach forff HSE activities and maintain a culturtt e of improvement in HSE practices. The Company's HSE policy identififf es and appr a tering a manages health, safeff ty and environmental risks and impacts through business decisions, plans and operations by fosff culturt e of safeff ty and environmental stewardship, as well as a proactive network of systems to monitor compliance with ies to all employees. The Company expects contractors, vendors and suppliers on regulatoryrr ation with Pioneer property forff the Company, and to maintain an HSE policy that meets or exceeds the Company's HSE policy. This expectation was furff ther strengthened in 2022 with the Company's implementation of a new Supplier Code of Conduct that aligns with and compliments the Company's Code of Conduct and provides additional clarity to suppliers regarding the Company's expectations in connection with HSE risks and other areas including values, human rights, sustainabia lity, compliance and anti-bribery,rr among others. es to identifyff and manage their own HSE risks and impacts in collabor requirements. This policy appl rr business-related purpos a a The Company's HSE policy covers all Pioneer operations and aligns with the Company's HSE Management System ("HSEMS"). As outlined in the HSE policy, the Company is dedicated to protecting the health and safeff ty of everyone who works at Pioneer faff cilities by encouraging high standards. All HSE incidents are required to be reported, no matter how small, and are investigated to develop corrective actions to reduce the likelihood of recurrence. The HSEMS consists of 13 elements employee engagement and drive HSE perforff mance improvement. Pioneer has that set HSE expectations, provide an avenue forff an HSE risk management program to identifyff and manage risk across business teams. In support of driving continuous improvement, HSE strategic objectives, focff us areas and tactical deliverabla es are establa ished annually to drive HSE perforff mance. Throughout the year, progress toward these objectives are measured and reported to the Executive Committee and the HSE Committee. rr FeFF edback and engagement.tt The Company's human capia tal management appr oach is augmented by a robust employee feff edback program. The Company believes that giving employees a voice is paramount to creating a thriving and resilient culturt e and undertakes an annual engagement survey to provide a view into overall organizational health. The results are used to identifyff ties. In 2022, the Company received a 76 percent participation rate in the survey and its engagement score ranked in the top 10 percent of companies who used the same platforff m. Most importantly, the quantitative and qualitative survey data was utilized by leaders across the organization to identifyff strengths and opportuni issues that are important to employees and to implement improvement opportuni improvement and to inforff m action plans to address issues. ties forff a t t 11 Regulation PIONEER NATURARR L RESOURCES COMPANY The oil and gas industryrr is extensively regulated at the feff deral, state and local levels. Regulations affff eff cting elements of the energy sector are under constant review forff amendment or expansion and frff equently more stringent requirements are imposed. Various feff deral and state agencies, including the Texas Railroad Commission, the Bureau of Land Management (the "BLM"), an agency of the U.S Department of the Interior ("DOI"), the U.S. Environmental Protection Agency (the "EPA") and the U.S. Occupational Safeff ty and Health Administration ("OSHA"), have legal and regulatoryrr authority and oversight over the Company's exploration and development activities and operations. Other agencies with certain authority over the Company's business include the Internal Revenue Service, the SEC and NYSE. Ensuring compliance with the rulrr es, regulations and orders promulgated by such entities requires extensive effff orff t and incremental costs to comply, which affff eff cts the Company's profiff tabia lity. Because public policy changes are commonplace, and existing laws and regulations are frff equently amended, the Company is unabla e to predict the futff urt e cost or impact of compliance. However, the Company does not expect that any of these laws and regulations will affff eff ct its operations materially diffff eff rently than they would affff eff ct other companies with similar operations, size and fiff nancial strength. The folff lowing are signififf cant areas of government control and regulation affff eff cting the Company: latll itt ons. Enterprrr SeSS curitii itt es regue ises that sell securities in public markets are subject to regulatoryrr oversight by agencies such as the SEC and the NYSE. This regulatoryrr oversight imposes many requirements on the Company, including the establa ishing and maintaining disclosure controls and procedures alongside internal controls over fiff nancial responsibility forff reporting, and ensuring that the fiff nancial statements and other inforff mation included in submissions to the SEC do not contain any untruerr to make the statements made in such submissions not misleading. Failure to comply with the rulrr es and regulations of the SEC could subject the Company to litigation frff om public or private plaintiffff sff . Failure to comply with the rulrr es of the NYSE could result in the delisting of the Company's common stock, which would have an adverse effff eff ct on the market price and liquidity of the Company's common stock. Compliance with some of these rulrr es and regulations is costly, and regulations are subject to change or reinterprrr etation. statement of a material faff ct or omit to state a material faff ct necessaryrr and occupatu EnEE virii onmentaltt itt onal healtll htt and safeff tytt matttt ett rsrr . The Company strives to conduct its operations in a socially and environmentally responsible manner and is required to comply with many feff deral, state and local laws, regulations and executive orders concerning occupational safeff ty and health, the discharge or other release of materials and protection of the environment and naturt al resources. These environmental legal requirements primarily relate to: • • • • • • • • the discharge or other release of pollutants into feff deral and state waters and the ambient air; assessing the environmental impact of seismic acquisition, drilling and construcrr the generation, storage, transportation and disposal of waste materials, including hazardous substances and wastes; the emission of certain gases, including GHGs, into the atmosphere; the monitoring, abaa ndonment, reclamation and remediation of wells and other sites, including sites of forff mer operations; the development of emergency response and spill contingency plans; the protection of threatened and endangered species; and worker protection. tion activities; The more signififf cant of these existing environmental and occupational health and safeff ty laws and regulations include the folff lowing U.S. legal standards, as amended frff om time to time: • • • • • adopting climate change regulatoryrr initiatives relating to GHG emissions; the Clean Air Act ("CAA"), which restricts the emission of air pollutants frff om many sources and imposes various tion, operational, monitoring and reporting requirements, and has also been relied upon by the EPA as preconstrucrr authority forff the Federal Water Pollution Control Act, also known as the Clean Water Act ("CWA"), which regulates discharges of pollutants frff om faff cilities to state and feff deral waters, and establa ishes the extent to which waterways are subject to feff deral jurisdiction and rulrr emaking as protected waters of the United States; the Comprehensive Environmental Response, Compensation and Liabia lity Act of 1980 ("CERCLA"), which imposes liabia lity on generators, transporters, disposers and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur; the Resource Conservation and Recoveryrr Act ("RCRARR "), which governs the generation, treatment, storage, transport and disposal of solid wastes, including oil and gas exploration and production wastes and hazardous wastes; the Safeff Drinking Water Act ("SDWA"), which ensures the quality of the nation's public drinking water through adoption of drinking water standards and controlling the injection of waste flff uids into below-ground forff mations that may adversely affff eff ct drinking water sources; 12 PIONEER NATURARR L RESOURCES COMPANY • • OSHA, which establa ishes workplace standards forff implementation of hazard communications programs designed to inforff m employees about the workplace, potential harmfulff the Endangered Species Act ("ESA"), which restricts activities that may affff eff ct feff derally identififf ed endangered and threatened species or their habia tats through the implementation of operating restrictions or a temporary,rr seasonal or permanent ban in affff eff cted areas. the protection of the health and safeff ty of employees, including the hazardous substances in effff eff cts of these substances and appr opriate control measures; and a a Additionally, there are existing tribal, state and local jurisdictions where the Company operates that also have, or are developing or considering developing, similar environmental and occupational health and safeff ty laws and regulations governing many of these same types of activities. Failure by the Company to comply with these laws, regulations and regulatoryrr initiatives or controls may result in the assessment of sanctions, including administrative, civil and criminal penalties; the imposition of investigatory,rr remedial and corrective action obligations or the obligation to incur capia tal or operating expenditurt es; the occurrence of restrictions, delays or cancellations in the permitting, development or expansion of projects; and issuance of injunctions restricting or prohibiting some or all of the Company's activities in a particular area. Historically, the Company's environmental and worker safeff ty compliance costs have not had a material adverse effff eff ct on its results of operations. However, there can be no assurance that such costs will not be material in the futff urt e or that such futff urt e compliance will not have a material adverse effff eff ct on the Company's business and operational results. The Company owns, leases or operates numerous properties that have been used forff oil and gas exploration and production activities forff many years. The Company also has acquired certain properties frff om third parties whose actions with respect to the management and disposal or release of hydrocarbons , hazardous substances or wastes at or frff om such properties r were not under the Company's control prior to acquiring them. Under certain environmental laws and regulations, such as CERCLA and RCRAR , the Company could incur strict joint and several liabia lity due to damages to naturt al resources or forff , hazardous substances or wastes disposed of or released by prior owners or operators. Moreover, an remediating hydrocarbons accidental release of materials into the environment during the Company's operations may cause it to incur signififf cant costs and liabia lities. The Company also could incur costs related to the clean-up of third-party sites to which it sent regulated substances forff damages to naturt al resources or other claims related to releases of regulated substances at or frff om such third-party sites. disposal or to which it sent equipment forff cleaning and forff r Over time, the trend in environmental and occupational health and safeff ty laws and regulations is to typically place more restrictions and limitations on activities that may adversely affff eff ct the environment or expose workers to injury.rr If existing legal requirements change or new legislative, regulatoryrr or executive initiatives are developed and implemented in the futff urtt e, the Company may be required to make signififf cant, unanticipated capia tal and operating expenditurt es. The Company may not have insurance or be fulff ly covered by insurance against all environmental and occupational health and safeff ty risks. For more inforff mation on environmental and occupational health and safeff ty matters, see the risk faff ctors identififf ed as Health, Safeff ty and Environmental Risks in "Item 1A. Risk Factors." Othtt er regue latll itt on of thtt e oilii and gas inii dustrtt yr .yy The Company's oil and gas operations are subject to laws and regulations that relate to matters including: • • • • • • • • • the acquisition of seismic data; location, drilling and casing of wells; hydraulic frff acturt ing; well production operations; disposal of produced water; regulation of transportation and sale of oil, NGLs and gas; surfaff ce usage; calculation and disbursement of royalty payments and production taxes; and restoration of properties used forff oil and gas operations. Development and production operations are subject to various regulations, including regulations requiring permits forff the drilling of wells, the posting of bonds in connection with development and production activities and the fiff ling of reports related to production operations. Texas, and some municipalities in which the Company operates, also regulate one or more of the folff lowing: • • • • • the location of wells; the method of drilling and casing wells; the method and abia lity to frff acturt e stimulate wells; the surfaff ce use and restoration of properties upon which wells are drilled; the disposal of produced water; 13 PIONEER NATURARR L RESOURCES COMPANY • • the plugging and abaa ndoning of wells; and notices to surfaff ce owners and other third parties. State laws regulate the size of drilling and spacing units or proration units governing the drilling and production of oil and gas properties. The Company relies on voluntaryrr pooling, production sharing agreements and the drilling of allocation wells to develop its leases. In some instances, forff ced pooling or unitization may be implemented by third parties and may reduce the Company's interest in the unitized properties. In addition, state conservation laws establa ish maximum rates of production frff om oil and gas wells and generally prohibit the venting or flff aring of gas without a permit. These laws and regulations may limit the amount of oil and gas the Company can produce frff om the Company's wells, negatively affff eff ct the economic decision to continue to produce these wells or limit the number of wells or locations that the Company can economically drill. Approximately one percent of the Company's U.S. oil and gas leases are granted or appr oved by the feff deral government and administered by the BLM. All of the Company's feff deral leases are outside of Texas and the Company has no current operations or plans to furff ther develop the leases at this time. Such leases require compliance with detailed feff deral regulations and orders that regulate, among other matters, drilling and operations on lands covered by these leases and the calculation and disbursement of royalty payments to the feff deral government. a See "Regulatoryrr Risks" and "Health, Safeff ty and Environmental Risks" included in "Item 1A. Risk Factors" forff additional inforff mation. 14 ITEM 1A. RISK FACTORS PIONEER NATURARR L RESOURCES COMPANY The Company's operations and fiff nancial results are subject to various risks and uncertainties, including but not limited to those described below. Other risks are described in "Item 1. Business — Competition, Markets and Regulations," "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Item 7A. Quantitative and Qualitative Disclosures About Market Risk." The Company's business could also be affff eff cted by additional risks and lly uncertainties not currently known to the Company or that it currently deems to be immaterial. If any of these risks actuat occur, it could materially harm the Company's business, fiff nancial condition or results of operations or impair the Company's abia lity to implement business plans or complete development activities as scheduled. In that case, the market price of the Company's common stock could decline. The folff lowing risk faff ctors are summarized as general business and industry;rr operational; fiff nancial; health, safeff ty and environmental; and regulatory.rr GeG neral Businii ess and InII dustrtt yr Risii ks • The COVID-19 pandemic and related developments in the global oil markets have had, and depending on the progression general economic, business and industryrr the Company's operations, fiff nancial condition, results of operations, cash flff ows and liquidity and those of the pandemic, may continue to have, material adverse consequences forff conditions and forff of its purchasers, suppliers and other counterparr rties. • Declining general economic, business or industryrr conditions could have a material adverse effff eff ct on the Company's results of operations. • The Company may be unabla e to make attractive acquisitions and any acquisition it completes is subject to substantial risks that could materially and adversely affff eff ct its business. • The Company's abia lity to complete dispositions of assets or sell partial interests in assets may be subject to faff ctors beyond its control, and in certain cases, the Company may be required to retain liabia lities forff certain matters. • The Company's operations and drilling activity are concentrated in the Midland Basin of West Texas; such concentration makes the Company vulnerabla e to risks associated with operating in a limited geographi a c area. • The Company may not be abla e to obtain access on commercially reasonabla e terms or otherwise to gathering systems, pipelines and other processing, frff actionation, refiff ning, storage, transportation and export faff cilities to market its oil, NGL and gas production. • The Company relies on a limited number of purchasers forff • The refiff ning industryrr and export faff cilities may be unabla e to aba sorbr U.S. oil production, and the abia lity to export oil is subject to suspension; in any such case, the resulting surplrr us could depress prices and restrict the availabia lity of markets. a maja ority of its products. • Estimates of proved reserves and futff urt e net cash flff ows are not precise. The actuat l quantities and net cash flff ows of the Company's proved reserves may prove to be lower than estimated. • Because the Company's producing wells decline continually over time, the Company will need to mitigate these declines through drilling and production enhancement initiatives and/or acquisitions. • A portion of the Company's total estimated proved reserves as of December 31, 2022 were undeveloped, and those proved reserves may not ultimately be developed. • The Company faff ces signififf cant competition and some of its competitors have resources in excess of the Company's availabla e resources. • The Company's business could be materially and adversely affff eff cted by security threats, including cybersecurity threats, and other disrupt rr ions. • Provisions of the Company's charter documents and Delaware law may inhibit a takeover, which could limit the price investors might be willing to pay in the futff urt e forff the Company's common stock. OpeOO ratitt onal Risii ks • The Company's operations involve many operational risks, some of which could result in unforff eseen interrupt rr ions to the Company's operations and substantial losses to the Company forff which the Company may not be adequately insured. • Exploration and development drilling involve substantial costs and risks and may not result in commercially productive reserves. • Part of the Company's strategy involves using some of the latest availabla e horizontal drilling and completion techniques, which involve risks and uncertainties in their appl a ication. • The Company's expectations forff futff urtt e drilling activities will be realized over several years, making them susceptible to uncertainties that could materially alter the occurrence or timing of such activities. • Multi-well pad drilling may result in volatility in the Company's operating results. • The Company's operations are substantially dependent upon the availabia lity of water and its abia lity to dispose of produced water gathered frff om drilling and production activities. 15 PIONEER NATURARR L RESOURCES COMPANY • The Company's use of seismic data is subject to interprrr etation and may not accurately identifyff the presence of oil and gas, which could materially and adversely affff eff ct the results of its futff ut re drilling operations. • The Company's gas processing and gathering systems are subject to operational and regulatoryrr risks. FiFF nii anciali Risii ks • The prices of oil, NGLs and gas are highly volatile. • Futurtt e declines in the price of oil, NGLs and gas could result in a reduction in the carryirr ng value of the Company's proved oil and gas properties. • The Company's actuat • The Company could experience periods of higher costs if commodity prices rise. • The Company is a party to debt instrumrr l production could diffff eff r materially frff om its forff ecasts. Company's abia lity to fundff futff urtt e business and fiff nancing activities. ents, a Credit Facility and other fiff nancial commitments that may limit the • The Company's returt n of capia tal strategies, including its base and variabla e dividend policy and share repurchase program, may be changed at the discretion of the Board, and the Company's abia lity to declare and pay base and variabla e dividends and repurchase shares are subject to certain considerations. • A faff ilure by purchasers of the Company's production to satisfyff their obligations to the Company could have a material adverse effff eff ct on the Company's results of operations. • The Company's derivative risk management activities could result in fiff nancial losses, limit the Company's potential gains or faff il to protect the Company frff om declines in commodity prices. • Pioneer's abia lity to utilize its U.S. net operating loss carryfrr orff wards to offff sff et futff urt e income taxes may be limited. • The Company periodically evaluates its unproved oil and gas properties forff impairment and could be required to recognize noncash charges in the earnings of futff urt e periods. • The Company periodically evaluates its goodwill forff impairment and could be required to recognize noncash charges in the earnings of futff urt e periods. HeHH altll htt , SafSS eff tytt and EnEE virii onmentaltt Risii ks • The Company's operations are subject to a series of risks arising out of the threat of climate change, energy conservation measures or initiatives that stimulate demand forff alternative forff ms of energy. • The naturt e of the Company's assets and production operations may impact the environment or cause environmental contamination. • The Company's hydraulic frff acturtt ing and forff mer sand mining operations may result in silica-related health issues and litigation. • Increasing attention to ESG matters may impact the Company's business. Regue latll ortt yr Risii ks • The Company's operations are subject to stringent environmental, oil and gas-related and occupational safeff ty and health legal requirements. • Laws, regulations and other executive actions or regulatoryrr ing could increase the Company's cost of doing business and result in additional operating restrictions, delays or cancellations that could have a material adverse effff eff ct on the Company's business, results of operations and fiff nancial condition. initiatives regarding hydraulic frff acturtt • Laws and regulations pertaining to protection of threatened and endangered species or to critical habia tat, wetlands and naturtt al resources could delay, restrict or prohibit the Company's operations and cause it to incur substantial costs. • The Company's transportation of gas; sales and purchases of oil, NGLs and gas or other energy commodities; and any derivative activities related to such energy commodities, expose the Company to potential regulatoryrr risks. • The enactment of derivatives legislation could have a material adverse effff eff ct on the Company's abia lity to use derivative instrumrr ents to reduce the effff eff ct of commodity price, interest rate and other risks associated with its business. • The Company's bylaws provide that the Court of Chanceryrr of the State of Delaware (or if the Court of Chanceryrr does not have jurisdiction, the feff deral district court forff certain legal actions between the Company and its stockholders and that the feff deral district courts of the United States shall be the sole the resolution of causes of action arising under the Securities Act of 1933. and exclusive forff umrr the District of Delaware) will be the exclusive forff umrr forff forff • Changes in tax laws or the interprrr etation thereof or the imposition of new or increased taxes or feff es may adversely affff eff ct the Company's operations and cash flff ows. 16 General Business and Industry Risks PIONEER NATURARR L RESOURCES COMPANY ThTT e COCC VIVV DII -19 pandemic and relatll ett d developmll thtt e pandemic,c may contitt nii ue tott have,e matett riali thtt e ComCC panm yn 's' operatitt ons,s fiff nii anciali and forff titt es. purchasersrr ,s supplu ill ersrr and othtt er countett rpar rr inii entstt ll thtt e global adversrr e consequences forff conditii itt on, resultll stt of operatitt ons,s cash flff owll tstt have had, and depeee ndinii g on thtt e progression of general economic,c businii ess and inii dustrtt yr conditii itt ons iditii ytt and thtt ose of itii stt sw and lill quii oilii markerr The onset of the COVID-19 pandemic signififf cantly affff eff cted the global economy, disrupt ed global supply chains and created signififf cant volatility in the fiff nancial markets. In addition, the onset of the pandemic resulted in widespread travel oil, NGLs and gas, restrictions, business closures and other restrictions that led to a signififf cant reduction in demand forff resulting in oil prices declining signififf cantly in the fiff rst quarter of 2020. While demand forff oil, NGLs and gas have improved throughout 2021 and 2022 as travel restrictions, business closures and other restrictions were liftff ed, an increase in infeff ctions or the onset of a new variant of the virusrr and prices of oil, NGLs and gas. If this were to continue forff a prolonged period, the Company, similar to the steps it took at the onset of the pandemic in 2020, may have to make changes to its operations and capia tal budgets, and the Company's operations, fiff nancial condition, results of operations, cash flff ows and liquidity may be materially and adversely affff eff cted. Risks include, but are not limited to, the folff could again reduce demand forff and prices forff lowing: rr • • • • • ff the transportation and other costs to reach those destinations, An extended decline in commodity prices could materially and adversely affff eff ct the amount of oil, NGLs and gas that the Company can produce economically, which may result in (i) the Company having to make signififf cant downward adjustments to its estimated proved reserves and (ii) a shortfaff ll in expected cash flff ows, which could require the Company to reduce capia tal spending or borrow funds to cover any such shortfaff ll. In addition, the continuation of depressed prices may adversely affff eff ct the abia lity of the Company to pay dividends or repurchase shares of common stock in the fuff turt e. oil, combined with an oversupply of oil, would likely result in an oil surplrr us in the United A reduced demand forff oil exports to forff eign markets, or if the price that can be obtained in States and worldwide. If the global demand forff forff eign markets does not support it may be uneconomical to invest in new wells and may cause the Company to shut in producing wells. The Company cannot ly returtt n to pre-shut-in production levels or that the costs required to be certain whether shut-in wells can successfulff returt n the wells to production will be economical. The Company's abia lity to develop and sell its production could be materially and adversely affff eff cted by the inabia lity or unwillingness of third parties to provide suffff iff cient processing, frff actionation, refiff ning, transportation, storage or export faff cilities to the Company. For example, at the onset of the COVID-19 pandemic, oil storage in the United States was, at times, near fulff an extended period, the Company's purchasers might decline to purchase the Company's oil, NGLs and gas, and the Company may not be abla e to store its production. Such a lack of market forff the Company's products could require that the Company shut in some portion of its production. The amount of oil in storage may also keep oil prices at low levels forff Under Texas law, the Texas Railroad Commission is empowered to prorate oil production in the state based on market demand. If the Texas Railroad Commission fiff nds that waste is taking place or is reasonabla y imminent, it is empowered to adopt a rulrr e or order to correct, prevent, or lessen the waste. If the Texas Railroad Commission imposes proration in the futff urt e, or if any other similar laws or regulations are imposed, those restrictions would limit the amount of oil, NGLs and gas the Company can produce. It is possible that any delay, reduction or curtailment of the Company's development and producing operations, whether due to regulatoryrr actions or actions by the Company in reaction to market conditions, could result in the loss of acreage through lease expiration. city in many locations. If this were to again occur forff an extended period, even aftff er demand begins to rise. or storage capaa city forff l capaa • rties to its derivative instrumrr ents and service providers may be unabla e to fulff • Market conditions resulting frff om the effff eff cts of the COVID-19 pandemic, low oil prices or a negative or recessionaryrr economy could also increase the risk that the purchasers of the Company's production, lenders under its credit agreement, counterparr their rty were to defaff ult on its obligations, such a defaff ult obligations in a timely manner, or at all. If any such counterparr could have a material adverse effff eff ct on the Company's results of operations. The Company perforff ms assessments of its proved and unproved oil and gas properties whenever events or circumstances indicate that the carryirr ng values of those assets may not be recoverabla e. To the extent such tests lifeff or estimated futff urtt e cash flff ows of the Company's proved oil and gas indicate a reduction of the estimated usefulff properties, an impairment charge could be required to reduce the carryirr ng value of its proved oil and gas properties to their faff ir value. In addition, goodwill is assessed forff impairment whenever it is likely that events or circumstances indicate that the carryirr ng value of a reporting unit exceeds its faff ir value. The Company's operations may be adversely affff eff cted if signififf cant portions of its workforff ce are unabla e to work effff eff ctively, including because of illness, quarantines, social distancing, government actions, or other restrictions in fiff ll • 17 PIONEER NATURARR L RESOURCES COMPANY connection with the COVID-19 pandemic. The Company, as recommended by the Centers forff Disease Control and Prevention, has implemented workplace restrictions, including guidance forff health and safeff ty reasons, where possible. As some employees may have been or may in the futff urtt e be placed in workplaces where exposure to COVID-19 is possible, the Company may be subject to risk of liabia lity should such employees allege that the Company faff iled to adequately mitigate the risk of exposure to COVID-19, to the extent obligated to do so. In addition, in order to faff cilitate remote working arrangements, some employees are accessing workspaces frff om their personal devices through cloud-based systems, which could increase cybersecurity risks to the Company and to its employees. There can be no assurance that the Company's operations will not be curtailed or suspended or otherwise adversely affff eff cted due to such workforff ce issues. employees to work remotely forff The Company is not abla e to predict the ultimate long-term impact of the COVID-19 pandemic on the Company's business, which will depend on numerous evolving faff ctors and futff urt e developments that are beyond the Company's control, including the length of time that the pandemic continues, the speed and effff eff ctiveness of responses to combat the COVID-19 virusrr oil, NGLs and gas, the response of the overall economy and the fiff nancial markets as well as the effff eff ct of governmental actions taken in response to the COVID-19 pandemic. , the impact of the pandemic and its aftff ermath on the demand forff Declill nii inii g general economic,c businii ess or inii dustrtt yr conditii itt ons couldll have a matett riali of operatitt ons. adversrr e efe fff eff ct on thtt e ComCC panm yn 's' resultll stt rr The economies in the United States and certain countries in Europe and Asia have been growing, with resulting improvements in industrial demand and consumer confiff dence. However, other economies, such as those of certain South American nations, continue to faff ce economic struggl es or slowing economic growth. If these conditions worsen, combined with a decline in economic growth in other parts of the world, there could be a signififf cant adverse effff eff ct on global fiff nancial markets and commodity prices. In addition, continued hostilities in the Middle East and the occurrence or threat of terrorist attacks in the United States or other countries could adversely affff eff ct the global economy. Global or national health concerns, including the outbrt eak of pandemic or contagious disease, such as the COVID-19 pandemic, may adversely affff eff ct the Company by (i) its oil, NGLs and gas because of reduced global or national economic activity, (ii) impairing its supply reducing demand forff chain (forff ing of materials used in operations) and (iii) affff eff cting the health of its workforff ce, rendering employees unabla e to work or travel. If the economic climate in the United States or abra oad were to deteriorate, due to inflff ation, rising interest rates or otherwise, demand forff petroleum products could diminish or stagnate, which could depress the prices at which the Company could sell its oil, NGLs and gas, affff eff ct the abia lity of the Company's vendors, suppliers and customers to continue operations and ultimately decrease the Company's cash flff ows and profiff tabia lity. In addition, reduced the Company worldwide demand forff to raise capia tal to fund debt and equity securities issued by oil and gas companies may make it more diffff iff cult forff its operations or refiff nance its debt obligations. example, by limiting manufaff cturtt ff ThTT e ComCC panm yn may be unablell thtt at couldll matett riallll yll and adversrr elyll affff eff ct itii stt businii ess. tott make atttt rtt actitt ve acquisii itii itt ons and anyn acquisii itii itt on itii complm ell tett s isii subject tott substantt titt al risii ks Acquisitions of oil and gas properties, including acreage trades, have frff om time to time contributed to the Company's growth. Acquisition opportuni ties in the oil and gas industryrr are veryrr competitive, which can increase the cost of, or cause the Company to refrff ain frff om, completing acquisitions. The success of any acquisition will depend on a number of faff ctors and involves potential risks, including, among other things: tt • • • • • • the inabia lity to accurately forff ecast futff urtt e commodity prices and estimate the costs to develop the acquired reserves, the recoverabla e volumes of the acquired reserves, rates of futff urtt e production and futff urt e net cash flff ows attainabla e frff om the acquired reserves; the assumption of unknown liabia lities, including environmental liabia lities, and losses or costs forff which the Company is not indemnififf ed or forff which the indemnity the Company receives is inadequate; the validity of assumptions about costs, including synergies; the effff eff ct on the Company's liquidity or fiff nancial leverage of using availabla e cash or debt to fiff nance acquisitions or frff om the amount of debt assumed as part of the acquisition; the diversion of management's attention frff om other business concerns; and an inabia lity to hire, train or retain qualififf ed personnel to manage and operate the Company's growing business and assets. a All of these faff ctors affff eff ct whether an acquisition will ultimately generate cash flff ows suffff iff cient to provide a suitabla e returt n on investment. Even though the Company perforff ms a review of the properties it seeks to acquire that it believes is consistent with industryrr practices, such reviews are oftff en limited in scope. As a result, among other risks, the Company's initial lowing an acquisition, which may materially and adversely affff eff ct the desired estimates of reserves may be subjb ect to revision folff 18 PIONEER NATURARR L RESOURCES COMPANY benefiff ts of the acquisition. See "Risks Associated with Acquisitions" included in "Item 1A. Risk Factors" forff inforff mation. additional ThTT e ComCC panm yn 's' abilii ill tii ytt contrtt ol,ll and inii certaitt nii cases,s thtt e ComCC panm yn may be requirii ed tott retaitt nii itii itt ons of assetstt or sellll partitt ali i lill abi tott complm ell tett disii pos s lii ill tii itt es forff certaitt nii matttt ett rsrr . inii tett reststt inii assetstt may be subject tott facff tortt srr beye ond itii stt The Company regularly reviews its property base forff e of identifyiff ng nonstrategic assets, the disposition of other activities and create organizational and operational effff iff ciencies. In which would increase capia tal resources availabla e forff addition, frff om time to time, the Company sells an interest in its oil and gas properties forff e of assisting or accelerating the asset's development. Various faff ctors could materially affff eff ct the abia lity of the Company to dispose of such nonstrategic assets or partial interests or complete announced dispositions, including the receipt of appr ovals of governmental agencies or third parties and the availabia lity of purchasers willing to acquire the nonstrategic assets or partial interests on terms and at prices acceptabla e to the Company. the purpos the purpos a rr rr Sellers typically retain certain liabia lities or indemnifyff buyers forff certain pre-closing matters, such as matters of litigation, of any such retained liabia lity or environmental contingencies, royalty obligations and income taxes. The magnitude indemnififf cation obligation may be diffff iff cult to quantifyff at the time of the transaction and ultimately may be material. Also, as is typical in divestiturt e transactions, third parties may be unwilling to release the Company frff om guarantees or other credit support provided prior to the sale of the divested assets. As a result, aftff er a divestiturt e, the Company may remain secondarily liabla e forff the obligations guaranteed or supported to the extent that the buyer of the assets faff ils to perforff m these obligations. t ThTT e ComCC panm yn 's' operatitt ons and drilii lll ill nii g actitt vitii ytt are concentrtt atett d inii inii dustrtt yr actitt vitii ytt ,yy which may affff eff ct itii stt abilii ill tii ytt needed tott complm ell tett ComCC panm yn vulnll erablell itii stt developmll tott risii ks associati ett d witii htt operatitt nii g inii a lill mii tott obtaitt nii ent actitt vitii itt es as planll ned or resultll inii thtt e persrr onnel,ll equipmii itii ett d geographic area. thtt e MiMM dlanll d Basinii of WeWW st TeTT xas ,s an area of highi ilii ill tii itt es access inii creased coststt ; such concentrtt atitt on alsll o makes thtt e ent,tt services,s resources and facff ee The Company's producing properties are geographi cally concentrated in the Midland Basin of West Texas. Industryrr activity is high in the Midland Basin and demand forff and costs of personnel, equipment, power, services and resources remains high. Any delay or inabia lity to secure the personnel, equipment, power, services and resources could result in oil, NGL and gas production volumes being below the Company's forff ecasted volumes. In addition, any such negative effff eff ct on production volumes, or signififf cant increases in costs, could have a material adverse effff eff ct on the Company's results of operations, cash flff ow and profiff tabia lity. a As a result of this concentration, the Company may be disproportionately exposed to the impact of delays or ions of operations or production in this area caused by external faff ctors such as governmental regulation, state politics, interrupt rr market limitations, produced water disposal limitations, water or sand shortages, or extreme weather related conditions. tott obtaitt nii lill nii es and othtt er processinii g, frff actitt onatitt on, refe iff nii inii g, stortt age,e trtt anspor access on commerciali ThTT e ComCC panm yn may not be ablell pipeii and gas productitt on. lll yll reasonablell tattt s tett rmrr s or othtt erwisii e tott gathtt erinii g sys stett ms,s t itii stt oilii ,ll NGNN LGG ilii ill tii itt es tott markerr t facff itt on and expor ee city of The marketing of oil, NGL and gas production depends in large part on the availabia lity, proximity and capaa gathering systems, pipelines and other processing, frff actionation, refiff ning, storage, transportation and export faff cilities, as well as city availabla e on these systems, if these systems were the existence of adequate markets. If there were insuffff iff cient capaa unavailabla e to the Company or if access to these systems were to become commercially unreasonabla e, the price offff eff red forff the Company's production could be signififf cantly depressed, or the Company could be forff ced to shut in some production or delay or ts its own faff cility discontinue drilling plans and commercial production folff or awaits the availabia lity of third party faff cilities. The Company also relies (and expects to rely in the futff urt e) on faff cilities developed and owned by third parties in order to gather, store, process, transport, frff actionate, refiff ne, export and sell its oil, NGL and gas production. The Company's plans to develop and sell production frff om its oil and gas reserves could be materially and adversely affff eff cted by the inabia lity or unwillingness of third parties to provide suffff iff cient gathering, transportation, storage, processing, frff actionation, refiff ning or export faff cilities to the Company, especially in areas of planned expansion where such faff cilities do not currently exist. Additionally, certain of these challenges may be compounded by a high level of industryrr activity in the Permian Basin. lowing a discoveryrr of hydrocarbons while it construcrr r For example, folff lowing Hurricane Harvey in 2017 and Hurricanes Gustav and Ike in 2008, certain Permian Basin gas processors were forff ced to shut down their plants due to the inabia lity of certain Texas Gulf Coast NGL frff actionators to operate. The Company was abla e to produce its oil wells and vent or flff are the associated gas; however, there is no certainty the Company ts and potential changes in regulations. The amount will vent or flff are gas in the futff urtt e as a result of its emissions reduction effff orff ions due to of oil and gas that can be produced is subject to limitations in certain circumstances, such as pipeline interrupt scheduled and unscheduled maintenance, excessive pressure, physical damage to gathering, transportation, storage, processing, rr 19 PIONEER NATURARR L RESOURCES COMPANY frff actionation, refiff ning or export faff cilities, or lack of capaa city at such faff cilities. The Company has periodically experienced high line pressure at its tank batteries, which has occasionally led to the flff aring of gas due to the inabia lity of the gas gathering systems in the areas to support the increased gas production. The curtailments arising frff om these and similar circumstances may last forff a feff w days, and in many cases, the Company may be provided only limited, if any, notice as to when these circumstances will arise and their duration. To the extent that the Company enters into transportation contracts with pipelines that are subject to the United States Federal Energy Regulatoryrr Commission ("FERC") regulation, the Company is subject to FERC requirements related to use of such capaa city. Any faff ilure on the Company's part to comply with FERC's regulations and policies related to pipeline transportation, reporting requirements or other regulations, and any faff ilure to comply with a FERC-related pipeline's tariffff ,ff could result in the imposition of civil and criminal penalties. In addition, any changes in FERC or state regulations or requirements on pipeline transportation may result in increased transportation costs on pipelines that are subject to such regulation, thereby negatively impacting the Company's profiff tabia lity. ThTT e ComCC panm yn relill es on a lill mii itii ett d number of puff rchasersrr forff a majoritii ytt of itii stt productstt . A limited number of companies purchase a maja ority of the Company's oil, NGLs and gas. The loss of a signififf cant purchaser could have a material adverse effff eff ct on the Company's abia lity to sell its production. t facff suspes nsion; inii anyn such case,e thtt e resultll itt nii g surplrr us couldll depree ThTT e refe iff nii inii g inii dustrtt yr and expor tott couldll matett riali lll yll and adversrr elyll affff eff ct thtt e ComCC panm yn 's' resultll stt of operatitt ons. ilii ill tii itt es may be unablell tott absorb U.SUU .SS oilii productitt on, and thtt e abilii ill tii ytt ess prices and restrtt ict thtt e availii abi ee ll tott expor ee lii ill tii ytt of markerr t oilii isii subject tstt ,s which city, an increase in U.S. production of oil could result in a surplrr us Absent an expansion of U.S. refiff ning and export capaa these commodities to faff ll and markets to constrict. Although of these products in the U.S., which would likely cause prices forff U.S. law was changed in 2015 to permit the export of oil, exports may not occur if demand is lacking in forff eign markets or the price that can be obtained in forff eign markets does not support associated export capaa city expansions, transportation and other costs. In such circumstances, the rate of returt n on the Company's capia tal projects would decline, possibly to levels that would the Company's products could require make execution of the Company's drilling plans uneconomical, and a lack of market forff that the Company shut in some portion of its production. If this were to occur, the Company's production and cash flff ow could decrease, or could increase less than forff ecasted, which could have a material adverse effff eff ct on the Company's cash flff ow and profiff tabia lity. Under the 2015 feff deral law that liftff ed the ban on U.S. exports of oil, the President, in certain limited circumstances, has the authority to impose export licensing requirements or other restrictions on exports of oil frff om the U.S. forff an initial period of up to one year, subject to extension. Such a limitation could result in a surplrr us of oil in the U.S., which would likely cause U.S. oil prices to faff ll. EsEE titt mii atett s of proved reserves and fuff ture net cash flff owll ComCC panm yn 's' proved reserves may prove tott be lowll er thtt an estitt mii atett d. sw are not precisii e.ee ThTT e actual quantitt tii itt es and net cash flff owll sw of thtt e Numerous uncertainties exist in estimating quantities of proved reserves and futff urt e net cash flff ows therefrff om. The th in this Report are based on various assumptions, which estimates of proved reserves and related futff urt e net cash flff ows set forff may ultimately prove to be inaccurate. Petroleum engineering is a subjective process of estimating underground accumulations of oil and gas that cannot be measured in an exact manner. Estimates of economically recoverabla e oil and gas reserves and estimates of futff urt e net cash flff ows depend upon a number of variabla e faff ctors and assumptions, including the folff lowing: • • • • • • historical production frff om the area compared with production frff om other producing areas; the quality and quantity of availabla e data; the interprrr etation of that data; the assumed effff eff cts of regulations by governmental agencies; assumptions concerning futff urt e commodity prices; and assumptions concerning futff urt e development costs, operating costs, severance, ad valorem and excise taxes, gathering, processing, transportation and frff actionation costs and workover and remedial costs. Because all proved reserve estimates are to some degree subjective, each of the folff lowing items may diffff eff r materially frff om those assumed in estimating proved reserves: • • the quantities of oil and gas that are ultimately recovered; the production costs incurred to recover the reserves; 20 PIONEER NATURARR L RESOURCES COMPANY • • the amount and timing of futff urt e development expenditurtt es; and futff urt e commodity prices. Furthermore, diffff eff rent reserve engineers may make diffff eff rent estimates of proved reserves and cash flff ows based on the l production, revenues and expenditurtt es with respect to proved reserves will likely same availabla e data. The Company's actuat diffff eff r frff om the estimates, and the diffff eff rences may be material. As required by the SEC, the estimated discounted futff urt e net cash flff ows frff om proved reserves are based on average prices l futff urtt e prices and costs may be materially preceding the date of the estimate and costs as of the date of the estimate, while actuat l futff urt e net cash flff ows also will be affff eff cted by faff ctors such as: higher or lower. Actuat • • • • the amount and timing of actuat the level of futff urt e capia tal spending; increases or decreases in the supply of or demand forff changes in governmental regulations or taxation. l production; oil, NGLs and gas; and Standardized Measure is a reporting convention that provides a common basis forff comparing oil and gas companies subject to the rulrr es and regulations of the SEC. In general, it requires the use of commodity prices that are based upon a historical 12-month unweighted average, as well as operating and development costs being incurred at the end of the reporting period. Consequently, it may not reflff ect the prices ordinarily received or that will be received forff futff urt e oil and gas production l costs that will be required because of seasonal price flff uctuat to produce or develop the oil and gas properties. Accordingly, estimates included herein of futff urtt e net cash flff ows may be materially diffff eff rent frff om the fuff turtt e net cash flff ows that are ultimately received. In addition, the 10 percent discount faff ctor, which is required by the SEC to be used in calculating discounted futff urt e net cash flff ows forff es, may not be the opriate discount faff ctor based on interest rates in effff eff ct frff om time to time and risks associated with the Company or the a most appr oil and gas industryrr in general. Thereforff e, the estimates of discounted futff urt e net cash flff ows or Standardized Measure in this Report should not be construerr d as accurate estimates of the current market value of the Company's proved reserves. tions or other varyirr ng market conditions, nor may it reflff ect the actuat reporting purpos rr ett Because thtt e ComCC panm yn 's' producinii g wellll sll declill nii e contitt nii uallll yll over titt mii e,e thtt e ComCC panm yn wilii lll need tott mitii itt gat thtt roughu drilii lll ill nii g and productitt on enhancement inii itii itt ati acquisii itii itt ons. itt ves and/or// i thtt ese declill nii es Producing oil and gas reservoirs are characterized by declining production rates, which varyrr depending upon reservoir characteristics and other faff ctors. Because the Company's producing wells decline continually over time as those wells are produced, the Company will need to mitigate these declines through drilling and production enhancement initiatives and/or acquisitions of additional recoverabla e reserves. There can be no assurance that the Company will be abla e to develop, exploit, fiff nd or acquire suffff iff cient additional reserves to replace its current or futff urt e production. A portitt on of thtt e ComCC panm yn 's' reserves may not ultll itt mii atett lyll be develope estitt mii atett d proved reserves as of December 31, 2022 were undevelope ll tottt altt d. ll d, and thtt ose proved As of December 31, 2022, 11 percent of the Company's total estimated proved reserves were undeveloped. Recoveryrr of undeveloped proved reserves requires signififf cant capia tal expenditurt es and successfulff drilling. The Company's reserve data ly, which assumptions assumes that the Company can and will make these expenditurt es and conduct these operations successfulff may not prove to be correct. If the Company chooses not to spend the capia tal to develop these proved undeveloped reserves, or if the Company is not otherwise abla e to successfulff ly develop these proved undeveloped reserves, the Company will be required to write-offff these proved reserves. In addition, under the SEC's rulrr es, because proved undeveloped reserves may be booked only if they relate to wells planned to be drilled within fiff ve years of the date of booking, the Company may be required to write- offff any proved undeveloped reserves that are not developed within this fiff ve-year timefrff ame. The Company's futff urtt e production levels and, thereforff e, its futff urt e cash flff ow and profiff tabia lity will be impacted if it is not abla e to successfulff ly develop its undeveloped leasehold acreage. A substantial portion of the Company's acreage is currently held under leases that require it to establa ish and maintain production of hydrocarbons in paying quantities, and such leases are typically held by production frff om horizontal wells and/or older, lower-producing vertical wells. Unless production in paying quantities is maintained frff om existing lease-holding wells, or is establa ished during the primaryrr term of the lease and then maintained thereaftff er with respect to these leases, the leases will terminate, and the Company will lose the right to develop the undeveloped leasehold acreage. r 21 PIONEER NATURARR L RESOURCES COMPANY ThTT e ComCC panm yn facff resources. es signi ifi iff cant compem titt tii itt on and some of itii stt compem titt tii ortt srr have resources inii excee ell ess of thtt e ComCC panm yn 's' availii abl ll The oil and gas industryrr operators in a number of areas such as: is highly competitive. The Company competes with a large number of companies, producers and seeking to acquire oil and gas properties suitabla e forff • • marketing oil, NGL and gas production; and • exploration or development; seeking to acquire the equipment, services and expertise, including trained personnel, necessaryrr develop and operate its properties. to identify,ff evaluate, Some of the Company's competitors are larger and have substantially greater fiff nancial and other resources than the Company, and as such, the Company may be at a competitive disadvantage in the identififf cation, acquisition and development of properties that complement the Company's operations. The Company also faff ces competition frff om companies that supply alternative sources of energy, such as wind, solar power or other renewabla e energy. Competition is expected to increase and in certain cases, governments are providing tax advantages and other subsidies to support alternative energy sources or are mandating the use of specififf c fueff ls or technologies. Governments and other parties are also promoting research into new technologies to accelerate the implementation of alternative energy sources. ThTT e ComCC panm yn 's' businii ess couldll be matett riali othtt er disii ruptu itt ons. lll yll and adversrr elyll affff eff ctett d by securitii ytt thtt reatstt ,s inii cludinii g cyc bersrr ecuritii ytt thtt reatstt ,s and turt e or third party faff cilities and infrff astrucrr As an oil and gas producer, the Company faff ces various security threats, including cybersecurity threats to gain ed or unusabla e; threats to the unauthorized access to, or control of,ff sensitive inforff mation or to render data or systems corrupt turtt e, such as processing plants and security of the Company's faff cilities and infrff astrucrr such security threats has subjected the Company's operations to pipelines; and threats frff om terrorist acts. The potential forff the Company's increased risks that could have a material adverse effff eff ct on the Company's business. In particular, the implementation of various procedures and controls to monitor and mitigate security threats and to increase security forff insurance Company's inforff mation, faff cilities and infrff astrucrr have also increased as a result of security threats, and insurance coverage has become more diffff iff cult to obtain, and may not be availabla e at prices acceptabla e to the Company or at all. Moreover, there can be no assurance that such procedures and controls will be suffff iff cient to prevent security breaches frff om occurring. If any of these security breaches were to occur, they could lead to losses of sensitive inforff mation, critical infrff astrucrr turt e or capaa bia lities essential to the Company's operations and could have a material adverse effff eff ct on the Company's reputation, fiff nancial position, results of operations and cash flff ows. turt e may result in increased capia tal and operating costs. Costs forff rr Cybersecurity attacks in particular are becoming more sophisticated. The Company relies extensively on inforff mation technology systems, including internet sites, computer softff ware, data hosting faff cilities and other hardware and softff ware platforff ms, some of which are hosted by third parties, to assist in conducting its business. The Company's technologies systems and networks, and those of its business associates may become the target of cybersecurity attacks, including without limitation denial-of-ff service attacks, malicious softff ware, data privacy breaches by employees, insiders or others with authorized access, cyber or phishing-attacks, ransomware, attempts to gain unauthorized access to data and systems, and other electronic security ions in critical systems and materially and adversely affff eff ct the Company in a variety of ways, breaches that could lead to disrupt including the folff lowing: rr • • • • • • rr rr rr rr ion or operational disrupt ion, communication interrupt ion or other operational disrupt inforff mation, which could have a material adverse effff eff ct on the Company's abia lity to compete forff unauthorized access to and release of seismic data, reserves inforff mation, strategic inforff mation or other sensitive or proprietaryrr oil and gas resources; data corrupt result in the faff ilure to reach the intended target or a drilling incident; data corrupt ions of production infrff astrucrr rr accidental discharges; unauthorized access to and release of personal inforff mation of royalty owners, employees and vendors, or the data or confiff dential inforff mation of customers, suppliers or other third parties, which could expose the Company to allegations that it did not suffff iff ciently protect that inforff mation; a cybersecurity attack on a vendor or service provider, which could result in supply chain disrupt delay or halt operations; a cybersecurity attack on third-party gathering, transportation, processing, frff actionation, refiff ning, storage or export faff cilities, which could delay or prevent the Company frff om transporting and marketing its production, resulting in a loss of revenues; turt e, which could result in loss of production or ions during drilling activities, which could ions and could rr 22 PIONEER NATURARR L RESOURCES COMPANY • • • a cybersecurity attack involving commodities exchanges or fiff nancial ions, which could slow or halt commodities trading, thus preventing the Company frff om marketing its production or engaging in derivative activities, resulting in a loss of revenues; a cybersecurity attack on a communications network or power grid, which could cause operational disrupt resulting in the loss of revenues; and a cybersecurity attack on the Company's automated and surveillance systems, which could cause a loss in production and potential environmental hazards. institutt ions rr These events could damage the Company's reputation and lead to fiff nancial losses frff om remedial actions, loss of business an extended period or potential liabia lity. Additionally, certain cyber incidents, such as surveillance, may remain undetected forff of time. While the Company has experienced cybersecurity incidents in the past, including attempts to gain unauthorized access to data and systems, inadvertent data exposures, distributed denial-of-ff service attacks and phishing-attacks, the Company has not suffff eff red any material losses as a result of such events. However, there is no assurance that the Company will not suffff eff r such losses in the futff urt e. As cyber threats continue to evolve, the Company may be required to expend signififf cant additional resources to continue to modifyff or enhance its protective measures or to investigate and remediate any inforff mation security vulnerabia lities. Additionally, the continuing and evolving threat of cybersecurity attacks has resulted in evolving legal and compliance matters, focff us on prevention, which could require the Company to expend signififf cant additional resources to meet such requirements. including increased regulatoryrr PrPP ovisii ions of thtt e ComCC panm yn 's' chartett r documentstt and Delawll inii vestortt t be wilii lll ill nii g tott pay inii thtt e fuff ture forff srr mighi thtt e ComCC panm yn 's' common stoctt k. are lawll may inii hibii tt tii a take over,r which couldll lill mii itii thtt e price Provisions in the Company's certififf cate of incorpor ation and bylaws may have the effff eff ct of delaying or preventing an acquisition of the Company or a merger in which the Company is not the surviving company and may otherwise prevent or slow changes in the Board and management. In addition, because the Company is incorpor ated in Delaware, it is governed by the provisions of Section 203 of the Delaware General Corpor ation Law. These provisions could discourage an acquisition of the Company or other change in control transactions and thereby negatively affff eff ct the price that investors might be willing to pay in the futff urtt e forff the Company's common stock. rr rr rr Operational Risks ThTT e ComCC panm yn 's' operatitt ons inii volvll e manyn operatitt onal risii ks,s some of which couldll losll ComCC panm yn 's' operatitt ons and substantt ses tott thtt e ComCC panm yn forff which thtt e ComCC panm yn may not be adequatett lyll resultll inii unfn orff eseen inii tett rruptu itt ons tott thtt e inii sured. titt ali The Company's operations, including (i) drilling and completion activities and (ii) water distribution, collection and disposal activities, are subject to all the risks incident to the oil and gas development and production business, including: • • • • • • • • • • • • • • ff rr ing; tions, faff ilures or accidents; or other services or materials, such as water and sand forff blowouts, cratering, explosions and fiff res; adverse weather effff eff cts; environmental hazards, such as NGL and gas leaks, oil and produced water spills, pipeline and vessel rupt urtt es, encountering naturtt ally occurring radioactive materials, and unauthorized discharges of toxic chemicals, gases, brine, well stimulation and completion flff uids or other pollutants onto the surfaff ce or into the subsurfaff ce environment; high costs, shortages or deliveryrr delays of equipment, labor a hydraulic frff acturt faff cility or equipment malfunc title problems; pipe or cement faff ilures or casing collapsa uncontrollabla e flff ows of oil, gas or water; compliance with environmental and other governmental requirements, including executive actions and regulatoryrr or legislative effff orff lost or damaged oilfiff eld workover and service tools; surfaff ce access restrictions; unusual or unexpected geological forff mations or pressure or irregularities in forff mations; l interests and physical, electronic and terrorism, vandalism, extreme physical acts of activism against fosff cybersecurity breaches and global or national health concerns, including the outbrt eak of a pandemic or contagious disease, such as the recent COVID-19 pandemic; and naturt al disasters. ts under a Biden administration; sil fueff es; 23 PIONEER NATURARR L RESOURCES COMPANY The Company's overall exposure to operational risks may increase as its drilling activity expands, along with any associated increases in internally-provided water distribution, water collection, disposal or other services. In addition, any of ed, these risks could adversely impact the Company's service providers and suppliers, causing its supply chain to be interrupt slowed or rendered inoperabla e. Any of these risks could result in substantial losses to the Company due to injuryrr or loss of lifeff , damage to or destrucrr tion of wells, production faff cilities or other property and naturt al resources, clean-up responsibilities, regulatoryrr investigations and penalties and suspension of operations. rr The Company may not be insured or is not fulff , either because such insurance is not availabla e or because of the high premium costs and deductibles associated with obtaining such insurance. Additionally, the Company relies, to a large extent, on faff cilities owned and operated by third parties, and damage to or tion of those third-party faff cilities could adversely affff eff ct the abia lity of the Company to produce, gather, process, destrucrr . frff actionate, refiff ne, store, transport, export and sell its hydrocarbons ly insured against certain of the risks described above a r ExplEE orll atitt on and developmll reserves. ent drilii lll ill nii g inii volvll e substantt titt ali coststt and risii ks and may not resultll inii commerciali lll yll productitt ve Drilling involves numerous risks, including the risk that no commercially productive oil or gas reservoirs will be encountered. The cost of drilling, completing and operating wells is oftff en uncertain and drilling operations may be curtailed, delayed or canceled, or become costlier, as a result of a variety of faff ctors, including: • • • • • • • • • • • • tion delays; unexpected drilling conditions; unexpected pressure or irregularities in forff mations; equipment faff ilures or accidents; construcrr frff acturtt e stimulation accidents or faff ilures; adverse weather conditions; restricted access to land forff title defeff cts; lack of availabla e gathering, transportation, processing, frff actionation, storage, refiff ning or export faff cilities; lack of availabla e capaa access to, and the cost and availabia lity of,ff the equipment, services, resources and personnel required to complete the Company's drilling, completion and operating activities; and restrictions, delays or cancellations imposed by or resulting frff om compliance with or changes in environmental and other governmental, regulatoryrr or contractuatt city on interconnecting transmission pipelines; drilling or laying pipelines; l requirements. The Company's futff urt e drilling activities may not be successfulff , the Company's proved reserves and production would decline, which could have an adverse effff eff ct on the Company's futff urt e results of operations and fiff nancial involves these risks, exploratoryrr and extension condition. While all drilling, whether developmental, extension or exploratory,rr drilling involves greater risks of dryrr holes or faff ilure to fiff nd commercial quantities of hydrocarbons . The Company expects that it will continue to recognize exploration and abaa ndonments expense in 2023. and, if unsuccessfulff r ParPP t of thtt e ComCC panm yn 's' strtt atett gye which inii volvll e risii ks and uncertaitt nii titt es inii thtt eirii applill catitt on. inii volvll es usinii g some of thtt e latll ett st availii abl ell horizii ontaltt ll drilii lll ill nii g and complm ell titt on tett chniquii es,s The Company's operations involve utilizing some of the latest drilling and completion techniques as developed by it and lowing: its service providers. Risks that the Company faff ces while drilling horizontal wells include, but are not limited to, the folff • • • • landing the wellbore in the desired drilling zone; staying in the desired drilling zone while drilling horizontally through the forff mation; runni rr being abla e to runrr tools and other equipment consistently through the horizontal wellbore. ng casing the entire length of the wellbore; and Risks that the Company faff ces while completing wells include, but are not limited to, the folff lowing: • • • the abia lity to frff acturt e stimulate the planned number of stages; the abia lity to runrr the abia lity to successfulff tools the entire length of the wellbore during completion operations; and ly clean out the wellbore aftff er completion of the fiff nal frff acturt e stimulation stage. Drilling in emerging areas is more uncertain than drilling in areas that are more developed and have a longer historyrr of establa ished drilling operations. New discoveries and emerging forff mations have limited or no production historyrr and, consequently, the Company is more limited in assessing futff urtt e drilling results in these areas. If the Company's drilling results 24 PIONEER NATURARR L RESOURCES COMPANY are worse than anticipated, the returt n on investment forff Company may recognize noncash charges to reduce the carryirr ng value of its unproved properties in those areas. a particular project may not be as attractive as anticipated and the ThTT e ComCC panm yn 's' expe itt ons forff uncertaitt nii titt es thtt at couldll matett riali ctattt ee lll yll altll ett r thtt e occurrence or titt mii inii g of such actitt vitii itt es. fuff ture drilii lll ill nii g actitt vitii itt es wilii lll be realill zii ed over several yearsrr ,s makinii g thtt em susceptee itt bli ell tott t a appr futff urt e drilling opportuni The Company has identififf ed drilling locations and prospects forff ties, including development, exploratory,rr extension and infiff ll drilling activities. These drilling locations and prospects represent a signififf cant part of the Company's futff urtt e drilling plans. For example, the Company's proved reserves as of December 31, 2022 include proved undeveloped reserves and proved developed non-producing reserves of 120 MMBbls of oil, 86 MMBbls of NGLs and 463 Bcf of gas. The Company's abia lity to drill and develop these locations depends on a number of faff ctors, including the availabia lity and ovals, negotiation of agreements with third parties, commodity prices, costs, access to and cost of capia tal, regulatoryrr availabia lity of equipment, services, resources and personnel and drilling results. There can be no assurance that the Company will drill these locations or that the Company will be abla e to produce oil or gas reserves frff om these locations or any other potential drilling locations. Well results varyrr by forff mation and geographi c area, and the Company generally prioritizes its drilling activities to focff us on remaining locations that are believed to offff eff r the highest returt n. Changes in the laws or regulations on which the Company relies in planning and executing its drilling programs could materially and adversely impact the Company's abia lity to successfulff ly complete those programs. For example, under current Texas laws and regulations, the Company may receive permits to drill, and may drill and complete, certain horizontal wells that traverse one or more units and/ or leases; a change in those laws or regulations could materially and adversely impact the Company's abia lity to drill those wells. Because of these uncertainties, the Company cannot give any assurance as to the timing of these activities or that they will ultimately result in the realization of proved reserves or meet the Company's expectations forff success. As such, the Company's actuat l drilling activities may materially diffff eff r frff om the Company's current expectations, which could have a material adverse effff eff ct on the Company's proved reserves, fiff nancial condition and results of operations. a MuMM ltll itt -ii wellll pad drilii lll ill nii g may resultll inii volatll itt lii ill tii ytt inii thtt e ComCC panm yn 's' operatitt nii g resultll stt . The Company utilizes multi-well pad drilling, and wells drilled on a pad are not placed on production until all wells on the pad are drilled and completed. In addition, problems affff eff cting a single well could adversely affff eff ct production frff om all of the wells on the pad. As a result, multi-well pad drilling can cause delays in the scheduled commencement of production, or interrupt ions may cause volatility in the Company's operating results. rr Further, any delay, reduction or curtailment of the Company's development and producing operations due to operational delays caused by multi-well pad drilling could result in the loss of acreage through lease expiration. ions in ongoing production. These delays or interrupt rr ThTT e ComCC panm yn 's' operatitt ons are substantt watett r gathtt ered frff om drilii lll ill nii g and productitt on actitt vitii itt es. Restrtt ictitt ons on thtt e ComCC panm yn 's' abilii ill tii ytt produced watett r may have a matett riali adversrr e efe fff eff ct on itii stt fiff nii anciali lll yll depeee ndent uponu thtt e availii abi lii ill tii ytt of watett r and itii stt abilii ill tii ytt conditii itt on, resultll stt of operatitt ons and cash flff owll s tott disii pos titt ali ll sw . tott obtaitt nii watett r or disii pos e of produced e of s Water is an essential component of the Company's drilling and hydraulic frff acturtt ing processes. Limitations or restrictions on the Company's abia lity to secure suffff iff cient amounts of water (including limitations resulting frff om naturt al causes such as drought), could materially and adversely impact its operations. Severe drought conditions can result in local water districts ing in order to protect the local taking steps to restrict the use of water in their jurisdiction forff water supply. If the Company is unabla e to obtain water to use in its operations frff om local sources, it may need to be obtained frff om new sources and transported to drilling sites, resulting in increased costs, which could have a material adverse effff eff ct on its fiff nancial condition, results of operations and cash flff ows. drilling and hydraulic frff acturt In addition, the Company must dispose of the flff uids produced frff om oil and gas production operations, including produced water, which it does directly or through the use of third party vendors. The legal requirements related to the disposal of produced water into a non-producing geologic forff mation by means of underground injection wells are subject to change based on concerns of the public or governmental authorities regarding such disposal activities. One such concern arises frff om the disposal of produced water resulting frff om oil and gas seismic events near underground disposal wells that are used forff activities. In 2016, the United States Geological Survey identififf ed Texas as being among the states with areas of increased rates of induced seismicity that could be attributed to flff uid injection or oil and gas extraction. In addition, a number of lawsuits have been fiff led alleging that disposal well operations have caused damage to neighboring properties or otherwise violated state and feff deral rulrr es regulating waste disposal. In response to these concerns, regulators in some states have imposed, or are considering imposing, additional requirements in the permitting of produced water disposal wells to assess any relationship between seismicity and the use of such wells. For example, in Texas, the Texas Railroad Commission has adopted rulrr es governing the permitting or re-permitting of wells used to dispose of produced water and other flff uids resulting frff om the production of oil and gas in order to address these seismic activity concerns within the state. Among other things, these rulrr es ications, provide forff more require companies seeking permits forff disposal wells to provide seismic activity data in permit appl a 25 PIONEER NATURARR L RESOURCES COMPANY frff equent monitoring and reporting forff a disposal well is likely to be, or determined to be, causing seismic activity. certain wells and allow the state to modify,ff suspend or terminate permits on grounds that In response to recent seismic activity in the Midland Basin, the Texas Railroad Commission has pursued a series of actions commencing in the latter half of 2021, including suspending deep disposal activity and curtailing certain shallow disposal activities in the areas of heightened seismic activity. Such restrictions have not had a material impact on the Company's ther restrictions across the basin as a result of more stringent regulations or legal directives, potential operations to date, but furff litigation or other developments could materially impact its abia lity to dispose of produced water, which could have a material adverse effff eff ct on the Company's business, fiff nancial condition and results of operations. ThTT e ComCC panm yn 's' use of seisii mic datatt which couldll matett riali itt on and may not accuratett lyll inii tett rprrr lll yll and adversrr elyll affff eff ct thtt e resultll stt of itii stt fuff ture drilii lll ill nii g operatitt ons. isii subject tott etattt identitt fi yff thtt e presence of oilii and gas,s Even when properly used and interprrr eted, seismic data and visualization techniques are only tools used to assist indicators and do not enabla e the interprrr eter to know whether geoscientists in identifyiff ng subsurfaff ce strucrr or hydrocarbons economic. In addition, the use of advanced technologies, such as 3-D seismic data, requires greater pre-drilling expenditurtt es than traditional drilling strategies, and the Company could incur losses as a result of such expenditurtt es. turt es. As a result, the Company's drilling activities may not be successfulff are, in faff ct, present in those strucrr turtt es and hydrocarbon r r ThTT e ComCC panm yn 's' gas processinii g and gathtt erinii g sys stett ms are subject tott operatitt onal and regue signi ifi iff cant damages and thtt e losll s of revenue.ee latll ortt yr risii ks,s which couldll resultll inii As of December 31, 2022, the Company owns interests in 10 gas processing plants, including the related gathering systems. There are signififf cant risks associated with the operation of gas processing plants and the associated gathering systems. Gas and NGLs are volatile and explosive and may include carcinogens. Damage to or improper operation of gas processing plants or gathering systems could result in an explosion or the discharge of toxic gases, which could result in signififf cant damage claims in addition to interrupt ing a revenue source. rr Moreover, while the Company's gas processing and gathering systems generally are not currently subject to FERC or state regulation with respect to rates or terms and conditions of service, there can be no assurance that such processing and gathering operations will continue to be unregulated in the futff urt e. Although these faff cilities may not be directly regulated, other laws and regulations may affff eff ct the availabia lity of gas forff gathering and processing, such as state regulations regarding production rates and the maximum daily production allowabla e frff om gas wells, which could impact the Company's business in these areas. Such regulation could result in additional costs and reduced revenues. Financial Risks ThTT e prices of oilii ,ll NGNN LGG s and gas are highi lyll volatll adversrr elyll affff eff ct thtt e ComCC panm yn 's' businii ess,s fiff nii anciali itt lii ell .ee A sustaitt nii ed declill nii e inii conditii itt on and resultll stt of operatitt ons. thtt ese commoditii ytt prices couldll matett riali lll yll and The Company's revenues, profiff tabia lity, cash flff ow and futff urt e rate of growth are highly dependent on commodity prices. oil, NGLs and te widely in response to relatively minor changes in the supply of and demand forff Commodity prices may flff uctuat gas, market uncertainty and a variety of additional faff ctors that are beyond the Company's control, such as: • • • • • • • • • • • city exists; oil, NGLs and gas; levels, including at Cushing, Oklahoma, the benchmark location forff WTI oil city of U.S. and international refiff ners to utilize U.S. supplies of oil and condensate; domestic and worldwide supply of and demand forff worldwide oil, NGL and gas inventoryrr prices, and the U.S. Gulf Coast, where the maja ority of the U.S. refiff neryrr capaa volatility and trading patterns in the commodity-futff urt es markets; the capaa weather conditions; overall domestic and global political and economic conditions, including the imposition of tariffff sff or trade or other economic sanctions, political instabia lity or armed conflff ict in Ukraine, RusRR sia and other oil and gas producing regions, and the effff eff ct on global markets of the price capa on RusRR sian oil; global or national health concerns, including the outbrt eak of pandemic or contagious disease, such as the recent COVID-19 virusrr oil, NGLs and gas because of reduced global or national economic activity; actions of OPEC, its members and other state-controlled oil companies relating to oil price and production controls; the price and quantity of oil, NGLs and LNG imports to and exports frff om the U.S.; technological advances or social attitude domestic and forff eign governmental legislative effff orff regulations, climate change regulations and taxation; ts, executive actions and regulations, including environmental s or policies affff eff cting energy consumption and energy supply; , which may reduce the demand forff t 26 PIONEER NATURARR L RESOURCES COMPANY • • • • ts; the effff eff ct of energy conservation effff orff stockholder activism or activities by non-governmental organizations to limit certain sources of capia tal forff energy sector or restrict the exploration, development and production of oil and gas; the proximity, capaa refiff nery,rr the price, availabia lity and acceptance of alternative fueff city, cost and availabia lity of gathering systems, pipelines and other processing, frff actionation, storage and export faff cilities; and the ls. Commodity prices have historically been, and continue to be, extremely volatile. For example, the Brent oil prices in 2022 ranged frff om a high of $127.98 to a low of $76.10 per Bbl and NYMEX gas prices in 2022 ranged frff om a high of $9.68 to a low of $3.72 per MMBtu.t The Company expects this volatility to continue. A furff ther or extended decline in commodity prices could materially and adversely affff eff ct the Company's futff urt e business, fiff nancial condition, results of operations, liquidity or its planned capia tal expenditurt es, pay dividends or repurchase shares of common stock. The Company makes price abia lity to fundff assumptions that are used forff es, and a signififf cant portion of the Company's cash outlays, including rent, salaries and noncancellabla e capia tal and transportation commitments, are largely fiff xed in naturt e. Accordingly, if commodity prices are below the expectations on which these commitments were based, the Company's fiff nancial results are likely to be adversely and disproportionately affff eff cted because these cash outlays are not variabla e in the short-term and cannot be quickly reduced to respond to unanticipated decreases in commodity prices. planning purpos rr Signififf cant or extended price declines could also materially and adversely affff eff ct the amount of oil, NGLs and gas that the Company can produce economically, which may result in the Company having to make signififf cant downward adjustments to its estimated proved reserves. A reduction in production could also result in a shortfaff ll in expected cash flff ows and require the Company to reduce capia tal spending or borrow funds to cover any such shortfaff ll. Any of these faff ctors could negatively affff eff ct the Company's abia lity to replace its production and its futff urt e rate of growth. ff FuFF ture declill nii es inii oilii and gas propertitt es,s which couldll matett riali thtt e price of oilii ,ll NGNN LGG s and gas couldll lll yll and adversrr elyll affff eff ct thtt e ComCC panm yn 's' resultll stt of operatitt ons. resultll inii a reductitt on inii thtt e carryr inii g value of thtt e ComCC panm yn 's' proved Signififf cant or extended price declines could result in the Company having to make downward adjustments to the carryirr ng value of its proved oil and gas properties. The Company perforff ms assessments of the recoverabia lity of its oil and gas properties whenever events or circumstances indicate that the carryirr ng values of those assets may not be recoverabla e. In order to perforff m these assessments, management uses various observabla e and unobservabla e inputs, including management's outlooks forff (i) proved reserves and risk-adjusted probabla e and possible reserves, (ii) commodity prices, (iii) production costs, (iv) capia tal lifeff or estimated futff urtt e expenditurt es and (v) production. To the extent such tests indicate a reduction of the estimated usefulff cash flff ows of the Company's oil and gas properties, the carryirr ng value may not be recoverabla e and thereforff e an impairment charge would be required to reduce the carryirr ng value of the proved properties to their faff ir value. The Company may incur impairment charges in the futff urt e, which could materially affff eff ct the Company's results of operations in the period incurred. See Note 4 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. ThTT e ComCC panm yn 's' actual productitt on couldll difi fff eff r matett riali lll yll frff om itii stt forff ecaststt . From time to time, the Company provides forff ecasts of expected quantities of futff urtt e oil and gas production and other fiff nancial and operating results. These forff ecasts are based on a number of estimates and assumptions, including that none of the risks associated with the Company's oil and gas operations summarized in this "Item 1A. Risk Factors" occur. Production forff ecasts, specififf cally, are based on assumptions such as: • • • • • • ence of faff cility or equipment malfunc ence of adverse weather effff eff cts; expectations of production frff om existing wells and futff urtt e drilling activity; the absa the absa expectations of commodity prices, which could experience signififf cant volatility; expected well costs; and the assumed effff eff cts of regulation by governmental agencies, which could make certain drilling activities or production uneconomical. tions; ff l Should any of these assumptions prove inaccurate, or should the Company's development plans change, actuat production could be materially and adversely affff eff cted. 27 PIONEER NATURARR L RESOURCES COMPANY ThTT e ComCC panm yn couldll ComCC panm yn 's' profiff tii abi tt ee expe rience periods of highi and abilii ill tii ytt er coststt tott complm ell tett developmll lii ill tii ytt ,yy cash flff owll ent actitt vitii itt es as planll ned. ifi commoditii ytt prices risii e.ee ThTT ese inii creases couldll reduce thtt e Historically, the Company's capia tal and operating costs have risen during periods of increasing oil, NGL and gas prices. These cost increases result frff om a variety of faff ctors beyond the Company's control, such as increases in the cost of electricity, steel and other raw materials that the Company and its vendors rely upon; increased demand forff , services and materials as drilling activity increases; and increased production and ad valorem taxes. Costs may rise faff ster than increases in the Company's revenue if commodity prices rise, thereby negatively impacting the Company's profiff tabia lity, cash flff ow and abia lity to complete development activities as scheduled and on budget. This impact may be magnififf ed to the extent that the Company's abia lity to participate in the commodity price increases is limited by its derivative risk management activities. Moreover, and distribution costs inflff ation is an area of increasing economic concern with price increases in equipment, materials, labor leading to possible negative impacts on the Company's fiff nancial condition and results of operations. a labor a ThTT e ComCC panm yn isii a partytt ComCC panm yn 's' abilii ill tii ytt tott fuff nd fuff ture businii ess and fiff nii ancinii g actitt vitii itt es. tott debt inii strtt umentstt ,s a CrCC editii FacFF ilii ill tii ytt and othtt er fiff nii anciali commitii mtt entstt thtt at may lill mii itii thtt e The Company is a borrower under fiff xed rate senior and convertible notes and maintains a revolving corpor ate credit faff cility (the "Credit Facility") that was undrawn as of December 31, 2022. The terms of the Company's borrowings specifyff scheduled debt repayments and require the Company to comply with certain associated covenants and restrictions. The Company's abia lity to comply with the debt repayment terms, associated covenants and restrictions is dependent on, among other things, faff ctors outside the Company's direct control, such as commodity prices and interest rates. In addition, frff om time to time, the Company enters into arrangements and transactions that can give rise to material offff -ff balance sheet obligations, including fiff rm purchase, transportation and frff actionation commitments, gathering, processing, transportation and storage commitments on uncertain volumes of futff urtt e throughput, commitments to purchase minimum volumes of goods and services, operating lease agreements and drilling commitments. The Company's fiff nancial commitments could have important consequences to its business including, but not limited to, the folff lowing: rr • • • • • the incurrence of charges associated with unused commitments if actuat expectations at the time such commitments are entered into; increasing its vulnerabia lity to adverse economic and industryrr conditions; limiting its flff exibility to plan forff limiting its abia lity to fund futff urt e development activities or engage in futff urt e acquisitions; and placing it at a competitive disadvantage compared to competitors that have less debt and/or feff wer fiff nancial commitments. , or react to, changes in its business and industry;rr l activities do not meet the Company's ff The Company's abia lity to obtain additional fiff nancing is also affff eff cted by the Company's debt credit ratings and competition forff availabla e debt fiff nancing. A ratings downgrade could materially and adversely impact the Company's abia lity to access debt markets, increase the borrowing cost under the Company's Credit Facility and the cost of futff urt e debt and potentially require the Company to post letters of credit or other forff ms of credit support forff certain obligations. ThTT e ComCC panm yn 's' returnrr of capitii altt strtt atett gie es,s inii cludinii g itii stt base and variabl may be changed at thtt e disii cretitt on of thtt e Board, and thtt e ComCC panm yn 's' abilii ill tii ytt and repuee rchase shares are subject tott certaitt nii consideratitt ons. i ell dividend polill cyc and share repuee tott declarll e and pay base and variabl i rchase program, ell dividends Dividends, whether base or variabla e, are authorized and determined by the Board at its sole discretion. The Company's stock repurchase program has no time limit, may be modififf ed, suspended or terminated at any time by the Board, and the oved by the Board are made frff om time to time based on repurchase of shares pursuant to the stock repurchase program appr management's discretion. Decisions regarding the payment of dividends and the repurchase of shares are subject to a number of considerations, including: a • • • • • • distribution or repurchases; cash availabla e forff the Company's results of operations and anticipated futff urt e results of operations; the Company's fiff nancial condition, especially in relation to its anticipated futff urtt e capia tal needs; the level of cash reserves the Company maintains to fundff the Company's share price; and other faff ctors the Board deems relevant. futff urt e capia tal expenditurtt es; The frff equency and amount of dividends, if any, may varyrr signififf cantly frff om amounts paid in previous periods. The Company can provide no assurance that it will continue to pay base or variabla e dividends or authorize share repurchases at the current rate or at all. Any elimination of or downward revision in the Company's base or variabla e dividend payout or stock 28 PIONEER NATURARR L RESOURCES COMPANY repurchase program could adversely affff eff ct the total returtt n of an investment in and have a material adverse effff eff ct on the market price of the Company's common stock. lii ure by purchasersrr of thtt e ComCC panm yn 's' productitt on tott A faiff adversrr e efe fff eff ct on thtt e ComCC panm yn 's' resultll stt of operatitt on. satitt sii fs yff thtt eirii oblill gat i itt ons tott thtt e ComCC panm yn couldll have a matett riali The Company relies on a limited number of purchasers to purchase a maja ority of its products. To the extent that their operations, there is a risk ff purchasers of the Company's production rely on access to the credit or equity markets to fund l obligations to the Company if such purchasers were unabla e to access the that those purchasers could defaff ult in their contractuatt credit or equity markets forff any reason the Company were to determine that it was probabla e that some or all of the accounts receivabla e frff om any one or more of the purchasers of the Company's production were uncollectible, the Company would recognize a charge in the earnings of that period forff an extended period of time. If forff the probabla e loss. ThTT e ComCC panm yn 's' derivatitt ve risii k management actitt vitii itt es couldll resultll inii faiff lii witii htt tott protett ct thtt e ComCC panm yn frff om declill nii es inii fuff ture volumes ifi prff respes ices are unatttt rtt actitt ve.ee ct tott gainii s or ses,s lill mii commoditii ytt prices; thtt e ComCC panm yn may not entett r inii tott derivatitt ve arrangementstt itii thtt e ComCC panm yn 's' potett ntitt ali fiff nii ancial losll The Company has historically entered into derivative arrangements covering a portion of its oil, NGL and gas production to mitigate the effff eff ct of commodity price volatility on the Company's net cash provided by operating activities and its net asset value, support the Company's annual capia tal expenditurtt e plans and planned dividend payments. These derivative arrangements, on a combined basis, are subject to mark-to-market accounting treatment, and the changes in faff ir market value of the contracts are reported in the Company's statements of operations each quarter, which may result in signififf cant noncash gains or losses. While intended to reduce the effff eff cts of oil, NGL and gas price volatility, the Company's derivative arrangements may limit the Company's potential gains if prices rise over the price establa ished by such arrangements. Conversely, the Company's derivative arrangements may be inadequate to protect the Company frff om continuing and prolonged declines in the price of oil, NGLs or gas. Global commodity prices are volatile. Such volatility challenges the Company's abia lity to forff ecast the price of oil, NGLs and gas, and, as a result, it may become more diffff iff cult forff the Company to manage its derivative arrangements. In tryirr ng to manage its exposure to commodity price risk, the Company may end up with too many or too feff w derivatives, depending upon where commodity prices settle relative to the Company's derivative price thresholds and how the Company's oil, NGL and gas volumes and production mix flff uctuat te relative to expectations when the derivatives were entered. The Company's derivative arrangements may also expose the Company to risk of fiff nancial loss in certain circumstances, including, but not limited to, when: • • • • rty to the derivative contract defaff ults on its contract obligations; production is less than the contracted derivative volumes; the counterparr there is a change in the expected diffff eff rential between the underlying price in the derivative contract and actuat received; or a sudden, unexpected event materially impacts oil and gas prices. l prices Failure to protect against declines in commodity prices exposes the Company to reduced liquidity when prices decline. A unprotected volumes and reduce the sustained lower commodity price environment would result in lower realized prices forff prices at which the Company could enter into derivative contracts on futff urt e volumes. The Company has signififf cantly reduced its derivative arrangements forff oil, NGLs and gas could have a material adverse effff eff ct on the Company's fiff nancial condition, cash flff ow, liquidity and results of operations. 2023 and beyond; thereforff e, any decreases in commodity prices forff The use of derivative risk management transactions involves the risk that the counterparr rties will be unabla e to meet the fiff nancial terms of such transactions. The Company is unabla e to predict changes in a counterparr rty's creditworthiness or abia lity to perforff m. Even if the Company accurately predicts sudden changes, the Company's abia lity to negate the risk may be limited l terms of the transactions. During periods of declining commodity prices, depending upon market conditions and the contractuat rty credit exposure. the Company's derivative receivabla e positions generally increase, which increases the Company's counterparr In periods of lower commodity prices, if any of the Company's counterparr rties were to defaff ult on its obligations under the Company's derivative arrangements, such a defaff ult could (i) have a material adverse effff eff ct on the Company's results of operations, (ii) result in a larger percentage of the Company's futff urt e production being subject to commodity price changes and (iii) increase the likelihood that the Company's derivative arrangements may not achieve their intended strategic purpos es. rr PiPP oneer's' abilii ill tii ytt tott utitt lii ill zii e itii stt U.UU S.SS net operatitt nii g losll s carryr fyy orff wards tott offff sff et fuff ture inii come taxe tt s may be lill mii itii ett d. As of December 31, 2022, Pioneer had U.S. feff deral net operating loss carryfrr orff wards ("NOLs") of $1.1 billion which were incurred on or aftff er Januaryrr 1, 2018. These will not expire and will be carried forff ward indefiff nitely under current tax law. 29 PIONEER NATURARR L RESOURCES COMPANY Pioneer's abia lity to utilize these NOLs and other tax attributes to reduce futff urt e taxabla e income depends on many faff ctors, including its futff urt e income, which cannot be assured. Section 382 of the Code ("Section 382") generally imposes an annual ation has undergone an "ownership limitation on the amount of NOLs that may be used to offff sff et taxabla e income when a corpor change" (as determined under Section 382). An ownership change generally occurs if one or more stockholders (or groups of stockholders) who are each deemed to own at least fiff ve percent of such corpor ation's stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. In the event that an ation's NOLs would be subject to an annual limitation under Section rr ownership change occurs, utilization of the relevant corpor 382, generally determined, subject to certain adjustments, by multiplying (i) the faff ir market value of such corpor ation's stock at the time of the ownership change by (ii) a percentage appr oximately equivalent to the yield on long-term tax-exempt bonds a during the month in which the ownership change occurs. Any unused annual limitation may be carried over to later years. rr rr rr ThTT e ComCC panm yn periodicallll yll evaluatett s itii stt unprn oved oilii and gas propertitt es forff noncash charger thtt e earnrr inii gs of fff uff ture periods. s inii imii paim rii mrr ent and couldll be requirii ed tott recognizii e As of December 31, 2022, the Company carried unproved oil and gas property costs of $6.0 billion. GAAP requires periodic evaluation of these costs on a project-by-project basis. These evaluations are affff eff cted by the results of current and planned exploration activities, commodity price outlooks, planned futff urtt e sales or expiration of all or a portion of the leases and the contracts and permits appur tenant to such projects. If the Company determines that a project is not expected to be developed based on the results of these evaluations, the Company will recognize a noncash charge in earnings in the period in which the unproved oil and gas properties is determined to be impaired. a ThTT e ComCC panm yn periodicallll yll evaluatett s itii stt goodwilii lll forff earnrr inii gs of fff uff ture periods. imii paim rii mrr ent and couldll be requiri ed tott recognizii e noncash charger s inii thtt e As of December 31, 2022, the Company had a carryirr ng value forff goodwill of $243 million. Goodwill is assessed forff impairment annually during the third quarter and whenever faff cts or circumstances indicate that the carryirr ng value of the Company's goodwill may be impaired, which may require an estimate of the faff ir values of the reporting unit's assets and liabia lities. Those assessments may be affff eff cted by (i) positive or negative reserve adjustments, (ii) results of drilling activities, commodity prices and costs and expenses, (iv) changes in the Company's market capia talization, (iii) management's outlook forff (v) changes in the Company's weighted average cost of capia tal and (vi) changes in income taxes. If the faff ir value of the reporting unit's net assets is not suffff iff cient to fulff ly support the goodwill balance in the futff urt e, the Company will reduce the carryirr ng value of goodwill forff the impaired value, with a corresponding noncash charge to earnings in the period in which goodwill is determined to be impaired. If incurred, an impairment of goodwill could result in a material noncash charge to the Company's earnings in the period in which goodwill is determined to be impaired. Health, Safeff ty and Environmental Risks ThTT e ComCC panm yn 's' operatitt ons are subject tott a series of risii ks arisii inii g out of thtt e thtt reat of clill mii atett change,e energyr measures,s or inii itii itt atitt ves thtt at stitt mii ulatll ett demand forff lill mii itii thtt e areas inii which oilii and gas productitt on may occur and reduce demand forff altll ett rnrr atitt ve forff mrr s of energyr conservatitt on inii creased operatitt nii g coststt ,s thtt e oilii and gas productitt on itii provides. thtt at couldll resultll inii ts have included consideration of cap-a and-trade programs, carbonr The threat of climate change continues to attract considerabla e attention in the United States and around the world. Numerous proposals have been made and could continue to be made at the international, national, regional and state levels of government to monitor and limit existing emissions of GHGs as well as to restrict or eliminate such futff urt e emissions. These effff orff taxes, GHG disclosure obligations and regulations that directly limit GHG emissions frff om certain sources. Moreover, President Biden highlighted addressing climate change as a priority of his administration, issued several executive orders related to climate change and recommitted the United States to long-term international goals to reduce emissions. In recent years the U.S. Congress has considered legislation to reduce dioxide, a byproduct of the burning of emissions of GHGs, including methane, a primaryrr component of naturt al gas, and carbon naturtt al gas. For example, the Inflff ation Reduction Act of 2022 (the "IRARR "), which appr ng forff opriates signififf cant feff deral fundi the fiff rst time ever, imposes a feff e on GHG emissions frff om certain faff cilities, was signed into renewabla e energy initiatives and, forff ng provisions of the law could increase operating costs within the oil and gas law in August 2022. The emissions feff e and fundi industryrr and accelerate the transition away frff om fosff ls, which could in turt n adversely affff eff ct the Company's business and results of operations. sil fueff r a ff ff The EPA has adopted regulations that, among other things, establa ish construcrr tion and operating permit reviews forff GHG emissions frff om certain large stationaryrr sources, require the monitoring and annual reporting of GHG emissions frff om certain petroleum and naturt al gas system sources in the United States, impose new standards reducing methane emissions frff om oil and gas operations through limitations on venting and flff aring and the implementation of enhanced emission leak detection and repair requirements, and together with the United States Department of Transportation ("DOT"), implement GHG emissions operation in the United States. The regulation of methane emissions frff om oil and gas limits on vehicles manufaff cturt ed forff 30 PIONEER NATURARR L RESOURCES COMPANY faff cilities has been subject to uncertainty in recent years and the EPA is currently proposing new and updated rulrr es forff both new and existing sources. The EPA's proposed rulrr es, if fiff nalized would make existing regulations more stringent, expand the scope of source types covered by the rulrr es and require states to develop plans to reduce methane and volatile organic compound ("VOC") emissions frff om existing sources that must be at least as effff eff ctive as presumptive standards set by EPA. Under the proposed rulrr es, owners or operators of affff eff cted emission units or processes would have to comply with specififf c standards of perforff mance that may include leak detection using optical gas imaging and subsequent repair requirements, reduction of emissions by 95 percent through capta urt e and control systems, zero-emission requirements, operations and maintenance requirements and so-called green well completion requirements. The EPA is currently seeking comments on the supplemental proposed rulrr e, and like each of the EPA's previous methane emission regulations, the adopted fiff nal rulrr e is likely to faff ce immediate litigation challenges. The BLM has also proposed rulrr es to limit methane emissions forff oil and gas operations on feff deral lands. Additionally, in Januaryrr 2023 the Council on Environmental Quality (the "CEQ") released updated guidance forff feff deral agency consideration of GHG emissions and climate change impacts in environmental reviews. While the Company cannot predict the fiff nal scope or compliance costs of these proposed regulatoryrr requirements, any such requirements have the potential to adversely affff eff ct the Company's operations, fiff nancial results and cash flff ows. At the international level, the United Nations ("UNUU ") -sponsored "Paris Agreement" requires member states to submit non-binding, individually-determined reduction goals known as Nationally Determined Contributions everyrr fiff ve years aftff er 2020. President Biden has recommitted the United States to the Paris Agreement and, in April 2021, announced a goal of reducing the United States' emissions by 50 to 52 percent below 2005 levels by 2030. Additionally, at the UNUU Climate Change Confeff rence of Parties ("COP26"), held in November 2021, the United States and the European Union jointly announced the launch of a Global Methane Pledge, an initiative committing to a collective goal of reducing global methane emissions by at least 30 percent frff om 2020 levels by 2030, including "all feff asible reductions" in the energy sector. COP26 concluded with the fiff nalization of the Glasgow Climate Pact, which stated long-term global goals (including those in the Paris Agreement) to limit the increase in the global average temperaturt e and emphasized reductions in GHG emissions. These goals were reaffff iff rmed at the November 2022 Confeff rence of Parties ("COP27"). At COP27, the US also announced, in conjunction with the European Union and other partner countries, that it would develop standards forff monitoring and reporting methane emissions to help low methane-intensity naturtt al gas. Moreover, various state and local governments have also publicly create a market forff l impact of these actions, and any legislation or regulation committed to furff promulgated to fulff fiff ll the United States' commitments thereunder, is uncertain at this time, and it is unclear what additional initiatives may be adopted or implemented that may have adverse effff eff cts upon the Company's operations. thering the goals of the Paris Agreement. The fulff Governmental, scientififf c and public concern over the threat of climate change arising frff om GHG emissions has resulted in increasing political risks in the United States, including climate change related pledges made by certain candidates elected to public offff iff ce. President Biden has issued several executive orders focff used on addressing climate change, including items that may impact costs to produce, or demand forff , oil and gas. Additionally, in November 2021, the Biden Administration released "The Long-Term Strategy of the United States: Pathways to Net-Zero Greenhouse Gas Emissions by 2050," which establa ishes a to net zero emissions in the United States by 2050 through, among other things, improving energy effff iff ciency, roadmapa zing energy sources via electricity, hydrogen and sustainabla e biofueff decarboni l sil fueff r reducing non-CO2 GHG emissions and increasing the emphasis on climate-related risks across government agencies industry,rr and economic sectors. The Biden Administration has also called forff revisions and restrictions to the leasing and permitting oil and gas development on feff deral lands. The DOI's comprehensive review of the feff deral leasing program programs forff lease and an increased royalty rate. Other actions that could be resulted in a reduction in the volume of onshore land held forff tion and permitting pursued by the Biden Administration include the imposition of more restrictive requirements forff of pipeline infrff astrucrr oil and gas faff cilities. turt e and LNG export faff cilities, as well as more restrictive GHG emissions limits forff Litigation risks are also increasing as a number of parties have sought to bring suit against various oil and naturt al gas companies in state or feff deral court, alleging, among other things, that such companies created public nuisances by producing ls that contributed to climate change or alleging that the companies have been aware of the adverse effff eff cts of climate change fueff forff some time but defrff auded their investors or customers by faff iling to adequately disclose those impacts. Should the Company be targeted by any such litigation, it may incur liabia lity, which, to the extent that societal pressures or political or other faff ctors are involved, could be imposed without regard to causation or contribution to the asserted damage, or to other mitigating faff ctors. An unfaff vorabla e rulrr ing in any such case could signififf cantly impact the Company's operations and could have an adverse impact on the Company's fiff nancial condition. ls, eliminating subsidies provided to the fosff the construcrr There are also increasing fiff nancial risks forff l energy ional lenders who provide companies may elect in the futff urt e to shiftff some or all of their investments into other sectors. Institutt l energy companies also have become more attentive to sustainabla e lending practices and some of them fiff nancing to fosff l energy companies. Although the Company cannot predict the effff eff cts of these may elect not to provide fundi actions, such limitation of investments in and fiff nancing forff l energy companies could result in the restriction, delay or cancellation of drilling programs or development or production activities. Additionally, in March 2022, the SEC issued a l producers as shareholders currently invested in fosff sil fueff sil fueff sil fueff sil fueff sil fueff ng forff fosff fosff fosff ff 31 PIONEER NATURARR L RESOURCES COMPANY proposed rulrr e that would mandate extensive disclosure of climate risks, including fiff nancial impacts, related governance and strategy and GHG emissions, foff r all U.S.-listed public companies. Although the fiff nal forff m and substance of this rulrr e and its requirements are not yet known and its ultimate impact on the Company's business is uncertain, compliance with the proposed rulrr e, if fiff nalized, may result in additional legal, accounting and fiff nancial compliance costs. The adoption and implementation of new or more stringent international, feff deral or state legislation, regulations or other initiatives that impose more stringent standards forff GHG emissions frff om the oil and naturt al gas sector or otherwise regulatoryrr restrict the areas in which this sector may produce oil and naturt al gas or generate GHG emissions could result in increased costs of compliance or costs of consuming, and thereby reduce demand forff oil and naturtt al gas, which could reduce the profiff tabia lity of the Company's business. Additionally, political, litigation and fiff nancial risks may result in the Company restricting or turt e damages as a result of climatic changes or impairments to cancelling production activities, incurring liabia lity forff the Company's abia lity to continue to operate in an economic manner, which also could reduce the profiff tabia lity of the Company's operations. To date, any costs related to climate change regulation has not had a material impact on the Company's production activities or otherwise materially and adversely affff eff cted their business. However, one or more of these developments could have a material adverse effff eff ct on the Company's business, fiff nancial condition and results of operation. As a fiff nal note, climate change may also result in various physical risks, such as the increased frff equency or severity of extreme weather events (including storms, droughts, flff oods and wildfiff res) or changes in meteorological and hydrological patterns, that could adversely impact the Company's operations and supply chains. Such physical risks could result in damage to the Company's faff cilities or indirectly adversely impact the Company's supply chains or operations through, forff example, water use curtailments in response to drought or decline in demand forff es in response to warmer winters. the Company's products forff heating purpos infrff astrucrr rr ThTT e nature of thtt e ComCC panm yn 's' assetstt and productitt on operatitt ons may imii pacm t thtt e envirii onment or cause envirii onmentaltt contamtt inii atitt on, which couldll resultll inii matett rial lill abi thtt e ComCC panm yn .yy lii ill tii itt es tott i r r treatment, storage, The Company's assets and producdd tion operations may give rise to signififf cant environmental costs and liabia lities as a result of the Company's handling of petroleum hydrocarbons and wastes, because of air emissions and water discharges related to its operations, and due to past industryrr operations and waste disposal practices. The Company's oil and gas business involves the generation, handling, transport and disposal of wastes, hazardous substances and petroleum and is subject to environmental hazards, such as oil and produced water spills, NGL and gas leaks, pipeline and hydrocarbons vessel rupt , that could expose the Company to rr substantial liabia lity due to pollution and other environmental damage. The Company could also incur costs and liabia lities arising out of the unintended release of its flff owback water or certain other oilfiff eld flff uids that the Company injects or has injected into non-producing forff mations. Another consequence of such contamination may be lawsuits alleging that its operations have caused damage to neighboring properties or otherwise violated state and feff deral rulrr es regulating waste disposal. The occurrence of any one or more of these developments could have a material adverse effff eff ct on the Company's business, fiff nancial condition and results of operations. urtt es and unauthorized discharges of such wastes, substances and hydrocarbons r ThTT e ComCC panm yn 's' hyh draulill c frff acturinii g and forff mrr er sand minii inii g operatitt ons may resultll i lill tii itt gat adversrr e efe fff eff ct on thtt e ComCC panm yn .yy itt on thtt at couldll have a matett riali inii silii ill ca-relatll ett d healtll htt isii sues and The Company routinely conducts hydraulic frff acturt ing in its drilling and completion programs, which activity requires the management and use of signififf cant volumes of sand. Additionally, the Company owns and forff merly operated certain sand mining operations. The inhalation of respirabla e crysrr talline silica dust is associated with the lung disease silicosis. There is evidence of an association between crysrr talline silica exposure or silicosis and lung cancer and a possible association with other diseases, including immune system disorders, such as scleroderma. These health risks have been, and may continue to be, a l or perceived health risks of mining, processing and signififf cant issue confrff onting the commercial sand industry.rr The actuatt handling sand could materially and adversely affff eff ct the Company through the threat of product liabia lity or personal injuryrr lawsuits, enacted OSHA silica regulations and increased scrutrr authorities. The occurrence of signififf cant silica-related health issues as well as any pending or futff urt e claims or inadequacies of insurance coverage or contractuat l indemnififf cation arising out of such issues could have a material adverse effff eff ct on the Company's results of operations. iny by feff deral, state and local regulatoryrr InII creasinii g atttt ett ntitt on tott ESEE G matttt ett rsrr may imii pacm t thtt e ComCC panm yn 's' businii ess. iny frff om stakeholders related to their ESG practices. industries are faff cing increasing scrutrr Businesses across all to or comply with investor or stakeholder expectations and standards, which are continuing to Businesses that do not adapta evolve, or businesses that are perceived to have not responded appr opriately to the growing concern forff ESG issues, regardless a of whether there is a legal requirement to do so, may suffff eff r frff om reputational damage and the business, fiff nancial condition and/ or share price of such business entity could be materially and adversely affff eff cted. Increasing attention to climate change, increasing societal expectations on businesses to address climate change and potential consumer use of substitutt es to energy 32 PIONEER NATURARR L RESOURCES COMPANY commodities may result in increased costs, reduced demand forff products, reduced profiff ts, increased investigations and litigation and negative impacts on its share price and access to capia tal markets. Increasing attention products, additional governmental to climate change, forff investigations and private litigation, an increase in shareholder activism as shareholders may attempt to effff eff ct changes to the Company's business or governance, whether by shareholder proposals, public campaigns, proxy solicitations or otherwise, or constraints in sources of capia tal as certain fiff nancial instituttt ional investors and other sources of capia tal limit or eliminate their investment in oil and gas activities. example, may result in demand shiftff s forff the Company's hydrocarbon the Company's hydrocarbonr ions, institutt r rr t to enhance its ESG effff orff As part of the Company's ongoing effff orff long-term net zero (Scope 1 and Scope 2) emissions ambition to furff ts, its Board has establa ished a Sustainabia lity and Climate Oversight Committee, which is charged with the ongoing oversight of the Company's corpor ate climate-related risk analysis, as well as its Sustainabia lity Report, Climate Risk Report and other related activities. The Company has establa ished an aspirational ther strengthen the Company's ESG perforff mance with interim targets as folff lows: (i) reduce its methane emissions intensity by 75 percent by 2030 and its Scope 1 and Scope 2 GHG emissions intensity by 50 percent by 2030, frff om a 2019 baseline and (ii) maintain a flff aring intensity standard of less than one percent of gas produced and end routine flff aring by 2030, with an aspirational goal to achieve it by 2025. The Company has also set an aspirational goal to reduce the frff eshwater used in its completions operations to 20 percent by 2026. While the Company may elect to establa ish and revise various voluntaryrr ESG targets now or in the futff urtt e, such targets are aspirational. The Company may not be abla e to meet such targets in the manner or on such a timeline as initially contemplated, including as a result of unforff eseen material costs or technical diffff iff culties associated with achieving such results. Some of these targets are dependent on or inflff uenced by faff ctors out of the control of the Company, including, but not limited to, the abia lity of suppliers to provide new equipment on schedule and the build out of suffff iff cient electricity capaa city in the areas the Company operates. Further, to the extent the Company elected to pursue such targets and were abla e to achieve the desired target levels, l arrangements, including the such achievement may have been accomplished as a result of entering into various contractuatt l changes in ESG purchase of various credits or offff sff ets that may be deemed to mitigate its ESG impact instead of actuat perforff mance. However, even in those cases the Company cannot guarantee that suffff iff cient quality environmental credits or offff sff ets the Company does purchase will not subsequently be determined to have faff iled to result in GHG emission reductions forff reasons out of the Company's control. Given the uncertainties related to the use of emerging technologies, the state of the offff sff ets, the Company cannot predict whether or not it will be abla e to markets forff timely meet its net zero ambition, if at all. and availabia lity of verififf ed quality carbon r In addition, voluntaryrr disclosures regarding ESG matters, as well as any ESG disclosures mandated by law, could result in private litigation or government investigation or enforff cement action regarding the suffff iff ciency or validity of such disclosures. Moreover, the faff ilure or a perception (whether or not valid) of faff ilure to implement ESG strategies or achieve ESG goals or commitments, including any GHG reduction or neutralization goals or commitments, could result in private litigation and damage the Company's reputation, cause investors or consumers to lose confiff dence in the Company and negatively impact the Company's operations. While the Company may participate in various voluntaryrr frff ameworks and certififf cation programs to improve the ESG profiff le of its operations and services, such as the Company's participation in Project Veritas, The Environmental Partnership and OGMP 2.0, the Company cannot guarantee that such participation or certififf cation will have the intended results on its ESG profiff le. Notwithstanding the Company's election to pursue aspirational targets now or in the futff urtt e, it may receive pressure frff om investors, lenders or other groups to adopt more aggressive climate or other ESG-related goals, but the Company cannot guarantee it will be abla e to implement such goals because of potential costs or technical or operational obstacles. Conversely, governments and private parties are also increasingly fiff ling lawsuits or initiating regulatoryrr action based on allegations that certain public statements regarding ESG-related matters and practices by companies are "greenwashing," i.e. misleading inforff mation or faff lse claims overstating potential ESG benefiff ts. For example, in March 2021, the SEC establa ished the Climate and ESG Task Force in the Division of Enforff cement to identifyff and address potential ESG-related misconduct, neutrality including greenwashing. Similar issues can also arise relating to aspirational statements such as net-zero or carbonr targets that are made without an adequate basis to support such statements. While the Company is currently not a party to any of these lawsuits, they present a high degree of uncertainty regarding the extent to which oil and gas companies faff ce an increased risk of liabia lity stemming frff om climate change or ESG disclosures and practices. evaluating business entities on their appr Furthermore, organizations that provide inforff mation to investors on corpor ate governance and related matters have oach to ESG matters. Currently, there are no universal developed ratings processes forff standards forff such scores or ratings, but the importance of sustainabia lity evaluations is becoming more broadly accepted by investors and shareholders. Such ratings are used by some investors to inforff m their investment and voting decisions. Additionally, certain investors use these scores to benchmark businesses against their peers and if a business entity is perceived as lagging, these investors may engage with such entities to require improved ESG disclosure or perforff mance. Moreover, certain members of the broader investment community may consider a business entity's sustainabia lity score as a reputational or other faff ctor in making an investment decision. Consequently, a low sustainabia lity score could result in exclusion of the , engagement by investors seeking to improve such scores and Company's stock frff om consideration by certain investment funds a rr ff 33 PIONEER NATURARR L RESOURCES COMPANY a negative perception of the Company's operations by certain investors. Additionally, though the Company believes it can achieve its voluntaryrr ESG targets and goals, any faff ilure to realize or the perception of a faff ilure to realize voluntaryrr targets or long-term goals, could lead to a negative perception of the Company. Regulatory Risks requirii ementstt ThTT e ComCC panm yn 's' operatitt ons are subject tott lell gal e inii businii ess,s resultll stt of operatitt ons and fiff nii anciali thtt at couldll conditii itt on. strtt inii gent envirii onmentaltt ,ll oilii and gas-relatll ett d and occupatu inii crease itii stt coststt of doinii g businii ess and resultll inii operatitt nii g restrtt ictitt ons,s delayll itt onal safeff tytt and healtll htt itt ons s or cancellll atll adversrr e efe fff eff ct on thtt e ComCC panm yn 's' thtt e permrr itii ttt itt nii g, drilii lll ill nii g or complm ell titt on of oilii and gas wellll sll ,s which couldll have a matett riali The Company's oil and gas exploration and production operations are subject to stringent feff deral, state and local legal requirements governing, among other things, the drilling of wells (including allocation wells on two or more leaseholds that are not pooled), rates of production, the size and shapea of drilling and spacing units or proration units, the transportation and sale of oil, NGLs and gas, the discharging of materials into the environment, environmental protection and occupational safeff ty and health. These requirements may take the forff m of laws, regulations and executive actions, and noncompliance with these legal requirements may subject the Company to sanctions, including administration, civil or criminal penalties, remedial cleanups or corrective actions, delays in permitting or perforff mance of projects, naturt al resource damages and other liabia lities. Changes in administrative procedures or authorizations, court decisions and legislative action with respect to any of these areas, including allocation wells, could have a material adverse effff eff ct on the Company's anticipated futff urtt e production, results authorizations forff of operations and fiff nancial condition. a In connection with its operations, the Company must obtain and maintain numerous environmental and oil and gas related permits, appr ovals and certififf cates frff om various feff deral, state and local governmental authorities, and may incur substantial costs in doing so. The need to obtain permits has the potential to delay, curtail or cease the development of oil and gas projects. The Company may in the futff urtt e be charged royalties on gas emissions or required to incur certain capia tal expenditurt es forff air pollution control equipment or other air emissions-related issues. For example, in 2015, the EPA under the Obama Administration issued a fiff nal rulrr e under the CAA, making the National Ambient Air Quality Standard ("NAAQS") forff ground-level ozone more stringent. Since that time, the EPA has issued area designations with respect to ground-level ozone and, on December 31, 2020, published a fiff nal action that, upon conducting a periodic review of the ozone standard in accord with CAA requirements, elected to retain the 2015 ozone NAAQS without revision on a going-forff ward basis. However, in October 2021, the EPA announced it will reconsider its December 2020 decision and is targeting to complete its reconsideration ground-level ozone as part of its reconsideration of the by the end of 2023. If the EPA were to adopt more stringent NAAQS forff December 2020 fiff nal action, state implementation of the revised NAAQS could, among other things, require installation of new emission controls on some of the Company's equipment, result in longer permitting timelines, and signififf cantly increase the Company's capia tal expenditurtt es and operating costs. a under the Trumrr ") under the Obama, Trumrr In another example, there continues to be uncertainty on the feff deral government's appl icabla e jurisdictional reach under of Engineers the CWA over waters of the United States ("WOTUS"), including wetlands, as the EPA and the U.S. Army Corpsrr p and Biden Administrations have pursued multiple rulrr emakings since 2015 in an attempt to ("Corpsrr determine the scope of such reach. While the EPA and Corpsrr p Administration issued a fiff nal rulrr e in April 2020 narrowing feff deral jurisdictional reach over WOTUS, two feff deral district courts vacated the 2020 rulrr e during the third quarter of have since published a new fiff nal rulrr e, which will take effff eff ct on March 20, 2023, defiff ning 2021. The EPA and the Corpsrr WOTUS according to the broader pre-2015 standards with updates to incorpor ate existing U.S. Supreme Court decisions and agency guidance regarding regional diffff eff rences. However, the new rulrr e has already been challenged in feff deral court. Moreover, ther revises the defiff nition of WOTUS the EPA and the Corpsrr and, separately, the U.S. Supreme Court is expected to rulrr e on certain aspects of the defiff nition in mid-2023. Separately, in April 2020, the U.S. Supreme Court held that, in certain cases, discharges frff om a point source to groundwater could faff ll within the scope of the CWA and require a permit. To the extent that any new rulrr e or judicial determination expands the scope of the CWA's jurisdiction in areas where the Company conducts operations, such developments could delay, restrict or halt the the development of projects, result in longer permitting timelines, or increased compliance expenditurt es or mitigation costs forff Company's operations, which may reduce the Company's rate of production of oil and gas and have a material adverse effff eff ct on the Company's business, results of operations and cash flff ows. have announced an intent to develop a subsequent rulrr e that furff rr Additionally, the Company's operations are subject to feff deral and state laws and regulations, including the feff deral OSHA and comparabla e state statutt es, whose purpos e is to protect the health and safeff ty of employees. Among other things, the OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of the feff deral Superfundff Amendment and Reauthorization Act and comparabla e state statuttt es require that inforff mation be maintained concernir ng hazardous materials used or produced in the Company's operations and that this inforff mation be provided to employees, state and local government authorities and citizens. rr 34 PIONEER NATURARR L RESOURCES COMPANY Compliance with these legal requirements, or any other new environmental or occupational safeff ty and health laws, regulations or executive actions could, among other things, require the Company to install new or modififf ed emission or safeff ty controls on equipment or processes, incur longer permitting timelines and incur increased capia tal or operating expenditurtt es, which costs may be signififf cant. Additionally, one or more of these developments could impact the Company's oil and gas exploration, production and development activities, which could have a material adverse effff eff ct on its business, results of operations and fiff nancial condition. latll Lawsw ,s regue itt ons and othtt er exeee ComCC panm yn 's' cost of doinii g businii ess and resultll matett riali cutitt ve actitt ons or regue yr latll ortt inii itii itt atitt ves regar e inii additii itt onal operatitt nii g restrtt ictitt ons,s delayll dinii g hyh draulill c frff acturinii g couldll s or cancellll atll inii crease thtt e itt ons thtt at couldll have a adversrr e efe fff eff ct on thtt e ComCC panm yn 's' businii ess,s resultll stt of operatitt ons and fiff nii anciali conditii itt on. The Company routinely conducts hydraulic frff acturt ing is typically regulated by state oil and gas commissions, but the practice continues to attract considerabla e public, scientififf c and governmental attention in certain parts of the country,rr iny and regulation, including by feff deral agencies. ing in its drilling and completion programs. Hydraulic frff acturt resulting in increased scrutrr certain hydraulic frff acturtt Currently, hydraulic frff acturtt ing processes involving the use of diesel fueff ing is generally exempt frff om regulation under the Underground Injection Control program of ing activities. For example, the the SDWA, but the EPA has asserted feff deral regulatoryrr authority over certain hydraulic frff acturtt EPA has published permitting guidance forff l and issued a fiff nal regulation under the CWA prohibiting discharges to publicly owned treatment works of wastewater frff om onshore unconventional oil and gas extraction faff cilities. The EPA is also conducting a studytt of private wastewater treatment faff cilities (also known as centralized waste treatment ("CWT") faff cilities) accepting oil and naturtt al gas extraction wastewater. The EPA is collecting data and inforff mation related to the extent to which CWT faff cilities accept such wastewater, availabla e treatment technologies (and their associated costs), discharge characteristics, fiff nancial characteristics of CWT faff cilities and the environmental impacts of discharges frff om CWT faff cilities. In late 2016, the EPA released its fiff nal report on the potential impacts of hydraulic frff acturtt ing on drinking water resources, concluding that "water cycle" activities associated with hydraulic frff acturtt ing may impact drinking water resources under certain circumstances. Other government agencies, including the U.S. Department of Energy, the U.S. Geological Survey and the U.S. Government Accountabia lity Offff iff ce, have evaluated or are ther regulate evaluating various aspects of hydraulic frff acturt hydraulic frff acturt ing activities. Also, frff om time to time, legislation has been introduced, but not enacted, in Congress to provide forff feff deral regulation of hydraulic frff acturtt ing process. This or other feff deral legislation ing may be considered again in the futff urt e, though the extent of any such legislation cannot be related to hydraulic frff acturt predicted at this time. Also, in 2016, the BLM under the Obama Administration published a fiff nal rulrr e imposing more stringent standards on hydraulic frff acturt p Administration, published ing on feff deral lands; however, in late 2018, the BLM, under the Trumrr a fiff nal rulrr e rescinding the 2016 fiff nal rulrr e. Since that time, litigation challenging the BLM's 2016 fiff nal rulrr e and the 2018 fiff nal als to those decisions are rulrr e has resulted in rescission in feff deral courts of both the 2016 rulrr e and the 2018 fiff nal rulrr e but appe ongoing. ing and to require disclosure of the chemicals used in the hydraulic frff acturt ing and ultimately make it more diffff iff cult or costly forff ing. These ongoing or proposed studi the Company to perforff m frff acturt es could spur initiatives to furff a t tion requirements on hydraulic frff acturt At the state level, many states have adopted legal requirements that have imposed new or more stringent permitting, public disclosure or well construcrr ing activities, including in states where the Company's oil and gas exploration and production activities occur. For example, the Texas Railroad Commission requires operators to disclose chemical ingredients and water volumes used in hydraulic frff acturt ing treatments via the public FracFocus website. ing and local governments may seek to adopt ordinances within States could also elect to place prohibitions on hydraulic frff acturt their jurisdictions regulating the time, place or manner of drilling activities in general or hydraulic frff acturt ing activities in particular. latll Lawsw and regue natural resources couldll delayll have a matett riali itt ons pertaitt nii inii g tott protett ctitt on of thtt reatett ned and endangered spes cies or tott adversrr e efe fff eff ct on thtt e ComCC panm yn 's' developmll tii ,yy restrtt ict or prohibii thtt e ComCC panm yn 's' operatitt ons and cause itii ent and productitt on of reserves. tott critii itt cal habitii attt titt ali inii cur substantt ,tt wetltt anll coststt ds and thtt at may The feff deral ESA and comparabla e state laws were establa ished to protect endangered and threatened species. Under the ESA, if a species is listed as threatened or endangered, restrictions may be imposed on activities adversely affff eff cting that species' habia tat. Similar protections are offff eff red to migratoryrr birds under the Migratoryrr Bird Treaty Act ("MBTA"). The U.S. p Administration, issued a fiff nal rulrr e on Januaryrr 7, 2021, which clarififf es Fish and Wildlifeff Service ("FWS"), during the Trumrr that criminal liabia lity under the MBTA will appl y only to actions "directed at" migratoryrr birds, its nests, or its eggs; however, the FWS under the Biden Administration has since published a fiff nal rulrr e in October 2021 revoking the Januaryrr 2021 rulrr e and affff iff rmatively stating that the MBTA prohibits incidental takes of migratoryrr birds. Some of the Company's operations are conducted in areas where protected species or their habia tats are known to exist. In these areas, the Company may be obligated to develop and implement plans to avoid potential adverse effff eff cts to protected species and their habia tats, and the Company may be a 35 PIONEER NATURARR L RESOURCES COMPANY delayed, restricted or prohibited frff om conducting operations in certain locations or during certain seasons, such as breeding and nesting seasons, when the Company's operations could have an adverse effff eff ct on the species. In addition, the FWS may make new determinations on the listing of species as endangered or threatened under the ESA. The Company takes proactive measures to mitigate the risks of existing or futff urtt e ESA regulations regarding certain species, like the Dunes Sagebrusrr h Lizard and Lesser Prairie Chicken, that have the potential to impact the Company's operations. For example, the Company is a participant in the Candidate Conservation Agreement with Assurance ("CCAA") forff the conservation of the Lesser Prairie Chicken. The terms of the CCAA enabla e the Company to minimize its impacts to and promote conservation of Lesser Prairie Chicken habia tat but also maintain its development plans through the generation of habia tat impact offff sff ets. The southern and northern population segments of the Lesser Prairie Chicken were forff mally listed as endangered and threatened, respectively, by the FWS in November 2022. However, the Company's participation in the Lesser Prairie Chicken CCAA insulates the Company's operations frff om most of the adverse impacts of this listing. Should the habia tat of the Lesser Prairie Chicken be expanded at a futff urtt e date through the actions of the FWS, operations in areas pertaining to any expanded habia tat would not be covered by the CCAA and futff urt e operations may require securing FWS permits. Separately, in August 2022, the FWS agreed, via a stipulated settlement agreement in a feff deral district court, to decide whether to list the Dunes Sagebrusrr h Lizard as oved a CCAA covering the Dunes Sagebrusrr h Lizard endangered or threatened by June 29, 2023. In Januaryrr 2021, the FWS appr habia tat in non-feff deral lands in certain counties of western Texas. The designation of previously unprotected species or the re- designation of under protected species as threatened or endangered in areas where the Company conducts operations could cause the Company to incur increased costs arising frff om species protection measures or could result in delays, restrictions or prohibitions on its development and production activities that could have a material adverse effff eff ct on the Company's abia lity to develop and produce reserves. a ThTT e ComCC panm yn 's' s trtt anspor derivatitt ve actitt vitii itt es relatll ett d tott such energyr tattt itt on of gas; salell s and purchases of oilii ,ll NGNN LGG s and gas or othtt er energyr commoditii itt es and anyn commoditii itt es,s expos ee e thtt e ComCC panm yn tott potett ntitt ali regue latll ortt yr risii ks. The FERC, the Federal Trade Commission and the U.S. Commodities Futurt es Trading Commission ("CFTC") hold statutt oryrr authority to monitor certain segments of the physical and futff urtt es energy commodities markets relevant to the Company's business. These agencies have imposed broad regulations prohibiting frff aud and manipulation of such markets. With regard to the Company's transportation of gas in interstate commerce, physical sales and purchases of oil, NGLs, gas or other energy commodities, and any derivative activities related to these energy commodities, the Company is required to observe the market-related regulations enforff ced by these agencies, which hold substantial enforff cement authority. Failure to comply with such regulations, as interprrr eted and enforff ced, could result in agency actions that could materially and adversely affff eff ct the Company's results of operations and fiff nancial condition. ThTT e enactmtt ent of derivatitt ves lell gie sii latll inii strtt umentstt tott reduce thtt e efe fff eff ct of commoditii ytt price,e inii tett rest ratett and othtt er risii ks associati ett d witii htt itii stt businii ess. itt on couldll have a matett riali adversrr e efe fff eff ct on thtt e ComCC panm yn 's' abilii ill tii ytt tott use derivatitt ve The Dodd-Frank Wall Street Reforff m and Consumer Protection Act (the "Dodd-Frank Act") enacted in July 2010, establa ished feff deral oversight and regulation of the over-the-counter derivatives market and entities, such as the Company, that participate in that market. The Dodd-Frank Act requires the CFTC and the SEC to promulgate rulrr es and regulations forff its implementation. While many Dodd-Frank Act regulations are already in effff eff ct, the rulrr emaking and implementation process is ongoing, and the ultimate effff eff ct of the adopted rulrr es and regulations and any futff urtt e rulrr es and regulations on the Company's business remain uncertain. In 2020, the CFTC voted to adopt a fiff nal rulrr e regarding position limits forff certain physical commodity derivatives (the futff urt es and "Final Position Limits RulRR e"). The Final Position Limits RulRR e establa ishes new and amended position limits forff that are their economic equivalents. Under the options contracts in various commodities (including oil and gas) and forff Final Position Limits RulRR e, certain types of derivative transactions are exempt frff om these limits, provided that such derivative transactions satisfyff and certain anticipatoryrr hedges. The Final Position Limits RulRR e also includes new exemptions forff conditional spot-month positions in gas, preexisting positions acquired in good faff ith and, in limited circumstances, upon request to the CFTC. certain enumerated "bona fiff de" derivative transactions, pass-through swapsa the CFTC's requirements forff swapsa The CFTC has also adopted fiff nal rulrr es regarding the aggregation requirements appl icabla e to position limits (such rulrr es, as expanded by the Final Positions Limits RulRR e, the "Aggregation RulRR e"). The Aggregation RulRR e requires the aggregation of positions in commodity futff urt es contracts and the economically equivalent futff urtt es, options and swapsa held by separate but es of determining compliance with position limits. These rulrr es may affff eff ct both the size of the related entities forff positions that the Company may hold and the abia lity or willingness of counterparr rties to trade with the Company, potentially increasing the costs of transactions. Moreover, such changes could materially reduce the Company's access to derivative opportuni ties, which could adversely affff eff ct revenues or cash flff ow during periods of low commodity prices. The ultimate effff eff ct of these rulrr es and any additional regulations on the Company's business is uncertain. rr purpos a t 36 PIONEER NATURARR L RESOURCES COMPANY uncleared swapsa swapsa . Although the Company expects to qualifyff In addition, certain banking regulators and the CFTC have adopted fiff nal rulrr es establa ishing minimum margin the end-user exception frff om margin ication of such requirements to other market that the Company uses. If any of the do not qualifyff the commercial end-user exception, the posting of collateral could reduce its liquidity and capia tal expenditurtt es and could reduce its abia lity to manage commodity price volatility and the volatility in its requirements forff requirements forff participants, such as swapa dealers, may change the cost and availabia lity of the swapsa Company's swapsa cash availabla e forff cash flff ows. entered into to manage its commercial risks, the appl forff forff a The fulff ly implemented and the market forff l impact of the Dodd-Frank Act and related regulatoryrr requirements upon the Company's business will not be known until the regulations are fulff derivatives contracts has adjusted. In addition, it is possible that the Biden administration could expand regulation of the over-the-counter derivatives market and the entities that participate in that market through either the Dodd-Frank Act or the enactment of new legislation. The Dodd-Frank Act (and any regulations implemented thereunder) and any new legislation could signififf cantly increase the cost of derivative contracts, materially alter the terms of derivative contracts, reduce the availabia lity of derivatives to protect against risks the Company encounters and reduce the Company's abia lity to monetize or restrucrr turt e existing derivative contracts. Further, the Dodd-Frank Act was intended, in part, to reduce the volatility of oil and gas prices, which some legislators attributed to speculative trading in derivatives and commodity instrumrr ents related to oil and gas. The Company's revenues could thereforff e be materially and adversely affff eff cted if a consequence of the Dodd-Frank Act and implementing regulations is to lower commodity prices. The European Union and other non-U.S. jurisdictions have also implemented and continue to implement new regulations rties in forff eign jurisdictions or rties with other businesses that subject them to regulations in forff eign jurisdictions, the Company may become subject with respect to the derivatives market. To the extent the Company transacts with counterparr counterparr to, or otherwise affff eff cted by, such regulations. At this time, the impact of such regulations is not clear. Regulation by the CFTC and banking regulators of the over-the-counter derivatives market and market participants could ions and other market participants, to curtail cause the Company's contract counterparr rties, which are generally fiff nancial instituttt or cease their derivatives activities. The Company believes that these regulatoryrr trends have contributed to a reduction in liquidity of the over-the-counter derivatives market, which could make it more diffff iff cult to engage in derivative transactions covering signififf cant volumes of the Company's futff urt e production, and which could materially and adversely affff eff ct the cost and availabia lity of derivatives to the Company. If the Company reduces its use of derivatives as a result of such regulation, the Company's results of operations may become more volatile and its cash flff ows may be less predictabla e, which could materially and adversely affff eff ct the Company's abia lity to plan forff capia tal expenditurt es. Any of these consequences could have a material adverse effff eff ct on the Company, its fiff nancial condition and its results of operations. and fundff thtt e fuff llll ell st extee ett nt permrr itii ttt ett d by lawll thtt e CouCC rt of ChCC anceryr does not have jurisii dictitt on, thtt e feff deral disii trtt ict court forff s provide,e tott ifi lusive forff um forff ThTT e ComCC panm yn 's' bylawll (or(( excee UnUU itii ett d StSS attt ett s shallll be thtt e solell and excee 1933. ThTT ese provisii ions couldll stoctt kholdell tott brinii g a claill mii ComCC panm yn or thtt e ComCC panm yn 's' dirii ectortt certaitt nii e lell gal rsrr ,w thtt at thtt e CouCC rt of ChCC anceryr of thtt e StSS attt ett of Delawll are are)e wilii lll be thtt e rsrr and thtt at thtt e feff deral disii trtt ict courtstt of thtt e thtt e resolutitt on of causes of actitt on arisii inii g under thtt e SeSS curitii itt es Act of thtt e abilii ill tii ytt of thtt e ComCC panm yn 's' thtt e disii pus , disii courage claill mii s or lill mii rsrr as more favff orablell thtt e Disii trtt ict of Delawll tett s witii htt forff itii actitt ons betwtt een thtt e ComCC panm yn and itii stt stoctt kholdell lusive forff um forff tott brinii g a claill mii inii crease coststt inii a judicial forff um viewed by thtt e stoctt kholdell srr ,s offff iff cersrr or othtt er emplm oyll ees. rr forff The Company's bylaws provide to the fulff the District of Delaware) will be the sole and exclusive forff umrr lest extent permitted by law that, unless the Company consents in writing to the , the Court of Chanceryrr of the State of Delaware (or if the Court of Chanceryrr does not have selection of an alternative forff umrr jurisdiction, the feff deral district court forff (a) any derivative action or proceeding brought on behalf of the Company, (b) any action asserting a claim of breach of a fiff duciaryrr duty owed by any director, offff iff cer, other employee, agent or stockholder of the Company to the Company or the Company's stockholders, (c) any action against the Company arising pursuant to any provision of the Delaware General Corpor ation Law or as to which the Delaware General Corpor ation Law confeff rs jurisdiction on the Court of Chanceryrr of the State of Delaware, or (d) any action against the Company or any director, offff iff cer, other employee or agent of the Company asserting a claim governed by the y, enforff ce or determine the validity of the a internal affff aff irs doctrine, including, without limitation, any action to interprrr et, appl ration or the Company's bylaws. The Company's bylaws also provided that the feff deral district Company's certififf cate of incorporr the resolution of any complaint asserting a cause of action courts of the United States shall be the sole and exclusive forff umrr arising under the Securities Act of 1933. Although the Company's bylaws provide forff causes of action an exclusive forff umrr under the Securities Act of 1933, its stockholders will not be deemed to have waived compliance with the feff deral securities provisions may increase costs to bring a claim, discourage laws and the rulrr es and regulations thereunder. The choice of forff umrr claims or limit a stockholder's abia lity to bring a claim in a judicial forff umrr disputes with the Company or the Company's directors, offff iff cers or other employees, which may discourage such lawsuits against the Company or the provision Company's directors, offff iff cers and other employees. Alternatively, if a court were to fiff nd the choice of forff umrr that it fiff nds faff vorabla e forff forff forff rr 37 PIONEER NATURARR L RESOURCES COMPANY contained in the Company's bylaws to be inappl associated with resolving such action in other jurisdictions. a icabla e or unenforff ceabla e in an action, the Company may incur additional costs etattt ChCC anges inii itt on thtt ereof or thtt e imii posm itii itt on of new or inii creased taxe lawll s. ComCC panm yn 's' operatitt ons and cash flff owll s or thtt e inii tett rprrr taxtt tt s or feff es may adversrr elyll affff eff ct thtt e intangible drilling and development costs, (iii) an extension of the amortization period forff From time to time, U.S. feff deral and state level legislation has been proposed that would, if enacted into law, make signififf cant changes to U.S. tax laws, including to certain key U.S. feff deral and state income tax provisions currently availabla e to oil and naturt al gas exploration and development companies. Such legislative changes have included, but have not been limited oil and naturt al gas properties, (ii) the elimination of current to, (i) the elimination of the percentage depletion allowance forff deductions forff certain geological and geophysical expenditurt es, (iv) the elimination of certain other tax deductions and relief previously availabla e to oil and naturtt al gas companies and (v) an increase in the U.S. feff deral income tax rate appl ations such as the Company. It is unclear whether these or similar changes will be enacted and, if enacted, how soon any such changes could take effff eff ct. Additionally, states in which the Company operates or owns assets may impose new or increased taxes or feff es on oil and naturt al gas extraction. The passage of any legislation as a result of these proposals and other similar changes in U.S. feff deral income tax laws or the imposition of new or increased taxes or feff es on naturt al gas and oil extraction could adversely affff eff ct the Company's operations and cash flff ows. icabla e to corpor a rr rr In addition, on August 16, 2022, President Biden signed into law the IRARR , which includes, among other things, a corpor rr qualififf ed biomass property and ate alternative minimum tax (the "CAMT"), provides forff introduces a one percent excise tax on corpor ate stock repurchases aftff er December 31, 2022. Under the CAMT, a 15 percent minimum tax will be imposed on certain adjusted fiff nancial statement income of "appl ations," which is effff eff ctive beginning Januaryrr 1, 2023. The CAMT generally treats a corpor ation in any taxabla e year in which a the "average annual adjusted fiff nancial statement income" of the corpor three-taxabla e-year period ending prior to such taxabla e year exceeds $1 billion. The Company is currently assessing the potential impact of these legislative changes and will continue to evaluate the overall impact of other current, futff urt e and proposed regulations and interprrr etive guidance frff om tax authorities on the Company's effff eff ctive tax rate and consolidated balance sheets. The Company is unabla e to predict whether any such changes or other proposals will ultimately be enacted. ation and certain of its subsidiaries and affff iff liates forff an investment tax credit forff ation as an appl icabla e corpor icabla e corpor a a rr rr rr rr ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES Reserve Estimation Procedures and Audits The inforff mation included in this Report about a the Company's proved reserves as of December 31, 2022, 2021 and 2020 is based on evaluations prepared by the Company's engineers and audited by Netherland, Sewell & Associates, Inc. ("NSAI"). Reserve estimation procedures. The Company has establa ished internal controls over reserve estimation processes and procedures to support the accurate and timely preparation and disclosure of reserve estimates in accordance with SEC requirements. These controls include oversight of the reserves estimation reporting processes by Pioneer's Corpor ate Reserves Group ("Corpor ate Reserves") and an annual external audit of substantial portions of the Company's proved reserves by NSAI. rr rr rr Corpor ate Reserves is staffff eff d with reservoir engineers who prepare reserve estimates using reservoir engineering inforff mation technology. Corpor ate Reserves interacts with the technical and production teams to ensure all availabla e engineering and geologic data is taken into account prior to establa ishing or revising an estimate. There is oversight of the reservoir engineers by the Director of Corpor ate Reserves who is in turt n subject to direct oversight by the Company's Executive Committee. rr rr a appr All reserve estimates, material assumptions and inputs used in reserve estimates and signififf cant changes in reserve opriateness and compliance with SEC rulrr es and U.S. GAAP. Annually, the Executive estimates are reviewed forff the portion of the reserves that it audits, beforff e Committee reviews the reserve estimates, and any diffff eff rences with NSAI forff oved. The engineers who participate in the reserve estimation and disclosure process periodically attend these estimates are appr ate Reserves has prepared training provided by external consultants and through internal Pioneer programs. Additionally, Corpor and maintains written policies and guidelines forff to refeff rence on reserve estimation and preparation to promote consistency in the preparation of the Company's reserve estimates and compliance with the SEC reserve estimation and reporting rulrr es. its staffff a rr 38 Proved reserves auditstt . The proved reserves audited by NSAI, in aggregate, represented the folff lowing: PIONEER NATURARR L RESOURCES COMPANY Proved reserves audited by NSAI Pre-tax present value of proved reserves discounted at 10 percent audited by NSAI As of December 31, 2022 2021 2020 95% 98% 93% 96% 89% 100% a In connection with the annual reserves audit, NSAI prepared its own estimates of the Company's proved reserves and compared its estimates to those prepared by the Company. NSAI determined that the Company's estimates of reserves were prepared in accordance with the defiff nitions and regulations of the SEC, including the criteria of "reasonabla e certainty," as it the recoverabia lity of reserves in futff urt e years, under existing economic and operating conditions, pertains to expectations about consistent with the defiff nition in RulRR e 4-10(a)(24) of Regulation S-X. NSAI issued an unqualififf ed audit opinion on the Company's proved reserves as of December 31, 2022, 2021 and 2020, respectively, based upon their evaluation. NSAI concluded that the Company's estimates of proved reserves were, in the aggregate, reasonabla e and had been prepared in accordance with Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Inforff mation promulgated by the Society of Petroleum Engineers. NSAI's audit report as of December 31, 2022, which should be read in its entirety, is attached as Exhibit 99.1 to this Annual Report on Form 10-K. e Qualifi iff cations of proved reserves prepar rr ate Reserves is staffff eff d by petroleum engineers with ersrr and auditorsrr . Corpor ate Reserves, the technical person who is primarily rr extensive industryrr experience and is managed by the Director of Corpor responsible forff overseeing the Company's reserves estimates. These individuals meet the profeff ssional qualififf cations of reserves estimators and reserves auditors as defiff ned by the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Inforff mation. The qualififf cations of the Director of Corpor ate Reserves include 43 years of international and domestic experience independent oil and gas companies, including Pioneer. as a petroleum engineer, with 25 years focff used on reserves reporting forff He has an additional 21 years of Permian Basin-focff used production engineering, advanced reservoir engineering, petrophysics, consulting and special project research experience with maja or oil companies. His educational background includes an undergraduate degree in Geological Engineering, with a Petroleum Engineering emphasis. rr ff NSAI provides worldwide petroleum property analysis services forff energy clients, fiff nancial organizations and d in 1961 and perforff ms consulting petroleum engineering services under Texas Board government agencies. NSAI was founde of Profeff ssional Engineers Registration No. F-2699. The technical person primarily responsible forff auditing the Company's reserves estimates is a Licensed Profeff ssional Engineer in the State of Texas and has been practicing consulting petroleum engineering at NSAI since 1993. He graduated with a Bachelor of Science degree in Chemical Engineering in 1983 and meets or exceeds the education, training and experience requirements set forff th in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Inforff mation. TeTT chnologies used in proved reserves estimates. Proved undeveloped reserves include those reserves that are expected to be recovered frff om new wells on undrilled acreage, or frff om existing wells where a relatively maja or expenditurtt e is required forff completion. Undeveloped reserves may be classififf ed as proved reserves on undrilled acreage directly offff sff etting development areas that are reasonabla y certain of production when drilled, or where reliabla e technology provides reasonabla e certainty of economic producibility. Undrilled locations may be classififf ed as having undeveloped proved reserves only if an abia lity and intent has been establa ished to drill the reserves within fiff ve years, unless specififf c circumstances justifyff a longer time period. In the context of reserves estimations, reasonabla e certainty means a high degree of confiff dence that the quantities will be recovered and reliabla e technology means a grouping of one or more technologies (including computational methods) that has been fiff eld-tested and has been demonstrated to provide reasonabla e certainty that the results will be consistent and repeatabla e in the forff mation being evaluated or in an analogous forff mation. In estimating proved reserves, the Company uses several diffff eff rent traditional methods such as perforff mance-based methods, volumetric-based methods and analogy with similar properties. In addition, the Company utilizes additional technical analysis such as seismic interprrr etation, wireline forff mation tests, geophysical logs and core data to provide incremental support forff more complex reservoirs. Inforff mation frff om this incremental support is combined with the traditional technologies outlined above to enhance the certainty of the Company's proved reserve estimates. a 39 PIONEER NATURARR L RESOURCES COMPANY Proved Reserves The Company's oil and gas proved reserves are as folff lows: As of December 31, 2022: Developed Undeveloped As of December 31, 2021: Developed Undeveloped As of December 31, 2020: Developed Undeveloped _____________________ Oil (MBbls) NGLs (MBbls) Gas (MMcf)ff (a) Total (MBOE) 861,973 110,045 972,018 847,632 119,996 967,628 539,320 29,464 568,784 660,066 78,379 738,445 3,574,429 422,562 3,996,991 2,117,777 258,851 2,376,628 584,492 85,488 669,980 3,076,329 430,379 3,506,708 1,944,845 277,214 2,222,059 362,584 16,603 379,187 1,855,607 84,493 1,940,100 1,211,172 60,149 1,271,321 % 89% 11% 100% 88% 12% 100% 95% 5% 100% (a) Total proved gas reserves include 192,814 MMcf,ff 186,325 MMcf and 115,239 MMcf of gas that the Company expected compressors) as of December 31, 2022, 2021 and 2020, respectively. to be produced and used as fiff eld fueff l (primarily forff The Company's Standardized Measure of total proved reserves are as folff lows: Proved developed reserves Proved undeveloped reserves As of December 31, 2022 2021 (in millions) 2020 $ $ 34,763 3,629 38,392 $ $ 24,992 2,692 27,684 $ $ 6,992 210 7,202 The NYMEX prices used forff oil and gas reserve preparation, based upon SEC guidelines, were as folff lows: Oil per Bbl Gas per Mcf Year Ended December 31, 2022 2021 2020 $ $ 93.67 6.36 $ $ 66.56 3.60 $ $ 39.57 1.98 See "Unaudited Supplementaryrr Inforff mation" included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. Description of Properties Average daily oil, NGLs, gas and total production is as folff lows: Oil (Bbls) NGLs (Bbls) Gas (Mcf)ff (a) Total (BOE) _____________________ (a) Gas production excludes gas produced and used as fiff eld fueff l. 40 Year Ended December 31, 2022 351,964 160,294 825,085 649,773 PIONEER NATURARR L RESOURCES COMPANY Costs incurred are as folff lows: Proved property acquisition costs Unproved property acquisition costs Exploration costs Development costs Asset retirement obligations Development and exploratory/rr extension drilling activity is as folff lows: Beginning wells in progress Wells spud Successfulff wells Ending wells in progress Year Ended December 31, 2022 (in millions) $ $ 6 167 3,161 625 161 4,120 Year Ended December 31, 2022 Development Exploratory/ Extension 33 27 (49) 11 263 471 (442) 292 As of December 31, 2022, the Company holds 964 thousand gross acres (856 thousand net acres), of which 948 thousand rry/rr Wolfcff amp fiff eld in the Midland Basin of West Texas. Pioneer rry/rr Wolfcff amp fiff eld, the of the Sinochem Group gross acres (844 thousand net acres) are located in the Sprabea is the largest acreage holder in the Sprabea Company has a joint venturtt e ("JV") with Sinochem Petroleum USA LLC, a U.S. subsidiaryrr ("Sinochem"), that encompasses 212 thousand gross acres. rry/rr Wolfcff amp fiff eld. In the southern portion of the Sprabea The oil produced frff om the Sprabea rry/rr Wolfcff amp fiff eld in the Midland Basin is West Texas Intermediate Sweet, and the gas produced is casinghead gas with an average energy content of 1,400 Btu.tt The oil and gas are produced primarily frff om six Jo Mill, Dean, Wolfcff amp, Strawn and Atoka), at depths ranging frff om 7,500 feff et to 14,000 feff et. The forff mations (Sprabea Jo Mill and Wolfcff amp acreage, based on the Company believes that it has signififf cant resource potential within its Sprabea Company's extensive geologic data covering the Middle Sprabea intervals, the Wolfcff amp A, B, C and D intervals and the Company's drilling results. Jo Mill and Lower Sprabea rry,rr rry,rr rry,rr rryrr During 2022, the Company successfulff ly completed 393 horizontal wells and seven vertical wells in the non-JV portion of the Midland Basin and 91 horizontal wells in the southern JV portion of the Midland Basin. In the non-JV portion of the Midland Basin, 48 percent of the horizontal wells placed on production were Sprabea interval wells, 25 percent were Wolfcff amp B interval wells, 24 percent were Wolfcff amp A interval wells and the remaining three percent were Wolfcff amp D interval wells. In the southern JV portion of the Midland Basin, all of the wells placed on production were Wolfcff amp A or B interval wells. rryrr The Company continues to complete acreage trades that allow the Company to drill wells with longer laterals, improving the expected returt ns of the wells. The Company estimates that the acreage trades completed in 2022 added 2.5 million lateral feff et to the Company's drilling inventory.rr The Company plans to operate 24 to 26 horizontal drilling rigs and six to seven frff ac flff eets in the Midland Basin in 2023. The Company will continue to evaluate its drilling and completions program with futff urt e activity levels assessed regularly. Selected Oil and Gas Inforff mation PrPP oductitt on, price and cost data.tt The price that the Company receives forff tion of market supply and demand. Demand has historically been affff eff cted by global economic conditions, including the ongoing recession concerns, the RusRR sia/Ukraine conflff ict, the COVID-19 pandemic, and weather and other seasonal conditions, such as hurricanes and tropical storms. Over or under supply of oil or gas can result in substantial price v lolatiilliityy. Hiistoriicallllyy, comm diodityy priices hhave bbeen lvolatiilliityy to contiinue iin thhe futff urt e. A decline in oil, NGL and gas prices or poor drilling results could have a material adverse effff eff ct on the Company's fiff nancial position, results of operations, cash flff ows, quantities of oil and gas reserves that may be economically produced and the Company's abia lity to access the capia tal markets. the oil and gas it produces is largely a func lvolatiille a dnd thhe Compa yny expects thhat ff 41 PIONEER NATURARR L RESOURCES COMPANY The folff lowing tabla e sets forff th production, price and cost data with respect to the Company's properties. These amounts represent the Company's historical results of operations without making pro forff ma adjustments forff any acquisitions, divestiturt es or drilling activity that occurred during the respective years. The production amounts will not match the proved reserve volume tabla es in "Unaudited Supplementaryrr Inforff mation" included in "Item 8. Financial Statements and Supplementaryrr Data" because fiff eld fueff l volumes are included in the proved reserve volume tabla es. Because of normal production declines, increased or decreased drilling activities and the effff eff cts of acquisitions or divestiturt es, the historical inforff mation presented below should not be interprrr eted as being indicative of futff urt e results. Annual sales volumes: Oil (MBbls) NGLs (MBbls) Gas (MMcf)ff Total (MBOE) Average daily sales volumes: Oil (Bbls) NGLs (Bbls) Gas (Mcf)ff Total (BOE) Average prices: Oil (per Bbl) NGLs (per Bbl) Gas (per Mcf)ff Revenue (per BOE) Average costs (per BOE): Production costs: Lease operating expense Gathering, processing and transportation expense Workover costs Net naturt al gas plant income Production and ad valorem taxes: Production taxes Ad valorem taxes Depletion expense Year Ended December 31, 2022 2021 2020 128,467 58,507 301,156 237,167 351,964 160,294 825,085 649,773 130,300 52,204 256,931 225,326 356,986 143,026 703,919 617,332 $ $ $ $ $ $ $ $ $ 95.66 37.67 6.03 68.77 3.89 4.21 1.03 (1.04) 8.09 3.27 0.81 4.08 10.48 $ $ $ $ $ $ $ $ $ 67.60 32.70 3.85 51.05 2.97 3.14 0.45 (0.93) 5.63 2.41 0.48 2.89 10.81 $ $ $ $ $ $ $ $ $ 77,095 31,376 155,662 134,415 210,641 85,728 425,307 367,253 37.24 15.62 1.73 27.01 3.00 2.59 0.24 (0.76) 5.07 1.17 0.64 1.81 11.55 PrPP oductitt ve wellll sll . Productive wells consist of producing wells and wells capaa bla e of production, including oil wells awaiting connection to production faff cilities, gas wells awaiting pipeline connections to commence deliveries and shut-in wells. One or more completions in the same well bore are counted as one well. Any well in which one of the multiple completions is an oil completion is classififf ed as an oil well. Productive oil and gas wells attributabla e to the Company's properties are as folff lows: As of December 31, 2022 Oil 10,676 Gross Productive Wells Gas 26 Total 10,702 Oil 8,149 Net Productive Wells Gas 21 Total 8,170 42 PIONEER NATURARR L RESOURCES COMPANY Developed, undeveloped and royalty leasehold acreage is as folff lows: As of December 31, 2022 Developed Acreage Undeveloped Acreage Gross Acres 910,582 Net Acres 805,744 Gross Acres 53,903 Net Acres 50,133 Royalty Acreage 132,457 The expiration dates of the leases attributabla e to gross and net undeveloped acres are as folff lows: 2023 (a) 2024 2025 2026 2027 Thereaftff er As of December 31, 2022 Acres Expiring Gross Net 44,210 2,252 5,441 — 640 1,360 53,903 42,847 2,248 4,109 — 481 448 50,133 _____________________ (a) The Company has an active drilling program and ongoing effff orff ts to extend leases that may not be drilled prior to expiration. The Company currently has no proved undeveloped reserve locations scheduled to be drilled aftff er lease expiration. Approximately 39 thousand net acres expiring are subject to continuous drilling obligations, which the Company expects to meet with its active drilling program. Drilii lll ill nii g actitt vitii itt es. The folff th the number of gross and net wells drilled by the Company that were productive or dryrr holes. This inforff mation should not be considered indicative of futff urt e perforff mance, nor should it be assumed that there was any correlation between the number of productive wells drilled and the oil and gas reserves generated thereby or the costs to the Company of productive wells compared to the costs of dryrr holes. lowing tabla e sets forff Productive wells: Development Exploratory/rr extension Success ratio (a) ______________________ Gross Wells Net Wells Year Ended December 31, Year Ended December 31, 2022 2021 2020 2022 2021 2020 49 442 491 100% 54 488 542 100% 13 242 255 100% 45 389 434 100% 52 440 492 100% 12 218 230 100% (a) Represents the ratio of those wells that were successfulff ly completed as producing wells or wells capaa bla e of producing to total wells drilled and evaluated. Wells in process of being drilled are as folff lows: Development Exploratory/rr extension ITEM 3. LEGAL PROCEEDINGS As of December 31, 2022 Gross Wells 11 292 303 Net Wells 11 266 277 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 liabia lity, if any, ultimately incurred with respect to these proceedings and claims will not have a material adverse effff eff ct on the Company's consolidated fiff nancial position as a whole or on its liquidity, capia tal resources or futff urt e annual results of operations. See Note 11 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. 43 PIONEER NATURARR L RESOURCES COMPANY ITEM 4. MINE SAFETY DISCLOSURES a Not appl icabla e. INFORMATION ABOUT OUR EXECUTIVE OFFICERS The folff lowing tabla e sets forff th certain inforff mation as of the date of this Report regarding the Company's executive offff iff cers. All of the Company's executive offff iff cers serve at the discretion of the Board. There are no faff mily relationships among any of the Company's directors or executive offff iff cers. Name Scott D. Sheffff iff eld Richard P. Dealy Mark S. Berg J.D. Hall Mark H. Kleinman Elizabea Neal H. Shah Tyson L. Taylor th A. McDonald Position rr ate Operations Chief Executive Offff iff cer President and Chief Operating Offff iff cer Executive Vice President, Corpor Executive Vice President, Operations Executive Vice President and General Counsel Senior Vice President, Strategic Planning, Field Development and Marketing Senior Vice President and Chief Financial Offff iff cer Senior Vice President, Human Resources Bonnie S. Black Senior Vice President, Technology and Operations Support Christopher L. Washburn Vice President and Chief Accounting Offff iff cer Scott D. Sheffff iff eld Age 70 56 64 57 61 44 52 44 51 39 Mr. Sheffff iff eld has served as the Company's Chief Executive Offff iff cer since Februarr ryrr 2019, and held the additional title of President frff om Februarr ryrr 2019 through the end of 2020. Previously, he had served as Chief Executive Offff iff cer of the Company frff om 1997 through December 31, 2016, and then as the Executive Chairman until December 31, 2017. He has served as a director of the Company since 1997 and had served as Chairman of the Board frff om 1999 through Februarr ryrr 2019. Mr. Sheffff iff eld was the Chairman of the board of directors and Chief Executive Offff iff cer of Parker & Parsley Petroleum Company, a predecessor of the Company (together with its predecessor companies, "Parker & Parsley"), frff om Januaryrr 1989 until the Company was forff med in August 1997. Mr. Sheffff iff eld joined Parker & Parsley as a petroleum engineer in 1979, was promoted to Vice President - Engineering in September 1981, was elected President and a Director in April 1985, and became Parker & Parsley's Chairman of the board of directors and Chief Executive Offff iff cer on Januaryrr 19, 1989. Beforff e joining Parker & Parsley, Mr. Sheffff iff eld was employed as a production and reservoir engineer forff Amoco Production Company. Mr. Sheffff iff eld is also a director of The Williams Companies, Inc. Mr. Sheffff iff eld is a distinguished graduate of the University of Texas with a Bachelor of Science degree in Petroleum Engineering. Richard P. Dealy the Company as Vice President and Chief Accounting Offff iff cer frff om Februarr Mr. Dealy was elected as the Company's President and Chief Operating Offff iff cer effff eff ctive Januaryrr 1, 2021. Prior to that, Mr. Dealy had served as the Company's Executive Vice President and Chief Financial Offff iff cer since November 2004. Mr. Dealy held positions forff ryrr 1998 to November 2004 and Vice President and Controller frff om August 1997 to Januaryrr 1998. Mr. Dealy joined Parker & Parsley in July 1992 and was promoted to Vice President and Controller in 1996, in which position he served until August 1997. Beforff e joining Parker & Parsley, Mr. Dealy was employed by KPMG LLP. Mr. Dealy is also a director of Compass Minerals International, Inc. Mr. Dealy graduated with honors frff om Eastern New Mexico University with a Bachelor of Business Administration degree in Accounting and Finance and is a Certififf ed Public Accountant. Mark S. Berg rr Mr. Berg joined the Company as Executive Vice President and General Counsel in April 2005, serving in that capaa city until Januaryrr 2014, at which time he assumed broader executive responsibilities, most recently being elected to serve as Executive Vice President, Corpor ate Operations, in April 2019. Prior to joining the Company, Mr. Berg served as Executive 200 diversififf ed fiff nancial services Vice President, General Counsel and Secretaryrr of American General Corpor company, frff om 1997 through 2002. Subsequent to the sale of American General to American International Group, Inc., Mr. Berg joined Hanover Compressor Company as Senior Vice President, General Counsel and Secretary.rr He served in that capaa city frff om May 2002 through April 2004. Mr. Berg began his career in 1983 with the Houston-based law fiff rm of Vinson & Elkins L.L.P. He was a partner with the fiff rm frff om 1990 through 1997. Mr. Berg is also a director of ProPetro Holding Corp.rr ("ProPetro") and a director and Vice Chairman of Permian Strategic Partnership Inc. Mr. Berg graduated Magna Cum Laude ation, a Fortune rr tt 44 PIONEER NATURARR L RESOURCES COMPANY and Phi Beta Kappa frff om the University of Texas School of Law in 1983. a with a Bachelor of Arts degree frff om Tulane University in 1980. He earned his Juris Doctorate with honors J. D. Hall Mr. Hall was elected as the Company's Executive Vice President, Operations, in April 2019. Mr. Hall had previously the Company as Executive Vice President, Permian Operations, frff om August 2015 to April 2019, Executive held positions forff Vice President, Southern Wolfcff amp Operations frff om August 2014 to August 2015, Senior Vice President, South Texas Operations frff om June 2013 to August 2014, Vice President, South Texas Operations frff om Februarr ryrr 2013 to June 2013, Vice President, South Texas Asset Team frff om September 2012 to Februarr ryrr 2013 and Vice President, Eagle Ford Asset Team frff om Januaryrr 2010 to September 2012. Prior to his positions in South Texas, he was the Operations Manager in Alaska frff om Januaryrr 2005 to Januaryrr 2010. He previously held several other positions with the Company, including managing offff sff hore, onshore and international projects. He began his career with a predecessor company, MESA, Inc. ("MESA"), in 1989. He has a Bachelor of Science degree in Mechanical Engineering frff om Texas Tech University and is a registered profeff ssional engineer in Texas. Mark H. Kleinman Mr. Kleinman was elected as the Company's Executive Vice President and General Counsel in April 2019. He also held the positions of Senior Vice President and General Counsel frff om Januaryrr 2014 through April 2019, Vice President frff om May 2006 until Januaryrr 2014, Corporr frff om June 2005 through August 2015, and Chief Compliance Offiff cer frff om June 2005 until May 2013. Mr. Kleinman earned a Bachelor of Arts degree in Government frff om the University of Texas and graduated, with honors, frff om the University of Texas School of Law. rate Secretaryrr Elizabeth A. McDonald Ms. McDonald was elected as the Company's Senior Vice President, Strategic Planning, Field Development and the Company as Vice President, Marketing, effff eff ctive Januaryrr 1, 2021. Ms. McDonald had previously held positions forff Permian Strategic Planning and Field Development, frff om May 2019 to Januaryrr 2021, Vice President, Permian Infrff astrucrr turt e Development and Operations, frff om April 2018 to May 2019, Vice President, South Texas Asset Team, frff om March 2017 to April 2018, and Vice President, South Texas Subsurfaff ce, frff om August 2014 to March 2017. She joined the Company in 2005 as a reservoir engineer on the Engineering and Development team focff used on the Gulf of Mexico and North Afrff ica exploration projects, and has held a number of positions, including as Senior Reservoir Engineering Manager – South Texas Asset Team, Manager of Planning – Corpor ate Finance, Business Analyst – Worldwide Operations, Senior Reservoir Engineer – Central Gulf Coast Exploration and Reservoir Engineer – Engineering and Development. Ms. McDonald earned a Bachelor of Science, Petroleum Engineering degree in 2001 frff om Texas A&M University and is a registered profeff ssional engineer in Texas. rr Neal H. Shah Mr. Shah was elected as the Company's Senior Vice President and Chief Financial Offff iff cer, effff eff ctive Januaryrr 1, 2021. Mr. Shah joined the Company in June 2017 as Vice President, Investor Relations. Beforff e joining the Company, Mr. Shah served as Senior Equity Research Analyst at Thrivent Asset Management frff om June 2016 to June 2017, and as Vice President at Nuveen LLC frff om March 2006 to June 2016. He has a fiff nancial and equity research background and has held various fiff nancial analysis positions at Piper Jaffff rff ay & Company, RBC Capia tal Markets and Goldman Sachs & Company. Mr. Shah earned a Bachelor of Science degree in Electrical Engineering frff om Louisiana State University and a Master of Business Administration degree frff om the Booth School of Business at the University of Chicago, where he was a Siebel Scholar and a recipient of the Irwin J. Biederman Leadership award. Tyson L. Taylor Ms. Taylor was elected as the Company's Senior Vice President, Human Resources, in November 2021. Prior to her current role, Ms. Taylor served as Vice President, Human Resources, frff om April 2019 through November 2021. Ms. Taylor has 20 years of Human Resources experience, including 11 years with the Company, during which she has worked in all areas of the Company's Human Resources department. Ms. Taylor previously held the positions of Vice President, Learning and Development, and Director, Organizational Development and Recruirr ting. Ms. Taylor earned a Bachelor of Business Administration frff om the University of North Texas and a Master of Business Administration frff om Southern Methodist University. Bonnie S. Black Ms. Black was elected as the Company's Senior Vice President, Technologies and Operations Support, in December 2022. Prior to her current role, Ms. Black served as Vice President of Drilling. In 2015, Ms. Black was named Vice President, Permian Well Planning & Permitting and also served as Vice President of Environmental and Sustainabla e Development frff om 45 PIONEER NATURARR L RESOURCES COMPANY 2013 to 2015. Ms. Black joined the company in 2007 as a Health, Safeff ty and Environmental manager aftff er more than 25 years' experience in the oil and gas industryrr working in client-faff cing environmental consulting roles in Texas, Oklahoma and Alaska. Ms. Black holds a Bachelor of Science in Civil Engineering frff om Texas A&M University and is a registered profeff ssional engineer with a specialization in Environmental Engineering. At her alma mater, she is the Chair of the Civil & Environmental Advisoryrr Council and an Executive Committee Member of the Aggie Women Engineering Network. Ms. Black also serves as an Advisoryrr Board Member of the Undergraduate Practice Opportuni ties Program at Massachusetts Institutt e of Technology. t Christopher L. Washburn Mr. Washburn was elected as the Company's Vice President and Chief Accounting Offff iff cer in October 2022. Mr. Washburn served as the Company's interim Chief Accounting Offff iff cer beginning in July 2022. He also held the position of the Company's Controller frff om March 2018 to July 2022. Prior to this role, Mr. Washburn has served in various accounting positions since joining the Company in 2006. Mr. Washburn earned a Bachelor of Business Administration degree and a Master of Profeff ssional Accounting degree frff om West Texas A&M University and is a Certififf ed Public Accountant. Offff iff cers are generally elected by the Board at its meeting on the day of each annual election of directors, with each such offff iff cer serving until a successor has been elected and qualififf ed. 46 PIONEER NATURARR L RESOURCES COMPANY PART II ITEM 5. , Q MARKET FOR REGISTRARR NT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Q The Company's common stock is listed and traded on the NYSE under the symbol "PXD." The Board has authority to declare dividends to the holders of the Company's common stock. The Board intends to continue the payment of dividends to the holders of the Company's common stock in the futff urt e. The declaration and payment of futff urtt e dividends, however, will be at the discretion of the Board and will depend on, among other things, the Company's earnings, fiff nancial condition, capia tal requirements, level of indebtedness, statutt oryrr ying to the payment of dividends and other considerations that the Board deems relevant. l restrictions appl and contractuat a As of Februarr ryrr 21, 2023, the Company's common stock was held by 8,159 holders of record. Purchases of Equity Securities by the Issuer and Affff iff liated Purchasers Purchases of the Company's common stock are as folff lows: Three Months Ended December 31, 2022 Total Number of Shares Purchased (a) 139,902 556,284 1,012,810 1,708,996 $ $ $ Average Price Paid per Share 229.42 252.29 225.18 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 138,889 555,179 1,012,810 1,706,878 Approximate Dollar Amount of Shares that May Yet Be Purchased under Plans or Programs (b) 2,718,728,180 $ 2,578,657,478 $ 2,350,597,194 $ Period October 1-31, 2022 November 1-30, 2022 December 1-31, 2022 __________________ (a) Includes shares withheld frff om employees in order forff share-based awards that vested during the period. employees to satisfyff income tax withholding payments related to (b) In Februarr ryrr 2022, the Board authorized a $4 billion common stock repurchase program. The stock repurchase program has no time limit and may be modififf ed, suspended or terminated at any time by the Board. 47 PIONEER NATURARR L RESOURCES COMPANY Perforff mance Graph The folff lowing perforff mance grapha the SEC, nor shall the inforff mation be incorpor Securities Exchange Act of 1934, each as amended, except to the extent that the Company specififf cally incorpor refeff rence into such fiff ling. and related inforff mation shall not be deemed "soliciting material" or to be "fiff led" with ated by refeff rence into any futff urtt e fiff ling under the Securities Act of 1933 or ates it by rr rr The grapha below compares the cumulative total stockholder returtt n on the Company's common stock during the fiff ve-year the Standard & Poor's ("S&P") 500 period ended December 31, 2022, with cumulative total returtt ns during the same period forff Index and the S&P Oil and Gas Exploration & Production Index. 2017 2018 2019 2020 2021 2022 As of December 31, Pioneer Naturt al Resources Company S&P 500 S&P Oil & Gas Exploration & Production $ $ $ 100.00 100.00 100.00 $ $ $ 76.23 95.62 80.50 $ $ $ 88.49 125.72 90.17 $ $ $ 68.27 148.85 58.24 $ $ $ 113.49 191.58 108.95 $ $ $ 157.60 156.89 172.69 The stock price perforff mance included in this grapha is not necessarily indicative of futff urtt e stock price perforff mance. ITEM 6. RESERVR ED 48 PIONEER NATURARR L RESOURCES COMPANY ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERARR TIONS Acquisitions The Company regularly seeks to acquire or trade forff acreage that complements its operations, provides exploration and ties, increases the lateral length of futff urtt e horizontal wells and provides superior returt ns on investment. t development opportuni The Company's notabla e recent acquisitions include: • • In May 2021, the Company completed the acquisition of Double Eagle III Midco 1 LLC ("DoublePoint") in exchange forff 27 million shares of Pioneer common stock and $1.0 billion of cash (the "DoublePoint Acquisition"). The Pioneer stock consideration transfeff rred had a faff ir value of $4.2 billion. In Januaryrr 2021, the Company completed the acquisition of Parsley Energy, Inc., a Delaware corpor ation 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's subsidiary,rr Parsley 52 million shares of Pioneer common stock. The Pioneer Energy, LLC (the "Parsley Acquisition"), in exchange forff stock consideration transfeff rred had a faff ir value of $6.9 billion. rr Divestitures The Company regularly reviews its asset base to identifyff nonstrategic assets, the disposition of which would increase capia tal resources availabla e forff ther the Company's objective of maintaining a strong balance sheet to ensure fiff nancial flff exibility. The Company's notabla e recent divestiturtt es include: other activities, create organizational and operational effff iff ciencies and furff • • • ryrr 2022, the Company completed the sale of its equity interest in a gas gathering and processing system in cash proceeds of $125 million. The sale was treated as a recoveryrr of investment frff om a In Februarr northern Martin County forff partial sale of proved property resulting in no gain or loss being recognized. In December 2021, the Company completed the sale of its assets in the Delaware Basin (the "Delaware Divestiturtt e") to Continental Resources, Inc. forff cash proceeds of $3.0 billion, aftff er 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 thousand net acres in western Glasscock County (the $137 million in cash and "Glasscock Divestiturt e") to Laredo Petroleum, Inc. ("Laredo") in exchange forff 960 thousand shares of Laredo's common stock representing total consideration transfeff rred of $206 million. Financial and Operating Perforff mance The Company's fiff nancial and operating perforff mance forff the year ended December 31, 2022 included the folff lowing highlights: • Net income attributabla e to common stockholders forff diluted share), as compared to net income of $2.1 billion ($8.61 per diluted share) forff primaryrr components of the increase in earnings attributabla e to common stockholders include: the year ended December 31, 2022 was $7.8 billion ($31.13 per the same period in 2021. The • • • a $4.8 billion increase in oil and gas revenues, primarily due to (i) a 35 percent increase in average realized commodity prices per BOE in 2022 due to the continued recoveryrr in oil, NGL and gas demand, low worldwide levels, OPEC supplies being below agreed quotas and the impact to global oil and gas supplies inventoryrr resulting frff om sanctions against RusRR sia related to their invasion of Ukraine and (ii) a fiff ve percent increase in daily sales volumes due to the Company's successfulff Sprabea l rry/rr Wolfcff amp horizontal drilling program and a fulff year of production frff om the assets acquired in the DoublePoint Acquisition in May 2021, partially offff sff et by reduced production associated with the assets divested as part of the Delaware Divestiturt e in December 2021; a $1.9 billion decrease in derivative losses, primarily due to a reduction in the Company's commodity derivative positions in 2022; and a $1.2 billion change in net gain/loss on disposition of assets, primarily due to the Delaware Divestiturt e in December 2021; partially offff sff et by: • • a $1.5 billion increase in income taxes, primarily due to the increase in earnings in 2022 compared to 2021; and a $1.0 billion increase in production costs, including taxes, primarily attributabla e to increases in (i) production taxes, ad valorem taxes and gathering, processing and transportation costs that are directly related to the 49 PIONEER NATURARR L RESOURCES COMPANY l and labor increase in commodity prices, (ii) lease operating expenses primarily due to inflff ationaryrr pressures on power, fueff l year of production costs added frff om the assets acquired in the DoublePoint Acquisition in May 2021, partially offff sff et by a decrease in production costs as a result of the Delaware Divestiturt e. costs, (iii) workover activity and (iv) a fulff a • • • • • • During the year ended December 31, 2022, average daily sales volumes increased on a BOE basis by fiff ve percent to 649,773 BOEPD, as compared to 617,332 BOEPD during the same period in 2021. Average oil and NGL prices per Bbl and average gas prices per Mcf increased to $95.66, $37.67 and $6.03, respectively, during the year ended December 31, 2022, as compared to $67.60, $32.70 and $3.85, respectively, forff the same period in 2021. Net cash provided by operating activities increased during the year ended December 31, 2022 to $11.3 billion, as compared to $6.0 billion forff the same period in 2021. The increase in net cash provided by operating activities during the year ended December 31, 2022, as compared to the same period in 2021, is primarily due to (i) the aforff ementioned increases in oil and gas revenues and daily sales volumes (ii) a decrease in cash used in derivative activities, partially offff sff et by (i) an increase in income taxes, (ii) an increase in production costs, including production and ad valorem taxes and (iii) a reduction in cash flff ow associated with the assets divested as part of the Delaware Divestiturt e. During the year ended December 31, 2022, the Company paid base dividends of $1.1 billion, or $4.38 per share, and variabla e dividends of $5.2 billion, or $21.68 per share, as compared to base dividends of $487 million, or $2.23 per share, and variabla e dividends of $1.1 billion, or $4.53 per share forff During the year ended December 31, 2022, the Company repurchased 7.2 million shares forff Company's stock repurchase program, as compared to repurchases of 1.4 million shares forff same period in 2021. As of December 31, 2022 and December 31, 2021, the Company's net debt to book capia talization was 15 percent and 12 percent, respectively. $1.6 billion under the $250 million during the the same period in 2021. Oil and Gas Industry Considerations rr ing the demand forff The COVID-19 pandemic resulted in a severe worldwide economic downturtt n, signififf cantly disrupt oil throughout the world, and created signififf cant volatility, uncertainty and turt moil in the oil and gas industry.rr The decrease in oil, combined with excess supply of oil and related products, resulted in oil prices declining signififf cantly beginning demand forff ryrr 2020. Since mid-2020, oil prices have improved, with demand steadily increasing despite the uncertainties in late Februarr surrounding the COVID-19 variants, and related responses by governments worldwide with regards to travel restrictions, business closures and other restrictions, which have continued to inhibit a fulff In addition, worldwide oil inventories, frff om a historical perspective, remain low and concerns exist with the abia lity of OPEC and other oil producing nations to meet forff ecasted futff urtt e oil demand growth, with many OPEC countries not abla e to produce at their OPEC agreed upon quota levels due to their limited capia tal investments directed towards developing incremental oil supplies over the past feff w years. Furthermore, sanctions, import bans and price capsa on RusRR sia have been implemented by various countries in response to the war in Ukraine, furff ther impacting global oil supply. As a result of these and other oil and gas supply constraints, the world has experienced signififf cant increases in energy costs. During December 2022, OPEC announced a continuation of its 2 MMBOPD production cut that started in November 2022 related to the uncertainty surrounding the global economy and futff urt e oil demand. As a result of the current global supply and demand imbalances, oil and gas prices have remained strong the three months ended December 31, 2022 being $82.64 per Bbl and with average NYMEX oil and NYMEX gas prices forff the same period in 2021. In $6.26 per Mcf,ff respectively, as compared to $77.19 per Bbl and $5.84 per Mcf,ff respectively, forff ions, addition, the ongoing pandemic, combined with the RusRR sia/Ukraine conflff ict, has resulted in global supply chain disrupt which has led to signififf cant cost inflff ation and the potential forff a global recession. Specififf cally, the Company's 2022 capia tal program was impacted by higher than expected inflff ation in steel, diesel and chemical prices, among other items. l global demand recovery.rr rr Global oil price levels and inflff ationaryrr pressures will ultimately depend on various faff ctors that are beyond the Company's control, such as (i) the abia lity of OPEC and other oil producing nations to manage the global oil supply, (ii) the impact of sanctions and import bans on production frff om RusRR sia, (iii) the timing and supply impact of any Iranian sanction relief on their abia lity to export oil, (iv) the effff eff ctiveness of responses by businesses and governments to combat any additional outbrt eaks of the COVID-19 virurr s and their impact on domestic and worldwide demand, (v) the global supply chain constraints ing and distribution delays, (vi) oilfiff eld service demand and cost inflff ation, (vii) political stabia lity of associated with manufaff cturt oil consuming countries and (viii) increasing expectations that the world may be heading into a global recession. The Company continues to assess and monitor the impact of these faff ctors and consequences on the Company and its operations. 50 First Quarter 2023 Outlook PIONEER NATURARR L RESOURCES COMPANY Based on current estimates, the Company expects the folff lowing operating and fiff nancial results forff the fiff rst quarter of 2023: Average daily production (MBOE) Average daily oil production (MBbls) Production costs per BOE DD&A per BOE Exploration and abaa ndonments expense General and administrative expense Interest expense Other expense Cash flff ow impact frff om fiff rm transportation (a) Cash income taxes Effff eff ctive tax rate _____________________ Three Months Ending March 31, 2023 Guidance ($ in millions, except per BOE amounts) 659 - 687 349 - 364 $11.75 - $13.25 $10.50 - $12.00 $10 - $20 $78 - $88 $27 - $32 $20 - $40 $(50) - $(90) $70 - $100 22% - 27% (a) The cash flff ow impact frff om fiff rm transportation is primarily based on (i) the forff ecasted diffff eff rential between Midland WTI oil prices and Brent oil prices less the costs to transport purchased oil frff om the areas of the Company's production to the Gulf Coast and (ii) oil price flff uctuat tions between the time the Company purchases the oil frff om its areas of operation and when the oil is delivered and sold to Gulf Coast refiff neries 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 fiff rm transport costs, the Company's results of operations will reflff ect the negative cash flff ow impact attributabla e to the shortfaff ll. 2023 Capital Budget The Company's capia tal budget forff 2023 is expected to be in the range of (i) $4.45 billion to $4.75 billion of development tion of tank batteries, saltwater related capia tal, which includes drilling and completion related activities, and the construcrr turt e, and (ii) $150 million to $200 million of exploration, environmental and other capia tal, disposal faff cilities and water infrff astrucrr Barnett/tt Woodforff d forff mation wells in the Midland Basin, additional testing of the Company's principally related to drilling four enhanced oil recoveryrr futff urt e drilling, completions and production turtt e forff operations. The 2023 capia tal budget excludes acquisitions, asset retirement obligations, capia talized interest, geological and geophysical general and administrative expense, corpor ("EOR") project and adding electric power infrff astrucrr ate faff cilities and vehicles. rr ff The 2023 capia tal budget is expected to be funde ff d frff om operating cash flff ow and, if necessary,rr frff om cash and cash equivalents on hand or borrowings under the Company's Credit Facility. Results of Operations Results of operations should be read together with the Company's consolidated fiff nancial statements and related notes included in "Item 8. Financial Statements and Supplementaryrr Data" of this Annual Report on Form 10-K. See the Company's a discussion of the Company's 2021 results of Annual Report on Form 10-K forff operations as compared to the Company's 2020 results of operations. the year ended December 31, 2021 forff Oilii and gas revenues. The Company's oil and gas revenues are derived frff om sales of oil, NGL and gas production. Increases or decreases in the Company's revenues, profiff tabia lity and futff urtt e production are highly dependent on commodity prices. Prices are market driven and futff urtt e prices will flff uctuat te due to supply and demand faff ctors, availabia lity of transportation, seasonality, geopolitical developments and economic faff ctors, among other items. Oil and gas revenues Year Ended December 31, 2022 2021 Change (in millions) $ 16,310 $ 11,503 $ 4,807 51 Average daily sales volumes are as folff lows: PIONEER NATURARR L RESOURCES COMPANY Oil (Bbls) NGLs (Bbls) Gas (Mcf)ff (a) Total (BOE) Year Ended December 31, 2022 351,964 160,294 825,085 649,773 2021 356,986 143,026 703,919 617,332 % Change (1%) 12% 17% 5% ____________________ (a) Gas production excludes gas produced and used as fiff eld fueff l. the year ended December 31, 2022, as compared to the same period in Average daily BOE sales volumes increased forff 2021, primarily due to the Company's successfulff Sprabea l year of production rry/rr Wolfcff amp horizontal drilling program and a fulff frff om the assets acquired in the DoublePoint Acquisition in May 2021, partially offff sff et by reduced production of 47 MBOE per day associated with the assets divested as part of the Company's Delaware Divestiturt e in December 2021, which had a higher percentage of oil production than the Company's Midland Basin assets. The oil, NGL and gas prices reported by the Company are based on the market prices received forff each commodity. Commodity prices forff the year ended December 31, 2022, as compared to the same period in 2021, increased due to the levels, OPEC supplies being below agreed quotas continued recoveryrr and the impact to global oil and gas supplies resulting frff om sanctions against RusRR sia related to their invasion of Ukraine. The average prices are as folff in oil, NGL and gas demand, low worldwide inventoryrr lows: Oil price per Bbl NGL price per Bbl Gas price per Mcf Price per BOE Year Ended December 31, 2022 2021 $ $ $ $ 95.66 37.67 6.03 68.77 $ $ $ $ 67.60 32.70 3.85 51.05 % Change 42% 15% 57% 35% NeNN t salell s of purchased commoditii itt es. The Company enters into pipeline capaa city commitments in order to secure city frff om the Company's areas of production and to secure diesel supply frff om the availabla e oil, NGL and gas transportation capaa Gulf Coast. The Company also enters into purchase commitments to secure sand supply forff 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 diversifyff a portion of the Company's oil and gas sales to (i) Gulf Coast refiff neries, (ii) Gulf Coast and West Coast gas city commitments. The Company periodically markets and (iii) international oil markets, and to satisfyff unused gas pipeline capaa sells diesel and sand to unaffff iff liated third parties in the Permian Basin if it has supply in excess of its operational needs. Revenues and expenses frff om 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 capaa city frff om the Company's areas of production to downstream sales points and storage capaa city at downstream sales points. The transportation and storage costs associated with these transactions are included in purchased commodities expense. city and storage commitments in order to secure availabla e oil and gas transportation capaa The net effff eff ct of third party purchases and sales of commodities is as folff lows: Sales of purchased commodities Purchased commodities expense Year Ended December 31, 2022 2021 Change (in millions) $ $ 8,074 $ 8,235 (161) $ 6,367 $ 6,560 (193) $ 1,707 1,675 32 The change in net sales of purchased commodities forff the year ended December 31, 2022, as compared to the same period in 2021, is primarily due to improved margins on the Company's downstream Gulf Coast refiff neryrr and export oil sales. 52 PIONEER NATURARR L RESOURCES COMPANY Firm transportation payments on excess pipeline capaa city are included in other expense in the accompanying consolidated statements of operations. See Note 16 of Notes to Consolidated Financial Statements included in "Item 8. additional inforff mation. Financial Statements and Supplementaryrr Data" forff InII tett rest and othtt er inii come,e net.tt Interest and other income, net Year Ended December 31, 2022 2021 Change (in millions) $ 119 $ 23 $ 96 The change in interest and other income forff the year ended December 31, 2022, as compared to the same period in 2021, is primarily due to (i) interest income of $36 million, as compared to $1 million, (ii) a noncash gain on the Company's short- term investment in Laredo of $17 million, as compared to a noncash loss of $11 million and (iii) changes in the faff ir value of the Company's investment in affff iff liate resulting in a noncash gain of $37 million, as compared to a noncash gain of $12 million. See Note 4 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. Derivatitt ve losll s,s net.tt Commodity price derivatives: Noncash derivative gain, net Cash payments/defeff rred obligations on settled derivatives, net (a) $ Total commodity derivative loss, net Marketing derivatives: Noncash derivative gain (loss), net Cash payments on settled derivatives, net Total marketing derivative loss, net Conversion option derivatives: Noncash derivative gain, net Cash receipts on settled derivatives, net Total conversion option derivative gain, net Derivative loss, net _____________________ Year Ended December 31, 2022 2021 Change (in millions) 158 (358) (200) (63) (66) (129) 1 13 14 $ $ 437 (2,595) (2,158) (279) 2,237 1,958 14 (39) (25) — — — (77) (27) (104) 1 13 14 $ (315) $ (2,183) $ 1,868 (a) The year ended December 31, 2021 includes $521 million of losses attributabla e to the early settlement of certain 2022 oil and gas commodity derivatives primarily related to (i) the termination of certain of its 2022 oil and gas commodity derivative positions and (ii) entering into equal and offff sff etting oil and gas commodity derivative trades, which had the net effff eff ct of eliminating futff urt e faff ir value changes to certain of its 2022 derivative positions. ComCC moditytt price derivatives. The Company primarily utilizes derivative contracts to reduce the effff eff ct of price volatility on the commodities the Company produces and sells. The oil and gas price impact related to the Company's commodity price derivatives are as folff lows: Oil derivative payments (a) Gas derivative payments, net (b) Year Ended December 31, 2022 2021 Net Cash Payments (in millions) $ $ (8) $ (350) $ ) ( ) ( (358) Price Impact (0.06) per Bbl (1.16) per Mcf Net Cash Payments (in millions) Price Impact $ $ (1,819) $ (13.96) per Bbl (0.99) per Mcf (255) $ ) ( (2,074) ) ( 53 PIONEER NATURARR L RESOURCES COMPANY _____________________ (a) Excludes the effff eff ct frff om early settlement of certain of the Company's oil derivative contracts, resulting in cash payments of $316 million and $192 million forff the year ended December 31, 2022 and 2021, respectively. (b) Excludes the effff eff ct frff om early settlement of certain of the Company's gas derivative contracts, resulting in cash payments of $12 million and $1 million forff the year ended December 31, 2022 and 2021, respectively. MarMM krr ekk ting derivatives. The Company uses marketing derivatives to diversifyff its oil pricing to Gulf Coast and international markets. As of December 31, 2022, the Company's marketing derivatives reflff ect long-term marketing contracts whereby the Company agreed to purchase and simultaneously sell barrels of oil at an oil terminal in Midland, Texas. In October 2019, the Company agreed to purchase and simultaneously sell 50 thousand barrels of oil per day beginning Januaryrr 1, 2021 and 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 is based on a Midland WTI price and the price the Company receives forff selling oil through a Gulf Coast storage and export faff cility at prices that are highly correlated with Brent oil prices during the same the contracts as month of the purchase. Based on the forff m of the long-term marketing contracts, the Company accounts forff derivative instrumrr the oil volumes sold is the WASP that a non-affff iff liated counterparr ents not designated as hedges. rty receives forff ConvCC ersrr ion option derivatives. In May 2020, the Company issued $1.3 billion principal amount of convertible senior notes due 2025 (the "Convertible Notes"). Certain holders of the Convertible Notes exercised their conversion option during the year ended December 31, 2022. Per the terms of the notes indenturt e, the Company elected to settle the conversions in cash, with settlement occurring 25 trading days frff om the notice of conversion (the "Settlement Period"). The Company's election to settle an exercised conversion option in cash results in a forff ward contract during the Settlement Period that is accounted forff as a ent not designated as a hedge. The Company's conversion option derivatives represent the change in the cash derivative instrumrr settlement obligation that occurs during the Settlement Period related to conversion options exercised by certain holders of the Company's Convertible Notes. The Company's open derivative contracts are subject to market risk. See "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" and Note 4 and Note 5 of Notes to Consolidated Financial Statements included in "Item 8. additional inforff mation. Financial Statements and Supplementaryrr Data" forff GaiGG nii (l(( osll s)s on disii pos s itii itt on of assetstt ,s net.tt Year Ended December 31, 2022 2021 Change (in millions) $ 106 $ (1,067) $ 1,173 Gain (loss) on disposition of assets, net The net gain on disposition of assets forff of certain undeveloped acres and producing wells in the Midland Basin forff the sales of $110 million. the year ended December 31, 2022 is primarily due to the Company's divestment cash proceeds of $164 million, resulting in a gain on The net loss on disposition of assets forff the year ended December 31, 2021 is primarily due to the completion of the Delaware Divestiturtt e, resulting in the Company recording a loss of $1.1 billion. See Note 3 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. Oilii and gas productitt on coststt . Oil and gas production costs Year Ended December 31, 2022 2021 Change (in millions) $ 1,922 $ 1,267 $ 655 54 Total production costs per BOE are as folff lows: PIONEER NATURARR L RESOURCES COMPANY Lease operating expense (a) Gathering, processing and transportation expense (b) Workover costs (a) Net naturt al gas plant income (c) ____________________ Year Ended December 31, 2022 2021 % Change $ $ 3.89 4.21 1.03 (1.04) 8.09 $ $ 2.97 3.14 0.45 (0.93) 5.63 31% 34% 129% 12% 44% (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 frff actionate 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 naturt al gas plant income represents the earnings frff om the Company's ownership share of gas processing faff cilities that gather and process the Company's and third party gas. The change in the Company's production costs per BOE during the year ended December 31, 2022, as compared to the same period in 2021, is due to the folff lowing: • • Lease operating expense per BOE increased primarily due to inflff ationaryrr pressures on power, fueff Gathering, processing and transportation expense per BOE increased primarily due to increased gas processing costs l volumes retained by the processor as a result of (i) an increase in gas and NGL prices attributabla e to the contractuatt as payment forff their services and (ii) an increase in gas processing plant electricity costs, which the processor passes through to each gas producer; l and labor costs; a • Workover costs per BOE increased due to an increase in workover activity as a result of improved commodity prices being realized in 2022, which increased the economic benefiff t of repairing certain of the Company's oil and gas wells; and Net naturt al gas plant income per BOE increased primarily due to improved gas and NGL prices, partially offff sff et by the loss of net naturt al gas plant income associated with the Company's Martin County Gas Processing Divestiturt e in Februarr ryrr 2022. • PrPP oductitt on and ad valorll tt em taxe s. Production and ad valorem taxes Production and ad valorem taxes per BOE are as folff lows: Production taxes per BOE Ad valorem taxes per BOE Year Ended December 31, 2022 2021 Change (in millions) 965 $ 651 $ 314 Year Ended December 31, 2022 2021 % Change 3.27 0.81 4.08 $ $ 2.41 0.48 2.89 36% 69% 41% $ $ $ 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. The change in production taxes per BOE forff the year ended December 31, 2022, as compared to the same period in 2021, is due to the aforff ementioned increase in oil, NGL and gas commodity prices. The change in ad valorem taxes per BOE forff the year ended December 31, 2022, as compared to the same period in 2021, is primarily due to an increase in prior year commodity prices that are used to determine current year ad valorem taxes. 55 Deplee ell titt on, depree eciati itt on and amortitt zii atitt on expe ee nse.ee PIONEER NATURARR L RESOURCES COMPANY Depletion, depreciation and amortization Total DD&A expense per BOE is as folff lows: DD&A per BOE Depletion expense per BOE Year Ended December 31, 2022 2021 Change (in millions) $ 2,530 $ 2,498 $ 32 Year Ended December 31, 2022 2021 % Change $ $ 10.67 10.48 $ $ 11.08 10.81 (4%) (3%) The change in DD&A and depletion expense per BOE forff the year ended December 31, 2022, as compared to the same period in 2021, is primarily due to additions of proved reserves attributabla e to the aforff ementioned successfulff rry/rr Wolfcff amp drilling program and improved commodity prices (which has the effff eff ct of extending the economic lifeff of producing wells). See "Unaudited Supplementaryrr Inforff mation" included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. Sprabea ExplEE orll atitt on and abandonmentstt expe ee nse.ee Geological and geophysical Leasehold abaa ndonments and other Year Ended December 31, 2022 2021 (in millions) Change $ $ 34 7 41 $ $ 46 5 51 $ $ (12) 2 (10) The change in geological and geophysical costs forff the year ended December 31, 2022, as compared to the same period in 2021, is primarily due to the one-time relicensing of certain Parsley seismic data in connection with the Parsley Acquisition during 2021. Leasehold abaa ndonment costs primarily represent the abaa ndonment of certain unproved properties that the Company no longer plans to drill beforff e the leases expire. During the year ended December 31, 2022 and 2021, the Company drilled and evaluated 442 and 488 exploratory/rr extension wells, respectively, with 100 percent successfulff ly completed as discoveries. See Note 6 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. GeGG neral and adminii isii trtt atitt ve expe ee nse.ee Cash general and administrative expense Noncash general and administrative expense Total general and administrative expense per BOE is as folff lows: Cash general and administrative expense Noncash general and administrative expense 56 Year Ended December 31, 2022 2021 Change (in millions) 293 41 334 $ $ 244 48 292 $ $ 49 (7) 42 Year Ended December 31, 2022 2021 % Change 1.24 0.17 1.41 $ $ 1.08 0.21 1.29 15% (19%) 9% $ $ $ $ PIONEER NATURARR L RESOURCES COMPANY The change in cash general and administrative expense per BOE forff the year ended December 31, 2022, as compared to the same period in 2021, is primarily due to (i) $20 million of charitabla e contributions to various Ukraine humanitarian aid organizations in response to the RusRR sia/Ukraine conflff ict and (ii) incremental general and administrative costs associated with an increase in headcount due to the Parsley Acquisition and DoublePoint Acquisition. The change in noncash general and administrative expense per BOE forff the year ended December 31, 2022, as compared to the same period in 2021, is primarily due to changes in the market value of investments underlying the Company's defeff rred compensation obligation. InII tett rest expe ee nse.ee Cash interest expense Noncash interest expense Year Ended December 31, 2022 2021 Change (in millions) $ $ 118 10 128 $ $ 151 10 161 $ $ (33) — (33) The change in cash interest expense forff the year ended December 31, 2022, as compared to the same period in 2021, is primarily due to (i) the early extinguishment of the Company's 0.750% Senior Notes due 2024 and the 4.450% Senior Notes due 2026 during Februarr ryrr 2022, (ii) the repayment of the Company's 3.950% Senior Notes due 2022 that maturt ed in July 2022 and (iii) the early extinguishment of the Company's 5.625% Senior Notes due 2027 during October 2022, partially offff sff et 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 forff the year ended December 31, 2022 decreased to 1.6 percent, as compared to 1.9 percent forff the same period in 2021. See Note 7 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. Othtt er expe ee nse.ee Other expense Year Ended December 31, 2022 2021 Change (in millions) $ 173 $ 410 $ (237) The change in other expense forff the year ended December 31, 2022, as compared to the same period in 2021, is primarily due to $244 million of transaction costs during 2021 related to the Parsley Acquisition and DoublePoint Acquisition and $80 million of costs during 2021 related to covering fiff rm gas commitments due to Winter Storm Uri, partially offff sff et by (i) $39 million in net losses attributabla e to the early extinguishment of the Company's 0.750% Senior Notes due 2024, 4.450% Senior Notes due 2026 and 5.625% Senior Notes due 2027 during 2022 and (ii) $23 million of impairment expense to adjust the carryirr ng values of a held forff sale unoccupied fiff eld offff iff ce and certain operating lease right-of-ff use assets to their estimated faff ir values during 2022. See Note 16 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. InII come taxtt provisii ion. Income tax provision Effff eff ctive tax rate Year Ended December 31, 2022 2021 Change (in millions, except percentages) $ (2,106) $ (628) $ (1,478) 21% 23% (2%) The change in income tax provision forff the year ended December 31, 2022, as compared to the same period in 2021, is primarily due to an increase of $7.2 billion in income beforff e income taxes. The Company's effff eff ctive tax rate diffff eff red frff om the U.S. statuttt oryrr rate of 21 percent in 2021 primarily due to state income taxes. The Company settled certain state unrecognized tax benefiff ts during the year ended December 31, 2022 resulting in lower 2022 state income taxes. 57 PIONEER NATURARR L RESOURCES COMPANY Based on the Company's earnings, the Company's availabla e tax attributes were not suffff iff cient to offff sff et taxabla e U.S. feff deral income in 2022. As a result, the Company made U.S. net feff deral cash tax payments totaling $424 million during the year ended December 31, 2022. Additionally, the Company made state cash tax payments totaling $21 million during the same period. Cash taxes were paid frff om operating cash flff ows and cash on hand. icabla e corpor ations," which is effff eff ctive forff On August 16, 2022, President Biden signed into law the IRAR , which includes, among other things, the CAMT. Under icabla e ation as ation" in any taxabla e year in which the "average annual adjusted fiff nancial statement income" of the a three-taxabla e-year period ending prior to such taxabla e year exceeds ations, stock repurchases aftff er December 31, 2022. The IRARR did not impact the Company's current year tax provision or the CAMT, a 15 percent minimum tax will be imposed on certain adjusted fiff nancial statement income of "appl corpor rr an "appl a corpor rr $1 billion. The IRAR also establa ishes a one percent excise tax on stock repurchases made by publicly traded U.S. corpor effff eff ctive forff the Company's consolidated fiff nancial statements, but the new provisions could impact futff urt e periods. tax years beginning aftff er December 31, 2022. The CAMT generally treats a corpor ation and certain of its subsidiaries and affff iff liates forff a rr rr rr See Note 17 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. Liquidity and Capital Resources Liquii iditii ytt .yy The Company's primaryrr sources of short-term liquidity are (i) cash and cash equivalents, (ii) net cash provided city under its Credit Facility, (v) issuances of debt by operating activities, (iii) sales of investments, (iv) unused borrowing capaa 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) capia tal expenditurt es, (ii) ities, (iv) dividends and these requirements may be provided by ng will be ng sources will be adequate to meet acquisitions of oil and gas properties, (iii) payments of contractuat share repurchases, (v) income taxes and (vi) working capia tal obligations. Funding forff any combination of the Company's sources of liquidity. Although the Company expects that its sources of fundi adequate to fundff the Company's futff urt e needs. its 2023 liquidity requirements, no assurance can be given that such fundi l obligations, including debt maturt ff ff 2023 capitii altt budget.tt The Company's capia tal budget forff 2023 is expected to be in the range of (i) $4.45 billion to $4.75 tion of tank billion of development related capia tal, which includes drilling and completion related activities, and the construcrr turtt e, and (ii) $150 million to $200 million of exploration, batteries, saltwater disposal faff cilities and water infrff astrucrr Barnett/tt Woodforff d forff mation wells in the Midland Basin, environmental and other capia tal, principally related to drilling four additional testing of the Company's EOR project and adding electric power infrff astrucrr futff urtt e drilling, completions and production operations. The 2023 capia tal budget excludes acquisitions, asset retirement obligations, capia talized interest, geological and geophysical general and administrative expense, corpor ate faff cilities and vehicles. turt e forff rr ff The 2023 capia tal budget is expected to be funde ff d frff om operating cash flff ow and, if necessary,rr frff om cash and cash equivalents on hand or borrowings under the Company's Credit Facility. CapiCC tii altt resources. As of December 31, 2022, the Company had no outstanding borrowings under its Credit Facility, city. The Credit Facility requires the maintenance of a ratio of total debt to book leaving $2.0 billion of unused borrowing capaa capia talization, 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 December 31, 2022. The Company also had unrestricted cash on hand of $1.0 billion as of December 31, 2022. Sources and uses of cash during the year ended December 31, 2022, as compared to the same period in 2021, are as folff lows: Net cash provided by operating activities Net cash used in investing activities Net cash used in fiff nancing activities Year Ended December 31, 2022 2021 Change (in millions) $ $ $ 11,348 $ (3,586) $ 6,046 $ (856) $ (10,614) $ (2,807) $ 5,302 2,730 7,807 OpeO rating activities. The change in net cash flff ow provided by operating activities forff the year ended December 31, 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 attributabla e to the Company's successfulff Sprabea rry/rr Wolfcff amp horizontal drilling program l year of sales volumes frff om the DoublePoint Acquisition and (ii) a decrease in cash used in derivative activities, and a fulff partially offff sff et by (i) an increase in income taxes, (ii) an increase in production costs, including production and ad valorem 58 PIONEER NATURARR L RESOURCES COMPANY taxes and (iii) a reduction in operating cash flff ow associated with the assets divested as part of the Delaware Divestiturtt e in December 2021. InvII lows: as folff esting activities. The Company's signififf cant investing activities forff the years ended December 31, 2022 and 2021 are • • ity of commercial papea 2022: The Company (i) used $3.9 billion forff maturt $1.1 billion, (iii) purchased commercial papea $367 million and (v) used $113 million forff additions to oil and gas properties, (ii) received proceeds frff om the r investments and the Company's short-term investment in Laredo common stock of $1.0 billion (iv) received proceeds frff om disposition of assets of r forff additions to other assets and other property, plant and equipment. 2021: The Company (i) used $3.2 billion forff disposition of assets of $3.2 billion, primarily related to the Delaware Divestiturtt e, (iii) used $943 million forff DoublePoint Acquisition, (iv) used $118 million forff equipment and (v) acquired $117 million of cash in the Parsley Acquisition. additions to oil and gas properties, (ii) received proceeds frff om the the additions to other assets and other property, plant and FiFF nancing activities. The Company's signififf cant fiff nancing activities forff the years ended December 31, 2022 and 2021 are as folff lows: • • a ion counterparr rties (the "Cappe 2022: The Company (i) paid dividends of $6.3 billion, (ii) paid $1.5 billion to redeem $1.4 billion of its outstanding 0.750% senior notes due 2024, 4.450% senior notes due 2026 and 5.625% senior notes due 2027, having aggregate principal amounts of $750 million, $500 million and $179 million, respectively, (iii) repurchased $1.7 billion of its common stock, (iv) paid $857 million to settle exercised conversion options related to the Company's Convertible ity of its 3.950% senior notes due in July 2022, (vi) paid Notes, (v) repaid $244 million associated with the maturt $192 million of other liabia lities and (vii) received $103 million in proceeds of privately negotiated cappe d call d Call") related to the aforff ementioned transactions with certain fiff nancial institutt exercised conversion options. 2021: The Company (i) received proceeds frff om the May 2021 issuance of 0.550% senior notes due May 2023 ("May 2021 Senior Notes Offff eff ring"), net of $4 million of issuance costs and discounts, of $746 million, (ii) received proceeds frff om the Januaryrr 2021 issuance of 0.750% senior callabla e notes due Januaryrr 2024, 1.125% senior notes due Januaryrr 2026 and 2.150% senior notes due Januaryrr 2031 ("Januaryrr 2021 Senior Notes Offff eff ring"), net of $24 million of issuance costs and discounts, of $2.5 billion, (iii) borrowed and repaid $650 million on the Company's Credit Facility, (iv) repaid the Parsley and DoublePoint credit faff cilities, which had outstanding balances of $397 ity of its 3.450% senior million and $240 million, respectively, (v) repaid $140 million associated with the maturt notes due in Januaryrr 2021, (vi) used proceeds frff om the May 2021 Senior Notes Offff eff ring to pay $731 million to redeem DoublePoint's 7.750% senior notes due 2025, (vii) used proceeds frff om the Januaryrr 2021 Senior Notes Offff eff ring to pay $1.6 billion to redeem Parsley's 5.250% senior notes due 2025, Parsley's 5.375% senior notes due 2025 and Jagged Peak's 5.875% senior notes due 2026 (assumed by Parsley in a prior acquisition), (viii) paid $852 million to purchase a portion of Parsley's 5.625% senior notes due 2027 and Parsley's 4.125% senior notes due 2028 pursuant to a cash tender offff eff r, (ix) paid dividends of $1.6 billion, (x) repurchased $269 million of its common stock and (xi) paid $164 million of other liabia lities. a Dividends/ss di// sii trtt ibutions. During the year ended December 31, 2022, the Company paid base dividends of $1.1 billion, or $4.38 per common share, compared to $487 million, or $2.23 per common share, during the year ended December 31, 2021. In addition to its base dividend program, the Company has a variabla e dividend strategy whereby the Company pays a quarterly variabla e dividend of up to 75 percent of the prior quarter's frff ee cash flff ow remaining aftff er its base dividend. Free cash flff ow is a non-GAAP fiff nancial measure. As used by the Company, frff ee cash flff ow is defiff ned as net cash provided by operating changes in operating assets and liabia lities, less capia tal expenditurt es. The Company believes this non- activities, adjusted forff GAAP measure is a fiff nancial indicator of the Company's abia lity to internally fund ities, dividends and share repurchases aftff er capia tal expenditurt es. Capia tal expenditurt es exclude acquisitions, asset retirement obligations, capia talized interest, geological and geophysical general and administrative expenses, inforff mation technology capia tal investments and additions to corpor ate faff cilities. During the year ended December 31, 2022, the Company paid variabla e dividends of $5.2 billion, or $21.68 per common share, compared to $1.1 billion, or $4.53 per common share, during the year ended December 31, 2021. acquisitions, debt maturt rr ff ryrr 22, 2023, the Board declared a quarterly base dividend of $1.10 per share and a quarterly variabla e dividend On Februarr of $4.48 per share forff shareholders of record on March 6, 2023, with a payment date of March 17, 2023. Futurt e base and variabla e dividends are at the discretion of the Board, and, if declared, the Board may change the dividend amount based on the commodity prices, liquidity, debt levels, capia tal resources, frff ee cash flff ow or other faff ctors. The Company Company's outlook forff can provide no assurance that dividends will be authorized or declared in the futff urt e or as to the amount of any futff urtt e dividends. 59 PIONEER NATURARR L RESOURCES COMPANY Any futff urt e variabla e dividends, if declared and paid, will flff uctuatt a number of faff ctors beyond the Company's control, including commodity prices. te based on the Company's frff ee cash flff ow, which will depend on OfO fff -ff balance sheet arrangementstt . From time to time, the Company enters into arrangements and transactions that can give rise to material offff -ff balance sheet obligations of the Company. As of December 31, 2022, the material offff -ff balance sheet arrangements and transactions that the Company had entered into included (i) fiff rm purchase, transportation, storage and l obligations forff which the ultimate settlement frff actionation commitments, (ii) open purchase commitments and (iii) contractuat amounts are not fiff xed and determinabla e. The contractuat l obligations forff which the ultimate settlement amounts are not fiff xed and determinabla e include (a) derivative contracts that are sensitive to futff urt e changes in commodity prices or the Company's share price, (b) gathering, processing and transportation commitments on uncertain volumes of futff urt e throughput and (c) indemnififf cation obligations folff lowing certain divestiturt es. In connection with its divestiturt e transactions, the Company may retain certain liabia lities and provide the purchaser certain indemnififf cations, subject to defiff ned limitations, which may appl y to identififf ed pre-closing matters, including matters of a litigation, environmental contingencies, royalties and income taxes. Also associated with its divestiturt e transactions, the l obligations, such as fiff rm transportation Company has issued and received guarantees to faff cilitate the transfeff r of contractuat agreements or gathering and processing arrangements. The Company does not recognize a liabia lity if the faff ir value of the obligation is immaterial or the likelihood of making payments under these guarantees is remote. Other than the offff -ff balance sheet arrangements described above , the Company has no transactions, arrangements or other a relationships with unconsolidated entities or other persons that are reasonabla y likely to materially affff eff ct the Company's liquidity or availabia lity of or requirements forff l arrangements in the futff urt e and additional fiff rm purchase, transportation, storage and frff actionation arrangements, in order to support the Company's business plans. See Note 11 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff capia tal resources. The Company expects to enter into similar contractuat additional inforff mation. ConvCC ertible senior notes. In May 2020, the Company issued $1.3 billion principal amount of convertible senior notes due 2025. The Convertible Notes bear a fiff xed interest rate of 0.250% per year, with interest payabla e on May 15 and November 15 of each year. The Convertible Notes will maturt e 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 ther 10.2823 shares of the Company's common stock per $1,000 principal amount of the Convertible Notes (subject to furff adjustment pursuant to the terms of the notes indenturt e, the "Conversion Rate"), which represents an adjusted conversion price of $97.25 per share (subject to furff ther adjustment pursuant to the terms of the notes indenturt e, the "Conversion Price") as of December 31, 2022. As a result of the quarterly base and variabla e dividends declared through December 31, 2022, the Conversion Rate increased frff om 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 frff om $109.77. Futurt e declarations of quarterly base and variabla e dividends in excess of $0.55 per common share will cause furff ther adjustments to the Conversion Rate and the Conversion Price pursuant to the terms of the notes indenturt e. Upon conversion, the Convertible Notes may be settled in cash, shares of the Company's common stock or a combination thereof,ff at the Company's election. Holders of the Convertible Notes may convert their notes at their option prior to Februarr ryrr 15, 2025 under the folff lowing circumstances: • • • • lowing any quarter during which the last reported sales price of the Company's common stock at least 20 of the last 30 consecutive trading days of such quarter exceeds 130 percent of the Conversion Price; during the quarter folff forff during the fiff ve-day period folff lowing any fiff ve 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 and the Conversion Rate; upon notice of redemption by the Company; or upon the occurrence of specififf ed corpor ate events, including certain consolidations or mergers. rr On or aftff er Februarr ryrr 15, 2025, until the close of business on the second scheduled trading day immediately preceding the ity date, holders may convert their notes at any time. The Company may not redeem the Convertible Notes prior to May maturt 20, 2023, and aftff er 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 forff 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 accruerr d and unpaid interest. 60 PIONEER NATURARR L RESOURCES COMPANY ff th quarter of 2022, the last reported sales prices of the Company's During the last 30 consecutive trading days of the four common stock exceeded 130 percent of the Conversion Price forff at least 20 trading days, causing the Convertible Notes to become convertible at the option of the holders during the three month period ending March 31, 2023. During the twelve months ended December 31, 2022, certain holders of the Convertible Notes exercised their conversion option resulting in the Company redeeming $361 million of the outstanding principal amount of the Convertible Notes forff total cash payments of $857 million. The Company reserves its right under the notes indenturt e 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 18 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. i ConCC trtt actual oblill gat itt ons. The Company's contractuat l obligations include long-term debt, leases (primarily related to ng obligations, derivative obligations, fiff rm contracted drilling rigs, offff iff ce faff cilities and other equipment), capia tal fundi transportation, storage and frff actionation commitments, minimum annual gathering, processing and transportation commitments and other liabia lities. Other joint owners in the properties operated by the Company could incur portions of the costs represented by these commitments. ff FiFF rm commitmt entstt . The Company has short-term and long-term fiff rm purchase, gathering, processing, transportation, l commitments (i) to frff actionation and storage commitments representing take-or-pay agreements, which include contractuat use in the Company's drilling and completion operations, (ii) with midstream service purchase sand, water and diesel forff futff urt e gathering, processing, transportation, frff actionation and storage and (iii) with oilfiff eld companies and pipeline carriers forff fiff ll all of services companies that provide drilling and pressure pumping services. The Company does not expect to be abla e to fulff its short-term and long-term fiff rm transportation volume obligations frff om projected production of availabla e reserves; consequently, the Company plans to purchase third party volumes to satisfyff its fiff rm transportation commitments if it is economic to do so; otherwise, it will pay demand feff es forff any commitment shortfaff lls. The Company also has open purchase inventories, materials and other property and equipment ordered, but not received, as of December 31, 2022. commitments forff See Note 11 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. Long-term debt. As of December 31, 2022, the Company's outstanding debt is comprised of senior notes, including senior notes issued by Parsley, and convertible senior notes. The senior notes and convertible senior notes issued by the turt ally subordinated to all obligations of the Company's subsidiaries. See Note 7 of Notes Company rank equally, but are strucrr to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. OpeO rating leases. The Company's short-term and long-term lease obligations primarily relate to contracted drilling rigs, storage tanks, equipment and offff iff ce faff cilities. See Note 10 of Notes to Consolidated Financial Statements included in "Item 8. additional inforff mation. Financial Statements and Supplementaryrr Data" forff i Derivative obligat ions. The Company's commodity, marketing and conversion option derivatives are periodically measured and recorded at faff ir value and continue to be subject to market and/or credit risk. As of December 31, 2022, these contracts represented net liabia lities of $139 million. The ultimate liquidation value of the Company's commodity and marketing derivatives will be dependent upon actuat l futff urtt e commodity prices, which may diffff eff r materially frff om the inputs used to determine the derivatives' faff ir values as of December 31, 2022. The ultimate liquidation of the Company's conversion option derivatives will be dependent on the Company's daily volumetric weighted average share price during the Settlement Period. See Note 4 and Note 5 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" and "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" forff additional inforff mation. Othett r liabilities. The Company's other liabia lities represent current and noncurrent other liabia lities that are primarily comprised of litigation and environmental contingencies, asset retirement obligations, a fiff nance lease forff ate headquarters offff iff ce building, defeff rred compensation retirement plan obligations and other obligations forff which neither the ultimate settlement amounts nor their timings can be precisely determined in advance. See Note 9 and Note 11 of Notes to additional Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff inforff mation. the corpor rr Book capitii altt ill zii atitt on and current ratitt o. The Company's net book capia talization as of December 31, 2022 was $26.4 billion, consisting of cash and cash equivalents of $1.0 billion, debt of $4.9 billion and equity of $22.5 billion. The Company's net debt to book capia talization increased to 15 percent as of December 31, 2022 frff om 12 percent as of December 31, 2021. The Company's ratio of current assets to current liabia lities was 0.96:1 as of December 31, 2022, as compared to 1.52:1 as of December 31, 2021. Debt ratitt nii gs. The Company is rated as investment grade by three credit rating agencies. The Company's credit ratings are subject to regular reviews by the credit rating agencies. The Company believes that each of the rating agencies considers 61 PIONEER NATURARR L RESOURCES COMPANY many faff ctors in determining the Company's ratings, including: (i) production growth opportuni ties, (ii) liquidity, (iii) debt levels, (iv) asset composition and (v) proved reserve mix. A reduction in the Company's debt ratings could increase the interest rates that the Company incurs on Credit Facility borrowings and could negatively impact the Company's abia lity to obtain additional fiff nancing or the interest rate, feff es and other terms associated with such additional fiff nancing. t Critical Accounting Estimates The Company prepares its consolidated fiff nancial statements forff inclusion in this Report in accordance with GAAP. See Note 2 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. The folff lowing is a discussion of the Company's most critical accounting estimates, judgments and uncertainties that are inherent in the Company's appl ication of GAAP. a Successfs uff l efe fff orff tstt methtt od of accountitt nii g. The Company utilizes the successfulff oil and l cost method. In general, the Company believes that net assets gas producing activities as opposed to the alternate acceptabla e fulff oil and gas producing and net income are more conservatively measured under the successfulff l cost method, particularly during periods of active exploration. The critical diffff eff rence between the activities than under the fulff successfulff ts method, exploratoryrr dryrr effff orff holes and geological and geophysical exploration costs are charged against earnings during the periods in which they occur; whereas, under the fulff l cost method of accounting, such costs and expenses are capia talized as assets, pooled with the costs of successfulff wells and charged against the earnings of futff urt e periods as a component of depletion expense. l cost method is that under the successfulff ts method of accounting and the fulff ts method of accounting forff ts method of accounting forff effff orff effff orff effff orff PrPP oved reserve estitt mii atett s. Estimates of the Company's proved reserves included in this Report are prepared in accordance with GAAP and SEC guidelines. The accuracy of a proved reserve estimate is a func ff tion of:ff • • • • the quality and quantity of availabla e data; the interprrr etation of that data; the accuracy of various mandated economic assumptions; and the judgment of the persons preparing the estimate. The Company's proved reserve inforff mation included in this Report as of December 31, 2022, 2021 and 2020 was prepared by the Company's engineers and audited by independent petroleum engineers with respect to the Company's maja or properties. Estimates prepared by third parties may be higher or lower than those included herein. l results, Because these estimates depend on many assumptions, all of which may substantially diffff eff r frff om futff urt e actuat proved reserve estimates will be diffff eff rent frff om the quantities of oil and gas that are ultimately recovered. In addition, results of drilling, testing and production aftff er the date of an estimate may justify,ff positively or negatively, material revisions to the estimate of proved reserves. It should not be assumed that the Standardized Measure included in this Report as of December 31, 2022 is the current market value of the Company's estimated proved reserves. In accordance with SEC requirements, the Company based the 2022 Standardized Measure on a twelve month average of commodity prices on the fiff rst day of each month in 2022 and prevailing l futff urt e prices and costs may be materially higher or lower than the prices and costs costs on the date of the estimate. Actuat Inforff mation included in "Item 8. Financial utilized in the estimate. See "Item 2. Properties" and Unaudited Supplementaryrr Statements and Supplementaryrr Data" forff additional inforff mation. The Company's estimates of proved reserves materially impact depletion expense. If the estimates of proved reserves decline, the rate at which the Company records depletion expense will increase, reducing futff urt e net income. Such a decline may result frff om lower commodity prices, which may make it uneconomical to drill forff and produce higher cost fiff elds. In addition, a decline in proved reserve estimates may impact the outcome of the Company's assessment of its proved properties and goodwill forff impairment. Suspes nded wellll sll . The Company suspends the costs of exploratory/rr extension wells that discover hydrocarbons pending a fiff nal determination of the commercial potential of the discovery.rr The ultimate disposition of these well costs is dependent on the results of futff urtt e drilling activity and development decisions. If the Company decides not to pursue additional appr aisal activities or development of these fiff elds, the costs of these wells will be charged to exploration and abaa ndonments expense. a r The Company does not carryrr the costs of drilling an exploratory/rr extension well as an asset in its consolidated balance sheets folff lowing the completion of drilling unless both of the folff lowing conditions are met: • • ff the well has found the Company is making suffff iff cient progress assessing the reserves and the economic and operating viabia lity of the project. a suffff iff cient quantity of reserves to justifyff its completion as a producing well; and 62 PIONEER NATURARR L RESOURCES COMPANY a Due to the capia tal intensive naturtt e and the geographi cal location of certain projects, it may take an extended period of time to evaluate the futff urtt e potential of an exploration project and the economics associated with making a determination on its commercial viabia lity. In these instances, the project's feff asibility is not contingent upon price improvements or advances in technology, but rather the Company's ongoing effff orff ts and expenditurt es related to accurately predicting the hydrocarbonr recoverabia lity based on well inforff mation, gaining access to other companies' production data in the area, transportation or processing faff cilities and/or getting partner appr aisal wells. These activities are ongoing and being pursued constantly. Consequently, the Company's assessment of suspended exploratory/rr extension well costs is continuous until a decision can be made that the project has found suffff iff cient proved reserves to sanction the project or is determined to be noncommercial and is charged to exploration and abaa ndonments expense. See Note 6 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff oval to drill additional appr additional inforff mation. a a ff Defe eff rred taxtt asset valuatitt on allll owll ances. The Company continually assesses both positive and negative evidence to determine whether it is more likely than not that its defeff rred tax assets can be realized prior to their expiration. Pioneer monitors Company-specififf c, oil and gas industryrr and worldwide economic faff ctors and based on that inforff mation, along with other data, reassesses the likelihood that the Company's net operating loss carryfrr orff wards and other defeff rred tax attributes in the U.S. feff deral, state, local and forff eign tax jurisdictions will be utilized prior to their expiration. There can be no assurance that faff cts and circumstances will not materially change and require the Company to establa ish defeff rred tax asset valuation allowances in certain jurisdictions in a futff urtt e period. i Litii itt gat itt on and envirii onmentaltt contitt nii gencies. The Company makes judgments and estimates in recording liabia lities forff a variety of reasons. ongoing litigation and environmental remediation. Actuatt The ultimate cost of litigation can varyrr frff om estimates based on diffff eff ring interprrr etations of laws and opinions and assessments on the amount of damages that may become payabla e. Similarly, environmental remediation liabia lities are subject to change because of changes in laws and regulations, developing inforff mation relating to the extent and naturtt e of site contamination and improvements in technology. A liabia lity is recorded forff these types of contingencies if the Company determines the loss to be both probabla e and reasonabla y estimabla e. See Note 11 of Notes to Consolidated Financial Statements included in "Item 8. additional inforff mation. Financial Statements and Supplementaryrr Data" forff l costs can materially varyrr frff om such estimates forff i ValVV uatitt on of othtt er assetstt and lill abi lii ill tii itt es at faiff rii value.ee The Company periodically measures and records certain assets and liabia lities at faff ir value. The assets and liabia lities that the Company measures and records at faff ir value on a recurring basis include equity investments, defeff rred compensation plan assets, commodity derivative contracts, marketing derivative contracts, conversion option derivatives and interest rate contracts. Other assets are not measured at faff ir value on an ongoing basis, but are subject to faff ir value adjustments in certain circumstances. The assets and liabia lities that the Company measures and records at faff ir value on a nonrecurring basis can include inventories, proved and unproved oil and gas properties, assets acquired and liabia lities assumed in business combinations, goodwill and other long-lived assets that are written down to faff ir value when they are determined to be impaired or held forff sale. The Company also measures and discloses certain fiff nancial assets and liabia lities at faff ir value, such as long-term debt. The valuation methods used by the Company to measure the faff ir values of these assets and liabia lities may require considerabla e management judgment and estimates to derive the inputs necessaryrr to determine faff ir value estimates, such as futff urt e prices, credit-adjusted risk-frff ee rates and current volatility faff ctors. See Note 4 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. New Accounting Pronouncements The effff eff cts of new accounting pronouncements are discussed in Note 2 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data." ITEM 7A. Q QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Q In the normal course of business, the Company's fiff nancial position is routinely subject to a variety of risks, including market risks associated with changes in commodity prices, changes in the Company's share price, which impacts the settlement value of convertible notes where holders have exercised their conversion option, interest rate movements on outstanding debt and credit risks. The folff ents to which the Company was a party as of December 31, 2022, and frff om which the Company may incur futff urt e gains or losses frff om changes in commodity prices or the Company's share price. The Company does not enter into any fiff nancial instrumrr ents, including derivatives, forff lowing quantitative and qualitative inforff mation is provided about speculative or trading purpos fiff nancial instrumrr es. a rr ComCC moditii ytt price risii k. The Company's primaryrr market risk exposure is related to the price it receives frff om the sale of its te with changes in oil, NGL and gas production. Realized pricing is volatile and is determined by market prices that flff uctuat supply and demand forff its production depends on many faff ctors outside of the control of the Company, including diffff eff rences in commodity pricing at the point of sale versus to be used in its capia tal program market index prices. Reducing the Company's exposure to price volatility helps secure funds these products throughout the world. The price the Company receives forff ff 63 PIONEER NATURARR L RESOURCES COMPANY and to fundff general working capia tal needs, debt obligations, dividends and share repurchases, among other uses. The Company mitigates its commodity price risk by (i) maintaining fiff nancial flff exibility with a strong balance sheet, (ii) using derivative fiff nancial instrumrr ents and (iii) sales of purchased commodities. ComCC moditytt price derivatives. The Company primarily utilizes derivative contracts to reduce the effff eff ct of price volatility on the commodities the Company produces and sells. 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 futff urt e market conditions. The Company may choose not to enter into derivative positions forff certain time periods is deemed to be unfaff vorabla e. Additionally, the Company may choose to liquidate existing derivative positions ity in order to monetize gain positions or minimize loss positions if it is prior to the expiration of their contractuatt ng anticipated that the commodity price forff ecast is expected to improve. Proceeds, if any, can be used forff the Company's capia tal program, general working capia tal needs, debt obligations, dividends and share repurchases, among other uses. While derivative positions limit the downside risk of adverse price movements, they also limit futff urtt e revenues frff om upward price movements. expected production if the commodity price forff ecast forff the purpos ff e of fundi l maturt rr As of December 31, 2022, the Company did not have any material outstanding commodity derivative contracts. See Note 4 and Note 5 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff a description of the Company's open derivative positions and additional inforff mation. Sales of purchased commodities. The Company enters into pipeline capaa city commitments in order to secure availabla e city frff om the Company's areas of production and to secure diesel supply frff om the Gulf oil, NGL and gas transportation capaa Coast. The Company also enters into purchase commitments to secure sand supply forff 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 diversifyff a portion of the Company's oil and gas sales to (i) Gulf Coast refiff neries, (ii) Gulf Coast and West Coast gas markets city commitments. The Company periodically sells and (iii) international oil markets, and to satisfyff unused gas pipeline capaa diesel and sand to unaffff iff liated third parties in the Permian Basin if it has supply in excess of its operational needs. MarMM krr ekk ting derivatives. The Company uses marketing derivatives to diversifyff its oil pricing to Gulf Coast and international markets. As of December 31, 2022, the Company's marketing derivatives reflff ect long-term marketing contracts whereby the Company agreed to purchase and simultaneously sell barrels of oil at an oil terminal in Midland, Texas. In October 2019, the Company agreed to purchase and simultaneously sell 50 thousand barrels of oil per day beginning Januaryrr 1, 2021 and 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 contracts is based on a Midland WTI price and the price the Company receives forff selling oil through a Gulf Coast storage and export faff cility at prices that are highly correlated with Brent oil prices during the same month of the purchase. Based on the forff m of the long-term marketing contracts, the Company accounts forff the contracts as derivative instrumrr the oil volumes sold is the WASP that a non-affff iff liated counterparr ents not designated as hedges. rty receives forff The Company could experience mark-to-market flff uctuat tions in the faff ir value of its marketing derivatives based on changes in (i) the diffff eff rential between Midland WTI and Brent and (ii) the historical monthly diffff eff rential between Brent oil rty to the marketing derivatives ("WASP Diffff eff rential Deduction") if it prices and the corresponding WASP of the counterparr deviates frff om historical levels. For example, a 10 percent increase or decrease in the diffff eff rential between Midland WTI and Brent would impact the faff ir value of the Company's marketing derivatives recorded by $83 million and a 10 percent increase or decrease in the WASP Diffff eff rential Deduction would impact the faff ir value of the Company's marketing derivatives recorded by $28 million as of December 31, 2022. See Note 4 and Note 5 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff a description of the Company's open derivative positions and additional inforff mation. ComCC panm yn share price risii k. When holders of the Company's Convertible Notes exercise their conversion option, the Company is subject to market risks related to changes in the Company's share price that occur during the 25 trading day Settlement Period. See Note 4, Note 5 and Note 7 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff a description of the Company's open conversion option derivative positions and additional inforff mation. 64 PIONEER NATURARR L RESOURCES COMPANY InII tett rest ratett risii k. As of December 31, 2022, the Company had no variabla e rate debt outstanding under the Credit Facility and, consequently, no related exposure to interest rate risk. As of December 31, 2022, the Company had $4.9 billion of fiff xed rate long-term debt outstanding with a weighted average cash interest rate of 1.6 percent. Although changes in interest rates may affff eff ct the faff ir value of the Company's fiff xed rate long-term debt, any changes would not expose the Company to the risk of earnings or cash flff ow losses. The Company has no interest rate derivative instrumrr ents outstanding; however, it may enter into derivative instrumrr ents in the fuff turtt e to mitigate interest rate risk. See Note 4 and Note 7 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. CrCC editii risii k. The Company's primaryrr resulting frff om the sale of oil and gas production and purchased commodities, and the risk of a counterparr obligations under derivative contracts with the Company. concentration of credit risks are associated with the collection of receivabla es rty's faff ilure to meet its The Company's commodities are sold to various purchasers who must be prequalififf ed under the Company's credit risk rties primarily by reviewing credit ratings, fiff nancial opriate, the Company obtains assurances of payment, such as a guarantee by the parent rty, a letter of credit or other credit support. Historically, the Company's credit losses on commodity policies and procedures. The Company monitors exposure to counterparr criteria and payment history.rr Where appr a company of the counterparr receivabla es have not been material. The Company uses credit and other fiff nancial criteria to evaluate the credit standing of,ff and to select, counterparr rties to its ents. Although the Company does not obtain collateral or otherwise secure the faff ir value of its derivative ents, associated credit risk is mitigated by the Company's credit risk policies and procedures. derivative instrumrr instrumrr The Company has entered into International Swapa Dealers Association Master Agreements ("ISDA Agreements") with each of its commodity derivative counterparr rties. The terms of the ISDA Agreements provide the Company and the rty to a counterparr derivative contract, whereby the party not in defaff ult may set offff all derivative liabia lities owed to the defaff ulting party against all derivative asset receivabla es frff om the defaff ulting party. See Note 5 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff rties with right of set offff upon the occurrence of defiff ned acts of defaff ult by either the Company or a counterparr additional inforff mation. 65 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS turt ents ing Activities the Years Ended December 31, 2022, 2021 and 2020 the Years Ended December 31, 2022, 2021 and 2020 the Years Ended December 31, 2022, 2021 and 2020 Report of Independent Registered Public Accounting Firm (Public Company Accounting Oversight Board ID #42) Consolidated Balance Sheets as of December 31, 2022 and 2021 Consolidated Statements of Operations forff Consolidated Statements of Equity forff Consolidated Statements of Cash Flows forff Notes to Consolidated Financial Statements 1. Organization and Naturt e of Operations 2. Summaryrr of Signififf cant Accounting Policies 3. Acquisitions, Divestiturt es, Decommissioning and Restrucr 4. Fair Value Measurements 5. Derivative Financial Instrumr 6. Exploratoryrr Well Costs 7. Long-term Debt and Interest Expense 8. Incentive Plans 9. Asset Retirement Obligations 10. Leases 11. Commitments and Contingencies 12. Related Party Transactions 13. Maja or Customers 14. Revenue Recognition 15. Interest and Other Income (Loss), Net 16. Other Expense 17. Income Taxes 18. Net Income (Loss) Per Share and Stockholders' Equity 19. Subsequent Events Unaudited Supplementaryrr Inforff mation Page 67 69 70 71 73 74 74 74 80 81 84 86 87 91 94 95 97 99 100 100 101 102 102 106 107 109 66 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Pioneer Naturt al Resources Company Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Pioneer Natural Resources Company (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated ebruar ryrr 23, 2023 expressed an unqualified opinion thereon. Basis forff Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 67 Descripti thett MatMM ter ion of Depletion, Depreciation and Amortization of Proved Oil and Gas Properties ts method of accounting forff At December 31, 2022, the net book value of the Company's proved oil and gas properties was $23,622 the year then million, and depletion, depreciation and amortization (DD&A) expense was $2,530 million forff lows the successfulff ended. As described in Note 2 to the consolidated fiff nancial statements, the Company folff effff orff ts method of effff orff its oil and gas properties. Under the successfulff accounting, the capia talized costs of proved properties are depleted using the unit-of-ff production method based on proved reserves, as estimated by the Company's engineers. Proved oil and gas reserves are prepared using standard geological and engineering methods generally recognized in the petroleum industryrr based on evaluations of estimated in-place hydrocarbon volumes using fiff nancial and non-fiff nancial inputs. Judgment is required by the Company's engineers in interprrr eting the data used to estimate reserves. Estimating proved oil and gas reserves requires the selection and evaluation of inputs, including historical production, oil and gas price assumptions, and futff urt e operating and capia tal cost assumptions, among others. Because of the complexity involved in estimating oil and gas reserves, management used independent petroleum engineers to audit the estimates prepared by the Company's engineers as of December 31, 2022. r Auditing the Company's DD&A calculation is especially complex because of the use of the work of the Company's engineers and the independent petroleum engineers and the evaluation of management's determination of the inputs described above used by these engineers in estimating proved oil and gas reserves. a HowHH WeWW Addressed thett MatMM ter in Our Audit We obtained an understanding, evaluated the design and tested the operating effff eff ctiveness of internal controls that address the risks of material misstatement relating to the DD&A calculation, including controls over the completeness and accuracy of the fiff nancial data used in estimating proved oil and gas reserves. Our testing of the Company's DD&A calculation included, among other procedures, evaluating the profeff ssional qualififf cations and objectivity of the Company's engineers responsible forff the preparation of the reserve estimates and the independent petroleum engineers used to audit the estimates. On a sample basis, we tested the completeness and accuracy of the fiff nancial data used in the estimation of proved oil and gas reserves by agreeing signififf cant inputs to source documentation, where availabla e, and assessing the inputs forff reasonabla eness based on our review of corroborative evidence and consideration of any contraryrr evidence. Additionally, we perforff med analytic procedures on select inputs into the oil and gas reserve estimate as well as lookback procedures on the output . Finally, we tested that the DD&A calculation is based on the a appr opriate proved oil and gas reserves amounts frff om the Company's reserve report. t /s/ Ernst & Young LLP We have served as the Company's auditor since 1998. Dallas, Texas Februar ryrr 23, 2023 68 PIONEER NATURARR L RESOURCES COMPANY CONSOLIDATED BALANCE SHEETS (in millions, except share data) ASSETS December 31, 2022 2021 Current assets: Cash and cash equivalents Restricted cash Accounts receivabla e, net Income taxes receivabla e Inventories Investment in affff iff liate Short-term investments, net Other Total current assets Oil and gas properties, using the successfulff effff orff ts method of accounting: Proved properties Unproved properties Accumulated depletion, depreciation and amortization LIABILITIES AND EQUITY Total oil and gas properties, net Other property and equipment, net Operating lease right-of-ff use assets Goodwill Other assets Current liabia lities: Accounts payabla e: Trade Due to affff iff liates Interest payabla e Income taxes payabla e Current portion of long-term debt Derivatives Operating leases Other Total current liabia lities Long-term debt Derivatives Defeff rred income taxes Operating leases Other liabia lities Equity: Common stock, $.01 par value; 500,000,000 shares authorized; 244,703,342 and 244,144,444 shares issued as of December 31, 2022 and December 31, 2021, respectively Additional paid-in capia tal Treasuryr stock, at cost; 8,667,824 and 1,366,610 shares as of December 31, 2022 and December 31, 2021, respectively Retained earnings Total equity Commitments and contingencies $ $ $ $ $ $ 1,032 — 1,853 164 424 172 — 81 3,726 38,465 6,008 (14,843) 29,630 1,658 340 243 143 35,740 2,487 150 33 63 779 44 125 206 3,887 4,125 96 3,867 236 988 2 18,779 (1,925) 5,685 22,541 3,847 37 1,685 1 369 135 58 41 6,173 34,454 6,063 (12,335) 28,182 1,694 348 243 171 36,811 2,380 179 53 45 244 538 121 513 4,073 6,688 25 2,038 243 907 2 19,123 (248) 3,960 22,837 $ 35,740 $ 36,811 The accompanying notes are an integral part of these consolidated fiff nancial statements. 69 PIONEER NATURARR L RESOURCES COMPANY CONSOLIDATED STATEMENTS OF OPERARR TIONS (in millions, except per share data) Year Ended December 31, 2022 2021 2020 Revenues and other income: Oil and gas Sales of purchased commodities Interest and other income (loss), net Derivative loss, net Gain (loss) on disposition of assets, net Costs and expenses: Oil and gas production Production and ad valorem taxes Depletion, depreciation and amortization Purchased commodities Exploration and abaa ndonments General and administrative Accretion of discount on asset retirement obligations Interest Other Income (loss) beforff e income taxes Income tax benefiff t (provision) Net income (loss) attributabla e to common stockholders Net income (loss) per share attributabla e to common stockholders: Basic Diluted Weighted average shares outstanding: Basic Diluted $ $ $ $ $ $ $ $ 16,310 8,074 119 (315) 106 24,294 1,922 965 2,530 8,235 41 334 15 128 173 14,343 9,951 (2,106) 7,845 32.61 31.13 240 252 $ $ $ $ 11,503 6,367 23 (2,183) (1,067) 14,643 1,267 651 2,498 6,560 51 292 7 161 410 11,897 2,746 (628) 2,118 9.06 8.61 233 246 3,630 3,394 (67) (281) 9 6,685 682 242 1,639 3,633 47 244 9 129 321 6,946 (261) 61 (200) (1.21) (1.21) 165 165 Dividends declared per share $ 25.44 $ 6.83 $ 2.20 The accompanying notes are an integral part of these consolidated fiff nancial statements. 70 Y T I U Q E F O S T N E M E T A T S D E T A D I L O S N O C ) e r a h s r e p s d n e d i v i d d n a a t a d e r a h s t p e c x e , s n o i l l i m n i ( 6 3 1 , 2 1 $ 2 4 0 , 4 $ ) 9 6 0 , 1 ( $ 1 6 1 , 9 $ ) 4 6 3 ( 0 3 2 ) 3 1 1 ( ) 5 2 ( 9 ) 6 7 1 ( — 2 7 ) 0 0 2 ( 9 6 5 , 1 1 ) 8 5 6 , 1 ( ) 2 0 2 ( 4 4 3 1 ) 9 6 2 ( 6 1 1 , 1 1 — 3 7 3 3 8 1 1 , 2 7 3 8 , 2 2 ) 4 6 3 ( — — — — — — — ) 0 0 2 ( 8 7 4 , 3 ) 8 5 6 , 1 ( 8 2 ) 6 ( — — — — — — 8 1 1 , 2 — — — — 1 1 ) 6 7 1 ( — — — ) 4 3 2 , 1 ( — — — 7 1 ) 9 6 2 ( 8 3 2 , 1 — — — — — 0 3 2 ) 3 1 1 ( ) 5 2 ( ) 2 ( — — 2 7 — — 3 2 3 , 9 0 5 ) 4 ( — ) 0 3 2 ( 8 7 8 , 9 — 3 7 3 3 — $ 0 6 9 , 3 $ ) 8 4 2 ( $ 3 2 1 , 9 1 $ 2 — — — — — — — — — 2 — — — — — — — — — — 2 l a t o T y t i u q E d e n i a t e R i s g n n r a E y r u s a e r T k c o t S l a n o i t i d d A n i - d i a P l a t i p a C n o m m o C k c o t S — — — — 8 9 ) 4 3 6 , 1 ( 6 6 4 — — 7 7 4 , 4 6 1 — — — 4 3 1 ) 7 1 5 , 1 ( 2 4 8 , 8 7 2 4 8 — — — $ 8 7 7 , 2 4 2 $ 7 4 5 , 5 6 1 s e r a h S g n i d n a t s t u O ) s d n a s u o h t n i ( : s e t o n r o i n e s e l b i t r e v n o c n o e g n a h c g n i t n u o c c a f o t c e ff f f ff e e v i t a l u m u C s e s a h c r u p k c o t s e e y o l p m e d n a s n o i t p o k c o t s f o e s i c r e x E s s o l t e n n i d e d u l c n i s t s o c n o i t a s n e p m o C t e n , s d r a w a n o i t a s n e p m o c d e t s e V ) e r a h s r e p 3 8 . 6 $ ( d e r a l c e d s d n e d i v i D 0 2 0 2 , 1 3 r e b m e c e D f o s a e c n a l a B s s o l t e N k c o t s y rr r u s a e r t f o s e s a h c r u P : n o i t a s n e p m o c d e s a b - k c o t S s e s a h c r u p k c o t s e e y o l p m e d n a s n o i t p o k c o t s f o e s i c r e x E e m o c n i t e n n i d e d u l c n i s t s o c n o i t a s n e p m o C s n o i t i s i u q c a r o ff f d e u s s i e r r o d e u s s i s e r a h S k c o t s y rr r u s a e r t f o s e s a h c r u P t e n , s d r a w a n o i t a s n e p m o c d e t s e V : n o i t a s n e p m o c d e s a b - k c o t S n o i s i v o r p x a t d e r r e ff f e D t n e n o p m o c y t i u q E s n o i t i s i u q c a h t i w d e t a i c o s s a e m o c n i t e n n i d e d u l c n i s t s o c n o i t a s n e p m o C 1 2 0 2 , 1 3 r e b m e c e D f o s a e c n a l a B e m o c n i t e N ) e r a h s r e p 0 2 . 2 $ ( d e r a l c e d s d n e d i v i D 9 1 0 2 , 1 3 r e b m e c e D f o s a e c n a l a B n o i s i v o r p x a t d e r r e ff f e D t n e n o p m o c y t i u q E l l a c d e p p a a C : s e t o n r o i n e s e l b i t r e v n o C . s t n e m e t a t s l a i c n a n i ff f d e t a d i l o s n o c e s e h t f o t r a p l a r g e t n i n a e r a s e t o n g n i y n a p m o c c a e h T 1 7 7 3 8 , 2 2 ) 0 2 1 , 6 ( ) 6 9 4 ( 3 0 1 ) 6 2 ( 7 ) 7 8 6 , 1 ( — 8 7 5 4 8 , 7 1 4 5 , 2 2 $ 0 6 9 , 3 $ ) 8 4 2 ( $ 3 2 1 , 9 1 $ 2 $ 8 7 7 , 2 4 2 ) 0 2 1 , 6 ( — — — — — — — 5 4 8 , 7 — — — — 0 1 — — — ) 7 8 6 , 1 ( — ) 6 9 4 ( 3 0 1 ) 6 2 ( ) 3 ( — — 8 7 — $ 5 8 6 , 5 $ ) 5 2 9 , 1 ( $ 9 7 7 , 8 1 $ — — — — — — — — — 2 — — — — 7 4 ) 8 4 3 , 7 ( 9 5 5 — — $ 6 3 0 , 6 3 2 l a t o T y t i u q E d e n i a t e R i s g n n r a E y r u s a e r T k c o t S l a n o i t i d d A n i - d i a P l a t i p a C n o m m o C k c o t S s e r a h S g n i d n a t s t u O ) s d n a s u o h t n i ( ) d e u n i t n o c ( Y T I U Q E F O S T N E M E T A T S D E T A D I L O S N O C ) e r a h s r e p s d n e d i v i d d n a a t a d e r a h s t p e c x e , s n o i l l i m n i ( s e s a h c r u p k c o t s e e y o l p m e d n a s n o i t p o k c o t s f o e s i c r e x E e m o c n i t e n n i d e d u l c n i s t s o c n o i t a s n e p m o C t e n , s d r a w a n o i t a s n e p m o c d e t s e V 2 2 0 2 , 1 3 r e b m e c e D f o s a e c n a l a B e m o c n i t e N k c o t s y rr r u s a e r t f o s e s a h c r u P : n o i t a s n e p m o c d e s a b - k c o t S ) e r a h s r e p 4 4 . 5 2 $ ( d e r a l c e d s d n e d i v i D : s n o i s r e v n o c e t o n r o i n e s e l b i t r e v n o C 1 2 0 2 , 1 3 r e b m e c e D f o s a e c n a l a B s e x a t d e r r e ff f e d d n a s e e ff f e c n a u s s I m u i m e r p n o i s r e v n o C s d e e c o r p l l a c d e p p a a C . s t n e m e t a t s l a i c n a n i ff f d e t a d i l o s n o c e s e h t f o t r a p l a r g e t n i n a e r a s e t o n g n i y n a p m o c c a e h T 2 7 PIONEER NATURARR L RESOURCES COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Year Ended December 31, 2021 2020 2022 $ 7,845 $ 2,118 $ (200) Cash flff ows frff om operating activities: Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depletion, depreciation and amortization Exploration expenses Defeff rred income taxes (Gain) loss on disposition of assets, net Loss on early extinguishment of debt, net Accretion of discount on asset retirement obligations Interest expense Derivative-related activity Amortization of stock-based compensation Investment valuation adjustments South Texas contingent consideration valuation adjustment South Texas defiff ciency feff e obligation, net Other Changes in operating assets and liabia lities, net of effff eff cts of acquisitions: Accounts receivabla e Income taxes receivabla e Inventories Other assets Accounts payabla e Interest payabla e Income taxes payabla e Other liabia lities Net cash provided by operating activities Cash flff ows frff om investing activities: Proceeds frff om disposition of assets Proceeds frff om short-term investments Purchases of short-term investments, net Cash used in acquisitions, net of cash acquired Additions to oil and gas properties Additions to other assets and other property and equipment Net cash used in investing activities Cash flff ows frff om fiff nancing activities: Proceeds frff om issuance of senior notes, net of discount Proceeds frff om issuance of convertible senior notes Purchase of derivatives related to issuance of convertible senior notes Borrowings under credit faff cility Repayment of credit faff cilities Repayment of long-term debt Proceeds frff om cappe Payments of other liabia lities Payments of fiff nancing feff es Purchases of treasuryrr stock Exercise of stock options and employee stock purchases Dividends paid d call on convertible notes a Net cash provided by (used in) fiff nancing activities Net increase (decrease) in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash, beginning of period Cash, cash equivalents and restricted cash, end of period $ 2,530 7 1,807 (106) 39 15 10 (96) 78 (54) — (18) 144 (171) (164) (59) (113) (274) (20) 18 (70) 11,348 367 1,100 (1,020) — (3,920) (113) (3,586) — — — — — (2,576) 103 (192) — (1,687) 7 (6,269) (10,614) (2,852) 3,884 1,032 $ 2,498 4 583 1,067 2 7 10 (451) 106 (1) — (10) 150 (607) (3) (125) (18) 1,059 (53) 41 (331) 6,046 3,244 — — (826) (3,156) (118) (856) 3,247 — — 650 (1,287) (3,371) — (164) (32) (269) 13 (1,594) (2,807) 2,383 1,501 3,884 $ 1,639 11 (52) (9) 27 9 34 325 72 64 42 80 115 309 (3) (20) 27 (179) (19) 1 (203) 2,070 60 — — — (1,589) (126) (1,655) 1,091 1,323 (113) 800 (800) (1,198) — (173) (36) (176) 9 (346) 381 796 705 1,501 The accompanying notes are an integral part of these consolidated fiff nancial statements. 73 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 NOTE 1. Organization and Nature of Operations Pioneer is a Delaware corpor rr ation whose common stock is listed and traded on the NYSE. The Company is a large , develops and produces oil, NGLs and gas in the independent oil and gas exploration and production company that explores forff Midland Basin in West Texas. NOTE 2. Summary of Signififf cant Accounting Policies PrPP inii ciplii ell s of consolill datitt on. The consolidated fiff nancial statements include the accounts of the Company and its wholly- intercompany balances and owned and maja ority-owned subsu idiaries since their acquisition or forff mation. All material transactions have been eliminated. ee thtt e prepar UsUU e of estitt mii atett s inii atitt on of fiff nii ancial stattt ett mentstt . Preparation of the Company's consolidated fiff nancial statements in conforff mity with GAAP requires management to make estimates and assumptions that affff eff ct the reported amounts of assets and liabia lities, the disclosure of contingent assets and liabia lities at the date of the fiff nancial 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 futff urt e rates of production and the timing of development expenditurt es. Similarly, evaluations forff impairment of proved and unproved oil and gas properties are subject to numerous uncertainties including, among others, estimates of futff urtt e recoverabla e proved and risk-adjusted probabla e reserves, commodity price outlooks and prevailing market rates of other sources of income and costs. Actuat l results could diffff eff r frff om the estimates and assumptions utilized. CasCC h and cash equivalell ntstt . The Company's cash and cash equivalents include depositoryrr accounts held by banks and marketabla e securities (including commercial papea r and time deposits) with original issuance maturtt ities of 90 days or less. Restrtt ictett d cash. The Company's restricted cash included funds held in escrow to cover defiff ciency feff e payments in connection with the Company's 2019 sale of its Eagle Ford assets and other remaining assets in South Texas (the "South Texas Divestiturt e"). During the year ended December 31, 2022, the Company settled the remaining defiff ciency feff e obligations related to the South Texas Divestiturt e utilizing the funds held in escrow. Interest income related to restricted cash is recorded in interest and other income in the consolidated statements of operations. ff ff Accountstt receivablell ,e net.tt The Company's net accounts receivabla e balance is primarily comprised of oil and gas sales receivabla es, joint interest receivabla es, accounts receivabla e due frff om affff iff liates and other receivabla es forff which the Company does not require collateral security. The Company's share of oil and gas production is sold to various purchasers who must be prequalififf ed under the Company's credit risk policies and procedures. The Company records allowances forff accounts based on historical collection experience, current and futff urtt e economic and market conditions, the length of time that the accounts receivabla es have been outstanding and the fiff nancial condition of its purchasers. The Company's credit risk related to collecting accounts receivabla es is mitigated by using credit and other fiff nancial criteria to evaluate the credit standing of the entity obligated to make payment on the accounts receivabla e, and where appr opriate, the Company obtains assurances of payment, such as a guarantee by the parent company of the counterparr rty, letters of credit or other credit support. doubtfulff a The Company considers forff ward-looking inforff mation to estimate expected credit losses. The Company establa ishes bad debts equal to the estimabla e portions of accounts receivabla e forff which faff ilure to collect is expected to occur. allowances forff The Company estimates uncollectible amounts forff joint interest receivabla es based on the length of time that the accounts receivabla es have been outstanding, historical collection experience and current and futff urt e economic and market conditions. Allowances forff accounts are recorded as reductions to the carryirr ng values of the receivabla es included in the Company's consolidated balance sheets and are recorded in other expense in the consolidated statements of operations in the accounting periods during which faff ilure to collect an estimabla e portion is determined to be probabla e. The Company's allowance forff doubtfulff accounts totaled $10 million and $9 million as of December 31, 2022 and 2021, respectively. doubtfulff InII ventortt ies. The Company's inventories consist of materials, supplies and commodities. The Company's materials and is primarily comprised of oil and gas maintenance materials and repair parts, water, sand and other operating supplies inventoryrr supplies. The materials and supplies inventoryrr use in futff urt e drilling and production operations or repair operations and is carried at the lower of cost or net realizabla e value, on a weighted average cost basis. Valuation allowances forff materials and supplies inventories are recorded as reductions to the carryirr ng values of the materials and supplies is primarily acquired forff 74 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 inventories included in the Company's consolidated balance sheets and as charges in other expense in the consolidated statements of operations. Commodity inventories are carried at the lower of cost or market, on a fiff rst-in, fiff rst-out basis. The Company's commodity inventories consist of oil, NGL, gas and diesel volumes held in storage or as linefiff ll in pipelines. Any valuation allowances of commodity inventories are recorded as reductions to the carryirr ng values of the commodity inventories included in the Company's consolidated balance sheets and as charges to other expense in the consolidated statements of operations. The components of inventories are as folff lows: Materials and supplies Commodities Total inventories As of December 31, 2022 2021 (in millions) 146 278 424 $ $ 99 270 369 $ $ InII vestmtt ent inii affff iff lii ill ati ett .ee Based on the Company's ownership in ProPetro Holding Corp.rr ("ProPetro") and representation on the ProPetro board of directors, ProPetro is considered an affff iff liate and deemed to be a related party. The Company uses the faff ir value option to account forff its equity method investment in ProPetro with any changes in faff ir value recorded in interest and other income (loss) in the consolidated statements of operations. The carryirr ng value of the Company's investment in ProPetro is included in investment in affff iff liate in the consolidated balance sheets. See Note 4, Note 12 and Note 15 forff additional inforff mation. r investments that were carried at amortized cost and classififf ed as held-to-maturt inii vestmtt entstt . During the year ended December 31, 2022, the Company's short-term investments included ShSS ort-tt tett rmrr ity as the Company had the commercial papea intent and abia lity to hold them until they maturt ed. Commercial papea ity dates that are less than 90 days at the date of purchase; otherwise, investments are reflff ected in short-term investments in the consolidated balance sheets based on their maturt r investments held as short-term investments had maturt ed. ity dates. As of December 31, 2022, all commercial papea r is included in cash and cash equivalents if it has maturtt In October 2021, the Company completed the sale of appr oximately 20,000 net acres in western Glasscock County (the "Glasscock Divestiturt e") to Laredo Petroleum, Inc. ("Laredo") in exchange forff $137 million in cash and 960 thousand shares of Laredo's common stock. During the year ended December 31, 2022, the Company sold the 960 thousand shares of Laredo common stock. The shares were treated as an investment in equity securities measured at faff ir value with changes in faff ir value recorded in interest and other income (loss) in the consolidated statements of operations. See Note 4 and Note 15 forff additional inforff mation. a Oilii and gas propertitt es. The Company utilizes the successfulff its oil and gas properties. Under this method, all costs associated with productive wells and nonproductive development wells are capia talized while nonproductive exploration costs and geological and geophysical expenditurt es are expensed. Oil and gas leasehold acquisition costs are capia talized when incurred and included as unproved oil and gas properties in the consolidated balance sheets. ts method of accounting forff effff orff The Company does not carryrr lowing the completion of drilling unless both of the folff the costs of drilling an exploratoryrr well as an asset in its consolidated balance sheets a suffff iff cient quantity lowing conditions are met: (i) the well has found folff of reserves to justifyff its completion as a producing well and (ii) the Company is making suffff iff cient progress assessing the reserves and the economic and operating viabia lity of the project. The Company's exploratoryrr wells include extension wells that extend the limits of a known reservoir. ff Due to the capia tal intensive naturtt e and the geographi cal location of certain projects, it may take an extended period of time to evaluate the futff urt e potential of an exploration project and the economics associated with making a determination on its commercial viabia lity. In these instances, the project's feff asibility is not contingent upon price improvements or advances in technology, but rather the Company's ongoing effff orff ts and expenditurt es related to accurately predicting the hydrocarbon recoverabia lity based on well inforff mation, gaining access to other companies' production data in the area, transportation or processing faff cilities, and/or getting partner appr aisal wells. These activities are ongoing and being pursued constantly. Consequently, the Company's assessment of suspended exploratory/rr extension well costs is continuous until oval to drill additional appr a a a r 75 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 a decision can be made that the project has found noncommercial and is charged to exploration and abaa ndonments expense. See Note 6 forff ff suffff iff cient proved reserves to sanction the project or is determined to be additional inforff mation. As of December 31, 2022, the Company owned a participating interest in 10 gas processing plants, including the related gathering systems. The Company's ownership interests in the gas processing plants are primarily to accommodate handling the Company's gas production and thus are considered a component of the capia tal and operating costs of the respective fiff elds that the plants service. The operators of the plants process the Company's and third-party gas volumes forff a feff e. The Company's share of revenues and expenses derived frff om volumes processed through the plants are reported as components of oil and gas the years ended December 31, 2022, 2021 and 2020 were production costs. Revenues generated frff om the plants forff $274 million, $271 million and $178 million, respectively. Expenses attributabla e to the plants forff the same respective periods were $27 million, $61 million and $76 million. The capia talized costs of the plants are included in proved oil and gas properties and are depleted using the unit-of-ff production method along with the other capia talized costs of the fiff eld that they service. The capia talized costs of proved properties are depleted using the unit-of-ff production method based on proved reserves. Costs of signififf cant nonproducing properties, wells in the process of being drilled and in-process development projects are excluded frff om depletion until the related project is completed and proved reserves are establa ished or, if unsuccessfulff , abaa ndonments expense is recognized. Proceeds frff om the sales of individual properties and the capia talized costs of individual properties sold or abaa ndoned are credited and charged, respectively, to accumulated depletion, depreciation and amortization, if doing so does not materially impact the depletion rate of its amortization base. Generally, no gain or loss is recorded until an entire amortization base is sold. However, gain or loss is recorded frff om the sale of less than an entire amortization base if the disposition is signififf cant enough to materially impact the depletion rate of the remaining properties in the amortization base. Othtt er propertytt and equipmii ent,tt net.tt Other property and equipment is recorded at cost. The carryirr ng values of other property and equipment, net of accumulated depreciation, as of December 31, 2022 and 2021, respectively, are as folff lows: As of December 31, 2022 2021 Land and buildings (a) Water infrff astrucrr turtt e (b) Inforff mation technology Transport and fiff eld equipment (c) Furniturt e and fiff xturt es Sand reserves Total other property and equipment, net ____________________ $ $ $ (in millions) 835 709 55 25 21 13 1,658 $ 889 682 56 29 24 14 1,694 (a) Includes land, buildings, any related improvements to land and buildings and a fiff nance lease entered into by the Company forff ate headquarters in Irving, Texas. See Note 10 forff additional inforff mation. rr its corpor (b) Includes costs forff water pipeline infrff astrucrr (c) Includes vehicles and aircraftff . turt e and water supply wells. Other property and equipment is net of accumulated depreciation of $371 million and $313 million as of December 31, lifeff on a straight-line basis 2022 and 2021, respectively. Other property and equipment is depreciated over its estimated usefulff turt e is generally when the asset is placed into service. Buildings are generally depreciated over 20 to 39 years. Water infrff astrucrr depreciated over three to 50 years. Equipment, vehicles, aircraftff , furff niturt e and fiff xturt es and inforff mation technology assets are generally depreciated over three to 10 years. Sand reserves are depleted on a units-of-ff production basis. rr its corpor Leases. The Company enters into operating leases forff drilling rigs, storage tanks, equipment and buildings, and has one ate headquarters in Irving, Texas. The Company recognizes lease expense on a straight-line basis fiff nance lease forff over the lease term. Lease right-of-ff use assets and liabia lities are initially recorded on the lease commencement date based on the present value of lease payments over the lease term. As most of the Company's lease contracts do not provide an implicit discount rate, the Company uses its incremental borrowing rate, which is determined based on inforff mation availabla e at the commencement date of a lease. Leases may include renewal, purchase or termination options that can extend or shorten the term of the lease. The exercise of those options is at the Company's sole discretion and is evaluated at inception and throughout 76 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 the contract to determine if a modififf cation of the lease term is required. Leases with an initial term of 12 months or less are not recorded as a lease right-of-ff use asset and liabia lity. See Note 10 forff additional inforff mation. ImII paim rii mrr ent of lonll g-lill ved assetstt . The Company perforff ms assessments of its long-lived assets to be held and used, whenever events or circumstances indicate that the carryirr ng value of those assets may not be recoverabla e. An impairment loss on proved oil and gas properties is indicated if the sum of the expected futff urt e cash flff ows, including cash flff ows frff om the Company's water services business that are used in the development of the assets, is less than the carryirr ng amount of the assets, including the carryirr ng value of the Company's water services business. In these circumstances, the Company recognizes an impairment charge forff the amount by which the carryirr ng amount of the assets exceeds the estimated faff ir value of the assets. Unproved oil and gas properties are periodically assessed forff impairment on a project-by-project basis. These impairment assessments are affff eff cted by the results of current and planned exploration activities, commodity price outlooks, planned futff urt e property sales or expiration of all or a portion of such projects. If the Company's assessment determines that a project is not expected to be developed, the Company will recognize an impairment charge at that time. Impairment charges forff unproved oil and gas properties are recorded in exploration and abaa ndonments expense in the consolidated statements of operations. Whenever events or changes in circumstances indicate that the carryirr ng amount of other long-lived assets, including the Company's operating lease right-of-ff use assets, may not be recoverabla e, an impairment assessment is perforff med and the the amount by which the carryirr ng amount of the assets exceeds the estimated Company recognizes an impairment charge forff faff ir value of the assets determined using either a discounted futff urt e cash flff ow model or another appr opriate faff ir value method. a See Note 4 and Note 16 forff additional inforff mation. G Goodw ilii lll .ll Goodwill is assessed forff impairment whenever it is more likely than not that events or circumstances indicate the carryirr ng value of a reporting unit exceeds its faff ir value, but no less oftff en than annually. An impairment charge is recorded forff the amount by which the carryirr ng amount exceeds the faff ir value of a reporting unit in the period it is determined to be impaired. The Company perforff med its annual quantitative assessment of goodwill during the third quarter of 2022 to determine whether it was more likely than not that the faff ir value of the Company's reporting unit was less than its carryirr ng amount. See Note 4 forff additional inforff mation. CapiCC tii altt ill zii ed inii tett rest.tt The Company capia talizes interest frff om external borrowings on expenditurtt es forff development projects (having an expected construcrr intended use. Capia talized interest is added to the cost of the underlying asset and is amortized over the usefulff in the same manner as the underlying assets. tion period of one year or longer) until such projects are ready forff signififf cant their lives of the assets i Asset retitt ri ement oblill gat itt ons. The Company records a liabia lity forff the faff ir value of an asset retirement obligation in the period in which the associated asset is acquired or placed into service, if a reasonabla e estimate of faff ir value can be made. Fair value is determined using a present value appr estimated amounts and timing of settlements. Asset retirement obligations are generally capia talized as part of the carryirr ng value of the long-lived asset to which it relates. Conditional asset retirement obligations that meet the defiff nition of liabia lities are recorded when incurred and when faff ir value can be reasonabla y estimated. ating assumptions about oach, incorpor a a rr The Company includes the current and noncurrent portions of asset retirement obligations in other current liabia lities and other liabia lities, respectively, in the consolidated balance sheets and expenditurt es are included as cash used in operating activities in the consolidated statements of cash flff ows. See Note 9 forff additional inforff mation. TrTT easuryr stoctt k. Treasuryrr stock purchases are recorded at cost. Upon reissuance, the cost of treasuryrr shares held is reduced by the average purchase price per share of the aggregate treasuryrr shares held. Revenue recognitii itt on. The Company recognizes revenue when control of the promised goods or services is transfeff rred to those goods customers at an amount that reflff ects the consideration to which the Company expects to be entitled in exchange forff or services. 77 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 Oil sales. The Company recognizes oil sales revenue when (i) control/custody transfeff rs to the purchaser and (ii) the agreed-upon index price, net of any price diffff eff rentials, is fiff xed and determinabla e. Any costs incurred prior to the transfeff r of control to the customer, such as gathering and transportation costs, are recognized as oil and gas production costs. NGNN LGG and gas sales. Under the maja ority of the Company's gas processing contracts, gas is delivered to a midstream processing entity and the Company elects to take residue gas and NGLs in-kind at the tailgate of the gas processing plant. The Company recognizes revenue when the products are delivered (custody transfeff r) to the ultimate third-party purchaser at a lly agreed-upon deliveryrr point at a specififf ed index price, with gathering and processing feff es recognized as oil and gas contractuat production costs. For NGL and gas products that the Company does not take in-kind, the Company recognizes revenue when the products are delivered to the midstream gathering or processing entity at a specififf ed index price, net of downstream gathering and processing feff es. NeNN t sales of purchased commodities. The Company enters into pipeline capaa city commitments in order to secure city frff om the Company's areas of production and to secure diesel supply frff om the availabla e oil, NGL and gas transportation capaa Gulf Coast. The Company also enters into purchase commitments to secure sand supply forff 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 diversifyff a portion of the Company's oil and gas sales to (i) Gulf Coast refiff neries, (ii) Gulf Coast and West Coast gas markets and (iii) international oil markets, and to satisfyff unused gas pipeline capaa city commitments. The Company periodically sells diesel and sand to unaffff iff liated third parties in the Permian Basin if it has supply in excess of its operational needs. Revenues and expenses frff om 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 capaa city frff om the city at downstream sales points. The transportation Company's areas of production to downstream sales points and storage capaa and storage costs associated with these transactions are included in purchased commodities expense. See Note 14 forff additional inforff mation. city and storage commitments in order to secure availabla e oil and gas transportation capaa Derivatitt ves. All of the Company's derivatives are accounted forff as non-hedge derivatives and are recorded at estimated faff ir value in the consolidated balance sheets. All changes in the faff ir values of its derivative contracts are recorded as gains or losses in the earnings of the periods in which they occur. The Company periodically enters into commodity price derivative positions, including oil production derivatives, NGL production derivatives and gas production derivatives. From time to time, the Company enters into contracts that contain embedded derivatives. These contracts are reviewed when they are entered into the derivative components. The Company's marketing derivatives, derivatives related to in order to identifyff and account forff exercised conversion options on convertible senior notes and a derivative associated with contingent consideration were deemed derivatives embedded in host contracts. The Company enters into derivatives under master netting arrangements, which, in an event of defaff ult, allows the rty. The Company classififf es the faff ir value amounts Company to offff sff et payabla es to and receivabla es frff om the defaff ulting counterparr of derivative assets and liabia lities executed under master netting arrangements as net current or noncurrent other assets or net current or noncurrent derivative liabia lities, whichever the case may be, by instrumrr ent type and counterparr rty. The Company enters into International Swapa Dealers Association Master Agreements ("ISDA Agreements") with its rties commodity price derivative counterparr with rights of set offff upon the occurrence of defiff ned acts of defaff ult by either the Company or a counterparr rty to a derivative, whereby the party not in defaff ult may set offff all derivative liabia lities owed to the defaff ulting party against all derivative asset receivabla es frff om the defaff ulting party. See Note 4 and Note 5 forff rties. The terms of the ISDA Agreements provide the Company and the counterparr additional inforff mation. InII come taxe s. The provision forff income taxes is determined using the asset and liabia lity appr oach of accounting forff tt oach, defeff rred income taxes reflff ect the net tax effff eff cts of temporaryrr diffff eff rences between the income taxes. Under this appr carryirr ng amounts of assets and liabia lities forff es and net operating loss and tax credit carryfrr orff wards. The amount of defeff rred taxes on these temporaryrr diffff eff rences is determined using the tax rates that are expected to appl icabla e, based on tax rates and laws in the respective tax jurisdiction enacted as of the balance sheet date. y to the period when the asset is realized or the liabia lity is settled, as appl es and the amounts used forff fiff nancial reporting purpos income tax purpos a a a a rr rr The Company reviews its defeff rred tax assets forff recoverabia lity and establa ishes a valuation allowance based on projected icabla e tax strategies and the expected timing of the reversals of existing temporaryrr diffff eff rences. A futff urt e taxabla e income, appl a 78 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 valuation allowance is provided when it is more likely than not (likelihood of greater than 50 percent) that some portion or all of the defeff rred tax assets will not be realized. The Company recognizes the tax benefiff t frff om an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based upon the technical merits of the position. If all or a portion of the unrecognized tax benefiff t is sustained upon examination by the taxing authorities, the tax benefiff t will be recognized as a reduction to the Company's defeff rred tax liabia lity and will affff eff ct the Company's effff eff ctive tax rate in the period it is recognized. See Note 17 forff additional inforff mation. The Company records any tax-related interest charges as interest expense and any tax-related penalties as other expense in the consolidated statements of operations. StSS octt k-based compem nsatitt on. Stock-based compensation expense forff restricted stock awards and units ("Equity Awards") and perforff mance units ("Perforff mance Awards") expected to be settled in the Company's common stock are measured at the grant date or modififf cation date, as appl feff iturtt es, on a straight line basis over the requisite service period of the respective award. The faff ir value of Equity Awards are determined on icabla e, using the prior day's closing share price. The faff ir value of Perforff mance the grant date or modififf cation date, as appl Awards are determined using a Monte Carlo simulation model. The Company has no program, plan or practice to coordinate the timing of grants of stock-based compensation with the release of material nonpublic inforff mation. icabla e, using the faff ir value of the award, and is recorded, net of estimated forff a a Equity Awards and Perforff mance Awards are net settled by withholding shares of the Company's common stock to satisfyff income tax withholding payments due upon vesting. Remaining vested shares are remitted to individual employee brokerage accounts. Shares to be delivered upon vesting of Equity Awards and Perforff mance Awards are made availabla e frff om authorized, but unissued, shares. Restricted stock units expected to be settled in cash on their vesting dates, rather than in common stock ("Liabia lity Awards"), are included in accounts payabla e – due to affff iff liates in the consolidated balance sheets. The faff ir value of Liabia lity Awards on the grant date is determined using the prior day's closing share price. The Company recognizes the value of Liabia lity Awards on a straight line basis over the requisite service period of the award. Liabia lity Awards are recorded at faff ir value as of each balance sheet date using the closing share price on the balance sheet date. Changes in the faff ir value of Liabia lity Awards are recorded as increases or decreases to stock-based compensation expense. Equity Awards, Perforff mance Awards and Liabia lity Awards participate in dividends during their vesting periods and generally vest over three years. See Note 8 forff additional inforff mation. NeNN t inii come (l(( osll s)s per share.ee The Company's basic net income per share attributabla e to common stockholders is computed as (i) net income attributabla e to common stockholders, (ii) less participating share-based basic earnings (iii) divided by weighted average basic shares outstanding. The Company's diluted net income per share attributabla e to common stockholders is computed as (i) basic net income attributabla e to common stockholders, (ii) plus the reallocation of participating earnings, if any, (iii) plus the aftff er-tax interest expense associated with the Company's convertible senior notes that are assumed to be converted into shares (iv) divided by weighted average diluted shares outstanding, which assumes the Company's convertible senior notes were converted into shares of the Company's common stock at the beginning of the reporting period. Diluted net income per share attributabla e to common stockholders is calculated under both the two-class method and the treasuryrr stock method and the more dilutive of the two calculations is presented. During periods in which the Company realizes a net loss attributabla e to common stockholders, securities or other contracts to issue common stock would be dilutive to loss per share; thereforff e, conversion into common stock is assumed not to occur. See Note 18 forff additional inforff mation. SeSS gme entstt . Based upon how the Company is organized and managed, the Company has one reportabla e operating segment, which is oil and gas development, exploration and production. The Company considers its water services business and sales of purchased commodities as ancillaryrr to its oil and gas development, exploration and producing activities and manages them to support such activities. In addition, the Company has a single, company-wide management team that allocates capia tal resources to maximize profiff tabia lity and measures fiff nancial perforff mance as a single enterprrr ise. Adoptitt on of new accountitt nii g stantt dards. There have not been any new standards issued that the Company considers material to its accounting or disclosures. 79 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 NOTE 3. Acquisition and Divestiture Activities Acquisii itii itt ons. The Company regularly seeks to acquire or trade forff acreage that complements its operations, provides ties, increases the lateral length of futff urt e horizontal wells and provides superior returt ns exploration and development opportuni on investment. t DoublePee oint acquisii ition. On May 4, 2021, the Company acquired Double Eagle III Midco 1 LLC ("DoublePoint") pursuant to a defiff nitive membership interest purchase agreement dated April 1, 2021 (the "DoublePoint Acquisition") in exchange forff 27 million shares of Pioneer common stock and $1.0 billion of cash. The Pioneer stock consideration transfeff rred had a faff ir value of $4.2 billion. Parsrr leye acquisii ition. On Januaryrr 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 transfeff rred of $6.9 billion. Both the Parsley Acquisition and the DoublePoint Acquisition were accounted forff using the acquisition method under ASC Topic 805, Business Combinations, which requires all assets acquired and liabia lities assumed to be recorded at faff ir value at the acquisition date. Othett r acquisii itions. During 2022, 2021 and 2020, consideration transfeff rred to acquire primarily undeveloped acreage forff rry/rr Wolfcff amp fiff eld of the Midland Basin totaled $193 million, $58 million and futff urt e exploration activities in the Sprabea $14 million, respectively. Divestitt tii ures. The Company regularly reviews its asset base to identifyff nonstrategic assets, the disposition of which ther the other activities, create organizational and operational effff iff ciencies and furff would increase capia tal resources availabla e forff Company's objective of maintaining a strong balance sheet to ensure fiff nancial flff exibility. • • • • • During the year ended December 31, 2022, the Company divested certain undeveloped acres and producing wells in the Midland Basin forff (i) cash proceeds of $164 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 $110 million, which is reflff ected in net gain (loss) on disposition of assets in the consolidated statements of operations. ryrr 2022, the Company completed the sale of its equity interest in certain gas gathering and processing In Februarr cash proceeds of $125 million (the "Martin County Gas Processing systems in northern Martin County forff Divestiturt e"). The sale was treated as a recoveryrr of investment frff om a partial sale of proved property resulting in no gain or loss being recognized. In December 2021, the Company completed the sale of its assets in the Delaware Basin (the "Delaware Divestiturtt e") cash proceeds of $3.0 billion, aftff er normal closing adjustments. The Company to Continental Resources, Inc. forff recognized a loss of $1.1 billion, which is reflff ected in net gain (loss) on disposition of assets in the consolidated statements of operations forff the year ended December 31, 2021. The Company's Delaware Basin assets were acquired as part of the Parsley Acquisition. In October 2021, the Company completed the sale of 20 thousand net acres in western Glasscock County to Laredo in exchange forff $137 million in cash and 960 thousand shares of Laredo's common stock, representing total consideration transfeff rred of $206 million, aftff er normal closing adjustments. The Company recognized a gain of $1 million, which is reflff ected in net gain (loss) on disposition of assets in the consolidated statements of operations forff In March 2021, the Company sold its well services business to a third party forff (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 reflff ected in net gain (loss) on disposition of assets in the consolidated statements of operations. the year ended December 31, 2021. 80 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 • In May 2020, the Company completed the sale of certain vertical wells and appr in Upton County of the Permian Basin forff $6 million associated with the sale. oximately 1,500 undeveloped acres net cash proceeds of $6 million. The Company recorded a gain of a NOTE 4. Fair Value Measurements The Company determines faff ir value based on the price that would be received frff om selling an asset or paid to transfeff r a liabia lity 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 liabia lity, which are characterized according to a hierarchy that prioritizes those inputs based on the degree to which they are observabla e. Observabla e inputs represent market data obtained frff om independent sources, whereas unobservabla e inputs reflff ect a company's own market assumptions, which are used if observabla e inputs are not reasonabla y availabla e without undue cost and effff orff t. The faff ir value input hierarchy level to which an asset or liabia lity measurement in its entirety faff lls is determined based on the lowest level input that is signififf cant to the measurement in its entirety. The three input levels of the faff ir value hierarchy are as folff lows: • • • identical assets or liabia lities in active markets. similar assets or liabia lities in active markets; quoted prices forff Level 1 – quoted prices forff identical or similar assets Level 2 – quoted prices forff or liabia lities in markets that are not active; inputs other than quoted prices that are observabla e forff the asset or liabia lity (e.g. interest rates) and inputs derived principally frff om or corroborated by observabla e market data by correlation or other means. Level 3 – unobservabla e inputs forff the asset or liabia lity, typically reflff ecting management's estimate of assumptions that market participants would use in pricing the asset or liabia lity. The faff ir values are thereforff e determined using model-based techniques, including discounted cash flff ow models. Assetstt and lill abilii ill tii itt es measured at faiff rii value on a recurrinii g basisii . Assets and liabia lities measured at faff ir value on a recurring basis are as folff lows: As of December 31, 2022 Fair Value Measurements Quoted Prices in Active Markets forff Identical Assets (Level 1) Signififf cant Other Observable Inputs (Level 2) Signififf cant Unobservable Inputs (Level 3) Total Assets: Investment in affff iff liate Defeff rred compensation plan assets Conversion option derivatives Liabilities: Marketing derivatives $ $ $ 172 65 — 237 $ $ — $ (in millions) — $ — 1 1 $ — $ — $ — — — $ 140 $ 172 65 1 238 140 81 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 As of December 31, 2021 Fair Value Measurements Quoted Prices in Active Markets forff Identical Assets (Level 1) Signififf cant Other Observable Inputs (Level 2) Signififf cant Unobservable Inputs (Level 3) Total Assets: Investment in affff iff liate Defeff rred compensation plan assets Short-term investments Liabilities: Commodity price derivatives (a) Marketing derivatives ______________________ $ $ $ $ 135 74 58 267 $ $ — $ — — $ (in millions) — $ — — — $ 486 — 486 $ $ — $ — — — $ — $ 77 77 $ 135 74 58 267 486 77 563 (a) Includes $328 million as of December 31, 2021 of liabia lities recorded in the four th quarter of 2021 related to entering into equal and offff sff etting oil and gas commodity derivative trades that had the net effff eff ct of eliminating futff urtt e faff ir value changes to certain of the Company's 2022 derivative obligations. ff InvII estmt ent in affff iff liate. The Company elected the faff ir value option forff measuring its equity method investment in ProPetro. The faff ir value of the Company's investment in ProPetro common stock is determined using Level 1 inputs based on observabla e prices on a maja or exchange. See Note 12 and Note 15 forff additional inforff mation. Defe eff rred compem nsation plan assetstt . The Company's defeff rred compensation plan assets include investments in equity and securities that are actively traded on maja or exchanges. The faff ir value of these investments is determined using l fundff mutuat Level 1 inputs based on observabla e prices on maja or exchanges. Short-term investmt entstt . In October 2021, the Company received 960 thousand shares of Laredo as partial consideration forff its Glasscock Divestiturt e. The shares were treated as an investment in equity securities measured at faff ir value. The faff ir value of the Company's investment in Laredo common stock was determined using Level 1 inputs based on observabla e prices on a maja or exchange. During the year ended December 31, 2022, the Company sold all 960 thousand shares of Laredo common stock. See Note 3 and Note 15 forff additional inforff mation. ConvCC ersrr ion option derivatives. In May 2020, the Company issued $1.3 billion principal amount of convertible senior notes due 2025 (the "Convertible Notes"). Certain holders of the Convertible Notes exercised their conversion option during the year ended December 31, 2022. Per the terms of the notes indenturt e, the Company elected to settle the conversions in cash, with settlement occurring 25 trading days frff om the notice of conversion (the "Settlement Period"). The Company's election to settle an exercised conversion option in cash results in a forff ward contract during the Settlement Period that is accounted forff as a ent not designated as a hedge. The change in faff ir value of the conversion option derivatives during the derivative instrumrr Settlement Period 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, Note 7 and Note 19 forff additional inforff mation. ComCC moditytt price derivatives. The asset and liabia lity measurements forff the Company's commodity price derivative contracts are determined using Level 2 inputs. The Company utilizes discounted cash flff ow and option-pricing models forff valuing its commodity price derivatives. The values attributabla e 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 appl icabla e estimated credit-adjusted risk-frff ee rate yield curve and (iv) the implied rate of volatility inherent in the collar contracts, which is based on active and independent market-quoted volatility faff ctors. The Company's commodity price derivatives represent oil basis swapa contracts as of December 31, 2022 and oil and gas swapa contracts, collar contracts and basis swapa contracts as of December 31, 2021. a 82 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 Commodity price derivative assets and liabia lities recorded in the consolidated balance sheets were less than $1 million as of December 31, 2022. See Note 5 forff additional inforff mation. MarMM krr ekk ting derivatives. The Company's marketing derivatives reflff ect long-term marketing contracts 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 the purchase contract is based on a Midland oil price and the price the Company receives forff selling oil through a Gulf Coast storage and export faff cility at prices that are highly correlated with Brent oil prices during the same month of the purchase. Based on the forff m of the long-term marketing contracts, the Company accounts forff ents not designated as hedges. The asset and liabia lity measurements forff the long-term marketing contracts are determined using both Level 2 and 3 inputs. The Company utilizes a discounted cash flff ow model forff the oil volumes sold is the WASP that the non-affff iff liated counterparr the contracts as derivative instrumrr valuing the marketing derivatives. rty receives forff The values attributabla e to the Company's marketing derivatives are determined based on Level 2 inputs that include icabla e estimated credit-adjusted a (i) the contracted notional volumes, (ii) independent active market price quotes, (iii) the appl l rates. The Level 3 inputs attributabla e to the Company's marketing risk-frff ee rate yield curve and (iv) stated contractuatt derivatives include the historical monthly diffff eff rential between Brent oil prices and the corresponding WASP of the counterparr rty to the marketing derivatives ("WASP Diffff eff rential Deduction") and, to a lesser extent, an estimated annual cost inflff ation rate. The average WASP Diffff eff rential Deduction used in the faff ir value determination as of December 31, 2022 and 2021 was $1.67 per barrel and $2.19 per barrel, respectively. The WASP Diffff eff rential Deduction and the estimated annual cost inflff ation rate reflff ects management's best estimate of futff urt e results utilizing historical perforff mance, but these estimates are not observabla e tions inputs by a market participant and contain a high degree of uncertainty. The Company experiences mark-to-market flff uctuat in the faff ir value of its marketing derivatives based on changes in the WASP Diffff eff rential Deduction if it deviates frff om historical levels. For example, a 10 percent increase or decrease in the WASP Diffff eff rential Deduction would impact the faff ir value of the Company's marketing derivatives recorded by $28 million as of December 31, 2022. See Note 5 forff additional inforff mation. i Assetstt and lill abi lii ill tii itt es measured at faiff rii value on a nonrecurrinii g basisii . Certain assets and liabia lities are measured at faff ir value on a nonrecurring basis. These assets and liabia lities are not measured at faff ir value on an ongoing basis, but are subject to faff ir value adjustments in certain circumstances. These assets and liabia lities can include inventories, proved and unproved oil and gas properties, assets acquired and liabia lities assumed in business combinations, goodwill and other long-lived assets that are written down to faff ir value when they are determined to be impaired or held forff sale. under the successfulff Proved oil and gas properties. The Company perforff ms assessments of its proved oil and gas properties, which are accounted forff ts method of accounting, whenever events or circumstances indicate that the carryirr ng value of those assets may not be recoverabla e. An impairment loss is indicated if the sum of the expected futff urtt e cash flff ows, including cash flff ows frff om the Company's water services business that are used in the development of the assets, is less than the carryirr ng amount of the assets, including the carryirr ng value of the water services business. In these circumstances, the Company recognizes an impairment charge forff the amount by which the carryirr ng amount of the assets exceeds the estimated faff ir value of the assets. effff orff Based on management's commodity price outlooks as December 31, 2022, which represent long-term commodity price outlooks that are internally developed based on third party futff urt e commodity price estimates as of the measurement date ("Management's Price Outlook"), the Company determined events and circumstances did not indicate that the carryirr ng value of the Company's proved properties were not recoverabla e. UnprUU oved oil and gas properties. Unproved oil and gas properties are periodically assessed forff impairment on a project- by-project basis. These impairment assessments are affff eff cted by the results of current and planned exploration activities, commodity price outlooks, planned futff urt e property sales or expiration of all or a portion of such projects. If the Company's assessment determines that a project is not expected to be developed, the Company will recognize an impairment charge at that time. Impairment charges forff unproved oil and gas properties are recorded in exploration and abaa ndonments expense in the consolidated statements of operations. During the years ended December 31, 2022, 2021 and 2020, the Company recorded noncash impairment charges of $7 million, $4 million and $11 million, respectively, to exploration and abaa ndonments expense in the consolidated statements of operations. Othett r long-lived assetstt . The Company reviews its long-lived assets forff impairment whenever events or changes in circumstances indicate that the carryirr ng amount of an asset may not be recoverabla e. If such assets are considered to be impaired, the impairment charge is measured as the amount by which the carryirr ng amount of the asset exceeds its estimated faff ir value. As a result of the Company's impairment assessments of other long-lived assets, the Company recorded $23 million of 83 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 noncash impairment charges to other expense in the consolidated statements of operations. See Note 16 forff inforff mation. additional Goodwill. Goodwill is assessed forff impairment whenever it is more likely than not that events or circumstances indicate the carryirr ng value of a reporting unit exceeds its faff ir value, but no less oftff en than annually. An impairment charge is recorded forff the amount by which the carryirr ng amount exceeds the faff ir value of a reporting unit in the period it is determined to be impaired. Based on the Company's annual assessment of the faff ir value of goodwill as of July 1, 2022, the Company determined that its goodwill was not impaired. As of December 31, 2022, there were no material changes in events or circumstances that would warrant a reassessment foff r impairment. FiFF nii anciali inii strtt umentstt not carried at faiff rii value.ee Carryirr ng values and faff ir values of fiff nancial instrumrr ents that are not carried at faff ir value in the consolidated balance sheets are as folff lows: Assets: Cash and cash equivalents (a) Restricted cash (a) (b) Liabilities: Current portion of long-term debt: Convertible senior notes (c) Senior notes (c) Long-term debt: Convertible senior notes (c) Senior notes (c) ______________________ As of December 31, 2022 As of December 31, 2021 Carrying Value Fair Value Carrying Value Fair Value (in millions) 1,032 $ 1,032 $ — $ — $ 3,847 37 $ $ 3,847 37 29 750 925 3,200 $ $ $ $ 69 738 2,184 2,696 $ $ $ $ — $ $ 244 1,307 5,381 $ $ — 247 2,359 5,390 $ $ $ $ $ $ (a) Fair value appr (b) Represents funds a ff oximates carryirr ng value due to the short-term naturt e of the instrumrr ents. in escrow forff use in defiff ciency feff e payments associated with the Company's South Texas Divestiturt e. See Note 2 and Note 11 forff additional inforff mation. (c) Fair value is determined using Level 2 inputs. The Company's senior notes are quoted, but not actively traded on maja or additional exchanges; thereforff e, faff ir value is based on periodic values as quoted on maja or exchanges. See Note 7 forff inforff mation. The Company has other fiff nancial instrumrr ents consisting primarily of receivabla es, payabla es, prepaid expenses and other current assets and liabia lities that appr ities. oximate faff ir value due to the naturt e of the instrumrr Non-fiff nancial assets and liabia lities initially measured at faff ir value include assets acquired and liabia lities assumed in business combinations, goodwill and asset retirement obligations. ent and their relatively short maturtt a NOTE 5. Derivative Financial Instruments The Company's derivatives are accounted forff as non-hedge derivatives and all changes in the faff ir values of its derivative contracts are recognized as gains or losses in the earnings of the periods in which they occur. The Company uses credit and other fiff nancial criteria to evaluate the credit standing of,ff and to select, counterparr rties to its ents. Although the Company does not obtain collateral or otherwise secure the faff ir value of its derivative additional ents, associated credit risk is mitigated by the Company's credit risk policies and procedures. See Note 2 forff derivative instrumrr instrumrr inforff mation. ComCC moditii ytt derivatitt ves. As of December 31, 2022, the Company has outstanding oil derivative contracts with JP Morgan Chase forff Januaryrr 2024 through December 2024. The basis swapa contracts fiff x the basis diffff eff rential between the WTI index price (the price at which the Company buys Midland Basin oil forff three thousand Bbls per day of Brent/tt WTI basis swapsa forff 84 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 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 diffff eff rential of $4.33 in order to reduce the Company's basis risk. MarMM kerr titt nii g derivatitt ves. The Company uses marketing derivatives to diversifyff its oil pricing to Gulf Coast and international markets. As of December 31, 2022, the Company's marketing derivatives reflff ect long-term marketing contracts entered into with Occidental Energy Marketing, Inc. ("Oxy") whereby the Company agreed to purchase and simultaneously sell barrels of oil at an oil terminal in Midland, Texas. In October 2019, the Company agreed to purchase and simultaneously sell 50 thousand barrels of oil per day beginning Januaryrr 1, 2021 and 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 contracts is based on a Midland WTI price selling oil through a Gulf Coast the oil volumes sold is the WASP that Oxy receives forff and the price the Company receives forff storage and export faff cility at prices that are highly correlated with Brent oil prices during the same month of the purchase. Based on the forff m of the long-term marketing contracts, the Company accounts forff ents not designated as hedges. See Note 4 forff the contracts as derivative instrumrr additional inforff mation. ConCC versrr ion optitt on derivatitt ves. The Company's conversion option derivatives represent the change in the cash settlement obligation that occurs during the Settlement Period related to conversion options exercised by certain holders of the Convertible Notes. For the year ended December 31, 2022, the conversion options attributabla e to $390 million of the principal amount of the Convertible Notes were exercised by the holders of the notes, of which $29 million remains in the Settlement Period as of December 31, 2022. See Note 4 and Note 7 forff additional inforff mation. FaiFF rii value.ee The faff ir value of derivative fiff nancial instrumrr ents not designated as hedging instrumrr ents are as folff lows: Type Assets: As of December 31, 2022 Consolidated Balance Sheet Location Fair Value Gross Amounts Offff sff et in the Consolidated Balance Sheet (in millions) Net Fair Value Presented in the Consolidated Balance Sheet Conversion option derivatives Other - current Liabilities: Marketing derivatives Marketing derivatives Derivatives - current Derivatives - noncurrent $ $ $ 1 44 96 $ $ $ — $ — $ — $ 1 44 96 Type Liabilities: Commodity price derivatives Marketing derivatives Marketing derivatives As of December 31, 2021 Consolidated Balance Sheet Location Fair Value Gross Amounts Offff sff et in the Consolidated Balance Sheet (in millions) Net Fair Value Presented in the Consolidated Balance Sheet Derivatives - current Derivatives - current Derivatives - noncurrent $ $ $ 486 52 25 $ $ $ — $ — $ — $ 486 52 25 85 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 Gains and losses recorded to net derivative loss in the consolidated statements of operations related to derivative fiff nancial instrumrr ents not designated as hedging instrumrr ents are as folff lows: Commodity price derivatives: Noncash derivative gain (loss), net Cash receipts (payments/defeff rred obligations) on settled derivatives, net (a) $ Total commodity derivative loss, net Marketing derivatives: Noncash derivative gain (loss), net Cash payments on settled derivatives, net Total marketing derivative loss, net Conversion option derivatives: Noncash derivative gain, net Cash receipts on settled derivatives, net Total conversion option derivative gain, net Interest rate derivatives: Cash payments on settled derivatives, net Derivative loss, net _____________________ Year Ended December 31, 2022 2021 (in millions) 2020 158 (358) (200) (63) (66) (129) 1 13 14 $ $ 437 (2,595) (2,158) 14 (39) (25) — — — (213) 66 (147) (112) — (112) — — — — (315) $ — (2,183) $ (22) (281) $ (a) The year ended December 31, 2021 includes $521 million of losses attributabla e to the early settlement of certain 2022 oil and gas commodity derivatives primarily related to (i) the termination of certain of its 2022 oil and gas commodity derivative positions and (ii) entering into equal and offff sff etting oil and gas commodity derivative trades, which had the net effff eff ct of eliminating futff urt e faff ir value changes to certain of its 2022 derivative positions. NOTE 6. Exploratory Well and Project Costs The Company capia talizes exploratoryrr well and project costs until a determination is made that the well or project has proved reserves, is impaired or is sold. The Company's capia talized exploratoryrr well and project costs are included ff either found in proved properties in the consolidated balance sheets. If the exploratoryrr well or project is determined to be impaired, the impaired costs are recorded in exploration and abaa ndonments expense in the consolidated statements of operations. The changes in capia talized exploratoryrr well and project costs are as folff lows: Year Ended December 31, 2022 2021 (in millions) 2020 Beginning capia talized exploratoryrr well and project costs $ 632 $ 498 $ 660 Additions to exploratoryrr well and project costs pending the determination of proved reserves Additions to capia talized exploratoryrr well and project costs frff om acquisitions Reclassififf cations due to determination of proved reserves Disposition of assets 3,341 — (3,139) — 2,935 235 (2,973) (63) Ending capia talized exploratoryrr well and project costs $ 834 $ 632 $ 1,163 — (1,325) — 498 86 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 Aging of capia talized exploratoryrr costs and the number of projects forff which exploratoryrr well costs have been capia talized forff a period of one year or less or more than one year, based on the date drilling was completed, are as folff lows: Year Ended December 31, One year or less More than one year Number of projects with exploratoryrr well costs that have been suspended forff a 2022 $ $ 2021 (in millions, except well counts) 834 — 834 621 11 632 $ $ $ $ — 3 2020 495 3 498 1 period greater than one year (a) ______________________ (a) The three exploratoryrr wells that were suspended forff completed during the fiff rst quarter of 2022. The one exploratoryrr well that was suspended forff year as of December 31, 2020 was completed in 2021. a period greater than one year as of December 31, 2021 were a period greater than one NOTE 7. Long-term Debt and Interest Expense The components of long-term debt, including the effff eff cts of issuance costs and net discounts, are as folff lows: Outstanding debt principal balances: 3.950% senior notes due 2022 0.550% senior notes due 2023 0.750% senior callabla e notes due 2024 0.250% convertible senior notes due 2025 1.125% senior notes due 2026 4.450% senior notes due 2026 5.625% senior notes due 2027 7.200% senior notes due 2028 4.125% senior notes due 2028 1.900% senior notes due 2030 2.150% senior notes due 2031 Issuance costs and discounts, net Total debt Less current portion of long-term debt Long-term debt As of December 31, 2022 As of December 31, 2021 (in millions) $ — $ 750 — 962 750 — — 241 138 1,100 1,000 4,941 (37) 4,904 779 4,125 $ $ 244 750 750 1,323 750 500 179 241 138 1,100 1,000 6,975 (43) 6,932 244 6,688 ilii ill tii ytt .yy The Company maintains a revolving corpor ions ("Syndicate") and has aggregate loan commitments of $2.0 billion. The Credit Facility has a maturt ate credit faff cility (the "Credit Facility") with a syndicate of CrCC editii facff fiff nancial institutt ity date of Januaryrr 12, 2026. As of December 31, 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 capia talization, subject to certain adjustments, not to exceed 0.65 to 1.0. As of December 31, 2022, the Company was in compliance with its debt covenants. rr Borrowings under the Credit Facility may be in the forff m of revolving loans or swing line loans. Revolving loans represent loans made ratabla y by the Syndicate in accordance with their respective commitments under the Credit Facility and bear interest, at the option of the Company, based on (a) a rate per annum equal to the higher of the prime rate announced frff om time to time by Wells Fargo Bank, National Association or the weighted average of the rates on overnight feff deral funds transactions with members of the Federal Reserve System during the last preceding business day plus 0.5 percent plus a defiff ned alternate base rate spread margin, which is currently 0.25 percent based upon the Company's debt rating or (b) a base Eurodollar ff 87 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 rate, plus a margin (the "Applicabla e Margin"), which is currently 1.25 percent and is also determined by the Company's debt rating. Swing line loans represent loans made by a subset of the lenders in the Syndicate and may not exceed $150 million. Swing line loans under the Credit Facility bear interest at a rate per annum equal to the "ASK" rate forff feff deral funds periodically published by the Dow Jones Market Service plus the Applicabla e Margin. Letters of credit outstanding under the Credit Facility are subject to a per annum feff e, representing the Applicabla e Margin plus 0.125 percent. The Company also pays commitment feff es on undrawn amounts under the Credit Facility that are determined by the Company's debt rating (currently 0.15 percent). Borrowings under the Credit Facility are general unsecured obligations. ff Assumptm itt on of Doublell Pee oiPP nii t notett s and payoffff of Doublell Pee oiPP nii t creditii facff ilii ill tii ytt .yy In connection with the completion of the DoublePoint Acquisition, the Company assumed DoublePoint's outstanding senior notes of $650 million in aggregate principal amount of 7.75% senior notes due 2025 (with a faff ir value of $735 million) and DoublePoint's credit faff cility with an outstanding balance of $240 million. The Company repaid and terminated the DoublePoint credit faff cility agreement on May 4, 2021. Assumptm itt on of ParPP srr lell ye notett s and payoffff of ParPP srr lell ye creditii facff ilii ill tii ytt .yy In connection with the completion of the Parsley Acquisition, the Company assumed Parsley's outstanding senior notes (the "Parsley Notes") of $2.7 billion in aggregate principal amount (with a faff ir value of $2.8 billion) and Parsley's credit faff cility with an outstanding balance of $397 million. The Company's senior notes are strurr cturt ally subordinated to the outstanding Parsley Notes. The Company repaid and terminated the Parsley credit faff cility agreement on Januaryrr 12, 2021. SeSS nior notett s. In September 2022, the Company delivered an irrevocabla e notice of call to the holders of its outstanding 5.625% senior notes due 2027. The 5.625% senior notes due 2027, with a debt principal balance of $179 million, were repaid in October 2022. The Company recorded an $8 million net gain on early extinguishment of debt to other expense associated with the debt repayment. See Note 16 forff additional inforff mation. In Februarr ryrr 2022, the Company paid $1.3 billion to redeem its outstanding 0.750% Senior Notes due 2024 and 4.450% Senior Notes due 2026, having aggregate principal amounts of $750 million and $500 million, respectively. The Company recorded a $47 million loss on early extinguishment of debt to other expense associated with the early redemptions. See Note 16 forff additional inforff mation. In May 2021, the Company issued $750 million of 0.550% senior notes that will maturt e May 15, 2023 (the "May 2021 Senior Notes Offff eff ring"). The Company received proceeds, net of $4 million of issuance costs and discounts, of $746 million. Interest on the notes is payabla e on May 15 and November 15 of each year. The Company used $731 million of the proceeds frff om the May 2021 Senior Notes Offff eff ring to redeem DoublePoint's 7.750% senior notes due 2025. Associated with the redemption, the Company recorded a $3 million gain on the early extinguishment of debt to other expense. See Note 16 forff additional inforff mation. In Januaryrr 2021, the Company issued $750 million of 0.750% senior callabla e notes that will maturt e Januaryrr 15, 2024, $750 million of 1.125% senior notes that will maturt e Januaryrr 15, 2026 and $1.0 billion of 2.150% senior notes that will maturt e Januaryrr 15, 2031 (the "Januaryrr 2021 Senior Notes Offff eff ring"). The Company received proceeds, net of $24 million of issuance costs and discounts, of $2.5 billion. Interest on each of the notes is payabla e on Januaryrr 15 and July 15 of each year. The Company used the proceeds frff om the Januaryrr 2021 Senior Notes Offff eff ring to pay (i) $1.6 billion to redeem Parsley's 5.250% senior notes due 2025, Parsley's 5.375% senior notes due 2025 and Jagged Peak's 5.875% senior notes due 2026 (assumed by Parsley in a prior acquisition) and (ii) $852 million to purchase a portion of Parsley's 5.625% senior notes due 2027 and Parsley's 4.125% senior notes due 2028 pursuant to a cash tender offff eff r. In connection with the tender offff eff rs, the Company also obtained the requisite consents frff om holders of Parsley's 5.625% senior notes due 2027 and Parsley's 4.125% senior notes due 2028 to amend the indenturt es pursuant to which the notes were issued to, among other things, (i) eliminate substantially all of the restrictive covenants and related provisions and certain events of defaff ult contained in each indenturt e and (ii) shorten the minimum notice requirement forff optional redemptions to three days. Associated with the redemption and tenders, the Company recognized a $5 million loss on the early extinguishment of debt to other expense. See Note 16 forff additional inforff mation. The Company's 3.950% senior notes and 3.450% senior notes, with debt principal balances of $244 million and d the $140 million, respectively, maturt ed and were repaid in July 2022 and Januaryrr 2021, respectively. The Company funde repayments with cash on hand. ff 88 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 The Company's 0.550% senior notes, with a debt principal balance of $750 million, will maturt e in May 2023. The 0.550% senior notes are recorded in the current portion of long-term debt in the consolidated balance sheets as of December 31, 2022. 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 futff urtt e subordinated indebtedness of the Company. The Company is a holding company that conducts all of its operations through subsidiaries; consequently, the turtt ally subordinated to all obligations of its subsidiaries. Interest on the Company's senior notes is payabla e senior notes are strucrr semiannually. ConCC vertitt bli ell senior notett s. The Convertible Notes bear a fiff xed interest rate of 0.250% per year, with interest payabla e on May 15 and November 15 of each year. The Convertible Notes will maturt e 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 ther 10.2823 shares of the Company's common stock per $1,000 principal amount of the Convertible Notes (subject to furff adjustment pursuant to the terms of the notes indenturt e, the "Conversion Rate"), which represents an adjusted conversion price of $97.25 per share (subject to adjustment pursuant to the terms of the notes indenturt e, the "Conversion Price"). Upon conversion, the Convertible Notes will be settled in cash, shares of the Company's common stock or a combination thereof,ff at the Company's election. Holders of the Convertible Notes may convert their notes at their option prior to Februarr ryrr 15, 2025 under the folff lowing circumstances: • • • • lowing any quarter during which the last reported sales price of the Company's common stock at least 20 of the last 30 consecutive trading days of such quarter exceeds 130 percent of the Conversion Price; during the quarter folff forff during the fiff ve-business day period folff lowing any fiff ve 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 and the Conversion Rate; upon notice of redemption by the Company; or upon the occurrence of specififf ed corpor ate events, including certain consolidations or mergers. rr On or aftff er Februarr ryrr 15, 2025, until the close of business on the second scheduled trading day immediately preceding the ity date, holders may convert their notes at any time. The Company may not redeem the Convertible Notes prior to May maturt 20, 2023, and aftff er 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 forff 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 accruerr d and unpaid interest. In connection with the issuance of the Convertible Notes, the Company entered into privately negotiated cappe d call transactions with certain fiff nancial institutt e of which was to reduce the potential dilution to the Company's common stock upon conversion of the Convertible Notes and/or offff sff et any cash payments the Company is required to make in excess of the principal amount of such converted notes, with such reduction and offff sff et d Call transactions have an adjusted strike price of $97.25 per share of common stock and d price. The Cappe subject to a cappe an adjusted cappe d d price of $138.40 per share of common stock. The net cost of $113 million incurred to purchase the Cappe Call transactions was recorded as a reduction to additional paid-in capia tal in the consolidated balance sheets. d Call"), the purpos rties (the "Cappe ion counterparr a a a a a a rr As of December 31, 2022, the Convertible Notes had an outstanding principal balance of $962 million and unamortized issuance costs of $8 million. The effff eff ctive annual interest rate on the Convertible Notes is 0.6 percent. 89 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 Interest expense recognized on the Convertible Notes is as folff lows: Contractuatt l coupon interest Amortization of issuance discount (a) Amortization of capia talized loan feff es ______________________ 2022 2020 Year Ended December 31, 2021 (in millions) 3 — 5 8 $ $ $ $ 3 — 4 7 2 28 2 32 $ $ (a) Upon adoption of ASU 2020-06, the Company no longer amortizes the issuance discount associated with the Convertible Notes to interest expense over the lifeff of the Convertible Notes. ConvCC ertible NotNN e conversrr ions. During the last 30 consecutive trading days of the four th quarter of 2021 and everyrr quarter of 2022, the last reported sale price of the Company's common stock exceeded 130 percent of the Conversion Price forff at least 20 trading days, causing the Convertible Notes to become convertible at the option of the holders frff om Januaryrr 1, 2022 through March 31, 2023. ff During the year ended December 31, 2022, certain holders of the Convertible Notes exercised their conversion option resulting in the Company recognizing the folff lowing cash receipts and cash payments associated with the conversions: Cash payments: Principal repayments Conversion premiums Cash payments Cash receipts: d Call proceeds Cappe a Conversion option derivative receipts, net Cash receipts, net Year Ended December 31, 2022 2021 (in millions) $ $ $ $ 361 496 857 103 13 116 $ $ $ $ — — — — — — The Company recorded the conversion premiums paid, Cappe a d Call proceeds and $26 million of associated issuance feff es and defeff rred taxes attributabla e to the principal amount of the Convertible Notes converted in additional paid-in-capia tal. As of December 31, 2022, $29 million of the principal amount of the Convertible Notes remains in the Settlement Period. These Convertible Notes are recorded in the current portion of long-term debt in the consolidated balance sheets as of December 31, 2022. The current portion of Convertible Notes will be cash settled at the end of their respective Settlement Periods during the fiff rst quarter of 2023. See Note 4, Note 5 and Note 19 forff additional inforff mation. Principal payments scheduled to be made on the Company's long-term debt are as folff lows (in millions): 2023 2024 2025 2026 2027 Thereaftff er $ $ $ $ $ $ 779 — 933 750 — 2,479 90 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 Interest expense activity is as folff lows: interest Cash payments forff Amortization of issuance discounts (premiums), net Amortization of capia talized loan feff es Net changes in accruarr ls Interest incurred Less capia talized interest NOTE 8. Incentive Plans Year Ended December 31, 2022 2021 (in millions) 2020 $ $ 138 (2) 12 (20) 128 — 128 $ $ 136 (4) 14 17 163 (2) 161 $ $ 119 29 5 (19) 134 (5) 129 Defe eff rred compem nsatitt on retitt ri ement planll qualififf ed offff iff cers and certain key employees of the Company to contribute up to 50 percent of their base salaryrr and 100 percent of their annual bonus. The Company provides a matching contribution of 100 percent of the offff iff cer's and key employee's contribution limited up to the fiff rst 10 percent of their salary.rr The Company's matching contribution vests immediately. A trusrr has been establa ished by the Company to accumulate the contributions made under this retirement plan. . The Company's defeff rred compensation retirement plan allows forff t fundff The Company match forff the defeff rred compensation plan is as folff lows: Defeff rred compensation plan Year Ended December 31, 2022 2021 (in millions) 2020 $ 2 $ 2 $ 1 planll 401(k)(( lowing their date of hire. Participants may contribute up to 80 percent of their annual base salaryrr . The Pioneer Naturtt al Resources USA, Inc. ("Pioneer USA," a wholly-owned subsidiaryrr of the Company) 401(k) and Matching Plan (the "401(k) Plan") is a defiff ned contribution plan establa ished under the Internal Revenue Code l-time and part-time employees of Pioneer USA are eligible to participate in the 401(k) Plan on the Section 401. All regular fulff fiff rst day of the month folff into the 401(k) Plan. Matching contributions are made to the 401(k) Plan in cash by Pioneer USA in amounts equal to 200 percent of a participant's contributions to the 401(k) Plan that are not in excess of fiff ve percent of the participant's annual base salaryrr (the "Matching Contribution"). Each participant's account is credited with the participant's contributions, Matching Contribution and allocations of the Matching Contribution's earnings. Participants are fulff ly vested in their account balances except forff Matching Contributions and their proportionate share of 401(k) Plan earnings attributabla e to Matching Contributions, which -year period that begins on the participant's date of hire. Eligible employees are automatically proportionately vest over a four enrolled in the 401(k) Plan at a contribution rate of fiff ve percent of the employee's annual base salary,rr unless the employee opts out of participation or makes an alternate election within 30 days of becoming eligible forff participation. ff The Company match forff the 401(k) Plan is as folff lows: Year Ended December 31, 2022 2021 (in millions) 2020 $ 21 $ 17 $ 18 401(k) Plan Long-TeTT rmrr InII centitt ve PlPP anll forff the granting of various forff ms of awards, including stock options, stock appr stock and restricted stock units to directors, offff iff cers and employees of the Company. a . The Company's Amended and Restated 2006 Long-Term Incentive Plan ("LTIP") provides eciation rights, perforff mance units, restricted 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, 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 right to receive a 91 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 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 availabla e forff futff urt e grant pursuant to awards under the LTIP are as folff lows: Approved and authorized awards 2014 Parsley Plan awards availabla e to the LTIP (a) Awards issued under plan ______________________ As of December 31, 2022 12,600,000 879,575 (9,376,230) 4,103,345 (a) Under NYSE rulrr es, the Company added the shares that were availabla e under the 2014 Parsley Plan to the LTIP. These shares can only be used forff grants to employees who were not employed or engaged by Pioneer or any of its subsidiaries immediately beforff e 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. EmEE plm oyll ee StSS octt k Purchase PlPP anll . The Company's Employee Stock Purchase Plan ("ESPP") allows eligible employees to annually purchase the Company's common stock at a discounted price. Offff iff cers of the Company are not eligible to participate in the ESPP. Employee contributions to the ESPP are limited to $21,250 during the eight-month offff eff ring period (Januaryrr 1 to August 31). Participants in the ESPP purchase the Company's common stock at a price that is 15 percent below the closing sales price of the Company's common stock on either the fiff rst day or the last day of each offff eff ring period, whichever closing sales price is lower. Shares availabla e forff futff urt e issuance under the ESPP are as folff lows: Approved and authorized shares Shares issued As of December 31, 2022 2,500,000 (1,213,133) 1,286,867 Stock-based compensation expense and the associated income tax benefiff t forff awards issued under both the LTIP and ESPP are as folff lows: Equity Awards Liabia lity Awards (a) Restricted stock and perforff mance units - Parsley awards (b) Perforff mance Awards ESPP Capia talized stock-based compensation expense Income tax benefiff t ______________________ Year Ended December 31, 2022 2021 (in millions) 2020 44 21 — 32 2 99 18 8 $ $ $ $ 44 17 33 27 2 123 17 14 $ $ $ $ 49 12 — 21 2 84 15 7 $ $ $ $ (a) Liabia lity Awards are expected to be settled on their vesting date in cash. As of December 31, 2022 and December 31, 2021, accounts payabla e – due to affff iff liates included $6 million and $9 million, respectively, of liabia lities attributabla e to Liabia lity Awards. (b) Represents the accelerated vesting of Parsley restricted stock equity awards and perforff mance units upon completion of the Parsley Acquisition, which was recorded to other expense in the consolidated statements of operations. 92 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 As of December 31, 2022, there is $91 million of unrecognized stock-based compensation expense related to unvested stock-based compensation awards of which $20 million is attributabla e to stock-based awards that are expected to be settled on their vesting date in cash, rather than in 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. Restrtt ictett d stoctt k awards. The Company routinely awards Equity Awards and Liabia lity Awards as compensation to directors, offff iff cers and employees of the Company. Year Ended December 31, 2022 2021 (in millions, except per share data) 2020 Equity Awards granted: Weighted average grant-date faff ir value per share Equity Awards vested: Grant-date faff ir value Total faff ir value at vesting Liabia lity Awards vested: Cash paid $ $ $ $ 223.05 62 109 24 $ $ $ $ 141.82 50 51 14 $ $ $ $ 108.24 59 47 16 PePP rfr orff mrr ance Awards. Each year, at its discretion, the Company's Board of Directors (the "Board") awards perforff mance units to the Company's offff iff cers under the LTIP. The number of shares of common stock to be issued is determined by comparing the Company's total shareholder returt n to the total shareholder returt n of a predetermined group of peer companies over the perforff mance period. The Perforff mance Awards vest over a service period of appr oximately three years. a The grant-date faff ir value of Perforff mance Awards is recorded as stock-based compensation expense ratabla y over the service period. Year Ended December 31, 2022 2021 (in millions, except per share data) 2020 Perforff mance Awards granted: Weighted average grant-date faff ir value per share Perforff mance Awards vested: Grant-date faff ir value Total faff ir value at vesting $ $ $ 331.58 26 30 $ $ $ 165.32 13 14 $ $ $ 184.06 10 5 The faff ir value of Perforff mance Awards is determined using a Monte Carlo simulation model that utilizes multiple input variabla es to determine the probabia lity of satisfyiff ng the market condition stipulated in the award grant and calculates the faff ir value of the award. Expected volatilities utilized in the model were estimated using a historical period consistent with the a perforff mance period of appr term commensurate with the expected lifeff of the grant. oximately three years. The risk-frff ee interest rate was based on the United States Treasuryrr rate forff a Assumptions used to estimate the faff ir value of Perforff mance Awards granted in each of the folff lowing years are as folff lows: Risk-frff ee interest rate Range of volatilities 2022 1.37% - 25% 2021 0.18% 2020 0.68% 105% 25% - 104% 31% - 45% 93 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 Activity forff Equity Awards, Liabia lity Awards, Perforff mance Awards and stock options is as folff lows: Year Ended December 31, 2022 Equity Awards Liability Awards Perforff mance Awards Number of Shares Weighted Average Grant- Date Fair Value 741,892 249,765 $ $ (50,793) $ (459,571) $ — $ $ 481,293 131.83 223.05 151.54 134.60 — 174.44 Number of shares Number of units (a) Weighted Average Grant- Date Fair Value 182,278 49,748 (12,829) (99,502) — 119,695 304,686 $ 114,066 $ (6,226) $ (144,523) $ — $ 268,003 $ 173.39 331.58 244.11 182.95 — 233.92 Stock Options Number of shares 6,039 — — — (6,039) — Beginning awards Awards granted Awards forff feff ited Awards vested (b) (c) Options exercised Ending awards ______________________ (a) Amount reflff ects the number of perforff mance units initially granted. The actuat l payout of shares upon vesting may be between zero and 250 percent of the perforff mance units included in this tabla e depending upon the total shareholder returt n ranking of the Company compared to peer companies at the vesting date. (b) Per the terms of award agreements and elections, the issuance of common stock may be defeff rred forff certain Equity Awards that vest during the period. (c) For Perforff mance Awards, the awards vested reflff ects the number of perforff mance units that vested upon retirement or departurtt e of eligible offff iff cers or when the perforff mance period of the award ended. Awards that vest upon retirement or es. departurtt e of eligible offff iff cers are not transfeff rred to the offff iff cer until the original perforff mance period of the award lapsa Of the 144,523 units that vested, 13,718 are associated with eligible offff iff cer retirements and departurtt es during the year ended December 31, 2022 that will be issued in futff urtt e years when the original perforff mance period ends. On December 31, 2022, the perforff mance period ended on 132,163 Perforff mance Awards that earned 0.99 shares forff each vested award resulting in 130,855 aggregate shares of common stock being issued on Januaryrr 3, 2023. Of the 132,163 Perforff mance Awards that lapsa ed, 1,358 units were associated with Perforff mance Awards that vested in prior years upon retirement or departurt e of eligible offff iff cers. NOTE 9. Asset Retirement Obligations The Company's asset retirement obligations primarily relate to the futff urtt e plugging and abaa ndonment of wells and related faff cilities. Market risk premiums associated with asset retirement obligations are estimated to represent a component of the Company's credit-adjusted risk-frff ee rate that is utilized in the calculations of asset retirement obligations. 94 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 Asset retirement obligations activity is as folff lows: Beginning asset retirement obligations Liabia lities assumed in Parsley Acquisition Liabia lities assumed in DoublePoint Acquisition New wells placed on production Changes in estimates (a) Dispositions Liabia lities settled Accretion of discount Ending asset retirement obligations Less current portion of asset retirement obligations Asset retirement obligations, long-term _____________________ Year Ended December 31, 2022 2021 $ $ (in millions) 354 $ — — 8 162 — (62) 15 477 (82) 395 $ 282 73 37 10 7 (24) (38) 7 354 (55) 299 (a) Changes in estimates are determined based on several faff ctors, including updating abaa ndonment cost estimates using l costs incurred to abaa ndon wells, credit-adjusted risk-frff ee discount rates, economic well lifeff estimates and the year ended December 31, 2022 is primarily due to recent actuatt forff ecasted timing of abaa ndoning wells. The change in estimate forff an increase in abaa ndonment cost estimates based on recent actuat l costs incurred to abaa ndon wells. NOTE 10. Leases As of December 31, 2022, the Company has one fiff nance lease forff its corpor rr ate headquarters offff iff ce building. The Company's operating leases, as of December 31, 2022, are comprised of drilling rigs, storage tanks, equipment and buildings. The Company's fiff nance lease balances are as folff lows: Type Consolidated Balance Sheet Location 2022 2021 As of December 31, Assets: Finance lease right-of-ff use asset Other property and equipment, net Liabilities: Finance lease liabia lity, current Finance lease liabia lity, noncurrent Other liabia lities - current Other liabia lities - noncurrent (in millions) 472 20 501 $ $ $ 500 18 521 $ $ $ 95 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 The components of lease costs, including amounts recoverabla e frff om joint operating partners, are as folff lows: Finance lease cost: Amortization of right-of-ff use asset Interest on lease liabia lity Operating lease cost (a) Short-term lease cost (b) Variabla e lease cost (c) _____________________ Year Ended December 31, 2022 2021 (in millions) 2020 $ $ 28 16 151 211 40 446 $ $ 28 16 162 107 59 372 $ $ 28 17 151 23 27 246 (a) Represents straight-line lease costs associated with the Company's operating lease right-of-ff use assets. (b) Represents costs associated with short-term leases (those with a contractuat l term of 12 months or less) that are not included in the consolidated balance sheets. (c) Variabla e lease costs are primarily comprised of the non-lease service component of drilling rig commitments above the minimum required payments. Both the minimum required payments and the non-lease service component of the drilling rig commitments are capia talized as additions to oil and gas properties. a The Company subleases to third parties certain offff iff ce space related to leases acquired by the Company through the Parsley Acquisition. The subleases are classififf ed as operating leases and the Company recognizes sublease income on a straight-line basis over the sublease term. During the years ended December 31, 2022 and 2021, the Company recorded $20 million and $4 million, respectively, to other income in the consolidated statement of operations associated with the subleases. The Company did not recognize sublease income during the year ended December 31, 2020. See Note 15 forff additional inforff mation. Cash flff ow inforff mation related to leases is as folff lows: Operating cash flff ows: Cash payments forff Cash payments forff Investing cash flff ows: Cash payments forff Financing cash flff ows: Cash payments forff operating, short-term and variabla e leases interest on fiff nance lease operating, short-term and variabla e leases (a) principal on fiff nance lease Year Ended December 31, 2022 2021 (in millions) 2020 $ $ $ $ 200 16 208 18 $ $ $ $ 131 16 191 17 $ $ $ $ 83 17 130 16 _____________________ (a) Represents costs associated with drilling operations that are capia talized as additions to oil and gas properties. 96 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 The changes in lease liabia lities are as folff lows: Year Ended December 31, 2022 Year Ended December 31, 2021 Operating Finance Operating Finance Beginning lease liabia lities $ 364 $ new right-of-ff use Liabia lities assumed in exchange forff assets (a) Liabia lities assumed in the Parsley Acquisition Liabia lities assumed in the DoublePoint Acquisition Contract modififf cations (b) Liabia lities settled Accretion of discount on operating leases (c) Ending lease liabia lities (d) ______________________ $ 149 — — (6) (153) 7 361 $ (in millions) 539 $ 210 $ — — — — (18) — 521 $ 100 201 2 2 (158) 7 364 $ 556 — — — — (17) — 539 (a) Represents noncash leasing activity. The weighted-average discount rate used to determine the present value of futff urt e the year ended December 31, 2022 and 2021, respectively. its operating lease payments was 2.5 percent and 1.8 percent forff The Company used a 3.0 percent discount rate to determine the present value of its futff urt e fiff nance lease payments forff rr corpor ate headquarters offff iff ce building that commenced in 2019. (b) Represents changes in lease liabia lities due to modififf cations of original contract terms. (c) Represents imputed interest on discounted futff urt e cash payments of operating leases. (d) As of December 31, 2022, the weighted-average remaining lease term of the Company's operating and fiff nance leases is fiff ve and 17 years, respectively, as compared to six and 18 years as of December 31, 2021. Maturt ities of lease liabia lities are as folff lows: 2023 2024 2025 2026 2027 Thereaftff er Total lease payments Less present value discount Present value of lease liabia lities NOTE 11. Commitments and Contingencies As of December 31, 2022 Operating Finance $ $ (in millions) 132 $ 93 42 20 20 78 385 (24) 361 $ 35 35 36 36 37 491 670 (149) 521 SeSS verance agreementstt . As of December 31, 2022, the Company has entered into severance and change in control agreements with certain of its offff iff cers and key employees. InII demnifi iff catitt ons. The Company has agreed to indemnifyff with respect to claims and damages arising frff om acts or omissions taken in such capaa litigation. its directors and certain of its offff iff cers, employees and agents city, as well as with respect to certain e Legal actitt ons. 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 liabia lity, if any, ultimately incurred with respect to these proceedings and claims will not have a material adverse effff eff ct on the Company's consolidated fiff nancial position as a whole or on its liquidity, capia tal resources or futff urtt e annual results of operations. The Company records reserves forff contingencies when inforff mation availabla e indicates that a loss is probabla e and the amount of the loss can be reasonabla y 97 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 estimated. Signififf cant judgement is required in making these estimates and the Company's fiff nal liabia lities may ultimately be materially diffff eff rent. EnEE virii onmentaltt .ll Environmental expenditurt es that relate to an existing condition caused by past operations and that have no futff urt e economic benefiff ts are expensed. Environmental expenditurt es that extend the lifeff of the related property or mitigate or prevent futff urt e environmental contamination are capia talized. Liabia lities forff capia talization are recorded when environmental assessment and/or remediation is probabla e and the costs can be reasonabla y estimated. Such the liabia lity is fiff xed or reliabla y determinabla e. Environmental liabia lities are undiscounted unless the timing of cash payments forff liabia lities normally involve estimates that are subject to revision until settlement or remediation occurs. expenditurt es that will not qualifyff forff lll owll i Oblill gat itt ons folff inii g divestitt tii ures. In connection with its divestiturt e transactions, the Company may retain certain liabia lities and provide the purchaser certain indemnififf cations, subject to defiff ned limitations, which may appl y to identififf ed pre- closing matters, including matters of litigation, environmental contingencies, royalties and income taxes. The Company does not recognize a liabia lity if the faff ir value of the divestiturt e obligation is immaterial or the likelihood of making payments forff the retained obligation is remote. a Southtt TeTT xee as Divestiture. In conjunction with the South Texas Divestiturt e, the Company transfeff rred its long-term midstream agreements and associated minimum volume commitments ("MVCs") to the buyer. However, the Company retained the obligation to pay 100 percent of any defiff ciency feff es associated with the MVCs frff om Januaryrr 2019 through July 2022. During the years ended December 31, 2022 and 2021, the Company paid $173 million and $147 million, respectively, related to 18 percent of the defiff ciency feff es paid by the the MVCs defiff ciency feff es. The buyer was required to reimburse the Company forff Company frff om Januaryrr 2019 through July 2022 in installments beginning in 2023 through 2025. During the year ended December 31, 2022, the Company received the defiff ciency feff e reimbursements of $89 million due to a change in control of the buyer, which resulted in the acceleration of the defiff ciency feff e installments. FiFF rii mrr purchase,e gathtt erinii g, processinii g, trtt anspor itt on, frff actitt onatitt on, stortt age and service commitii mtt entstt . From time to time, the Company enters into, and as of December 31, 2022 was a party to, take-or-pay agreements, which include contractuat l use in the Company's drilling and completion operations, (ii) with commitments (i) to purchase sand, water and diesel forff midstream service companies and pipeline carriers forff futff urt e gathering, processing, transportation, frff actionation and storage and (iii) with oilfiff eld services companies that provide drilling, pressure pumping and water disposal services. These commitments are normal and customaryrr the Company's business activities. forff tattt s Minimum fiff rm commitments forff the next fiff ve years are as folff lows: 2023 2024 2025 2026 2027 As of December 31, 2022 (in millions) $ $ $ $ $ 844 791 787 609 626 Oilii and gas delill veryr and purchase commitii mtt entstt . The Company has contracts that require deliveryrr or purchases of fiff xed fiff ll its short-term and long-term deliveryrr obligations with the Company's volumes of oil and gas. The Company intends to fulff production or frff om purchases of third party volumes. 98 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 Deliveryrr and purchase commitments forff oil and gas are as folff lows: 2023 2024 2025 2026 2027 Thereaftff er As of December 31, 2022 Delivery Oil Gas (Bbls per day) 130,000 122,459 74,795 50,000 39,521 — (MMBtu per day) 428,356 408,880 345,000 223,630 129,932 101,472 Purchase Oil (Bbls per day) 90,000 90,000 90,000 90,000 90,000 11,230 NOTE 12. Related Party Transactions In December 2018, the Company completed the sale of its pressure pumping assets to ProPetro in exchange forff 16.6 million shares of ProPetro common stock and $110 million of cash that was received during the fiff rst quarter of 2019. ProPetro is considered a related party as the shares received represent 14 percent of ProPetro's outstanding common stock. In addition to the sale of equipment and related faff cilities, the Company entered into a long-term agreement with ProPetro forff it to provide pressure pumping and related services that ended on December 31, 2022. During 2022, the Company entered into two new agreements with ProPetro forff pressure pumping services, with one agreement ending in August 2023 and the other ending in August 2024. Under the two new ProPetro agreements, the Company has the right to terminate with 90-days written notice without penalty. Phillip A. Gobe, a nonemployee member of the Board, was appoi nted by the board of directors of ProPetro to serve as its Executive Chairman in October 2019 and Chief Executive Offff iff cer in March 2020, and served as Chief Executive Offff iff cer 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. ate Operations, serves as a member of the ProPetro board of directors Berg, the Company's Executive Vice President, Corpor under the Company's right to designate a director to the board of directors of ProPetro so long as the Company owns fiff ve percent or more of ProPetro's outstanding common stock. a rr Based on the Company's ownership in ProPetro and representation on the ProPetro board of directors, ProPetro is considered an affff iff liate and deemed to be a related party. Transactions forff ProPetro pressure pumping related services were capia talized in oil and gas properties or charged to other expense as incurred. ProPetro pressure pumping related service charges are as folff lows: Year Ended December 31, 2022 2021 (in millions) 2020 Pressure pumping related service charges $ 342 $ 406 $ 238 Accounts payabla e - due to affff iff liate As of December 31, 2022 As of December 31, 2021 $ (in millions) 44 $ 66 99 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 The Company discloses ProPetro's summarized fiff nancial inforff mation on a one-quarter lag as it enabla es the Company to report its quarterly results independent frff om the timing of when ProPetro reports its results. Summarized fiff nancial inforff mation forff ProPetro is as folff lows: Nine Months Ended September 30, 2022 Year Ended December 31, 2021 (in millions) 2020 Revenue - service revenue Cost of services (exclusive of depreciation and amortization) Net loss $ $ $ $ 931 640 $ (11) $ $ 875 662 $ (54) $ 789 584 (107) NOTE 13. Major Customers Purchasers of the Company's oil, NGL and gas production that individually accounted forff Company's oil and gas revenues in at least one of the three years ended December 31, 2022 are as folff 10 percent or more of the lows: rr Marketing LLC Energy Transfeff r Crude Shell Trading US Company Occidental Energy Marketing Inc. Plains Marketing L.P. Year Ended December 31, 2022 2021 2020 23% 14% 12% 10% 20% 13% 10% 9% 36% 2% 18% 14% The loss of any of these maja or purchasers, which primarily purchase the Company's oil production, could have a material adverse effff eff ct on the abia lity of the Company to produce and sell its oil production. Purchasers of the Company's purchased commodities that individually accounted forff 10 percent or more of the Company's sales of purchased commodities in at least one of the three years ended December 31, 2022 are as folff lows: Occidental Energy Marketing Inc. Year Ended December 31, 2022 2021 2020 14% 27% 28% The loss of the above a maja or purchaser of purchased commodities would not be expected to have a material adverse effff eff ct on the abia lity of the Company to sell commodities it purchases frff om third parties. NOTE 14. Revenue Recognition e Disii aggregat ett d revenue frff om contrtt actstt witii htt purchasersrr . Revenues on sales of oil, NGLs, gas and purchased oil, gas, diesel and sand are recognized when control of the product is transfeff rred to the purchaser and payment can be reasonabla y assured. Sales prices forff oil, NGLs, gas, diesel and sand are negotiated based on faff ctors normally considered in the industry,rr such as an index or spot price, distance frff om the well to the pipeline or market, commodity quality and prevailing supply and demand conditions. Accordingly, the prices received by the Company forff te similar to changes in the relevant market index prices. oil, NGLs, gas, diesel and sand generally flff uctuat 100 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 Disaggregated revenue frff om contracts with purchasers by product type is as folff lows: Oil sales NGL sales Gas sales Total oil and gas revenues Sales of purchased oil Sales of purchased gas Sales of purchased diesel Sales of purchased sand Total sales of purchased commodities Year Ended December 31, 2022 2021 (in millions) 2020 $ $ 12,289 2,204 1,817 16,310 7,992 80 — 2 8,074 24,384 $ $ 8,808 1,707 988 11,503 6,247 62 58 — 6,367 17,870 $ $ 2,871 490 269 3,630 3,359 24 11 — 3,394 7,024 i a in Disii aggregat PePP rfr orff mrr ance oblill gat itt ons and contrtt act balanll ces. The maja ority of the Company's product sale commitments are short- term in naturtt e with a contract term of one year or less. The Company typically satisfiff es its perforff mance obligations upon ed revenue frff om contrtt actstt withtt purchasersrr and records the related revenue transfeff r of control as described above in the month production is delivered to the purchaser. Settlement statements forff sales of oil, NGLs, gas and sales of purchased 30 to 60 days aftff er the date the volumes are delivered, and as a result, the Company is oil and gas may not be received forff the sale of the required to estimate the amount of volumes delivered to the purchaser and the price that will be received forff product sales in the product. The Company records the diffff eff rences between estimates and the actuat month that payment is received frff om the purchaser. The Company records revenues frff om the sale of purchased diesel and sand upon deliveryrr to the purchaser. As of December 31, 2022 and December 31, 2021, the accounts receivabla e balance representing amounts due or billabla e under the terms of contracts with purchasers is $1.8 billion and $1.6 billion, respectively. l amounts received forff e NOTE 15. Interest and Other Income (Loss), Net The components of interest and other income (loss) are as folff lows: Investment in affff iff liate valuation adjustment (Note 4) Interest income Sublease income (Note 10) Investment in Laredo valuation adjustment (Note 4) Contingent consideration valuation adjustment (Note 5) Defeff rred compensation plan income (loss), net (Note 4) Other Year Ended December 31, 2022 2021 (in millions) 2020 $ $ 37 36 20 17 — (7) 16 119 $ $ 12 $ 1 4 (11) — 10 7 23 $ (64) 5 — — (42) 7 27 (67) 101 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 NOTE 16. Other Expense The components of other expense are as folff lows: Loss on early extinguishment of debt, net (Note 7) Unoccupied faff cility expense (a) Termination and idle drilling and frff ac equipment charges (b) Legal and environmental contingencies (Note 11) Impairment of long-lived assets (c) (Note 4) Transportation commitment charges (d) Restrucrr Parsley Acquisition transaction costs (f)ff DoublePoint Acquisition transaction costs (g) Winter Storm Uri gas commitments (h) Vertical integration services income (i) South Texas defiff ciency feff e obligation, net (j(( ) Other ing charges (e) turt Year Ended December 31, 2022 2021 (in millions) 2020 $ $ 39 $ 35 25 23 23 10 — — — — (7) (18) 43 173 $ 2 $ 38 10 17 — 22 2 211 33 80 (6) (10) 11 410 $ 27 (1) 80 12 — 16 79 10 — — (2) 80 20 321 ____________________ (a) Primarily represents faff cilities expense associated with certain acquired Parsley offff iff ces that are no longer occupied by the Company. (b) Includes idle frff ac equipment feff es, frff ac reservation feff es and drilling rig early termination charges. (c) Impairments of long-lived assets in 2022 primarily represents a decrease in faff ir value of an unoccupied fiff eld offff iff ce and certain operating lease right-of-ff use assets to their estimated faff ir values. (d) Primarily represents fiff rm transportation charges on excess pipeline capaa (e) Primarily represents the Company's 2020 corpor ing to reduce its staffff iff ng levels to correspond with a city commitments. ate restrucrr turtt rr planned reduction in futff urt e activity levels. (f)ff Represents costs associated with the Parsley Acquisition, which includes $90 million of employee-related costs and additional inforff mation. $121 million of transaction-related feff es during the year ended December 31, 2021. See Note 3 forff (g) Represents transaction costs associated with the DoublePoint Acquisition. See Note 3 forff (h) Represents costs related to the Company's fulff fiff llment of certain fiff rm gas commitments during Winter Storm Uri in additional inforff mation. Februarr ryrr 2021. (i) Represents net margins (attributabla e to third party working interest owners) that result frff om Company-provided vertically integrated services, which are ancillaryrr to and supportive of the Company's oil and gas joint operating activities, and do not represent intercompany transactions. The components of the vertical integration services net margins are as folff lows: Gross revenues Gross costs and expenses Year Ended December 31, 2022 2021 (in millions) 2020 $ $ 34 27 $ $ 40 $ 34 $ 42 40 (j(( ) Represents changes to the Company's forff ecasted MVCs defiff ciency feff e obligation and related receivabla e associated with the South Texas Divestiturt e. See Note 11 forff additional inforff mation. NOTE 17. Income Taxes The Company and its eligible subsidiaries fiff le a consolidated U.S. feff deral income tax returt n. Certain subsidiaries are not income taxes have been eligible to be included in the consolidated U.S. feff deral income tax returt n and separate provisions forff 102 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 determined forff examination by U.S. feff deral, state, local and forff eign taxing authorities. these entities or groups of entities. The tax returtt ns and the amount of taxabla e income or loss are subject to The Company continually assesses both positive and negative evidence to determine whether it is more likely than not that defeff rred tax assets can be realized prior to their expiration. Pioneer monitors Company-specififf c, oil and gas industryrr and worldwide economic faff ctors and based on that inforff mation, along with other data, reassesses the likelihood that the Company's net operating loss carryfrr orff wards ("NOLs") and other defeff rred tax attributes in the U.S. feff deral, state, local and forff eign tax jurisdictions will be utilized prior to their expiration. Doublell Pee oiPP nii t Acquisii itii itt on. During the year ended December 31, 2021, the Company purchased all the membership es, the Company interests of DoublePoint, a disregarded entity forff recorded the cost basis in the assets acquired equal to its purchase price (i.e. stepped-up basis). feff deral income tax purpos es. As a result, forff tax purpos rr rr rr rr ParPP srr lell ye Acquisii itii itt on. For feff deral income tax purpos es, the Parsley Acquisition qualififf ed as a tax-frff ee merger whereby the Company acquired carryove r tax basis in Parsley's assets and liabia lities. During the year ended December 31, 2021, the Company recorded a defeff rred tax liabia lity of $133 million associated with the acquired assets. Included in the defeff rred tax liabia lity are defeff rred tax asset attributes acquired frff om Parsley, which primarily consisted of NOLs of $2.3 billion that are subject to an annual limitation under Internal Revenue Code Section 382. As of December 31, 2022, $1.2 billion of the acquired NOLs have been realized. The Company believes it is more likely than not that the remaining acquired NOLs will be utilized beforff e they expire. Offff sff etting the defeff rred tax asset attributes are defeff rred tax liabia lity attributes, primarily related to the cost basis in oil and gas properties forff es being less than the recorded book amounts. tax purpos rr EnEE actmtt ent of thtt e InII fn lff atll ations," which is effff eff ctive forff Reduction Act of 2022 (the "IRARR "), which includes, among other things, a corpor Under the CAMT, a 15 percent minimum tax will be imposed on certain adjusted fiff nancial statement income of "appl rr corpor an "appl a corpor rr $1 billion. The IRAR also establa ishes a one percent excise tax on stock repurchases made by publicly traded U.S. corpor The excise tax is effff eff ctive forff year tax provision or the Company's consolidated fiff nancial statements, but the new provisions could impact futff urt e periods. itt on Reductitt on Act of 2022. On August 16, 2022, President Biden signed into law the Inflff ation ate alternative minimum tax (the "CAMT"). rr icabla e ation as ation" in any taxabla e year in which the "average annual adjusted fiff nancial statement income" of the a three-taxabla e-year period ending prior to such taxabla e year exceeds ations. any stock repurchases aftff er December 31, 2022. The IRARR did not impact the Company's current tax years beginning aftff er December 31, 2022. The CAMT generally treats a corpor ation and certain of its subsidiaries and affff iff liates forff icabla e corpor a rr rr rr EnEE actmtt ent of thtt e ConCC solill datett d ApprA p signed into law the Consolidated Appropriations Act, 2021 (the "Act"). The Act includes many tax provisions, including the extension of various expiring provisions, extensions and expansions of certain earlier pandemic tax relief provisions, among other things. The Act did not have a material impact on the Company's tax provisions or the Company's consolidated fiff nancial statements. opriatitt ons Act,tt 2021. On December 27, 2020, President Trumrr p signed EnEE actmtt ent of thtt e CorCC onavirii us Aid, Relill efe and Economic SeSS curitii ytt Act.tt On March 27, 2020, President Trumrr into law the Coronavirusrr Aid, Relief and Economic Security Act ("CARES Act"). The CARES Act, among other things, bla e payroll tax credits, defeff rment of employer social security payments, net operating includes provisions relating to refunda loss carryba , modififf cations to the net interest deduction limitations and technical corrections to tax depreciation methods forff qualififf ed improvement property. The CARES Act did not have a material impact on the Company's tax provisions or the Company's consolidated fiff nancial statements. ck periods, alternative minimum tax credit refunds rr ff ff taxtt UnUU certaitt nii positii itt ons.. The Company had state unrecognized tax benefiff ts ("UTBs") forff the tax years of 2015 through 2018 resulting frff om research and experimental expenditurt es related to horizontal drilling and completion innovations. In July 2022, the Company and the state taxing authorities effff eff ctively settled the uncertain tax positions forff all years. As of December 31, 2022, the Company no longer has any UTBs. the 2013 tax year and forff 103 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 Unrecognized tax benefiff t activity is as folff lows: Beginning unrecognized tax benefiff ts Current year additions Effff eff ctively settled tax positions Ending unrecognized tax benefiff ts Othtt er taxtt matttt ett rsrr . Net tax refunds ff (payments) related to fiff led tax returt ns are as folff lows: ff Tax refunds (payments), net (a) ____________________ Year Ended December 31, 2022 2021 (in millions) 2020 $ $ $ 27 — (27) — $ — $ 27 — 27 $ 39 — (39) — Year Ended December 31, 2022 2021 (in millions) 2020 $ (445) $ (1) $ 13 (a) Represents state tax payments of $21 million, $3 million and $3 million forff and 2020, respectively, U.S. net feff deral tax payments of $424 million forff feff deral tax refunds of $2 million and $16 million forff ff the years ended December 31, 2022, 2021 the year ended December 31, 2022 and U.S. the years ended December 31, 2021 and 2020, respectively. The Company fiff les income tax returt ns in the U.S. feff deral jurisdiction and various state and forff eign jurisdictions. As of December 31, 2022, there are no proposed adjustments in any jurisdiction that would have a signififf cant effff eff ct on the Company's futff urt e results of operations or fiff nancial position. The earliest open years in the Company's key jurisdictions are as folff lows: U.S. feff deral Various U.S. states Income tax benefiff t (provision) is as folff lows: Current: U.S. feff deral U.S. state Current income tax benefiff t (provision) Defeff rred: U.S. feff deral U.S. state Defeff rred income tax benefiff t (provision) Income tax benefiff t (provision) 2021 2014 Year Ended December 31, 2022 2021 (in millions) 2020 $ $ (260) $ (39) (299) (1,788) (19) (1,807) (2,106) $ (1) $ (44) (45) (585) 2 (583) (628) $ 12 (3) 9 55 (3) 52 61 104 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 The effff eff ctive tax rate forff income (loss) is reconciled to the United States feff deral statutt oryrr rate as folff lows: Year Ended December 31, 2022 2021 (in millions, except percentages) 2020 feff deral income taxes at the statutt oryrr income tax rate Income (loss) beforff e income taxes Federal statutt oryrr Benefiff t (provision) forff State income tax provision (net of feff deral tax) Transaction costs Other Income tax benefiff t (provision) Effff eff ctive tax rate rate 21% (2,090) (45) — 29 (2,106) 21% $ 21% (577) (33) (6) (12) (628) 23% $ (261) 21% 55 (5) — 11 61 23% $ 9,951 $ 2,746 $ Signififf cant components of defeff rred tax assets and defeff rred tax liabia lities are as folff lows: Defeff rred tax assets: Net operating loss carryfrr orff ward (a) Credit carryfrr orff wards Lease defeff rred tax assets Asset retirement obligations Net defeff rred hedge losses Incentive plans Convertible debt South Texas Divestiturtt e Other Defeff rred tax assets Defeff rred tax liabilities: Oil and gas properties, principally due to diffff eff rences in basis, depletion and the deduction of intangible drilling costs forff tax purpos rr es Other property and equipment, principally due to the deduction of bonus depreciation forff rr purpos es tax Lease defeff rred tax liabia lities South Texas Divestiturtt e Other Defeff rred tax liabia lities Net defeff rred tax liabia lity ____________________ $ $ $ As of December 31, 2022 2021 (in millions) $ 225 — 190 104 33 25 2 — 54 633 1,263 110 196 77 167 27 17 41 60 1,958 (4,186) (3,664) (233) (72) — (9) (4,500) (3,867) $ (235) (76) (18) (3) (3,996) (2,038) (a) Net operating loss carryfrr orff wards as of December 31, 2022 consist of $1.1 billion of U.S. feff deral NOLs that can be carried forff ward indefiff nitely. Additionally, the net operating loss carryfrr orff wards consist of $177 million of Colorado NOLs that begin to expire in 2027, all of which have a fulff ly offff sff etting valuation allowance. 105 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 NOTE 18. Net Income (Loss) Per Share and Stockholders' Equity NeNN t inii come (l(( osll stockholders are as folff s)s per share.ee The components of basic and diluted net income (loss) per share attributabla e to common lows: Net income (loss) attributabla e to common stockholders Participating share-based earnings (a) Basic net income (loss) attributabla e to common stockholders Adjustment to aftff er-tax interest expense to reflff ect the dilutive impact attributabla e to Convertible Notes Diluted net income (loss) attributabla e to common stockholders Basic weighted average shares outstanding Contingently issuabla e stock-based compensation Convertible Notes (b) Diluted weighted average shares outstanding Net income (loss) per share attributabla e to common stockholders: Basic Diluted ______________________ Year Ended December 31, 2022 2021 2020 (in millions, except per share data) 7,845 (15) 7,830 6 7,836 $ $ 240 — 12 252 2,118 (5) 2,113 6 2,119 $ $ 233 1 12 246 (200) — (200) — (200) 165 — — 165 32.61 31.13 $ $ 9.06 8.61 $ $ (1.21) (1.21) $ $ $ $ (a) Unvested Equity Awards represent participating securities because they participate in non-forff feff itabla e dividends with the common equity owners of the Company. Participating share-based earnings represent the distributed and undistributed earnings of the Company attributabla e to the participating securities. Unvested Equity Awards do not participate in undistributed net losses as they are not contractuat lly obligated to do so. The dilutive effff eff ct of the reallocation of participating share-based earnings to diluted net income attributabla e to common stockholders was negligible. (b) Diluted weighted average common shares outstanding includes the dilutive effff eff ct had the Company's Convertible Notes been converted as of the beginning of the years ended December 31, 2022 and 2021, respectively. If converted by the holder, the Company may settle in cash, shares of the Company's common stock or a combination thereof,ff at the Company's election. See Note 7 forff additional inforff mation. StSS octt kholdell rsrr ' equitii ytt .yy The Company's returtt n of capia tal strategies include a base and variabla e dividend policy and a stock repurchase program. The Board, at its sole discretion, may change its dividend policy and/or the Company's stock repurchase program based on the Company's outlook forff commodity prices, liquidity, debt levels, capia tal resources, quarterly operating cash flff ows or other faff ctors. Dividends declared by the Board and stock repurchased during the period are presented in the stock, respectively. Dividends Company's consolidated statements of equity as dividends declared and purchases of treasuryrr paid and stock repurchased during the period are presented as cash used in fiff nancing activities in the Company's consolidated statements of cash flff ows. Dividends that are declared and have not been paid, if any, are included in other current liabia lities in the consolidated balance sheets. Stock repurchases are included as treasuryrr stock in the consolidated balance sheets. 106 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 Dividends. Base and variabla e dividends declared by the Board are as folff lows: 2022: First quarter Second quarter Third quarter Fourth quarter 2021: First quarter Second quarter Third quarter Fourth quarter 2020: First quarter Second quarter Third quarter Fourth quarter Base (per share) Variable (per share) Total (per share) Total (in millions) $ $ $ $ $ $ 0.78 0.78 1.10 1.10 3.76 0.56 0.56 0.56 0.62 2.30 0.55 0.55 0.55 0.55 2.20 $ $ $ $ $ $ 3.00 6.60 7.47 4.61 21.68 $ $ — $ — 1.51 3.02 4.53 $ — $ — — — — $ 3.78 7.38 8.57 5.71 25.44 0.56 0.56 2.07 3.64 6.83 0.55 0.55 0.55 0.55 2.20 $ $ $ $ $ $ 922 1,788 2,053 1,357 6,120 122 138 508 890 1,658 91 91 91 91 364 The Company can provide no assurance that dividends will be authorized or declared in the futff urt e or as to the amount of any futff urt e dividends. See Note 19 forff additional inforff mation. e Stock repur chase program. In Februarr ryrr 2022, the Board authorized a $4 billion common stock repurchase program. This authorization replaced the previously authorized $2 billion common stock repurchase program, which had $841 million remaining at the time it was replaced. Under this stock repurchase program, the Company may repurchase shares in accordance with appl icabla e securities laws or pursuant to a trading plan meeting the requirements of RulRR e 10b5-1 under the Securities Act a of 1934, which would permit the Company to repurchase shares at times that may otherwise be prohibited under the Company's insider trading policy. Expenditurtt es to acquire shares under the stock repurchase programs are as folff lows: Shares repurchased (a) ______________________ Year Ended December 31, 2022 2021 (in millions) 2020 $ 1,649 $ 250 $ 160 (a) During the year ended December 31, 2022, 7.2 million shares were repurchased under the stock repurchase program, as compared to 1.4 million and 1.5 million shares repurchased during the years ended December 31, 2021 and 2020, respectively. As of December 31, 2022, $2.4 billion remained availabla e forff use to repurchase shares under the Company's common stock repurchase program. NOTE 19. Subsequent Events Dividends. On Februarr ryrr 22, 2023, the Board declared a quarterly base dividend of $1.10 per share and a quarterly variabla e dividend of $4.48 per share on the Company's outstanding common stock, payabla e March 17, 2023 to shareholders of record at the close of business on March 6, 2023. 107 PIONEER NATURARR L RESOURCES COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022, 2021 and 2020 ShSS are repuee rchases. Subsequent to December 31, 2022, pursuant to a RulRR e 10b5-1 plan, the Company repurchased 1.2 million shares forff $250 million under its stock repurchase program. ConCC vertitt bli ell NotNN ett conversrr ions. Subsequent to December 31, 2022, the Company settled certain conversion options that were exercised by the holders of the Company's Convertible Notes prior to December 31, 2022. The Company settled the conversion options in cash, resulting in total cash payments of $69 million, of which $29 million was a repayment of the Convertible Notes principal balance. Additionally, subsequent to December 31, 2022, certain holders of the Company's Convertible Notes exercised their conversion options attributabla e to $69 million of the Convertible Notes' principal balance. The Company received Cappe d Call proceeds of $17 million subsequent to December 31, 2022 associated with conversion options. See Note 7 forff additional inforff mation. a 108 PIONEER NATURARR L RESOURCES COMPANY UNAUDITED SUPPLEMENTARYRR INFORMATION December 31, 2022, 2021 and 2020 Oil & Gas Exploration and Production Activities The Company has only one reportabla e operating segment, which is oil and gas development, exploration and production results of operations in the U.S. See the Company's accompanying consolidated statements of operations forff forff oil and gas producing activities. inforff mation about a Capitalized Costs Oil and gas properties: Proved Unproved Capia talized costs forff oil and gas properties Less accumulated depletion, depreciation and amortization Net capia talized costs forff oil and gas properties Costs Incurred forff Oil and Gas Producing Activities Property acquisition costs: Proved Unproved Exploration costs (a) Development costs (b) Total costs incurred ______________________ As of December 31, 2022 2021 (in millions) $ $ 38,465 6,008 44,473 (14,843) 29,630 $ $ 34,454 6,063 40,517 (12,335) 28,182 Year Ended December 31, 2022 2021 (in millions) 2020 $ $ 6 167 3,167 780 4,120 $ $ 9,039 8,090 2,690 706 20,525 $ $ — 14 1,172 387 1,573 (a) Exploration costs incurred forff asset retirement obligations forff (b) Development costs incurred forff oil and gas production activities includes $6 million, $8 million and $5 million related to the years ended December 31, 2022, 2021 and 2020, respectively. oil and gas producing activities includes the folff lowing amounts: Production faff cilities (a) Development drilling Asset retirement obligations Equipment upgrades Gas processing plants (b) Other (c) Total development costs incurred ______________________ Year Ended December 31, 2022 2021 (in millions) 2020 $ $ 262 247 155 65 13 38 780 $ $ 171 327 7 133 18 50 706 $ $ 79 118 107 40 17 26 387 (a) Primarily represents production faff cilities, including tank batteries, flff owlines and pipeline connections that were associated with development wells and successfulff exploratory/rr extension wells placed on production. (b) Represents gas plant capia tal related to the Company's ownership share in gas processing plants and related gathering systems. (c) Primarily represents (i) electrical infrff astrucrr turt e (ii) labor a costs associated with the Company's capia tal program and (iii) development costs related to produced water disposal wells. 109 PIONEER NATURARR L RESOURCES COMPANY UNAUDITED SUPPLEMENTARYRR INFORMATION December 31, 2022, 2021 and 2020 Reserve Quantitt tii ytt InII fn orff mrr atitt on The estimates of the Company's proved reserves as of December 31, 2022, 2021 and 2020 were based on evaluations prepared by the Company's engineers and audited by independent petroleum engineers with respect to the Company's maja or properties and prepared by the Company's engineers with respect to all other properties. Proved reserves were estimated in accordance with guidelines establa ished by the SEC and the FASB, which require that reserve estimates be prepared under existing economic and operating conditions based upon an average of the fiff rst-day-of-ff the-month commodity price during the 12-month period ending on the balance sheet date with no provision forff l price and cost escalations except by contractuat arrangements. ff Proved reserve quantity estimates are subject to numerous uncertainties inherent in the estimation of quantities of proved reserves and in the projection of futff urtt e rates of production and the timing of development expenditurt es. The accuracy of such tion of the quality of availabla e data and of engineering and geological interprrr etation and judgment. Results of estimates is a func subsequent drilling and production perforff mance may cause either upward or downward revision of previous estimates. Further, the volumes considered to be commercially recoverabla e flff uctuat te with changes in commodity prices and operating costs. The Company emphasizes that proved reserve estimates are inherently imprecise and that estimates of new discoveries are more imprecise than those of currently producing oil and gas properties. Accordingly, these estimates are expected to change as additional inforff mation becomes availabla e in the futff urt e. 110 e r a s e m u l o v l a t o t d n a f c M M n i d e s s e r p x e e r a s e m u l o v s a g , s l b B M n i d e s s e r p x e e r a s e m u l o v L G N d n a l i O . s e v r e s e r d e v o r p l a t o t f o d r a w r o ff f l l o r a s e d i v o r p e l b a a t g n i w o l l o ff f e h T Y N A P M O C S E C R U O S E R L A RR R U T A N R E E N O I P N O I T A M R O F N I Y RR R A T N E M E L P P U S D E T I D U A N U 0 2 0 2 d n a 1 2 0 2 , 2 2 0 2 , 1 3 r e b m e c e D l a t o T ) E O B M ( ) a ( ) ff f c M M ( s a G 0 2 0 2 s L G N ) s l b B M ( l i O ) s l b B M ( l a t o T ) E O B M ( s a G ) a ( ) ff f c M M ( s L G N ) s l b B M ( l i O ) s l b B M ( l a t o T ) E O B M ( ) a ( , 1 3 r e b m e c e D d e d n E r a e Y 1 2 0 2 ) ff f c M M ( s a G 2 2 0 2 s L G N ) s l b B M ( l i O ) s l b B M ( 2 5 6 , 5 3 1 , 1 3 1 5 , 9 9 4 , 1 3 8 9 , 1 8 2 0 5 7 , 3 0 6 1 2 3 , 1 7 2 , 1 0 0 1 , 0 4 9 1 , 7 8 1 9 7 3 , 4 8 7 , 8 6 5 9 5 0 , 2 2 2 2 , , 8 0 7 6 0 5 3 , 0 8 9 , 9 6 6 8 2 6 , 7 6 9 ) 2 8 2 , 6 3 1 ( ) 3 6 8 , 6 6 1 ( ) 6 7 3 , 1 3 ( 7 2 9 , 1 6 4 7 7 , 1 1 2 ) 2 2 0 , 3 ( 2 7 2 , 1 0 2 7 , 2 4 3 7 9 4 , 7 6 2 ) 4 3 4 , 4 ( 7 6 6 , 1 ) 3 0 8 ( 4 2 3 7 0 1 , 3 7 2 5 9 , 5 5 ) 5 9 0 , 7 7 ( ) 0 0 3 , 8 6 ( ) 6 9 8 , 7 2 2 ( ) 1 5 3 , 2 7 2 ( ) 4 0 2 2 5 ( , , ) 0 0 3 0 3 1 ( ) 2 2 2 , 0 4 2 ( ) 6 8 4 , 9 1 3 ( ) 7 0 5 , 8 5 ( ) 7 6 4 , 8 2 1 ( 9 3 2 , 1 1 1 7 4 9 , 1 8 4 ) 2 7 6 , 8 3 ( 2 2 8 , 1 6 1 7 3 6 8 8 6 , 2 4 2 ) 4 8 8 5 6 ( , ) 8 5 9 1 1 ( , 6 1 7 6 3 1 , 8 5 4 , 0 3 2 0 6 4 7 0 4 , 8 2 4 , 3 0 2 1 3 2 7 0 6 , 2 8 8 , 7 ) 5 4 7 , 3 5 ( s e t a m i t s e s u o i v e r p f o s n o i s i v e R 2 5 2 , 9 1 1 3 0 0 , 7 8 1 s e i r e v o c s i d d n a s n o i s n e t x E 0 7 6 8 6 7 , 6 0 9 9 6 1 , 2 3 1 1 , 5 0 6 9 3 2 , 3 2 4 2 2 5 ) 0 8 4 , 1 ( ) 9 0 4 , 1 7 1 ( ) 9 6 6 , 3 4 1 ( ) 6 6 5 3 3 ( , , ) 8 9 8 3 1 1 ( ) 4 3 1 1 ( , ) 2 1 4 1 ( , ) 2 6 2 ( 0 0 1 ) 7 3 6 ( 6 3 2 e c a l p - n i - s l a r e n i m f o s e s a h c r u P e c a l p - n i - s l a r e n i m f o s e l a S 1 2 3 , 1 7 2 , 1 0 0 1 , 0 4 9 , 1 7 8 1 , 9 7 3 4 8 7 , 8 6 5 9 5 0 , 2 2 2 , 2 8 0 7 , 6 0 5 3 , 0 8 9 , 9 6 6 7 9 9 , 7 7 0 , 1 7 1 4 , 9 2 4 , 1 8 6 4 , 8 6 2 2 7 1 , 1 1 2 , 1 7 0 6 , 5 5 8 , 1 4 8 5 , 2 6 3 5 5 6 , 7 5 9 4 1 , 0 6 6 9 0 , 0 7 3 9 4 , 4 8 5 1 5 , 3 1 3 0 6 , 6 1 3 9 2 , 1 7 5 0 2 3 , 9 3 5 7 5 4 , 2 3 4 6 4 , 9 2 2 7 1 , 1 1 2 , 1 7 0 6 , 5 5 8 1 , 4 8 5 2 6 3 , 5 4 8 , 4 4 9 , 1 9 2 3 , 6 7 0 3 , 2 9 4 , 4 8 5 9 4 1 , 0 6 4 1 2 , 7 7 2 3 9 4 4 8 , 9 7 3 0 3 4 , 3 0 6 6 1 , 8 8 4 5 8 , 8 6 4 , 8 7 4 8 2 6 , 7 6 9 0 2 3 , 9 3 5 2 3 6 , 7 4 8 4 6 4 9 2 , 6 9 9 9 1 1 , , 8 2 6 6 7 3 2 , 1 9 9 , 6 9 9 3 , 5 4 4 , 8 3 7 8 1 0 , 2 7 9 1 3 r e b m e c e D , e c n a l a B , 5 4 8 4 4 9 1 , , 9 2 3 6 7 0 3 , 2 9 4 , 4 8 5 , 7 7 7 7 1 1 2 , 9 2 4 , 4 7 5 3 , 6 6 0 , 0 6 6 4 1 2 7 7 2 , 1 5 8 8 5 2 , 9 7 3 0 3 4 , 2 6 5 2 2 4 , 8 8 4 , 5 8 9 7 3 , 8 7 2 3 6 , 7 4 8 3 7 9 , 1 6 8 6 9 9 , 9 1 1 5 4 0 , 0 1 1 : s e v r e s e R d e p o l e v e D d e v o r P 1 3 r e b m e c e D , e c n a l a B 1 y rr r a u n a J , e c n a l a B : s e v r e s e R d e p o l e v e d n U d e v o r P 1 3 r e b m e c e D , e c n a l a B 1 y rr r a u n a J , e c n a l a B _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ o t d e t c e p x e y n a p m o C e h t t a h t s a g f o , y l e v i t c e p s e r , ff f c M M 9 3 2 , 5 1 1 d n a f c M M 5 2 3 , 6 8 1 , ff f c M M 4 1 8 , 2 9 1 e d u l c n i 0 2 0 2 d n a 1 2 0 2 , 2 2 0 2 , 1 3 r e b m e c e D f o s a s e v r e s e r s a g d e v o r p e h T ) a ( . y l e v i t c e p s e r , l e u ff f d l e i ff f s a d e m u s n o c s a g f o f c M M 1 0 2 , 1 1 d n a f c M M 0 2 4 , 5 1 , ff f c M M 0 3 3 , 8 1 s e d u l c n i 0 2 0 2 d n a 1 2 0 2 , 2 2 0 2 , 1 3 r e b m e c e D d e d n e s r a e y e h t r o ff f n o i t c u d o r P ) b ( . l e u ff f d l e i ff f s a d e z i l i t u d n a d e c u d o r p e b d n a 2 2 0 2 , 1 3 , r e b m e c e D d e d n e s r a e y e h t r o F . s n o i s i v e r g n i c i r p d n a s n o i s i v e r l a c i n h c e t h t o b f o d e s i r p m o c e r a s e t a m i t s e s u o i v e r p f o s n o i s i v e R . s e t a m i t s e s u o i v e r p ff f o s n o i s ii i v e R . E O B M M 5 4 1 d e l a t o t s n o i s i v e r l a c i n h c e t e v i t i s o p , 0 2 0 2 , 1 3 r e b m e c e D d e d n e r a e y e h t r o ff f d n a , y l e v i t c e p s e r , E O B M M 1 1 1 d n a E O B M M 3 4 d e l a t o t s n o i s i v e r l a c i n h c e t e v i t a g e n , 1 2 0 2 e r e w d n a e ff f i l e v i t c u d o r p r i e h t f o d n e e h t r a e n e r a t a h t s l l e w l a c i t r e v o t d e t a l e r s n o i s i v e r e v i t a g e n f o E O B M M 2 3 ) i ( o t e l b a a t u b i r t t a y l i r a m i r p e r a 2 2 0 2 n i s n o i s i v e r l a c i n h c e t e v i t a g e n e h T t a h t s n o i t a c o l d e p o l e v e d n u d e v o r p 0 3 f o l a v o m e r e h t o t d e t a l e r s n o i s i v e r e v i t a g e n f o E O B M M 3 2 ) i i ( , d e n o d n a b a a d n a d e g g u l p g n i e b g n i d n e p n i - t u h s r o d e n o d n a b a a d n a d e g g u l p r e h t i e o t d e t a l e r E O B M M 1 1 ) v i ( d n a e s n e p x e g n i t a r e p o e s a e l d e s a e r c n i o t e u d s n o i s i v e r e v i t a g e n f o E O B M M 5 1 ) i i i ( , d e t a p i c i t n a y l l a n i g i r o e m a r ff f e m i t e h t n i d e l l i r d e b o t d e t c e p x e t o n e r a e v r e s e r d e p o l e v e d n u d e v o r p o t e l b a a t u b i r t t a s n o i s i v e r l a c i n h c e t e v i t i s o p f o E O B M M 8 3 y b t e s ff f f ff o y l l a i t r a p ; s l l e w g n i c u d o r p h t i w d e t a i c o s s a n o i t c u d o r p e r u t t u ff f f o s e t a m i t s e n i s n o i t c u d e r E O B M M 5 5 ) i ( o t e l b a a t u b i r t t a y l i r a m i r p e r a 1 2 0 2 n i s n o i s i v e r l a c i n h c e t e v i t a g e n e h T . s l l e w d e p o l e v e d n u d e v o r p n i a t r e c n o s h t g n e l l a r e t a l e h t g n i d n e t x e h t i w d e t a i c o s s a s n o i t i d d a d e t c e p x e t o n e r a t a h t s n o i t a c o l d e p o l e v e d n u d e v o r p 6 3 f o l a v o m e r e h t o t d e t a l e r E O B M M 2 3 ) i i ( , s l l e w g n i c u d o r p h t i w d e t a i c o s s a n o i t c u d o r p e r u t t u ff f f o s e t a m i t s e n i s n o i t c u d e r o t d e t a l e r d n a d e g g u l p r e h t i e e r e w d n a e ff f i l e v i t c u d o r p r i e h t f o d n e e h t r a e n e r a t a h t s l l e w l a c i t r e v o t d e t a l e r y l i r a m i r p E O B M M 4 2 ) i i i ( d n a d e t a p i c i t n a y l l a n i g i r o e m a r ff f e m i t e h t n i d e l l i r d e b o t a s a s n o i s i v e r s a g d n a L G N e v i t i s o p f o E O B M M 7 6 1 o t e l b a a t u b i r t t a y l i r a m i r p e r a 0 2 0 2 n i s n o i s i v e r l a c i n h c e t e v i t i s o p e h T . d e n o d n a b a a d n a d e g g u l p g n i e b g n i d n e p n i - t u h s r o d e n o d n a b a a o t n i d e c a l p g n i e b y t i c a p a a c y a w a e k a t d n a s e i t i l i c a ff f g n i s s e c o r p w e n ) i i ( , e m i t r e v o ) n o i t c u d o r p l a t o t s ' l l e w l a t n o z i r o h a f o e g a t n e c r e p a s a ( n o i t c u d o r p s a g t e w g n i s a e r c n i ) i ( f o t l u s e r . s L G N r o ff f s e t a r y rr r e v o c e r d e s a e r c n i ) i i i ( d n a , s e r u s s e r p e n i l g n i r e w o l f o t c e ff f f ff e e h t d a h h c i h w , 0 2 0 2 d n a 9 1 0 2 g n i r u d e c i v r e s 1 1 1 . E O B M n i d e s s e r p x e : s e v r e s e R d e v o r P l a t o T 1 y rr r a u n a J , e c n a l a B ) b ( n o i t c u d o r P Y N A P M O C S E C R U O S E R L A RR R U T A N R E E N O I P N O I T A M R O F N I Y RR R A T N E M E L P P U S D E T I D U A N U 0 2 0 2 d n a 1 2 0 2 , 2 2 0 2 , 1 3 r e b m e c e D 3 8 d n a , y l e v i t c e p s e r , 1 2 0 2 , 2 2 0 2 , 1 3 r e b m e c e D d e d n e s r a e y e h t r o ff f s n o i s i v e r e c i r p e v i t i s o p f o E O B M M 2 7 d n a E O B M M 1 3 f o d e s i r p m o c e r a s e t a m i t s e s u o i v e r p f o s n o i s i v e R : s w o l l o ff f s a e r e w , s e n i l e d i u g C E S n o p u d e s a b , n o i t a r a p e r p e v r e s e r s a g d n a l i o r o ff f d e s u s e c i r p X E M Y N e h T . 0 2 0 2 , 1 3 r e b m e c e D d e d n e r a e y e h t r o ff f s n o i s i v e r e c i r p e v i t a g e n f o E O B M M e g n a h C % , 1 3 r e b m e c e D d e d n E r a e Y 9 1 0 2 o t 0 2 0 2 0 2 0 2 o t 1 2 0 2 1 2 0 2 o t 2 2 0 2 9 1 0 2 0 2 0 2 1 2 0 2 2 2 0 2 ) % 9 2 ( ) % 3 2 ( % 8 6 % 2 8 % 1 4 % 7 7 8 5 . 2 3 9 . 5 5 $ $ 8 9 . 1 7 5 . 9 3 $ $ 0 6 . 3 6 5 . 6 6 $ $ 6 3 . 6 7 6 . 3 9 $ $ f c M r e p s a G l b B r e p l i O e l b a a t u b i r t t a s n o i t i d d a e v r e s e r d e v o r p f o d e s i r p m o c y l i r a m i r p e r e w 0 2 0 2 d n a 1 2 0 2 , 2 2 0 2 , 1 3 r e b m e c e D d e d n e s r a e y e h t r o ff f s e i r e v o c s i d d n a s n o i s n e t x E . s e i r e v o c s ii i d d n a s n o i s n e t x EE E e h t , 0 2 0 2 d n a 1 2 0 2 , 2 2 0 2 , 1 3 r e b m e c e D d e d n e s r a e y e h t g n i r u D . n i s a B d n a l d i M e h t n i d l e i ff f l i o p m a c ff f l o W / y rr r r e b a a r p S e h t n i m a r g o r p g n i l l i r d l a t n o z i r o h l u ff f s s e c c u s ' s y n a p m o C e h t o t d e t a i c o s s A . y l e v i t c e p s e r , s n o i t a c o l d e p o l e v e d n u d e v o r p f o 8 2 d n a 6 3 , e e r h t d e d d a d n a , y l e v i t c e p s e r , s l l e w n o i s n e t x e / y r rr o t a r o l p x e e v i t c u d o r p s s o r g 2 4 2 d n a 8 8 4 , 2 4 4 d e l l i r d y n a p m o C d n a s n o i s n e t x e m o r ff f s e v r e s e r t e n f o E O B M M 2 1 2 d n a E O B M M 2 8 4 , E O B M M 7 0 4 d e d d a y n a p m o C e h t , 0 2 0 2 d n a 1 2 0 2 , 2 2 0 2 , 1 3 r e b m e c e D d e d n e s r a e y e h t g n i r u d , h t i w e r e h t , x e l p m o c s i y g o l o e g ' s n i s a B n a i m r e P e h T . s e v r e s e r d e p o l e v e d n u d e v o r p s a d e d r o c e r e r e w , y l e v i t c e p s e r , E O B M M 9 2 d n a E O B M M 0 3 , E O B M M 4 h c i h w f o , y l e v i t c e p s e r , s e i r e v o c s i d g n i t t e s ff f ff f o y l t c e r i d e g a e r c a d e l l i r d n u n o s e v r e s e r d e p o l e v e d n u d e v o r p s e z i n g o c e r y n a p m o C e h T . s c i t s i r e t c a r a h c e u q i n u n w o s t i h t i w h c a e , s e n o z / s n o z i r o h d e k c a t s e l p i t l u m f o g n i t s i s n o c t o n d i d y n a p m o C e h T . y t i l i b i c u d o r p c i m o n o c e f o y t n i a t r e c e l b a a n o s a e r s e d i v o r p y g o l o n h c e t e l b a a i l e r n e h w r o , d e l l i r d n e h w n o i t c u d o r p f o n i a t r e c y l b a a n o s a e r e r a t a h t s a e r a t n e m p o l e v e d . 0 2 0 2 d n a 2 2 0 2 , 1 3 r e b m e c e D d e d n e s r a e y e h t g n i r u d y g o l o n h c e t e l b a a i l e r g n i s u s e v r e s e r d e p o l e v e d n u d e v o r p y n a d d a e g a e r c a n i s a B d n a l d i M e r o c - n o n g n i t s e v i d o t d e t a l e r y l i r a m i r p e r e w 0 2 0 2 d n a 2 2 0 2 , 1 3 r e b m e c e D d e d n e s r a e y e h t g n i r u d e c a l p - n i - s l a r e n i m f o s e l a S . e c a l p - - n i - s ll l a r e n i m f o s e l a S , e r u t t i t s e v i D k c o c s s a l G d n a e r u t t i t s e v i D e r a w a l e D e h t o t d e t a l e r y l i r a m i r p e r e w 1 2 0 2 , 1 3 r e b m e c e D d e d n e r a e y e h t g n i r u d e c a l p - n i - s l a r e n i m f o s e l a S . s l l e w g n i c u d o r p d e t a i c o s s a d n a . n o i t a m r o f ff n i l a n o i t i d d a r o ff f s t n e m e t a t s l a i c n a n i ff f g n i y n a p m o c c a e h t o t 3 e t o N e e S . y l e v i t c e p s e r , E O B M M 3 1 d n a E O B M M 8 5 1 f o e c a l p - n i - s l a r e n i m f o s e l a s g n i t c e l ff f e r / y rr r r e b a a r p S e h t n i s n o i t i s i u q c a o t d e t a l e r y l i r a m i r p e r e w 0 2 0 2 d n a 2 2 0 2 , 1 3 r e b m e c e D d e d n e s r a e y e h t g n i r u d e c a l p - n i - s l a r e n i m f o s e s a h c r u P . e c a l p - - n i - s ll l a r e n i m f o s e s a h c r u P e h t d n a n o i t i s i u q c A y e l s r a P e h t o t d e t a l e r y l i r a m i r p e r e w 1 2 0 2 , 1 3 r e b m e c e D d e d n e r a e y e h t g n i r u d e c a l p - n i - s l a r e n i m f o s e s a h c r u P . n i s a B d n a l d i M e h t f o d l e i ff f l i o p m a c ff f l o W d e p o l e v e d n u d e v o r p 8 4 2 d n a 0 6 f o n o i t i d d a e h t g n i d u l c n i , s e v r e s e r d e v o r p t e n f o , y l e v i t c e p s e r , E O B M M 1 6 3 d n a E O B M M 6 4 5 f o n o i t i d d a e h t g n i t c e l ff f e r , n o i t i s i u q c A t n i o P e l b u o D . y l e v i t c e p s e r , s n o i t a c o l 2 1 1 PIONEER NATURARR L RESOURCES COMPANY UNAUDITED SUPPLEMENTARYRR INFORMATION December 31, 2022, 2021 and 2020 Proved undeveloped reserves activity is as folff lows (in MBOE): Beginning proved undeveloped reserves Revisions of previous estimates Extensions and discoveries Transfeff rs to proved developed Ending proved undeveloped reserves Year Ended December 31, 2022 277,214 16,658 3,782 (38,803) 258,851 As of December 31, 2022, the Company had 229 proved undeveloped well locations, as compared to 305 and 60 as of December 31, 2021 and 2020. The Company has no proved undeveloped well locations that are scheduled to be drilled more than fiff ve years frff om their original date of booking. The changes in proved undeveloped reserves during the year ended December 31, 2022 are comprised of the folff lowing items: Revisii ions of previous estimates. Revisions of previous estimates are comprised of 15 MMBOE of positive technical revisions and 2 MMBOE of positive price revisions. The positive technical revisions are primarily related to 38 MMBOE of positive revisions due to additional reserves associated with extending lateral lengths on planned wells, partially offff sff et by 23 MMBOE of negative revisions related to the removal of 30 proved undeveloped locations that are not expected to be drilled in the time frff ame originally anticipated. ExEE tensions and disii coveries. Extensions and discoveries are primarily comprised of proved reserve additions attributabla e to the Company's successfulff horizontal drilling program in the Sprabea rry/rr Wolfcff amp oil fiff eld of the Midland Basin. TrTT ansfs eff rsrr to proved developed. Transfeff rs to proved developed reserves represented the proved undeveloped reserves associated with 49 undeveloped locations that moved to proved developed as a result of development drilling. The Company uses both public and proprietaryrr geologic data to establa ish continuity of the forff mation and its producing properties. This included seismic data and interprrr etations (2-D, 3-D and micro seismic); open hole log inforff mation (both vertical and horizontally collected) and petrophysical analysis of the log data; mud logs; gas sample analysis; drill cutting samples; measurements of total organic content; thermal maturtt ity; sidewall cores and data measured frff om the Company's internal core analysis faff cility. Aftff er the geologic area was shown to be continuous, statistical analysis of existing producing wells was conducted to generate areas of reasonabla e certainty at distances frff om establa ished production. As a result of this analysis, proved undeveloped reserves forff drilling locations within these areas of reasonabla e certainty were recorded during 2022. ff ng forff While the Company expects, based on Management's Price Outlook, that futff urt e operating cash flff ows will provide futff urt e development of its proved undeveloped reserves over the next fiff ve years, it may also use any city under its Credit Facility, these and other capia tal adequate fundi combination of (i) cash and cash equivalents, (ii) sales of investments, (iii) unused borrowing capaa (iv) issuances of debt or equity securities or (v) other sources, such as sales of nonstrategic assets to fundff expenditurt es. 113 PIONEER NATURARR L RESOURCES COMPANY UNAUDITED SUPPLEMENTARYRR INFORMATION December 31, 2022, 2021 and 2020 The estimated timing and cash flff ows of developing proved undeveloped reserves are as folff lows: As of December 31, 2022 Future Cash Inflff ows Future Production Costs Future Development Costs Future Net Cash Flows Estimated Future Production (MBOE) Year Ended December 31, (a) 2023 2024 2025 2026 2027 Thereaftff er (b) Total ______________________ 2,179 7,468 17,628 31,754 24,057 175,765 258,851 $ $ 170 547 1,263 2,199 1,458 9,228 14,865 $ $ (in millions) 21 66 154 271 204 2,144 2,860 $ $ 209 394 642 456 16 27 1,744 $ $ (59) 87 467 1,472 1,238 7,056 10,261 (a) Production and cash flff ows represent the drilling results frff om the respective year plus the incremental effff eff cts of proved undeveloped drilling beginning in 2023. (b) Futurtt e development costs include $27 million of net abaa ndonment costs in years beyond the forff ecasted years. The Company's 2022 estimated futff urt e production costs attributabla e to proved undeveloped reserves of $11.05 per BOE lowing are less than the forff ecasted futff urt e production costs attributabla e to total proved reserves of $18.41 per BOE forff reasons: the folff • • horizontal wells and $43.43 per BOE forff As of December 31, 2022, a signififf cant portion of the Company's proved developed producing wells are comprised of legacy vertical wells that have higher production costs, on a per BOE basis, than the Company's proved developed producing horizontal wells. The total proved reserves production cost per BOE of $18.41 is comprised of $17.15 per BOE forff vertical wells. The estimated futff urt e production costs of $11.05 per BOE associated with proved undeveloped reserves, comprised entirely of horizontal wells, is lower than the $17.15 per BOE average of the Company's producing horizontal wells included in total proved reserves. The lower costs take into account the initial production rates of new wells, which are higher at the beginning of a well's lifeff , and result in a lower overall production cost, on a per BOE basis, when looked at over the well's total productive lifeff versus a well that is later in its productive lifeff . In addition, the futff urt e production costs on proved undeveloped horizontal wells also reflff ect the economies of scale of adding the wells to existing infrff astrucrr turt e, allowing the Company to spread certain fiff xed costs over a larger production volume. StSS antt s dardizii ed MeMM asure of Disii countett d FuFF ture NeNN t CasCC h FlFF owll The standardized measure of discounted futff urt e net cash flff ows is computed by appl ying commodity prices used in determining proved reserves (with consideration of price changes only to the extent provided by contractuat l arrangements) to the estimated futff urt e production of proved reserves less estimated futff urt e expenditurt es (based on year-end estimated costs) to be incurred in developing and producd ing the proved reserves, discounted using a rate of 10 percent per year to reflff ect the estimated timing of the futff urt e cash flff ows. Futurt e income taxes are calculated by comparing undiscounted futff urt e cash flff ows to the tax basis of oil and gas properties plus availabla e carryfrr orff wards and credits and appl ying the current tax rates to the diffff eff rence. The discounted futff urtt e cash flff ow estimates do not include the effff eff cts of the Company's derivative contracts. a a Discounted futff urt e cash flff ow estimates, like those shown below, are not intended to represent estimates of the faff ir value of oil and gas properties. Estimates of faff ir value should also consider probabla e and possible reserves, anticipated futff urt e commodity prices, interest rates, changes in development and production costs and risks associated with futff urt e production. Because of these and other considerations, any estimate of faff ir value is necessarily subjective and imprecise. 114 PIONEER NATURARR L RESOURCES COMPANY UNAUDITED SUPPLEMENTARYRR INFORMATION December 31, 2022, 2021 and 2020 The standardized measure of discounted futff urt e cash flff ows as well as a rollforff ward in total forff each respective year are as folff lows: Oil and gas producing activities: Futurt e cash inflff ows Futurt e production costs Futurt e development costs (a) Futurt e income tax expense Standardized measure of futff urt e cash flff ows Ten percent annual discount faff ctor Standardized measure of discounted futff urt e cash flff ows __________________ 2022 December 31, 2021 (in millions) 2020 $ $ 140,672 (43,755) (2,996) (18,161) 75,760 (37,368) 38,392 $ $ 95,717 (29,682) (2,621) (10,136) 53,278 (25,594) 27,684 $ $ 30,357 (14,784) (1,124) (1,597) 12,852 (5,650) 7,202 (a) Includes $1.1 billion, $801 million and $595 million of undiscounted futff urtt e asset retirement expenditurt es estimated as of December 31, 2022, 2021 and 2020, respectively, using current estimates of futff urt e abaa ndonment costs at the end of each year. See Note 9 forff additional inforff mation. ChCC anges inii StSS antt sw dardizii ed MeMM asure of Disii countett d FuFF ture NeNN t CasCC h FlFF owll Oil and gas sales, net of production costs Revisions of previous estimates: Net changes in prices and production costs Changes in futff urt e development costs Revisions in quantities Accretion of discount Extensions, discoveries and improved recoveryrr Development costs incurred during the period Sales of minerals-in-place Purchases of minerals-in-place Change in present value of futff urt e net revenues Net change in present value of futff urt e income taxes Balance, beginning of year Balance, end of year Year Ended December 31, 2022 2021 (in millions) 2020 $ (14,003) $ (9,167) $ (2,566) 14,986 (569) (618) 2,465 12,725 217 (10) 6 15,199 (4,491) 10,708 27,684 38,392 $ 19,117 (248) (1,743) 977 10,266 257 (2,789) 7,902 24,572 (4,090) 20,482 7,202 27,684 $ (3,971) 152 (27) 809 2,366 105 (9) 7 (3,134) 602 (2,532) 9,734 7,202 $ 115 PIONEER NATURARR L RESOURCES COMPANY ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES Evaluatitt on of disii closll ure contrtt olsll and procedures. The Company's management, with the participation of its principal executive offff iff cer and principal fiff nancial offff iff cer, have evaluated, as required by RulRR e 13a-15(b) under the Exchange Act, the effff eff ctiveness of the Company's disclosure controls and procedures (as defiff ned in Exchange Act RulRR e 13a-15(e)) as of the end of the period covered by this Report. Based on that evaluation, the principal executive offff iff cer and principal fiff nancial offff iff cer concluded that the Company's disclosure controls and procedures were effff eff ctive, as of the end of the period covered by this Report, in ensuring that inforff mation required to be disclosed by the Company in the reports that it fiff les or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specififf ed in the SEC's rulrr es and forff ms, including that such inforff mation is accumulated and communicated to the Company's management, including the principal executive offff iff cer and principal fiff nancial offff iff cer, to allow timely decisions regarding required disclosure. ChCC anges inii inii tett rnrr al contrtt ol over fiff nii anciali titt nii g. There have been no changes to the Company's internal control over fiff nancial reporting (as defiff ned in RulRR e 13a-15(f)ff under the Exchange Act) that occurred during the three months ended December 31, 2022 that have materially affff eff cted, or are reasonabla y likely to materially affff eff ct, the Company's internal control over fiff nancial reporting. ee repor MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING external purpos The Company's management is responsible forff establa ishing and maintaining adequate internal control over fiff nancial reporting. The Company's internal control over fiff nancial reporting is a process designed by or under the supervision of the Company's principal executive offff iff cer and principal fiff nancial offff iff cer and effff eff cted by the Board, management and other personnel to provide reasonabla e assurance regarding the reliabia lity of fiff nancial reporting and the preparation of the Company's es in accordance with generally accepted accounting principles. The Company's internal fiff nancial statements forff control over fiff nancial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonabla e detail accurately and faff irly reflff ect the transactions and dispositions of the assets of the Company; (2) provide reasonabla e assurance that transactions are recorded as necessaryrr to permit preparation of fiff nancial statements in accordance with generally accepted accounting principles and that receipts and expenditurt es of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and (3) provide reasonabla e assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effff eff ct on the fiff nancial statements. rr The Company's management, with the participation of its principal executive offff iff cer and principal fiff nancial offff iff cer assessed the effff eff ctiveness, as of December 31, 2022, of the Company's internal control over fiff nancial reporting based on the criteria forff effff eff ctive internal control over fiff nancial reporting establa ished in "Internal Control - Integrated Framework (2013)," issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the assessment, management determined that the Company maintained effff eff ctive internal control over fiff nancial reporting at a reasonabla e assurance level as of December 31, 2022, based on those criteria. Ernst & Young LLP, the independent registered public accounting fiff rm that audited the consolidated fiff nancial statements of the Company included in this Annual Report on Form 10-K, has issued an attestation report on the effff eff ctiveness of the Company's internal control over fiff nancial reporting as of December 31, 2022. The report, which expresses an unqualififf ed opinion on the effff eff ctiveness of the Company's internal control over fiff nancial reporting as of December 31, 2022, is included in this Item under the heading "Report of Independent Registered Public Accounting Firm." ChCC anges inii inii tett rnrr al contrtt ol over fiff nii anciali titt nii g. There have been no changes in the Company's internal control over fiff nancial reporting (as defiff ned in RulRR e 13a-15(f)ff under the Exchange Act) that occurred during the three months ended December 31, 2022 that have materially affff eff cted or are reasonabla y likely to materially affff eff ct the Company's internal control over fiff nancial reporting. ee repor 116 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Pioneer Naturtt al Resources Company Opinion on Internal Control Over Financial Reporting We have audited Pioneer Naturt al Resources Company's internal control over fiff nancial reporting as of December 31, 2022, based on criteria establa ished in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 frff amework) (the COSO criteria). In our opinion, Pioneer Naturt al Resources Company (the Company) maintained, in all material respects, effff eff ctive internal control over fiff nancial reporting as of December 31, 2022, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, equity and cash flff ows forff each of the three years in the period ended December 31, 2022, and the related notes and our report dated Februarr ryrr 23, 2023 expressed an unqualififf ed opinion thereon. Basis forff Opinion The Company's management is responsible forff maintaining effff eff ctive internal control over fiff nancial reporting and forff its assessment of the effff eff ctiveness of internal control over fiff nancial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over fiff nancial reporting based on our audit. We are a public accounting fiff rm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. feff deral securities laws and the appl icabla e rulrr es and regulations of the Securities and Exchange Commission and the PCAOB. a We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perforff m the audit to obtain reasonabla e assurance about whether effff eff ctive internal control over fiff nancial reporting was maintained in all material respects. a Our audit included obtaining an understanding of internal control over fiff nancial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effff eff ctiveness of internal control based on the assessed risk, and perforff ming such other procedures as we considered necessaryrr in the circumstances. We believe that our audit provides a reasonabla e basis forff our opinion. Defiff nition and Limitations of Internal Control Over Financial Reporting A company's internal control over fiff nancial reporting is a process designed to provide reasonabla e assurance regarding the reliabia lity of fiff nancial reporting and the preparation of fiff nancial statements forff es in accordance with generally accepted accounting principles. A company's internal control over fiff nancial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonabla e detail, accurately and faff irly reflff ect the transactions and dispositions of the assets of the company; (2) provide reasonabla e assurance that transactions are recorded as necessaryrr to permit preparation of fiff nancial statements in accordance with generally accepted accounting principles, and that receipts and expenditurt es of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonabla e assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effff eff ct on the fiff nancial statements. external purpos rr Because of its inherent limitations, internal control over fiff nancial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effff eff ctiveness to futff urt e periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Dallas, Texas Februarr ryrr 23, 2023 117 PIONEER NATURARR L RESOURCES COMPANY ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION Not Applicabla e. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORARR TE GOVERNANCE , The names of the executive offff iff cers of the Company and their ages, titles and biographi a ated by refeff rence frff om Part I of this Report. The other inforff mation required in response to this Item will be set forff the annual meeting of stockholders to be held in May 2023 and is incorpor incorpor rr the Company's defiff nitive proxy statement forff herein by refeff rence. es as of the date hereof are th in ated rr ITEM 11. EXECUTIVE COMPENSATION The inforff mation required in response to this Item will be set forff th in the Company's defiff nitive proxy statement forff the annual meeting of stockholders to be held in May 2023 and is incorpor rr ated herein by refeff rence. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Securities Authorized forff Issuance under Equity Compensation Plans Summarized inforff mation about a the Company's equity compensation plans is as folff lows: Equity compensation plans appr a oved by security holders: 2006 Long-Term Incentive Plan (b)(c) Employee Stock Purchase Plan (d) As of December 31, 2022 Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available forff fuff ture issuance under equity compensation plans (excluding securities reflff ected in fiff rst column) — $ — — $ — — — 4,103,345 1,286,867 5,390,212 _______________________ (a) There are no outstanding warrants or equity rights awarded under the Company's equity compensation plans. (b) The number of remaining securities availabla e forff futff urt e issuance under the Company's 2006 Long-Term Incentive Plan is based on the aggregate securities authorized forff issuance under the plan of 12,600,000. (c) The number of securities remaining forff futff urt e issuance has been reduced by the maximum number of shares that could be issued pursuant to outstanding grants of perforff mance units as of December 31, 2022. (d) The number of remaining securities availabla e forff futff urt e issuance under the Company's Employee Stock Purchase Plan is based on the aggregate securities authorized forff issuance under the plan of 2,500,000. See Note 8 of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementaryrr Data" forff additional inforff mation. The remaining inforff mation required in response to this Item will be set forff th in the Company's defiff nitive proxy statement forff the annual meeting of stockholders to be held in May 2023 and is incorpor rr ated herein by refeff rence. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRARR NSACTIONS, AND DIRECTOR INDEPENDENCE , The inforff mation required in response to this Item will be set forff th in the Company's defiff nitive proxy statement forff the annual meeting of stockholders to be held in May 2023 and is incorpor rr ated herein by refeff rence. 118 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The inforff mation required in response to this Item will be set forff th in the Company's defiff nitive proxy statement forff the annual meeting of stockholders to be held in May 2023 and is incorpor rr ated herein by refeff rence. ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES PART IV (a) Listing of Financial Statements FiFF nii anciali StSS attt ett mentstt The folff Supplementaryrr Data:" lowing consolidated fiff nancial statements of the Company are included in "Item 8. Financial Statements and • • • • • • • Report of Independent Registered Pubic Accounting Firm Consolidated Balance Sheets as of December 31, 2022 and 2021 Consolidated Statements of Operations forff the Years Ended December 31, 2022, 2021 and 2020 Consolidated Statements of Equity forff the Years Ended December 31, 2022, 2021 and 2020 Consolidated Statements of Cash Flows forff the Years Ended December 31, 2022, 2021 and 2020 Notes to Consolidated Financial Statements Unaudited Supplementaryrr Inforff mation (b) Exhibits The exhibits to this Report that are required to be fiff led pursuant to Item 15(b) are listed below. (c) Financial Statement Schedules No fiff nancial statement schedules are required to be fiff led as part of this Report or they are inappl a icabla e. 119 ExhEE ibii tii stt Exhibit Number 2.1* 2.2* 3.1 3.2 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 PIONEER NATURARR L RESOURCES COMPANY Description — Membership Interest Purchase Agreement, dated as of April 1, 2021, by and among Pioneer Naturt al Resources Company, Pioneer Naturtt al Resources USA, Inc. and Double Eagle III Midco 2, LLC (incorpor ated by refeff rence to Exhibit 10.1 to the Company's Current Report on Form 8-K, File No. rr 1-13245, fiff led with the SEC on April 2, 2021). — Purchase and Sale Agreement, dated as of November 1, 2021, by and among Parsley Energy, LLC, Parsley Energy, L.P., Parsley Minerals, LLC, Parsley Energy Operations, LLC, and Continental Resources, Inc. (incorpor ated by refeff rence to Exhibit 2.1 to the Company's Current Report on Form 8-K, File No. 1-13245, fiff led with the SEC on November 5, 2021). rr — Amended and Restated Certififf cate of Incorpor of Amendment of the Amended and Restated Certififf cate of Incorpor (incorpor rr quarter ended March 31, 2018, File No. 1-13245). ated by refeff rence to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q forff ation of the Company, dated June 26, 1997, and Certififf cate ation, effff eff ctive May 18, 2012 the rr rr — Seventh Amended and Restated Bylaws of the Company, dated Februarr ated by refeff rence to Exhibit 3.1 to the Company's Current Report on Form 8-K , File No. 1-13245, fiff led with the SEC on Februarr ryrr 8, 2023 (incorpor ryrr 13, 2023). rr — Form of Certififf cate of Common Stock, par value $.01 per share, of the Company (incorpor ated by refeff rence to Exhibit 4.1 to the Company's Registration Statement on Form S-4 (Amendment No. 2), dated June 26, 1997, Registration No. 333-26951). rr — Indenturtt e, dated Januaryrr 22, 2008, between the Company and Wells Fargo Bank, National Association, ated by refeff rence to Exhibit 4.1 to the Company's Current Report on Form 8-K, File tee (incorpor as trusrr No. 1-13245, fiff led with the SEC on Januaryrr 22, 2008). rr — Second Supplemental Indenturt e, dated November 13, 2009, by and among the Company, Pioneer USA as ated by refeff rence to Exhibit 4.1 to the Company's Current Report on Form 8-K, File and Wells Fargo Bank, National Association, as trusrr Exhibit 4.2 (incorpor No. 1-13245, fiff led with the SEC on November 13, 2009). tee, with respect to the indenturtt e identififf ed above a rr — Indenturtt e, dated as of May 14, 2020, by and between Pioneer Naturt al Resources Company and Wells ated by refeff rence to Exhibit 4.1 to the Company's rr Fargo Bank, National Association, as trusrr Current Report on Form 8-K, File No. 1-13245, fiff led with the SEC on May 15, 2020). tee (incorpor — Indenturtt e, dated June 26, 2012, between the Company and Wells Fargo Bank, National Association, as ated by refeff rence to Exhibit 4.1 to the Company's Current Report on Form 8-K, File No. tee (incorpor trusrr 1-13245, fiff led with the SEC on June 28, 2012). rr — First Supplemental Indenturt e, dated June 26, 2012, by and among the Company, Pioneer USA and Wells as Exhibit 4.4 ated by refeff rence to Exhibit 4.2 to the Company's Current Report on Form 8-K, File No. tee, with respect to the indenturt e identififf ed above Fargo Bank, National Association, as trusrr (incorpor rr 1-13245, fiff led with the SEC on June 28, 2012). a — Second Supplemental Indenturtt e, dated December 7, 2015, by and among the Company, Pioneer USA and as ated by refeff rence to Exhibit 4.2 to the Company's Current Report on Form 8-K File Wells Fargo Bank, National Association, as trusrr Exhibit 4.6 (incorpor No. 1-13245, fiff led with the SEC on December 7, 2015). tee, with respect to the indenturt e identififf ed above a rr — Third Supplemental Indenturtt e, dated August 11, 2020, by and between Pioneer Naturt al Resources ated by refeff rence to Exhibit 4.1 to the Company and Wells Fargo Bank, National Association (incorpor Company's Current Report on Form 8-K, File No. 1-13245, fiff led with the SEC on August 11, 2020). — Fourth Supplemental Indenturtt e, dated Januaryrr 29, 2021, by and between Pioneer Naturt al Resources ated by refeff rence to Exhibit 4.1 to the Company and Wells Fargo Bank, National Association (incorpor Company's Current Report on Form 8-K, File No. 1-13245, fiff led with the SEC on Januaryrr 29, 2021). — Fiftff h Supplemental Indenturt e, dated May 18, 2021, by and between the Company and Wells Fargo Bank, ated by refeff rence to Exhibit 4.1 to the Company's Current Report on Form National Association (incorpor 8-K, File No. 1-13245, fiff led with the SEC on May 18, 2021). rr rr rr — Indenturtt e, dated October 11, 2017, by and among Parsley Energy, LLC, Parsley Finance Corp., subsidiaryrr guarantors named therein and U.S. Bank National Association, as trusrr 5.625% Senior Notes due 2027 (incorpor rr Report on Form 8-K, File No. 1-36463, fiff led with the SEC on October 11, 2017). the tee, related to the ated by refeff rence to Exhibit 4.1 to the Company's Current rr — First Supplemental Indenturtt e, dated Januaryrr 15, 2020, by and among Parsley Energy, LLC, Parsley tee, ated by refeff rence to Exhibit 4.14 to the Parsley ryrr 21, 2020). Finance Corp., related to the 5.625% Senior Notes due 2027 (incorpor Energy Inc.'s Annual Report on Form 10-K, File No. 1-36463, fiff led with the SEC on Februarr the subsidiaryrr guarantors named therein and U.S. Bank National Association, as trusrr rr rr 120 4.13 4.14 4.15 4.16 4.17 10.1 10.2 10.3 H 10.4 H 10.5 H 10.6 H 10.7 H 10.8 H 10.9 H 10.10 H 10.11 H 10.12 H 10.13 H PIONEER NATURARR L RESOURCES COMPANY rr the subsidiaryrr guarantors named therein and U.S. Bank National Association, as trusrr — Second Supplemental Indenturt e, dated Januaryrr 26, 2021, by and among Parsley Energy, LLC, Parsley tee, ated by refeff rence to Exhibit 4.5 to the Company's Finance Corp., related to the 5.625% Senior Notes due 2027 (incorpor Current Report on Form 8-K, File No. 1-13245, fiff led with the SEC on Januaryrr 29, 2021). the subsidiaryrr rr tee, related to the 4.125% Senior ated by refeff rence to Exhibit 4.1 to Parsley Energy Inc.'s Current Report on ryrr 11, 2019). guarantors named therein and U.S. Bank National Association, as trusrr Notes due 2028 (incorpor Form 8-K, File No. 1-36463, fiff led with the SEC on Februarr ryrr 11, 2020, among Parsley Energy, LLC, Parsley Finance Corp., — Indenturtt e, dated Februarr rr rr — First Supplemental Indenturt e, dated Januaryrr 26, 2021, among Parsley Energy, LLC, Parsley Finance tee, related to the subsidiaryrr guarantors named therein and U.S. Bank National Association, as trusrr ated by refeff rence to Exhibit 4.6 to the Company's Current Corp., rr the 4.125% Senior Notes due 2028 (incorpor Report on Form 8-K, File No. 1-13245, fiff led with the SEC on Januaryrr 29, 2021). rr — Description of capia tal stock (incorpor rr ated by refeff rence to Exhibit 4.15 to the Company's Annual Report on Form 10-K forff the year ended December 31, 2020, File No. 1-13245). — Registration Rights Agreement dated as of May 4, 2021, by and among the Company and each of the ated by refeff rence to Exhibit 10.1 to other parties listed on the signaturtt e pages attached thereto (incorpor the Company's Current Report on Form 8-K, File No. 1-13245, fiff led with the SEC on May 4, 2021). — Credit Agreement, dated as of October 24, 2018, by and among the Company, as the Borrower, Wells Fargo Bank, National Association, as Administrative Agent, and the other agents and lenders party thereto (incorpor ated by refeff rence to Exhibit 10.1 to the Company's Current Report on Form 8-K, File No. 1-13245, fiff led with the SEC on October 30, 2018). rr rr — First Amendment to Credit Agreement, dated as of Januaryrr 12, 2021, by and among the Company, as the Borrower, Wells Fargo Bank, National Association, as Administrative Agent, and the other agents and lenders party thereto (incorpor ated by refeff rence to Exhibit 10.1 to the Company's Current Report on Form 8-K, File No. 1-13245, fiff led with the SEC on Januaryrr 12, 2021). rr — The Company's Long-Term Incentive Plan (incorpor ated by refeff rence to Exhibit 4.1 to the Company's Registration Statement on Form S-8, Registration No. 333-35087, fiff led with the SEC on September 8, 1997). rr — First Amendment to the Company's Long-Term Incentive Plan, effff eff ctive as of November 23, 1998 the year ated by refeff rence to Exhibit 10.72 to the Company's Annual Report on Form 10-K forff rr (incorpor ended December 31, 1999, File No. 1-13245). — Amendment No. 2 to the Company's Long-Term Incentive Plan, effff eff ctive as of May 20, 1999 the year ated by refeff rence to Exhibit 10.73 to the Company's Annual Report on Form 10-K forff (incorpor rr ended December 31, 1999, File No. 1-13245). — Amendment No. 3 to the Company's Long-Term Incentive Plan, effff eff ctive as of Februarr (incorpor rr ended December 31, 1999, File No. 1-13245). ated by refeff rence to Exhibit 10.76 to the Company's Annual Report on Form 10-K forff ryrr 17, 2000 the year — Amendment No. 4 to the Company's Long-Term Incentive Plan, effff eff ctive as of November 20, 2003 the ated by refeff rence to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q forff (incorpor rr quarter ended March 31, 2005, File No. 1-13245). — Amendment No. 5 to the Company's Long-Term Incentive Plan, effff eff ctive as of May 12, 2004 the ated by refeff rence to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q forff (incorpor rr quarter ended March 31, 2005, File No. 1-13245). — Amendment No. 6 to the Company's Long-Term Incentive Plan, effff eff ctive as of December 17, 2004 the ated by refeff rence to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q forff (incorpor rr quarter ended March 31, 2005, File No. 1-13245). — Amendment No. 7 to the Company's Long-Term Incentive Plan, effff eff ctive November 20, 2008 ated by refeff rence to Exhibit 10.8 to the Company's Current Report on Form 8-K, File No. (incorpor rr 1-13245, fiff led with the SEC on November 25, 2008). — Pioneer Naturt al Resources Company Amended and Restated 2006 Long-Term Incentive Plan ated by refeff rence to Exhibit 10.1 to the Company's Current Report on Form 8-K, File No. rr (incorpor 1-13245, fiff led with the SEC on May 24, 2016). — Amendment No.1 to Pioneer Naturt al Resources Company Amended and Restated 2006 Long-Term ated by refeff rence to Exhibit 10.12 to the Company's rr Incentive Plan, dated Januaryrr 12, 2021. (incorpor Annual Report on Form 10-K forff the year ended December 31, 2020, File No. 1-13245). — Form of Restricted Stock Unit Award Agreement forff Non-Employee Directors to be used in connection ated by rr the year ended December with initial equity awards under the Company's 2006 Long-Term Incentive Plan (incorpor refeff rence to Exhibit 10.18 to the Company's Annual Report on Form 10-K forff 31, 2014, File No. 1-13245). 121 10.14 H 10.15 H 10.16 H 10.17 H 10.18 H 10.19 H 10.20 H 10.21 H 10.22 H PIONEER NATURARR L RESOURCES COMPANY — Form of Restricted Stock Unit Award Agreement forff Non-Employee Directors to be used in connection ated by the quarter ended June 30, with annual equity awards under the Company's 2006 Long-Term Incentive Plan (incorpor refeff rence to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q forff 2010, File No. 1-13245). rr — Form of Restricted Stock Award Agreement between the Company and Timothy L. Dove, with respect to annual awards made under the Company's 2006 Long-Term Incentive Plan, together with a schedule identifyiff ng other substantially identical agreements between the Company and each of its other executive offff iff cers who received this award and identifyiff ng the material diffff eff rences between each of those agreements and the fiff led Restricted Stock Award Agreement (incorpor ated by refeff rence to Exhibit 10.2 to the quarter ended March 31, 2012, File No. 1-13245). the Company's Quarterly Report on Form 10-Q forff — Form of Nonstatuttt oryrr Stock Option Agreement between the Company and each of Scott D. Sheffff iff eld and Timothy L. Dove, with respect to awards made under the Company's 2006 Long-Term Incentive Plan, together with a schedule identifyiff ng other substantially identical agreements between the Company and each of its other executive offff iff cers and identifyiff ng the material diffff eff rences between each of those agreements and the fiff led Nonstatutt oryrr Stock Option Agreement (incorpor ated by refeff rence to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q forff the quarter ended March 31, 2012, File No. 1-13245). rr rr — Form of Restricted Stock Unit Agreement between the Company and each of Scott D. Sheffff iff eld and Timothy L. Dove, with respect to annual awards made under the Company's 2006 Long-Term Incentive Plan, together with a schedule identifyiff ng other substantially identical agreements between the Company and each of its other executive offff iff cers who received this award and identifyiff ng the material diffff eff rences ated by between each of those agreements and the fiff led Restricted Stock Unit Agreement (incorpor refeff rence to Exhibit 10.2 to the Company's Current Report on Form 8-K, File No. 1-13245), fiff led with the SEC on May 24, 2016). rr — Form of Restricted Stock Unit Award Agreement between the Company and executive offff iff cers of the Company, with respect to retention awards made under the Company's 2006 Long-Term Incentive Plan the rr (incorpor quarter ended March 31, 2012, File No. 1-13245). ated by refeff rence to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q forff — Form of Perforff mance Unit Award Agreement between the Company and Timothy L. Dove, with respect to awards made under the Company's 2006 Long-Term Incentive Plan, commencing in 2018, together with a schedule identifyiff ng other substantially identical agreements between the Company and each of its other executive offff iff cers and identifyiff ng the material diffff eff rences between each of those agreements and the fiff led Perforff mance Unit Award Agreement (incorpor ated by refeff rence to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q forff the quarter ended March 31, 2018, File No. 1-13245). rr — Form of Restricted Stock Unit Award Agreement between the Company and Timothy L. Dove, with respect to awards made under the Company's 2006 Long-Term Incentive Plan, commencing in 2018, together with a schedule identifyiff ng other substantially identical agreements between the Company and each of its other executive offff iff cers and identifyiff ng the material diffff eff rences between each of those agreements and the fiff led Perforff mance Unit Award Agreement (incorpor ated by refeff rence to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q forff the quarter ended March 31, 2018, File No. 1-13245). rr — Form of Restricted Stock Award Agreement between the Company and executive offff iff cers of the Company with respect to annual awards made under the Company's 2006 Long-Term Incentive Plan, commencing in 2018 (incorpor ated by refeff rence to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q forff the quarter ended March 31, 2018, File No. 1-13245). rr — Form of Perforff mance Unit Award Agreement between the Company and Scott D. Sheffff iff eld, with respect to awards made under the Company's 2006 Long-Term Incentive Plan, commencing in 2022, together with a schedule identifyiff ng other substantially identical agreements between the Company and each of its other executive offff iff cers and identifyiff ng the material diffff eff rences between each of those agreements and ated by refeff rence to Exhibit 10.22 to the the fiff led Perforff mance Unit Award Agreement (incorpor Company's Annual Report on Form 10-K forff the year ended December 31, 2021, File No. 1-13245). rr 10.23 H (a) 10.24 H (a) Form of Restricted Stock Unit Agreement between the Company and executive offff iff cers of the Company with respect to annual awards made under the Company's 2006 Long-Term Incentive Plan, commencing in 2023. Form of Perforff mance Unit Award Agreement between the Company and Scott D. Sheffff iff eld, with respect to awards made under the Company's 2006 Long-Term Incentive Plan, commencing in 2023, together with a schedule identifyiff ng other substantially identical agreements between the Company and each of its other executive offff iff cers and identifyiff ng the material diffff eff rences between each of those agreements and the fiff led Perforff mance Unit Agreement. 10.25 H 10.26 H (a) — Amended and Restated Pioneer Naturt al Resources Company Employee Stock Purchase Plan dated ated by refeff rence to Exhibit 10.1 to the Company's Current Report effff eff ctive September 1, 2021 (incorpor rr on Form 8-K, File No. 1-13245, fiff led with the SEC on June 1, 2021). Amended and Restated Pioneer Naturt al Resources Company Employee Stock Purchase Plan dated effff eff ctive December 1, 2022. 122 10.27 H 10.28 H 10.29 H 10.30 H 10.31 H 10.32 H 10.33 H 10.34 H 10.35 H 10.36 H 10.37 H 10.38 H 10.39 H (a) 10.40 H 10.41 H 10.42 H 10.43 H 10.44 H 10.45 H PIONEER NATURARR L RESOURCES COMPANY — The Company's Executive Defeff rred Compensation Plan, Amended and Restated, effff eff ctive as of August 1, ated by refeff rence to Exhibit 10.15 to the Company's Quarterly Report on Form 10-Q forff 2002 (incorpor the quarter ended March 31, 2005, File No. 1-13245). rr — Amendment No. 1 to the Company's Executive Defeff rred Compensation Plan, effff eff ctive as of Januaryrr 1, the ated by refeff rence to Exhibit 10.15 to the Company's Annual Report on Form 10-K forff 2007 (incorpor year ended December 31, 2006, File No. 1-13245). rr — Amended and Restated Executive Defeff rred Compensation Plan, effff eff ctive as of Januaryrr 1, 2009 ated by refeff rence to Exhibit 10.6 to the Company's Current Report on Form 8-K, File No. (incorpor rr 1-13245, fiff led with the SEC on November 25, 2008). — Amendment No. 1 to the Company's Amended and Restated Executive Defeff rred Compensation Plan, ated by refeff rence to Exhibit 10.4 to the Company's Quarterly Report effff eff ctive Januaryrr 1, 2009 (incorpor on Form 10-Q forff rr the quarter ended June 30, 2009, File No. 1-13245). — Amendment No. 2 to the Company's Amended and Restated Executive Defeff rred Compensation Plan, ated by refeff rence to Exhibit 10.56 to the Company's Annual Report on effff eff ctive Januaryrr 1, 2011 (incorpor Form 10-K forff rr the year ended December 31, 2010, File No. 1-13245). — Amendment No. 3 to the Company's Amended and Restated Executive Defeff rred Compensation Plan, ated by refeff rence to Exhibit 10.36 to executed August 19, 2013 and effff eff ctive Januaryrr 1, 2009 (incorpor the Company's Annual Report on Form 10-K forff the year ended December 31, 2013, File No. 1-13245). rr — Amendment No. 4 to the Company's Amended and Restated Executive Defeff rred Compensation Plan, ated by refeff rence to Exhibit 10.37 to the Company's Annual Report on rr effff eff ctive Januaryrr 1, 2014 (incorpor Form 10-K forff the year ended December 31, 2013, File No. 1-13245). — Amendment No. 5 to the Company's Amended and Restated Executive Defeff rred Compensation Plan, ated by refeff rence to Exhibit 10.30 to the Company's Annual rr executed November 15, 2016 (incorpor Report on Form 10-K forff the year ended December 31, 2016, File No. 1-13245). — Amendment No. 6 to the Company's Amended and Restated Executive Defeff rred Compensation Plan, ated by refeff rence to Exhibit 10.3 to the Company's Quarterly Report executed August 30, 2018 (incorpor on Form 10-Q forff rr the quarter ended September 30, 2018, File No. 1-13245). — Amendment No. 7 to the Company's Amended and Restated Executive Defeff rred Compensation Plan, ated by refeff rence to Exhibit 10.1 to the Company's Quarterly Report on executed March 5, 2019 (incorpor Form 10-Q forff rr the quarter ended March 31, 2019, File No. 1-13245). — Amendment No. 8 to the Company's Amended and Restated Executive Defeff rred Compensation Plan, ated by refeff rence to Exhibit 10.1 to the Company's Quarterly Report on rr executed May 6, 2020 (incorpor Form 10-Q forff the quarter ended June 30, 2020, File No. 1-13245). — Amendment No. 9 to the Company's Amended and Restated Executive Defeff rred Compensation Plan, ated by refeff rence to Exhibit 10.35 to the Company's Annual executed November 30, 2020. (incorpor Report on Form 10-K forff the year ended December 31, 2020, File No. 1-13245). Amendment No, 10 to the Company's Amended and Restated Executive Defeff rred Compensation Plan, executed November 15, 2022. rr — Pioneer Naturt al Resources USA, Inc. 401(k) and Matching Plan (Amended and Restated Effff eff ctive as of ated by refeff rence to Exhibit 10.1 to the Company's Quarterly Report on Form Januaryrr 1, 2020) (incorpor 10-Q forff rr the quarter ended June 30, 2020, File No. 1-13245). Restated Effff eff ctive as of Januaryrr 1, 2020), dated May 6, 2020 (incorpor to the Company's Quarterly Report on Form 10-Q forff — First Amendment to Pioneer Naturt al Resources USA, Inc. 401(k) and Matching Plan (Amended and ated by refeff rence to Exhibit 10.1 the quarter ended June 30, 2020, File No. 1-13245). — Second Amendment to Pioneer Naturtt al Resources USA, Inc. 401(k) and Matching Plan (Amended and ated by refeff rence to Exhibit 10.1 the quarter ended June 30, 2020, File No. 1-13245). — Third Amendment to Pioneer Naturt al Resources USA, Inc. 401(k) and Matching Plan (Amended and ated by refeff rence to Exhibit the quarter ended September 30, 2020, File Restated Effff eff ctive as of Januaryrr 1, 2020), dated June 18, 2020 (incorpor to the Company's Quarterly Report on Form 10-Q forff Restated Effff eff ctive as of Januaryrr 1, 2020), dated August 27, 2020 (incorpor 10.1 to the Company's Quarterly Report on Form 10-Q forff No. 1-13245). rr rr rr — Fourth Amendment to Pioneer Naturt al Resources USA, Inc. 401(k) and Matching Plan (Amended and ated by refeff rence to Exhibit the year ended December 31, 2020, File No. Restated Effff eff ctive as of Januaryrr 1, 2020), dated November 2, 2020. (incorpor 10.40 to the Company's Annual Report on Form 10-K forff 1-13245). rr — Fiftff h Amendment to Pioneer Naturt al Resources USA, Inc. 401(k) and Matching Plan (Amended and ated by refeff rence to Exhibit 10.3 the quarter ended March 31, 2021, File No. Restated Effff eff ctive as of Januaryrr 1, 2020), dated March 4, 2021 (incorpor to the Company's Quarterly Report on Form 10-Q forff 1-13245). rr 123 10.46 H 10.47 H 10.48 H 10.49 H 10.50 H 10.51 H 10.52 H 10.53 H 10.54 H 10.55 H PIONEER NATURARR L RESOURCES COMPANY Restated Effff eff ctive as of Januaryrr 1, 2020), dated June 21, 2021 (incorpor to the Company's Quarterly Report on Form 10-Q forff — Sixth Amendment to Pioneer Naturtt al Resources USA, Inc. 401(k) and Matching Plan (Amended and ated by refeff rence to Exhibit 10.1 the quarter ended June 30, 2021, File No. 1-13245). — Seventh Amendment to Pioneer Naturtt al Resources USA, Inc. 401(k) and Matching Plan (Amended and ated by refeff rence to Exhibit the year ended December 31, 2021, File No. Restated Effff eff ctive as of Januaryrr 1, 2020), dated December 2, 2021 (incorpor 10.43 to the Company's Annual Report on Form 10-K forff 1-13245). rr rr — Eighth Amendment to Pioneer Naturt al Resources USA, Inc. 401(k) and Matching Plan (Amended and ated by refeff rence to Exhibit the quarter ended March 31, 2022, File No. Restated Effff eff ctive as of Januaryrr 1, 2020), dated March 10, 2022 (incorpor 10.1 to the Company's Quarterly Report on Form 10-Q forff 1-13245). rr — Ninth Amendment to Pioneer Naturt al Resources USA, Inc. 401(k) and Matching Plan (Amended and ated by refeff rence to Exhibit the quarter ended September 30, 2022, File Restated Effff eff ctive as of Januaryrr 1, 2020), dated August 10, 2022 (incorpor 10.1 to the Company's Quarterly Report on Form 10-Q forff No. 1-13245). rr — Indemnififf cation Agreement, dated as of May 16, 2019, between the Company and Scott D. Sheffff iff eld, together with a schedule identifyiff ng other substantially identical agreements between the Company and each of its non-employee directors and executive offff iff cers identififf ed on the schedule and identifyiff ng the material diffff eff rences between each of those agreements and the fiff led Indemnififf cation Agreement (incorpor the rr quarter ended June 30, 2019, File No. 1-13245). ated by refeff rence to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q forff — Indemnififf cation Agreement, dated as of Januaryrr 12, 2021, between the Company and A.R. Alameddine, together with a schedule identifyiff ng other substantially identical agreements between the Company and Matt Gallagher (incorpor ated by refeff rence to Exhibit 10.42 to the Company's Annual Report on Form 10- K forff the year ended December 31, 2020, File No. 1-13245). rr — Indemnififf cation Agreement, dated as of June 24, 2021, between the Company and Lori G. Billingsley. the ated by refeff rence to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q forff (incorpor rr quarter ended June 30, 2021, File No. 1-13245). — Indemnififf cation Agreement, dated as of September 21, 2021, between the Company and Maria S. Jelescu ated by refeff rence to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q forff Dreyfusff the quarter ended September 30, 2021, File No. 1-13245). rr (incorpor — Indemnififf cation Agreement, dated as of July 14, 2022, between the Company and Christopher L. ated by refeff rence to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q Washburn (incorpor forff rr the quarter ended June 30, 2022, File No. 1-13245) — Indemnififf cation Agreement, dated as of July 18, 2022, between the Company and Jacinto J. Hernandez the ated by refeff rence to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q forff (incorpor rr quarter ended June 30, 2022, File No. 1-13245). 10.56 H — Severance Agreement, dated Februarr ryrr ated by refeff rence to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q forff 21, 2019, between the Company and Scott D. Sheffff iff eld the (incorpor rr quarter ended March 31, 2019, File No. 1-13245). 10.57 H 10.58 H 10.59 H 10.60 H — Severance Agreement, dated August 16, 2005, between the Company and each of its executive offff iff cers identififf ed on the schedule and identifyiff ng the material diffff eff rences between each of those agreements and the fiff led Severance Agreement (incorpor ated by refeff rence to Exhibit 10.24 to the Company's Annual Report on Form 10-K forff the year ended December 31, 2007, File No. 1-13245). rr — Form of Amendment to Severance Agreement, dated November 20, 2008, between the Company and ated by refeff rence to Exhibit each executive offff iff cer of the Company other than Scott D. Sheffff iff eld (incorpor 10.2 to the Company's Current Report on Form 8-K, File No. 1-13245, fiff led with the SEC on November 25, 2008). rr — Severance Agreement, dated effff eff ctive August 10, 2005, between the Company and the executive offff iff cer ated by refeff rence to Exhibit 10.4 to the Company's Quarterly identififf ed on the schedule thereto (incorpor Report on Form 10-Q forff rr the quarter ended September 30, 2014, File No. 1-13245). — Amendment to Severance Agreement, dated December 8, 2008, between the Company and the executive ated by refeff rence to Exhibit 10.5 to the Company's offff iff cer identififf ed on the schedule thereto (incorpor Quarterly Report on Form 10-Q forff rr the quarter ended September 30, 2014, File No. 1-13245). 10.61 H — Severance Agreement, dated effff eff ctive Januaryrr ated by refeff rence to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q forff 14, 2010, between the Company and J. D. Hall the (incorpor rr quarter ended September 30, 2014, File No. 1-13245). 10.62 H — Severance Agreement, dated effff eff ctive Januaryrr 1, 2014, between the Company and Margaret M. ated by refeff rence to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q Montemayor (incorpor forff rr the quarter ended March 31, 2014, File No. 1-13245). 124 10.63 H 10.64 H 10.65 H 10.66 H 10.67 H 10.68 H 10.69 H 10.70 H (a) 10.71 H 10.72 H 10.73 H 10.74 H 10.75 H 10.76 H 10.77 H 10.78 H PIONEER NATURARR L RESOURCES COMPANY — Severance Agreement, dated effff eff ctive December 12, 2005, between the Company and William Hannes, together with a schedule identifyiff ng the other substantially identical agreement between the Company and the executive offff iff cer identififf ed on the schedule and identifyiff ng the material diffff eff rences between that agreement and the fiff led Severance Agreement (incorpor ated by refeff rence to Exhibit 10.55 to the Company's Annual Report on Form 10-K forff the year ended December 31, 2016, File No. 1-3245). rr — Amendment to Severance Agreement, dated November 20, 2008, between the Company and William Hannes, together with a schedule identifyiff ng the other substantially identical agreement between the Company and the executive offff iff cer identififf ed on the schedule and identifyiff ng the material diffff eff rences between that agreement and the fiff led Amendment to Severance Agreement (incorpor ated by refeff rence to Exhibit 10.56 to the Company's Annual Report on Form 10-K forff the year ended December 31, 2016, File No. 1-3245). rr — Severance Agreement, dated effff eff ctive Februarr identififf ed on the schedule thereto (incorpor Report on Form 10-K forff rr the year ended December 31, 2016, File No. 1-3245). ryrr 27, 2013, between the Company and the executive offff iff cer ated by refeff rence to Exhibit 10.57 to the Company's Annual — Change in Control Agreement, dated Februarr ryrr 21, 2019, between the Company and Scott D. Sheffff iff eld, together with a schedule identifyiff ng other substantially identical agreements between the Company and the executive offff iff cers identififf ed on the schedule and identifyiff ng the material diffff eff rences between each of those agreements and the fiff led Change in Control Agreement (incorpor ated by refeff rence to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q forff the quarter ended March 31, 2019, File No. 1-13245). rr — Change in Control Agreement, dated May 15, 2019, between the Company and Bonnie S. Black, together with a schedule identifyiff ng other substantially identical agreements between the Company and each of its executive offff iff cers identififf ed on the schedule and identifyiff ng the material diffff eff rences between each of those agreements and the fiff led Change in Control Agreement (incorpor ated by refeff rence to Exhibit 10.3 the quarter ended June 30, 2019, File No. 1-13245). to the Company's Quarterly Report on Form 10-Q forff rr — Change in Control Agreement, dated Februarr identififf ed on the schedule thereto (incorpor Report on Form 8-K, File No. 1-13245, fiff led with the SEC on March 5, 2018). ryrr 27, 2018, between the Company and the executive offff iff cers ated by refeff rence to Exhibit 10.1 to the Company's Current rr — Form of Amendment to Severance Agreement and Change in Control Agreement, dated May 17, 2017, ated by refeff rence to Exhibit the quarter ended June 30, 2017, File No. between the Company and each executive offff iff cer of the Company (incorpor 10.1 to the Company's Quarterly Report on Form 10-Q forff 1-13245). rr Form of Amended and Restated Change in Control Agreement, dated Februarr ryrr 8, 2023 between the Company and each of Scott D. Sheffff iff eld, Richard P. Dealy, Neal H. Shah, Mark S. Berg, J.D.Hall, and other executive offff iff cers. — Confiff rmation of Base Cappe d Call Option Transaction, dated as of May 11, 2020, by and between Pioneer Naturt al Resources Company and Credit Suisse Capia tal LLC (incorpor ated by refeff rence to Exhibit 10.2 to the Company's Current Report on Form 8-K, File No. 1-13245, fiff led with the SEC on May 15, 2020). a rr — Confiff rmation of Base Cappe d Call Option Transaction, dated as of May 11, 2020, by and between Pioneer Naturt al Resources Company and Goldman Sachs & Co. LLC (incorpor ated by refeff rence to Exhibit 10.3 to the Company's Current Report on Form 8-K, File No. 1-13245, fiff led with the SEC on May 15, 2020). a rr — Confiff rmation of Base Cappe Pioneer Naturt al Resources Company and Bank of Montreal (incorpor the Company's Current Report on Form 8-K, File No. 1-13245, fiff led with the SEC on May 15, 2020). d Call Option Transaction, dated as of May 11, 2020, by and between ated by refeff rence to Exhibit 10.4 to a rr — Confiff rmation of Additional Cappe d Call Option Transaction, dated as of May 14, 2020, by and between Pioneer Naturt al Resources Company and Credit Suisse Capia tal LLC (incorpor ated by refeff rence to Exhibit 10.5 to the Company's Current Report on Form 8-K, File No. 1-13245, fiff led with the SEC on May 15, 2020). a rr — Confiff rmation of Additional Cappe d Call Option Transaction, dated as of May 14, 2020, by and between Pioneer Naturt al Resources Company and Goldman Sachs & Co. LLC (incorpor ated by refeff rence to Exhibit 10.6 to the Company's Current Report on Form 8-K, File No. 1-13245, fiff led with the SEC on May 15, 2020). a rr a — Confiff rmation of Additional Cappe d Call Option Transaction, dated as of May 14, 2020, by and between ated by refeff rence to Exhibit 10.7 to Pioneer Naturt al Resources Company and Bank of Montreal (incorpor the Company's Current Report on Form 8-K, File No. 1-13245, fiff led with the SEC on May 15, 2020). — Voting and Support Agreement, dated as of October 20, 2020, by and between Q-Jagged Peak and ated by refeff rence to Exhibit 10.1 to the Company's Current Pioneer Naturtt al Resources Company (incorpor Report on Form 8-K, File No. 1-13245, fiff led with the SEC on October 21, 2020). rr rr — Voting and Support Agreement, dated as of October 20, 2020, by and between Bryarr n Sheffff iff eld and ated by refeff rence to Exhibit 10.2 to the Company's Current Pioneer Naturtt al Resources Company (incorpor Report on Form 8-K, File No. 1-13245, fiff led with the SEC on October 21, 2020). rr 125 PIONEER NATURARR L RESOURCES COMPANY 21.1 (a) 23.1 (a) 23.2 (a) — Subsidiaries of the registrant. — Consent of Ernst & Young LLP. — Consent of Netherland, Sewell & Associates, Inc. — Chief Executive Offff iff cer certififf cation under Section 302 of the Sarbar nes-Oxley Act of 2002. — Chief Financial Offff iff cer certififf cation under Section 302 of the Sarbar nes-Oxley Act of 2002. — Chief Executive Offff iff cer certififf cation under Section 906 of the Sarbar nes-Oxley Act of 2002. — Chief Financial Offff iff cer certififf cation under Section 906 of the Sarbar nes-Oxley Act of 2002. — Report of Netherland, Sewell & Associates, Inc. 31.1 (a) 31.2 (a) 32.1 (b) 32.2 (b) 99.1 (a) 101. INS (a) — XBRL Instance Document. — XBRL Taxonomy Extension Schema. 101. SCH 101. CAL — XBRL Taxonomy Extension Calculation Linkbase Document. 101. DEF (a) — XBRL Taxonomy Extension Defiff nition Linkbase Document. 101. LAB 101. PRE (a) — XBRL Taxonomy Extension Presentation Linkbase Document. 104 — Cover Page Interactive Data File (forff matted as Inline XBRL and contained in Exhibit 101) — XBRL Taxonomy Extension Labea l Linkbase Document. __________________________ (a) (b) H * Filed herewith. Furnished herewith. Executive Compensation Plan or Arrangement. Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furff nish to the SEC a copy of any omitted schedule upon request. ITEM 16. FORM 10-K SUMMARYRR None. 126 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES Date: Februarr ryrr 23, 2023 PIONEER NATURARR L RESOURCES COMPANAA Y By: /s/ Scott D. Sheffff iff eld Scott D. Sheffff iff eld, Chief Executive Offff iff cer 127 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the folff lowing persons on behalf of the registrant and in the capaa cities and on the dates indicated. Signature Title Date /s/ Scott D. Sheffff iff eld Scott D. Sheffff iff eld /s/ Neal H. Shah Neal H. Shah /s/ Christopher L. Washburn Christopher L. Washburn /s/ J. Kenneth Thompson J. Kenneth Thompson /s/ A.R. Alameddine A.R. Alameddine /s/ Lori G. Billingsley Lori G. Billingsley /s/ Edison C. Buchanan Edison C. Buchanan /s/ Maria S. Dreyfusff Maria S. Dreyfusff /s/ Matthew M. Gallagher Matthew M. Gallagher /s/ Phillip A. Gobe Phillip A. Gobe /s/ Jacinto J. Hernandez Jacinto J. Hernandez /s/ Stacy P. Methvin Stacy P. Methvin /s/ Royce W. Mitchell Royce W. Mitchell /s/ Frank A. Risch Frank A. Risch /s/ Phoebe A. Wood Phoebe A. Wood Chief Executive Offff iff cer and Director (principal executive offff iff cer) Februarr ryrr 23, 2023 Senior Vice President and Chief Financial Offff iff cer (principal fiff nancial offff iff cer) Vice President and Chief Accounting Offff iff cer (principal accounting offff iff cer) Februarr ryrr 23, 2023 Februarr ryrr 23, 2023 Chairman of the Board Februarr ryrr 23, 2023 Februarr ryrr 23, 2023 Februarr ryrr 23, 2023 Februarr ryrr 23, 2023 Februarr ryrr 23, 2023 Februarr ryrr 23, 2023 Februarr ryrr 23, 2023 Februarr ryrr 23, 2023 Februarr ryrr 23, 2023 Februarr ryrr 23, 2023 Februarr ryrr 23, 2023 Februarr ryrr 23, 2023 Director Director Director Director Director Director Director Director Director Director Director 128 S H A R E H O LD E R I N FO R MATI O N S TO C K E XC H A N G E L I S T I N G – CO M M O N S TO C K New York Stock Exchange: PXD CO R P O R AT E I N F O R M AT I O N Pioneer Natural Resources Company 777 Hidden Ridge Irving, TX 75038 (972) 444-9001 pxd.com S TO C K T R A N S F E R AG E N T A N D R EG I S T R A R Communication concerning the transfer or exchange of shares, dividend payments, lost certificates or change of address should be directed to: Continental Stock Transfer & Trust Company 1 State St., 30th Floor New York, NY 10004-1561 (888) 509-5581 continentalstock.com pioneer@continentalstock.com A N N UA L M E E T I N G The Annual Meeting of Stockholders will be held on Thursday, May 25, 2023, at 8:00 a.m. Central Time. See investors.pxd.com for details. I N F O R M AT I O N R EQ U E S T S To receive additional copies of the Annual Report on Form 10-K as ﬁled with the SEC or to obtain other Pioneer publications, please contact: Pioneer Natural Resources Company ATTN: Investor Relations 777 Hidden Ridge Irving, TX 75038 (972) 969-4019 IR@pxd.com INVESTOR REL ATIONS AND MEDIA CONTACTS Shareholders, portfolio managers, brokers and securities analysts seeking information concerning Pioneer’s operations or financial results are encouraged to contact Pioneer’s Investor Relations team at (972) 969-4019 or IR@pxd.com. Media inquiries should be directed to Media and Public Affairs, Christina Voss, (972) 969-5706. Free cash ﬂow (“FCF”) is a non-GAAP ﬁnancial measure. As used by the Company, FCF is deﬁned as net cash provided by operating 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 (excluding acquisitions, asset retirement obligations, capitalized interest, geological and geophysical general and administrative expense, information technology and corporate facilities). Future dividends, whether base or variable, are authorized and determined by the Company’s board of directors in its sole discretion. Decisions regarding the payment of dividends are subject to a number of considerations at the time, including without limitation the Company’s liquidity and capital resources, the Company’s results of operations and anticipated future results of operations, the level of cash reserves the Company maintains to fund future capital expenditures or other needs, and other factors the board of directors deems relevant. The Company can provide no assurance that dividends will be authorized or declared in the future or the amount of any future dividends. Any future variable dividends, if declared and paid, will by their nature ﬂuctuate based on the Company’s free cash ﬂow, which will depend on a number of factors beyond the Company’s control, including commodities prices. NYSE: PXD | PXD.COM 777 Hidden Ridge Irving, TX 75038 | (972) 444-9001

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