Welcome to Pioneer Natural Resources' first quarter conference call. Joining us today will be Scott Sheffield, Chief Executive Officer, Rich Dealy, President and Chief Operating Officer, Joey Hall, Executive Vice President of Operations, and Neal Shah, Senior Vice President and Chief Financial Officer. Pioneer has prepared PowerPoint slides to supplement our comments today. These slides can be accessed over the internet at www.pxd.com. Again, the internet site to access the slides related to today's call is www.pxd.com. At the website, select Investors, then select Earnings and Webcasts. This call is being recorded. A replay of the call will be archived on the internet site through June 1st, 2021. The company's comments today will include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements, and the business prospects of Pioneer, are subject to a number of risks and uncertainties that may cause actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties are described in Pioneer's news release, on page two of the slide presentation, and in Pioneer's public filings made with the Securities and Exchange Commission. At this time, for opening remarks, I would like to turn the call over to Pioneer's Senior Vice President and Chief Financial Officer, Neal Shah. Please go ahead, sir. Thank you, Nick. Good morning, everyone, and thank you for joining us. Today, we will be discussing our strong first quarter results and the highly accretive acquisition of DoublePoint Energy that leads to a stronger outlook with significant free cash flow generation. We will also detail the high level of execution our teams continue to deliver and the top-tier ESG standards to which we adhere. After that, we will open up the call for your questions. With that, I'll turn it over to Scott. Thank you, Neal. Good morning. Slide number three. Pioneer delivered a very strong first quarter, generating free cash flow of approximately $370 million when adjusted for Parsley acquisition cost. You can see that we increased our 2021 estimated free cash flow up to about $2.7 billion. That's at strip pricing, which includes the contribution from the very accretive acquisition of DoublePoint, obviously higher commodity prices as the strip continues to move up. You can see the magnitude of the synergies, $525 million, which will improve our free cash flow generation, which will be highlighted on a subsequent slide. Again, we'll remain focused on environmental stewardship and minimize flaring through our operations. Lastly, you can see now with DoublePoint, we're the largest producer in the Permian. That brings lower cost of capital, economies of scale, shared facilities, and infrastructure. Going into 2022, the company will be over 700,000 barrels of oil equivalent per day just in the Permian Basin in 2022. Going to slide number four. I think the key point here, solid execution from all levels of operation in our field drive strong first quarter results. Again, the outperformance exceeded the top end of guidance oil production was due to our field staff bringing our production back online sooner in the wake of the winter storm and also the outperformance of new wells. Going to slide number five. As Neal mentioned, we closed yesterday on our DoublePoint acquisition, approximately 100,000 acres right in the heart, the core of the core of the Midland Basin. This will take our Midland Basin on up to over 900,000 net acres. This transaction generates double-digit free cash flow on accretion per share, enabling increased variable dividends over the next several years. With the contiguous acreage and the operational synergies, just to give you an idea on how dominant we are in the Midland Basin, we'll have 25% of the basin rig count and 25% of the basin frac fleet rig count. Allows for continued synergies, drilling longer laterals, which Rich will talk about later. Our production exceeded, as discussed in the press release, production for DoublePoint exceeded 92,000 barrels of oil equivalent per day this week, which is way ahead of schedule as we're moving forward to averaging over about 100,000 barrels of oil equivalent per day the last six months of 2021. Going to slide number six, long-term investment thesis. When you look at the strip I mean, over the strip over the next several years as it continues to move up, and look at our model of growing oil production 5% per year over the next several years, our reinvestment rate will actually be below, we say 50%-60% here, it'll actually be below 50%. Generate strong corporate returns, double-digit returns. We'll continue to reduce our leverage. It's at one today. We'll continue to reduce it below 0.75 next year and continue to drive it down to a very low level. We remain committed to our key thesis in returning most of our capital back to the shareholders. We're targeting a 10% total return. We'll talk more about that later. Going to slide number seven, compelling free cash flow generation. We're showing now with DoublePoint Energy on top in the brighter, darker blue color, adding about $5 billion of free cash flow over the next several years through 2026. On increasing our total free cash flow at the company with the strip. This is a strip a few days ago, so the number continues to move up with the strip moving up, generating $23 billion of free cash flow. As we have already stated, this actually represents 50% of our current enterprise value, that total enterprise value, including market cap plus debt. The addition of DoublePoint is a 25% increase on top of our free cash flow, just taking the $5 billion over the $23 billion. $5 billion over $23 billion. I think what's key is that when you look at the current stock price, our dividend yield will move up from 1.5% to over 4% in 2022 and over 8% in the following years through 2026. That's at the current stock price. I do have to have a call-out for Devon and Rich's great slide comparing their dividend to peers. I think we're in there around 1.5% toward the bottom quartile. They're showing them leading this year at 7%. Pioneer will move to second place next year, moving over four, and then moving up to the top spot above Devon. Their primary driver is really just our margins in the high 20s, our low-cost basis, and in addition, the fact that we're paying out 75% of our cash flow versus Devon's 50%. Going to slide number eight. Again, just emphasizing the variable dividend long-term shareholder return model. Last quarter, we initiated the mechanics of it. The mechanics will be paying out long-term, roughly 75% of the remaining annual free cash flow after the base dividend is paid. When you look at including the base dividend, approximately 80% of the company's free cash flow is expected to be returned to shareholders. Between the base and the variable dividend shareholders next year should expect eight separate dividend checks per year. Obviously, this is all subject to our board approval, like we do on the base dividend and the variable dividend. Let me now turn it over to Rich. Thanks, Scott, and good morning. I'm going to start on slide nine. With the closing of the DoublePoint transaction yesterday, we wanted to provide an updated outlook for our 2021 production in capital. As Scott mentioned, DoublePoint is currently producing at 92,000 BOEs per day, and we expect to ramp them up to about 100,000 BOEs per day by the end of the quarter, and with an additional 20 to 25 POPs planned between now and quarter end. We plan to maintain that production at 100,000 BOEs a day for the second half of the year, so that's embedded in our updated guidance. We also have adjusted our guidance to reflect the actual results for Q1, where we were able to recover production from the winter storm quicker than anticipated, and along with the Q1 strength of our well performance and the execution by our operating teams. Overall, we are forecasting 2021 production of 351,000 barrels of oil per day to 366,000 barrels of oil per day, and on a BOE basis, 605,000 to 631,000. Looking at capital, we are adding $530 million-$570 million of incremental capital related to the DoublePoint transaction over the course of the remainder of the year. This is up from the bottom of our previous announcement, since we were able to close the transaction earlier than originally anticipated. Total CapEx is now projected at $2.95 billion-$3.25 billion on cash flow of about $5.9 billion based on strip prices, which is leading to what Scott talked about, $2.7 billion of free cash flow for the year. Turning to slide 10. You can see for a full year that we plan to average 22-24 rigs and deliver 470-510 POPs. If you take that just for the remainder of the year, we plan to run, with the addition of DoublePoint, 24-26 rigs and 7-9 frac fleets. Currently, we're at 26 rigs and 9 frac fleets. This does reflect the fact that we do plan on reducing DoublePoint's rig count from 7 to 5 by year end. Longer term, as we think about reducing our growth rate from 30% down to 5%, we can drive that down to 3-4 rigs as we are consistent with our 5% growth plan over the long term. You can see on the map there over 1 million acres predominantly in the Midland Basin, 920,000 and 100,000 acres in the Delaware. In terms of Delaware plans, we will start drilling our first well there later this year. The team is looking forward to bringing that same efficiency gains that we've achieved in the Midland Basin to the Delaware and see how we can further improve our well returns, especially given the higher oil cut that we see in Delaware and the lower royalty burden. Just for a point of reference, first quarter production was 74% oil in the Delaware. Turning to slide 11. We want to provide an update on our planned synergies related to the Parsley and DoublePoint transactions. On G&A, we've accomplished the $100 million of Parsley savings, we checked that box. As it relates to DoublePoint, they were running about $25 million annually in G&A. We expect to bring that under $10 million on an annual basis, we think we'll be there beginning the third quarter of 2021. On interest, we refinanced Parsley's bonds in January. If you recall, those were over 5% coupon. We refinanced those on a weighted average basis well under 2%. We plan on refinancing the DoublePoint bonds later this month. Along with paying off DoublePoint's credit facility that happened yesterday, we're going to accomplish our interest savings sooner than we originally anticipated, and we'll have that fully done by the end of this month. On operational synergies, we are making great progress on those. We've been able to leverage our supplier relationships and are seeing significant savings on things of like pressure pumping, wireline, cement, casing, and tubulars, to name a few examples. We've also, and Joey will talk more about this, successfully tested simul-frac on our acreage during the first quarter, and we're seeing significant savings, like the other industry participants, in that $200,000-$300,000 per well. This is something that we'll be able to not only execute across Pioneer's acreage, but we'll also be able to execute, I guess, across Parsley and DoublePoint's acreage. The team has also continued to optimize our development plans to take advantage of existing facilities. Looking at tank batteries, water disposal, saltwater disposal gathering systems, reuse facilities, and really optimizing those as we move into the 2022 program to really take advantage of those savings. As Scott mentioned, one of the other significant benefits of combining Parsley and DoublePoint is really adding to our contiguous acreage position. What this allows us to do, as we've successfully drilled longer laterals out to 15,000 ft, really up from the 9,000 ft to 10,000 ft that we've been drilling at, it'll allow for a lot of locations that we can drill longer laterals on, which is much more capital efficient and really adding essentially the same production by drilling fewer wells. It's still early, but it should add significant long-term value across our portfolio and just demonstrates the benefit of having contiguous blocky acreage to be able to drill that type of laterals. Turning to slide 12. This just reflects our trend of what we've accomplished on G&A over the past three years, including the synergies from the acquisitions. We are forecasting G&A per BOE to be around $1.15 to $1.20 by year-end. I think this is just an example of really, and highlights the focus of the companies had on improving returns and improving our return of capital to shareholders. It's really lowering our overall cost structure. You've seen us drive down well costs, lower LOE, lower G&A per BOE, lower interest per BOE, all with the idea of improving our free cash flow profile. With that, I'll turn to Neal to talk about breakevens. Thanks, Rich. On slide 13, you can see how Pioneer's high-quality asset base positions us as the only E&P to realize a corporate breakeven below $30 a barrel WTI within our peer group. As Scott stated earlier, it is this attractive peer-leading breakeven oil price that enables Pioneer's low investment rate and drives significant free cash flow generation and return of capital to our shareholders. This low breakeven price reflects the quality and the resilience of Pioneer's portfolio, underpinning our operational and financial strength and flexibility. With that, I'll turn it over to Joey. Thanks, Neal. Good morning, everybody. I'm going to be starting on slide 14. Our drilling and completions teams continued their streak of resetting the bar with another great quarter of efficiency gains. Our simul-frac operations contributed to these gains with the successful execution of four pads in Q1, where we were able to achieve approximately 3,000 ft of completed lateral per day. This is greater than a 50% improvement when compared to our program average. It's still early days. We estimate savings to be in the range of $200,000-$300,000 per well. We will continue to refine our simul-frac operations and conduct more trials throughout the second quarter. You will note that our wells per pad projection for 2021 is down slightly from last quarter. This is due to the integration of DoublePoint pads into our schedule. Our wells per pad continues to increase, which further contributes to our efficiency gains. I know this slide only illustrates improvements in drilling and completions, I want to emphasize that we are also seeing tremendous performance in our production operations, facilities construction, and water management teams. None of this would be possible without those that support development planning, our robust supply chain, and our expanding use of technology. I also want to thank all the teams for their efficient integration of Parsley and a great start on Doublepoint. We remain focused on delivering peer-leading performance, keeping our people safe, and reducing our environmental footprint. Congratulations to all the teams for their contributions to our safe and efficient execution in Q1. I'm now going to go to slide 15. I know that Scott covered this in some detail last quarter, so I'll be brief, but this chart represents more than 64 million barrels of hydrocarbon liquids per day, including the largest national oil companies, majors, and independents. Pioneer's operations produce barrels with one of the lowest associated CO2 emissions intensities globally. Our low-cost, low-emissions barrels will continue to be desired around the world. With that, I'm gonna turn it back over to Scott. Thank you, Joey. On slide number 16, a strong focus on ESG. Pioneer continues to hold all pillars of ESG of great importance. We've talked about our new sustainability report released late last year, which reflects our significant strides in reducing both Scope 1 and Scope 2 greenhouse gas and methane emissions and incorporates emissions intensity reduction goals on both. Pioneer, inclusive of Parsley, has a very low flaring intensity of 0.4%, compared to peers of 1.3%. We will also work to bring DoublePoint's assets in line with Pioneer's high standards of environmental stewardship. We also continue to promote a diverse workforce all the way up to the board level, which reflects the community in which we live and work. Again, on slide 17, we're really committed to driving value for our shareholders and returning cash flow back to the shareholders over the next several years. We'll stop there and open it up for Q&A. Our first question comes from Neil Mehta with Goldman Sachs. Please go ahead. Good morning, team. I guess the first question is, in a short period of time, you've done two acquisitions here, both in Parsley and Double Point. Just want to get your perspectives, Scott, on whether you view Pioneer as a roll-up story and a natural consolidator in the Permian Basin, or were these just two opportunistic transactions that made sense in the moment? No, we are focused primarily on the Midland Basin. Two opportunities came to us. They came to us earlier than we had thought. They're great opportunities. They're both highly accretive, and we're focused on bringing those two. We pretty much have already accomplished a lot of the synergies on Parsley because we had started so much earlier before we closed last October. DoublePoint, I'm confident our team will be able to bring that on. Those are primarily the two key components of Midland Basin. It makes us stronger, as we talked about in the Midland Basin. The other opportunity I've mentioned in the past to our shareholder base and to other analysts is not available, the other large opportunity in the Midland Basin. Fair to assume that you're going to take some time to digest these transactions before moving ahead with another one? Exactly. Okay. The follow-up is on slide seven. This is a really good one. I just want to kind of walk through the math with you guys. Let me know if any of this sounds off. You got $23 billion of cumulative free cash flow, $3 billion in 2021. The period from 2022 to 2026, that five-year period, you got $20 billion of free cash flow over five years. That's like $4 billion of free cash flow per year on a $40 billion market cap or so is 10% free cash flow yield. I think in the next slide, you said you plan on paying out 80% of that in the form of a dividend, either fixed or variable. Is it fair to assume, based on this framework, we should be thinking about kind of 8% through the cycle dividend yield on the current market cap? Anything that I'm missing there and anything you'd add? Neil, you got the numbers perfectly, and that's why we stated what we had stated. You got to realize, the strip is in a $10 backwardation. If you take the current strip today and go out through 2026, it's 10 years. You can imagine what the free cash flow is if you just march the current price forward through 2026. The number simply increases. It is an extreme backwardation, even with the $23 billion. Your calculation of 8%+ is very good. Okay. Thank you, Scott. Thank you. Our next question comes from John Freeman with Raymond James. Please go ahead. Anything else, Neil? Good morning, guys. Can you guys hear me? Operator? Yep, please go ahead, Mr. Freeman. Yeah. Can you hear me? Yes, we can hear you. Okay, great. Sorry about that. Rich, I just want to make sure that. Operator, did I lose you or are you still there? Can they not hear me? Just you, operator? All right, speakers, you are back on the line. Questioner, please go ahead. Okay. Right. Sorry about that. Quick. Sorry. Go ahead. Hey, John. It's Neal Shah. Apologies to everyone on the line. For some reason, we dropped. Not sure why, we dialed in. We'll be sure to extend it to ensure we get all the questions in as required. Apologies on our end. We're back on. Happy to answer and take all your questions. Great. This is John. I hope it wasn't anything I said that had caused the issues. Sorry, John, we never heard your first question. Yeah. Hey, no worries. I was just following up, Rich. I just want to make sure that I heard right on the legacy DoublePoint. You said after you drop down to the 5 rigs to kind of hold that 100,000 barrels a day flat in the second half of 2022, did you say that it then drops to basically 3- 4 rigs if you wanted it to kind of have the 5% sort of growth rate, similar to legacy Pioneer? Yeah, I would say the first is that we keep it 100,000 flat for the second half of 2021, not 2022. Sorry, I meant 2021. If we move into 2022, we'll be in that 5 rig. We were just saying longer term is their decline rate that's in the higher 40% range, moderates back to our mid-30s to low 30% rate, that it'll move down to 3- 4 rigs to keep production at that 5% growth consistent with our growth plan. That's what we think it'll take long term to grow their assets at 5%, consistent with growing our assets at 5%. Got it. Thanks. On slide 11, we all sort of show the progress that y'all have made on the synergies up to this point and then what's. what's to come. Scott, you said, I believe that you'd already sort of realized most of the synergies associated with the Parsley transaction. Does that mean that the $100 million that was sort of in the budget for the Parsley integration expenses, that that will largely show up in the financials by 2Q? Is that the way to think about that? No, John, I would think about it really is the G&A and the interest. We've accomplished those. The operational ones, we're progressing, but it's still going to be year-end before we get some of that capital to tie in deep disposal wells, to tie in different tank batteries, to tie in water systems. There's just-- and bring their standards up to ours in terms of environmental. That capital is still going to be progressing throughout the year. We've made good progress on G&A and interest. Those are done for Parsley. Operationally, we're well on our way on the supply chain side of things and other things that we've been able to accomplish. It won't be complete until we get to closer to year-end. Great. I appreciate it, guys. Well done. Thank you. Thank you. Our next question comes from Jeanine Wai with Barclays. Please go ahead. Hi, good morning, everyone. Thanks for taking our questions. Hi, Jeanine. How are you doing? Good morning. Our first question is on maybe inventory. Now that Parsley and DoublePoint, they're both in the portfolio, can you update us on the number of Tier 1 inventory that you have at the current 5% growth rate? What do you think the right amount of inventory is from a value perspective? Yeah. Jeanine, what I'd tell you is, with adding these things, probably our Tier 1 inventory is close to 15,000 locations at this point with the combination of the three transactions. These are all premium locations that will get developed even in low commodity prices. That's really what we're focused on executing, and that's a long inventory out there to get developed. Okay, great. Sounds good. Maybe if I could sneak one in on 2022, since you have a little bit of longer-term commentary out there. Can you please talk about how you see activity levels in the back half of 2021 once you've got DoublePoint fully up and running? I guess I'm just thinking back to last quarter and pre-DoublePoint when Pioneer was forecasting a strong 8%-10% exit rate this year, 4Q to 4Q, and that set up for a favorable 2022. Now you've got DoublePoint. It looks like the exit rate will be moderating a bit. Could be strong, still see very strong capital efficiency in 2022, but maybe just looking for a little bit of commentary on how you see the back half of the year and the exit. Thank you. Yeah, Jeanine, great question. Yeah, as I mentioned in my prepared remarks, we'll be running that 24-26 rigs and 7-9 frac fleets. When we think about 2022, think about it as basically on an oil basis being 5% growth on a normalized 2021. When I say normalized 2021, I mean assuming 100,000 BOEs a day for DoublePoint as for that number, assuming that we had the 11 days from Parsley and adjusting for the weather. When you adjust for those things and look at it in 2022, it's basically going to be net 5% oil growth. As Scott talked about, that'll be slightly on a BOE basis, slightly over 700,000 BOEs a day. Okay, great. Thank you. Sure. Thank you. Our next question comes from Derrick Whitfield with Stifel. Please go ahead. Thanks, and good morning, all. Morning, Derrick. Perhaps for Rich or Joey, the revised 2021 operational plan is now targeting longer lateral lengths. To what degree did Double Eagle directly or indirectly impact that estimate based on their legacy plans or your revised legacy plans inclusive of their position? Yeah, Derrick, I'd say we're still, in terms of longer laterals, the team's working on that. Most of our development plan for 2021 and DoublePoint and Parsley, as we talked about earlier, because of permitting and everything, those are already well established. There may be a few tweaks here and there, but I would think about longer laterals really coming into our portfolios more in the late this year, but more likely in 2022 as we can plan for them and get them on the schedule appropriately. They'll just be part of our capital allocation process. Now that we have confidence in doing it and have experience, we'll start looking at just how that looks in our capital allocation and where those rise in terms of rate of return and focusing on those high rate of return projects first. As my follow-up, and perhaps just to dig a little further on lateral lengths. Wanted to get your view on optimal lateral lengths, as we've noticed a few 15,000-ft laterals show up in state data. Specifically, could you comment on your appraisal activity to date, the technical challenges you're experiencing, and where you think the efficient frontier is for Pioneer? Certainly with your highly contiguous and blocky position and inventory depth, we believe you guys stand to gain the most from long lateral development. Derrick, we've kind of rather than jump into the water, taken the slow approach into moving into the longer laterals. I don't know the exact count, we've drilled quite a few 15,000-ft laterals already. Again, we'll continue to feather those into our program as the land opportunity presents itself. In the early days, we were trying to mitigate the risks, primarily associated with completions. We've done a tremendous job, particularly on the drill out side, of being able to mitigate those risks, and we've seen minimal to no challenges. Long story short there, we'll continue to put those into our portfolio as the opportunity allows. I assume that you're on the appraisal question, you're talking about appraising the 15,000-ft lateral, or are you talking about the entire portfolio? More around appraisal of the 15,000-ft lateral, but certainly there's going to be an applicability factor within your portfolio. Yep. You'll continue to see us drill more and more 15,000-ft laterals. One of the bigger challenges, like I said, is on the drill outside. Where we were hesitant was on the shallower zones, because you have lower pressures, and it makes it more difficult. We've had great success, and our Parsley predecessors had some great success in drilling some of those shallower zones, and being able to get them completed and drilled out. I think that is just another opportunity that we've recognized, and you'll continue to see us expand our use of 15,000-ft laterals going forward. Once again, Derrick, just highlights the benefit of having contiguous and blocky acreage and lease configurations that allow us to get to those links. It'll just be much more capital efficient going forward. Very helpful. Well done, guys. Thank you. Thank you. Our next question comes from Charles Meade with Johnson Rice. Please go ahead. Good morning, Scott, and to the rest of the guys on your team there. I wanted to ask a question, and maybe this is for Joey, I'm not sure, but I wanted to ask a question to drill down a little bit more on the 1,200 DoublePoint locations. This is picking up a bit on the long lateral question. Can you give us a sense of what the average lateral length of those 1,200 locations is, and how they break down across, say, Wolfcamp B, Wolfcamp A, Middle and Lower Spraberry, that sort of look? Yeah. I don't have the exact numbers here in front of me, but, in general, the 1,200 are in, you saw on the maps, the blocky acreage in Midland County and down in Upton County. Generally, they've been drilling 8,000 ft to 9,000 ft laterals, typically we're 9,000 ft to 10,000 ft. Call it in that they're all going to be in that 8,000 ft to 10,000 ft. We haven't assessed their acreage yet for the longer laterals in terms of what that would look like. We surround all that acreage, there's clearly going to be a big chunk of acreage that we can put 15,000 ft on. We just haven't done that work yet. That's something we have to continue to do over the course of the next few months. More to come later on. I don't remember the exact counts by zone, so apologies for that. Got it. Yeah, that makes sense. It's in the core of the core, so it's all the same six zones that we're drilling in terms of Jo Mill, Middle Spraberry, Lower Spraberry, A, B, and D, for sure. Got it. Yeah, it does make sense that maybe a 5,000 ft or a 10,000 ft could turn into a 10,000 ft or 15,000-ft location. Scott, I'd like to ask a question of you on that slide seven, and I really appreciate that you guys have given us a glimpse that we don't often get, of, in this case, a six-year plan. To me, it really highlights the, or kind of underscores the value in this group right now. I wanted to ask you is, in your career at Pioneer or even some of the predecessors, do you recall another time when six years of free cash flow at the strip represented 50% or more than 50% of EV of a company you were working for? No. In fact, Enverus put out a recent publication, and they used Pioneer as example. We never did confirm the numbers, but what's interesting to me, they said we spent 133% of our cash flow over the last 10 years. We grew over 25% per year the last 10 years. I think this new model, spending less than 50% of our cash flow and returning over 80% back to the shareholders, is going to be a much better stock performance for us, for all shareholders of Pioneer. I just think it's a unique model, and I hope all public companies stay disciplined, because I'm very optimistic about the pricing environment over the next several years. The price is going to keep going up. I've been stating we're going to bounce around between $50 and $70. Obviously, we're going to be over $70 before we know it. The only thing that's going to bring it down, it's not going to be supply this time, because U.S. production has moderated. It's going to be how long will demand continue to pay a higher price? You have to go back to 2013 and 2014 when oil was closer to $100 a barrel, and somewhere between $80 and $100 a barrel is where demand's going to reduce. It's going to take demand reducing the price. I like the cycles. Obviously, much better of too much supply coming on and tanking the market. Let's let supply-demand take care of it. I'm very optimistic about pricing over the next several years. Got it. Thank you for sharing your perspective there. Thank you. Our next question comes from Paul Cheng with Scotiabank. Please go ahead. Thank you. Scott, talking about you are more optimistic about the pricing outlook, and the company is also a very different company. From that standpoint, how should we look at hedging program for the company going forward? Should that be dramatically scaled back or even eliminated? That's the first question. Second question, yes, for maybe Rich. I think right now in the DoublePoint, you're running, say, 7 rigs and you're scaling down to 5. You're averaging about 6 rigs, and you're saying that you're going to stay about flat at 100,000 barrels per day. That for next year, you think that at 5 rigs or more, At around 5 rigs, you will be able to grow at about 5%. Trying to reconcile why that the higher rig program for the second half of the year will only be able to keep you flat, while by next year that a lower rig program will be able to grow again. Thank you. Yeah. Paul, on the first question on hedging, obviously, we just have a little hedging for 2022. Most of our poor hedging in the first half of 2021 is gone now, so that's why we have a much stronger free cash flow model into the back half of 2021. You'll probably see us do much hedging. Only reason we would do more hedging, if it runs up into that $75-$100 price range, you'll probably see us do a lot more hedging, but we're not there yet, obviously. Paul, on the rig count, really on DoublePoint, you're moving from the 7 rigs down to 5 by end of the year and then growing their production from the 100,000 to the 105,000. I mean, you're exactly right on those numbers. Really, the plan in 2022 would be roughly around that 5-rig program. As I talked about in John's question, that longer term, moving that to 3-4 rigs. It's really just being driven because they have a steeper base decline rate, just given they've grown faster. This will moderate that growth as we cut their production growth from 30% back to 5%. It just takes a little while to get on that. We saw that back when we looked at Parsley when they came in at 2019, 2020. They were growing big rate in 2019. Slowed their activity in 2020, and it moderated their production back into that low to mid-30s like ours. We anticipate the same thing happening with Double Point, and that rig count will move down to five and ultimately lower. You think that it will be so quickly that you can bring down the underlying decline curves that next year, at five rig, you actually will be able to grow at 5% already? Yeah. I think you'll see that by end of 2022, that base decline on DoublePoint is normalized back to ours. Like I said, we saw the same thing with Parsley. I would anticipate it being in that range. All right. Thank you. Sure. Thank you. Our next question comes from Neal Dingmann with Truist Securities. Please go ahead. Good morning, all. Thanks for the time. My first question is on your well spacing. Specifically, guys, I was wondering, are you going to continue to largely co-develop? Second, just what type of spacing are you still assuming on sort of primary and secondary zones? Our spacing hasn't changed in that 800 ft to 900 ft ranges that we plan on doing that. We're still looking at that full co-development and, as we call it, full stack. Where the geology supports it, then we're going to do either the full stack development for all the zones. There's really no change in that development program. Okay. Just secondly, follow up on long-term free cash flow guide. I'm just wondering specifically behind that, Scott, that you laid out. I'm just wondering, could you talk about is the price assumption just on strip behind that? I'm just wondering, based on that, are you including sort of quarter in, quarter out working capital and quarterly dividends? I'm just wondering sort of maybe some of the assumptions behind that. It is the strip. As I said, it's about a $10 backwardation. It's strip as a few days ago. The strip today is obviously higher. It does include increasing the base dividend roughly 2%-3% per year on the base dividend. It includes our 50% payout next year and 75% after that. Right. Thank you. Growing oil 5% per year. You do throw in the working cap in there as well, the change in working capital each quarter? Yes. Okay. Thank you all. Thank you. Moving to our next question. This comes from Scott Gruber with Citigroup. Please go ahead. Yes, good morning. As we look at the backdrop here, inflationary trends appear to be intensifying. Obviously, we've seen steel prices move and chemical prices move, and now the service companies are starting to talk about testing pricing. Can you just speak to your ability to offset this inflationary forces near term? Obviously, you have efficiency gains in your legacy assets and further gains on the acquired assets, simul-frac, and the lateral extensions. Just some color on your ability to fully offset these inflationary forces here near term. Yeah. What we're seeing is 4%-6% inflation still being driven by raw materials. As you talked about, the tubulars and steel and diesel and sand, chemicals, cement, those are the things that we're really seeing as raw products that we're seeing that inflation. We have not seen any pressure on service, Scott. The limits of the raw materials at this point. Management, we're offsetting that 4%-6% with the efficiency gains we talked about, the efficiencies that we're finding in drilling and completions. The operations that are building it. Those things are really offsetting that 4%- 6% they expect it to be the case for the remainder of this year. Small factor, obviously, as well. We don't see any pressure above that that we have to be able to offset with efficiency. At this point, we're not anticipating any additional inflation. Got it. Just as we start to think about 2022, should the analyst community start thinking about some modest D&C inflation? Do you think you'll be able to continue to offset reasonable rate of inflation into 2022 as well? We'll have to continue to watch it to see, but our assumption going into it is that we'll continue to see efficiency gains, and we'll be able to offset it with efficiency gains. Got it. Appreciate the call. Thank you. Sure. Thank you. Our next question comes from Doug Leggate with Bank of America. Please go ahead. Well, thanks. Good morning, guys. Just sound check first of all. Can you all hear me okay? I think so, Doug. Yeah, it's a little vibrate. You guys are a little choppy on your end, so I wanted to let you know. I've got one philosophical question relating to DoublePoint and then one, Neal, probably for you, a valuation question. I, for one, appreciate, guys, the free cash flow visibility that I think the sell side is finally figuring out how to value your business, which is a great thing for the whole market. My question on DoublePoint is, you now preside over very significant growth in the basin. In other words, adding to global supply, which kind of goes against your philosophy, Scott, about capital discipline. Why would you still look to grow when you're already acquiring a very aggressive growth story out of DoublePoint in 2022? It kind of contradicts a little bit what you're saying about industry capital discipline. Well, no, I think our acquisition actually helps the situation, obviously. If other companies would take out other privates, that would help too. Our deal was driven primarily the fact this was the core acreage, and we focused on making sure that we hit double-digit accretion, and that we can add value to all of our shareholders. We had a significant double-digit accretion on variable dividend cash flow per share. That was the key driver. At the same time, we've got to meet our corporate returns and beat all corporate returns, ROCE, CROCI, and net asset value. The transaction did that too. I don't know if that's answering your question, but that was the key driver. I hope other privates are taken out that are growing too much. They still have a large part of the rig count, and I've answered the question that I just don't think privates are going to upset the OPEC situation at this point in time. A lot of the privates are in the Haynesville, obviously, and growing the Haynesville significantly. Does that answer your question, Doug? Or were you getting at something else? Yeah. It does, Scott. I guess just to be clear, the feedback we have is the fact that Pioneer is prepared to do this. Great bolt on, no question about it, in terms of the acreage. Is it going to encourage other privates to go crazy growing so they can sell themselves? That's kind of the worry. What behavior is this going to encourage? That's really what was behind my question. Yeah. Go ahead. To me, it'll be interesting to watch. Let me see. I think the only deal that I know of right now, well, Chevron has a package in Central Basin Platform. Oxy has a package in the Delaware. There's a few other deals that are out there. It'll be interesting to see what they go. I don't know of any other privates at this point in time that are going to be able to sell in this marketplace. Okay, thank you. My follow-up is, Neal, it's probably a few housekeeping data points, if you may. It's that chart you guys referenced in slide 13. How do you see your breakeven oil price and sustaining capital evolving? Given this is about a 13-year inventory, I wonder if you could just elaborate on the accretion math, because it's easy to accrete on cash flow when you're using stock. If you look at the $6.5 billion value versus a DCF of 13 years of free cash flow, the value accretion is not obvious unless you make a call on the oil price. Can you just walk us through how this changes Pioneer's sustaining capital, and how exactly you're defining accretion? Yeah. I'll start, Doug, on the sustaining capital. Sustaining capital, it kind of depends on where you measure it from, as you know. Generally, we look at what I'll call maintenance capital towards the end of the year. Clearly, we've got from Q4 of 2020 to Q4 2021 growth. We've got the DoublePoint and Parsley. When we think about maintenance capital, we'll come out later this year, really based on fourth quarter of what that maintenance program looks like. We've kind of got to roll that forward till then and kind of get all the pieces together. It's still early for us to really say what that sustaining capital is to keep production flat long term, just because we still need to incorporate and embed all these assets that we've brought together and the growth profile that we have this year. Stay tuned on that, and that'll come later this year. Doug, hey, this is Neal. On the modeling and the accretion, I can tell you the way we approached this, we really did a well level stick by stick, rolling the rigs in, frack fleets in on an annual basis. Understanding the synergies that we can bring to bear, both on the Parsley and DoublePoint transactions. Looking at our operating cash flow, the capital necessarily embedded within those annual years, and then the free cash flow that we generated. Then applied that in terms of how was it accretive, what did it do to ROCE, what did it do to CROCI? As Scott said earlier, the benefit to ROCE and CROCI were positive. The benefit to free cash flow was a double-digit accretive. Really what we're looking here, and as Scott alluded to on that Pioneer model, it really comes back to the model and the assets. The assets and what they provide us and allow us to do really drive that free cash flow generation with the high margin wells, with the low cost of capital we can bring to bear. It's our goal and our ability. When I think about valuation, as you and I have talked about in the past, we look at free cash flow. E&Ps tend to trade in a pretty tight band historically on EBITDA. It's our goal that Pioneer will be able to disaggregate itself from that tight band in which E&Ps trade, to trade consistent with other companies and other names and other sectors that generate a high level of free cash flow and return that capital to shareholders. That is our long-term vision and our long-term goal, really to drive that appreciation, accretion, and have it manifest itself within the stock price by returning that capital to shareholders over the course of time on an annual basis. Thanks for the full answer, guys. As you well know, Neal, the multiple is the output of the free cash flow. I appreciate the reaffirmation of that. Thanks again. You got it, Doug. Thank you. Thank you. Our next question comes from Nitin Kumar with Wells Fargo. Please go ahead. Hi. Good morning, gentlemen, and thanks for taking my questions. I want to revisit slide seven. Really appreciate the look on the free cash flow opportunity. Do you see any tax leakage associated with that? I know you talked about strip and 5% growth, but what is the tax impact? $23 billion is a lot of money. It is, Nitin. On the cash built into the model as well. I mean, that's easy to tell. At the end of the quarter, we have about an [$18 billion NOL. As you've seen the increase in commodity prices, free cash flow, if you think back to our last quarterly call, Scott talked about $16 billion of free cash flow, bringing [several boots] to the party, the same price deck. Since the improvement in the price deck, that's moved up to something higher, in the 2023 range now. As prices have moved up, that's also accelerated our tax liability. When we were looking at it before, we were in that 2025-2026 time period of paying cash taxes with the improvement in commodity prices and the free cash flow from the synergies and the things that we're doing internally. That's accelerated that into that 2023, 2024 time period now. That's what's built into the model, is that trajectory of paying cash taxes. Hopefully that answers your question. I appreciate it. Yes, it does. Look, making more money means you pay more taxes. That's life. Scott, my other question was for you. I appreciate the comments about the scale of Pioneer in the Midland Basin and especially the leadership you have had as a company in terms of greenhouse gas emissions. As you look forward, are there opportunities in terms of technology, given your scale, where you can participate selectively in green revenues? I'm thinking of carbon capture or other technologies. Have you looked at that? Yeah. Some of the things we're doing, we do have 40,000, 30,000 acre ranches, surfaces that we're looking at, both wind and solar farms on those. We're waiting for the extension of the tax credits on both of those in the infrastructure bill to go out to the marketplace. Secondly, we're starting to electrify a lot of our practices. I see over time, moving from diesel to natural gas or moving from natural gas to the grid. We'll be doing that. We're not getting as fast as the majors are or Oxy is in the carbon capture. We're evaluating it and studying it. We've talked about our enhanced oil recovery project starting after the quarter for injecting wet gas. We do know that CO2 does work versus the wet gas. If wet gas does work, we probably could be injecting CO2 at some point in time within 10 years, which would be a big plus versus both the gas. There's a lot of things we're working on. Obviously we're seeing hydrogen and green hydrogen, but we're not going to move that fast. We'll let the majors and other companies do the research on both carbon capture and hydrogen. Excellent. Thank you for the answers, guys. Thank you. Our next question comes from Arun Jayaram with JP Morgan. Please go ahead. Yeah, good morning. My first question is just thinking about 2022. Scott, you mentioned how production could exceed 700,000 BOE per day. I was trying to think about what kind of oil mix would you anticipate, and some of the pushes and pulls on CapEx as we think about synergy capture from both deals, simul-frac, et cetera, and just trying to think about the 2022 outlook. Arun, I would say, from an oil percentage, and we still believe we're going to be in that 58% range, is where we've been running. Maybe it'll be ± 1% in there, but that's really the mix on that 700,000 + BOEs a day. In terms of capital, I think it's still just early. We're trying to get everything incorporated, get the synergies captured, look at where we can get more capital efficient for 2022 just on facilities and tank batteries, longer laterals. There's a lot of moving parts, so it's hard for me to tell you today. I would tell you that long term, we still believe that we have to add to grow at 5%, 1-2 rigs. That's for modeling purposes, I'd still assume that in your capital outlook. Got it. Hopefully that helps. Yeah. Will the water system be a potential source of synergies as well, Rich, thinking about 2022? I think when we look at the Midland system, it's coming on mid this year. It just adds from an ESG standpoint. It improves our ESG of getting off of fresh water, but it also adds some of our cheaper sources of water, or the effluent water from the cities and our reuse facilities. All those are getting in the mix. We've got a very complex algorithm of how we use water. It takes into account the source cost of the water, but also how much we have to transport it to get by location. It's a complex thing, and they optimize it to make sure that we're getting the biggest benefit we can. All those things will play into the 2022 capital budget for sure. Okay. My follow-up is just post the Diamondback print. One of the questions we've gotten was, given the close of DoublePoint is, what is the timing on the registration of the shares that you're going to issue to private equity as part of the transaction? Under the agreement, we had a short period of time afterwards. I can't remember if it's actually been done yet or is coming in the near future. It was just part of the transaction to get those registered after closing. I just can't remember if that's done already or it'll be early next week. Okay. Fair enough. Thanks a lot. Sure. Thank you. Our next question comes from Scott Hanold with RBC Capital Markets. Please go ahead. Yeah, thanks. Appreciate it. Big picture question on obviously the narrative about generating the $23 billion of free cash flow going forward. I apologize, some of your answers, Scott, had been a little bit choppy with the line, so it may run over on the question on your view on hedging. Maybe big picture holistically on the macro at this point. You've obviously talked about jet fuel being something that may take a little bit of time to obviously come back. We do see very robust oil prices right now. You've got pretty good visibility on the curve on free cash flow. What is your view on the macro? Is it going to continue to strengthen in your view, so it doesn't make sense to hedge? Should you really start locking in some of these prices to obviously recognize some of the free cash flow? As we know, oil can be quite volatile. Yeah. I talked earlier about the positive macro of we're probably going to pick up about 5 million barrels a day of demand. The rest toward the end of the year. We'll pick up another 2 million barrels in 2022, pick up another 1 million to 2 million barrels in 2023. A lot of that, as you said, is jet fuel and international travel. We're going to pick up 8 million to 9 million barrels a day. Be back up to 100 to 101. The key is there's no extra supply. I think the market's going to continue to be tight over the next two or three years. For that reason, I think the price will continue to move up. It'll test where demand starts falling off. As you go back to the 2012, 2013, 2014 time period, even though we had a supply issue there, we're not going to have a supply issue there. The oil price got up to $80-$100. I think it'd easily test those prices over the next few years. We will probably do less hedging. If it gets up into that $75-$100 range, you'll probably see us continue to do some three-ways at that point in time to protect, obviously, both the base and the variable dividend. Okay. when you say $75- Not as high as we've done in the past. When you say $75-$100, you're talking Brent, is that right? Yes. Okay. Going really quickly to page 15, Joey, I think you obviously pointed out this chart, which positions you as obviously a very, on a relative basis, clean producer of oil. Have you guys gone down the path of looking at responsibly sourced oil? Obviously, there's some RSG efforts that are going on. Is there any opportunity down the road for you guys to get a premium for your barrel because you do have a relatively low emissions? Have you explored that, or is that something that could actually occur? We're just in the initial phases of looking at that. More to come on it. I don't have a good answer for you right now, other than that it's something that we're looking at and getting educated on, and more to come in the future. Fair enough. Thank you. Thank you. Once again, if you would like to ask a question, please press star one. Our next question comes from David Heikkinen with Heikkinen Energy Advisors. Please go ahead. Good morning, guys. Thanks for taking the question. As you think about your current well cost after the $200,000 or $300,000 savings, where do you stand now? Currently, we're in that $6.3 million-$6.4 million range. If you look at our capital budget and completions, that's what it would average out to be. Okay. We're trying to think through the DoublePoint acquisition and the 1,200 locations you added. As you allocate some of that purchase price to those undeveloped locations, it's several million dollars per well. How do you think about the burden of the acquisition price on that inventory? It's not unlike we did Parsley. It's going to get booked in our undeveloped property. As Neal talked about earlier, our evaluation on this was looking at it from a bottoms-up, well-by-well standpoint and what the valuation of each of these wells, it'll just get moved over as we develop those. We'll prioritize those in the hierarchy just like everything else and look at the synergies and the longer laterals. We're going to do whatever's most capitally efficient and generates the highest rate of return in free cash flow. That's how we have always done capital allocation, and we're going to continue to do it that way. It doesn't ding the asset economics for those locations versus your other. You think about that as a sunk cost in your undeveloped inventory from here forward? Yeah. Once it's in inventory. That's right. Yeah. Okay. That's what I thought. Thanks. Sure. We have no additional questions at this time. I'll now turn the conference back to our presenters for any closing remarks. We apologize for our five-minute interruption. Thank you for listening to the call. Look forward to seeing everybody, hopefully, on the road at some point in time. Hopefully, things open up in the fall. We're bringing all of our employees back to work here over the next four weeks, so we're excited about that. Look forward to seeing you all. Take care. This concludes today's call. Thank you all for your participation. You may now disconnect.