Energy Prospectus

It's real

Pioneer Natural Resources Company (NYSE: PXD) (“Pioneer” or “the Company”) today announced that the Company has entered into a definitive agreement with Continental Resources (NYSE: CLR) to sell all of its assets in the Delaware Basin for cash proceeds of $3.25 billion, subject to normal closing adjustments. The transaction is expected to close toward the end of the fourth quarter of 2021, subject to the satisfaction of customary closing conditions, including regulatory approval.

CEO Scott D. Sheffield stated, “This transaction returns Pioneer to being 100% focused on its high-margin, high-return Midland Basin assets, where we have the largest acreage position and drilling inventory. Proceeds from this divestment will be used to further strengthen Pioneer’s balance sheet, improving our already strong leverage metrics. Supplementing our industry leading base and variable dividend program, the Company has $1.1 billion of remaining capacity under a $2 billion share repurchase program that was authorized during the fourth quarter of 2018, providing flexibility to return additional capital opportunistically during market dislocations.”

The divested assets include approximately 92,000 net acres, with net production of approximately 50 thousand barrels oil equivalent per day and approximately 35 thousand barrels oil per day. The Company expects to recognize a pretax loss of $900 million to $1.1 billion associated with the divestiture.

PXD ALSO RELEASES AFTER THE MARKET

Pioneer Natural Resources Company (“Pioneer”) (NYSE:PXD) today announced its third quarter 2021 earnings news release is scheduled to be issued after the close of trading on the New York Stock Exchange on Wednesday, November 3, 2021.

Recall that CLR pushed out its reporting date to today last week

Could be a joint announcement after 4 pm

PXD takes a 1 billion dollar hit

You have to admire Hamm.

Completely unhedged and he invests 3.25 b (ALL CASH) to add more acreage/production.

He puts his money where his mouth is and doesn't write ridiculous $40 dollar hedges

Market is punishing CLR without knowing what the details are, Down 7 %

3.25b for this >>>>>>>>>>

I bet this makes 1.b a year cash flow, 3 year payback

The divested assets include approximately 92,000 net acres, with net production of approximately 50 thousand barrels oil equivalent per day and approximately 35 thousand barrels oil per day

CLR out with comments

Projected to generate $750 MM of annual cash flow from operations & $500 MM of annual free cash flow (non-GAAP) in 2022 at current prices.
• PDP represents ~75% of transaction price; ~55 MBoepd (~70% oil).

https://investors.clr.com/2021-11-03-Co ... mian-Basin

This is one that I eagerly await Dan's take. I seem to recall cpe getting punished for a big buy, and now it seems prescient. If oil stays at 80 next year, I think Hamm will look really smart.

This will definitely increase my workload this weekend. Harold Hamm definitely believes oil prices are going higher.

Hamm must be reading the same stuff we are reading.
The seller thinks a good time to divest the buyer believes in
In 100 plus oil. Remember the current strip is in backwardation
They make a ton of money if it doesn’t even move from 80
They probably used 60 in their analysis
And who else is out there that can and will write a 3.25 b check

Now will Biden hold this deal up?

Clr market cap down about 12 % on deal roughly 2 b lower, makes no sense
Noticed a broker downgraded to an outright SELL

Dan, can you share brokers comments

https://investors.clr.com/event-calendar?item=18

May be worth a listen

The name is down about 12 % from yesterday high about $ 45 at start of call

-Estimate 3.0 b in cash flow next year
-Net debt will be 1x next year
-Credit agency upgraded to investment grade
- using debt to pay for the acquisition

added ng hedges on Ng swap 3.71 , 4.95 collars , in filings, will review later for qty and prices.

No hedges on oil

stock down another 1 % 15 minutes into call..Q & A will be interesting

Truist- Neil Dingman, Congratulates them, ask genesis of deal, something they wanted to add last few years, stressing good numbers.

RBC Capital- Seller said they were approached by CLR. Wanted to know what they did ie due diligence. Bring more value with CLR operating it..big opportunity to enhance performance, right up their alley, all contiguous acreage, water infrastructure, teed up for development, got to look ahead not backwards, seemless intergration

Steifel - What wil debt be? Expect to be back to 4 b by next year, so that means they expect to have 3.25 cash flow in next 5 qtrs. Where do you see greatest opportunity? CLR experience , not very clear

Capital One- PXD had 0 rigs then 3 or 4 how many next year>> a couple of rigs ,

Not really getting into too much details, no comments from Hamm 44.50 at end of call

mkarpoff had an interesting comment , he said "I seem to recall cpe getting crushed after an acquisition" I went back at looked at the chart on cpe

Stock was $ 60 and traded as low as $ 25 in August of this year, 3 months later its $ 60 and Dan's new estimate is $ 88.

It's very frustrating to see the oily names go up 5 % and see CLR get whacked 10 % on an acquisition that adds $ 500 m in FCF and more if 100 oil plays out ($ 20*35 day=$262) more cash flow 762/3100 =roughly 25 % roi and 15.0 BOE of NG as icing on the cake

I see CLR recovering at some point. Main risk is oil prices. Main opportunity is oil prices.
The fundamentals for oil today as bullish as they are going to be. The world needs it.

CLR is 100 % unhedged on oil. What other company out there is unhedged.

Hamm , is putting his money down on where he thinks oil is heading (and so am I )