Attached files
| file | filename |
|---|---|
| EX-99.1 - EX-99.1 - PIONEER NATURAL RESOURCES CO | ex991auditedconsolidatedfi.htm |
| EX-23.1 - EX-23.1 - PIONEER NATURAL RESOURCES CO | ex231consentofkpmgllpindep.htm |
| 8-K - 8-K - PIONEER NATURAL RESOURCES CO | pxd-20210507.htm |
Exhibit 99.2
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
On January 12, 2021, Pioneer Natural Resources Company ("Pioneer" or 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's subsidiary, Parsley Energy, LLC (the "merger" or the "Parsley Acquisition"). On the closing date of the Parsley Acquisition, Parsley merged into a newly formed wholly-owned subsidiary of the Company, and the subsidiaries of Parsley, including Jagged Peak Energy LLC ("Jagged Peak"), became indirect subsidiaries of the Company.
The following pro forma financial statements have been prepared from the respective historical consolidated financial statements of Pioneer and Parsley, adjusted to give effect to the merger. The unaudited pro forma combined balance sheet (the “pro forma balance sheet”) combines the historical consolidated balance sheets of Pioneer and Parsley as of December 31, 2020, giving effect to the merger as if it had been consummated on December 31, 2020. The unaudited pro forma combined statement of operations (the “pro forma statement of operations”) combines the historical consolidated statements of operations of Pioneer and Parsley for the year ended December 31, 2020, giving effect to the merger as if it had been consummated on January 1, 2020. The unaudited pro forma combined financial statements ("pro forma financial statements") contain certain reclassification adjustments to conform the historical Parsley financial statement presentation to Pioneer’s financial statement presentation. The pro forma financial statements have been developed from and should be read in conjunction with (i) the audited consolidated financial statements of Pioneer included in its Annual Report on Form 10-K for the year ended December 31, 2020 and (ii) the audited consolidated financial statements of Parsley as of and for the year ended December 31, 2020 which are filed as Exhibit 99.1 to this Current Report on Form 8-K.
The pro forma financial statements are provided for illustrative purposes only and are not intended to represent what Pioneer’s financial position or results of operations would have been had the Parsley Acquisition actually been consummated on the assumed dates nor do they purport to project the future operating results or the financial position of the combined company following the merger. The pro forma financial statements do not reflect future events that may occur after the merger, including, but not limited to, the anticipated realization of savings from potential operating efficiencies, cost savings, or economies of scale that the combined company may achieve with respect to the combined operations. Specifically, the pro forma financial statements of operations do not include projected synergies expected to be achieved as a result of the Parsley Acquisition or any associated costs that may be incurred to achieve any projected synergies. The pro forma statements of operations also exclude the costs associated with any integration activities that may result from the merger. Further, the pro forma financial statements do not reflect the effect of any regulatory actions that may impact the results of the combined company following the Parsley Acquisition.
The pro forma financial statements have been prepared to reflect adjustments to Pioneer’s historical consolidated financial information. Accordingly, the pro forma financial statements reflect the following assumptions:
•the Parsley Acquisition will be accounted for as a business combination using the acquisition method of accounting, with Pioneer identified as the acquirer, and the issuance of shares of Pioneer common stock as merger consideration;
•each eligible share of Class A Parsley common stock, each eligible Parsley LLC unit and each Parsley equity award converted or settled as part of the merger will be converted automatically into the right to receive 0.1252 shares of Pioneer common stock, in accordance with the terms of the merger agreement;
•the assumption of Parsley's senior notes and credit facility;
•the assumption of liabilities for merger-related expenses; and
•the recognition of the estimated tax impact of the pro forma adjustments.
Assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the pro forma financial statements. In Pioneer’s opinion, all adjustments are based on available information and assumptions that Pioneer believes are reasonable and necessary to present fairly the pro forma information.
The pro forma financial statements should be read in conjunction with the separate historical consolidated financial statements and related notes of Pioneer, which are included in Pioneer’s Annual Report on Form 10-K for the year ended December 31, 2020, and the audited financial statements of Parsley, which are filed as Exhibit 99.1 to this Current Report on Form 8-K.
1
Exhibit 99.2
PIONEER NATURAL RESOURCES COMPANY
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF DECEMBER 31, 2020
(in millions)
| Pioneer Historical | Parsley Historical, As Adjusted (Note 4) | Transaction Accounting Adjustments | Pro Forma Combined | |||||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||||
| Current assets: | ||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 1,442 | $ | 58 | $ | — | $ | 1,500 | ||||||||||||||||||
| Restricted cash | 59 | — | — | 59 | ||||||||||||||||||||||
| Accounts receivable: | ||||||||||||||||||||||||||
| Trade, net | 695 | 156 | 3 | (a) | 854 | |||||||||||||||||||||
| Due from affiliates | — | — | 1 | (a) | 1 | |||||||||||||||||||||
| Income taxes receivable | 4 | — | — | 4 | ||||||||||||||||||||||
| Inventories | 224 | 17 | (2) | (b) | 239 | |||||||||||||||||||||
| Derivatives | 5 | 24 | (24) | (c) | 5 | |||||||||||||||||||||
| Investment in affiliate | 123 | — | — | 123 | ||||||||||||||||||||||
| Other | 43 | 10 | (4) | (d) | 49 | |||||||||||||||||||||
| Total current assets | 2,595 | 265 | (26) | 2,834 | ||||||||||||||||||||||
| Oil and gas properties, using the successful efforts method of accounting: | ||||||||||||||||||||||||||
| Proved properties | 23,934 | 4,847 | 257 | (e) | 29,038 | |||||||||||||||||||||
| Unproved properties | 576 | 2,755 | 2,818 | (e) | 6,149 | |||||||||||||||||||||
| Accumulated depletion, depreciation and amortization | (10,071) | (382) | 382 | (e) | (10,071) | |||||||||||||||||||||
| Total oil and gas properties, net | 14,439 | 7,220 | 3,457 | 25,116 | ||||||||||||||||||||||
| Other property and equipment, net | 1,584 | 163 | (30) | (e) | 1,717 | |||||||||||||||||||||
| Operating lease right-of-use assets | 197 | 212 | (11) | (f) | 398 | |||||||||||||||||||||
| Derivatives | 3 | — | — | 3 | ||||||||||||||||||||||
| Goodwill | 261 | — | — | 261 | ||||||||||||||||||||||
| Other assets | 150 | 2 | (1) | (d) | 151 | |||||||||||||||||||||
| $ | 19,229 | $ | 7,862 | $ | 3,389 | $ | 30,480 | |||||||||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||||||||
| Accounts payable: | ||||||||||||||||||||||||||
| Trade | $ | 928 | $ | 357 | $ | 69 | (g) | $ | 1,354 | |||||||||||||||||
| Due to affiliates | 102 | 3 | 262 | (h), (i) | 367 | |||||||||||||||||||||
| Interest payable | 35 | 46 | — | 81 | ||||||||||||||||||||||
| Income taxes payable | 4 | — | — | 4 | ||||||||||||||||||||||
| Current portion of long-term debt | 140 | — | — | 140 | ||||||||||||||||||||||
| Derivatives | 234 | 240 | (29) | (c) | 445 | |||||||||||||||||||||
| Operating leases | 100 | 45 | (44) | (f) | 101 | |||||||||||||||||||||
| Other | 363 | 4 | 24 | (j), (k) | 391 | |||||||||||||||||||||
| Total current liabilities | 1,906 | 695 | 282 | 2,883 | ||||||||||||||||||||||
| Long-term debt | 3,160 | 2,957 | 155 | (l) | 6,272 | |||||||||||||||||||||
| Derivatives | 66 | 9 | — | 75 | ||||||||||||||||||||||
| Deferred income taxes | 1,366 | 8 | 140 | (m) | 1,514 | |||||||||||||||||||||
| Operating leases | 110 | 172 | 28 | (f) | 310 | |||||||||||||||||||||
| Other liabilities | 1,052 | 29 | 44 | (n) | 1,125 | |||||||||||||||||||||
| Equity: | ||||||||||||||||||||||||||
| Common stock | 2 | 4 | (4) | (k) | 2 | |||||||||||||||||||||
| Additional paid-in capital | 9,323 | 7,038 | (1,361) | (h), (k) | 15,000 | |||||||||||||||||||||
| Treasury stock | (1,234) | (15) | 1,253 | (k) | 4 | |||||||||||||||||||||
| Retained earnings / (accumulated deficit) | 3,478 | (3,264) | 3,081 | (g), (h), (k) | 3,295 | |||||||||||||||||||||
| Total equity attributable to common stockholders | 11,569 | 3,763 | 2,969 | 18,301 | ||||||||||||||||||||||
| Noncontrolling interest in consolidated subsidiaries | — | 229 | (229) | (k) | — | |||||||||||||||||||||
| Total equity | 11,569 | 3,992 | 2,740 | 18,301 | ||||||||||||||||||||||
| Commitments and contingencies | ||||||||||||||||||||||||||
| $ | 19,229 | $ | 7,862 | $ | 3,389 | $ | 30,480 | |||||||||||||||||||
2
Exhibit 99.2
PIONEER NATURAL RESOURCES COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2020
(in millions, except per share data)
| Pioneer Historical | Parsley Historical, As Adjusted (Note 4) | Transaction Accounting Adjustments | Pro Forma Combined | |||||||||||||||||||||||
| Revenues and other income: | ||||||||||||||||||||||||||
| Oil and gas | $ | 3,630 | $ | 1,688 | $ | — | $ | 5,318 | ||||||||||||||||||
| Sales of purchased commodities | 3,394 | — | — | 3,394 | ||||||||||||||||||||||
| Interest and other income (loss), net | (67) | 70 | — | 3 | ||||||||||||||||||||||
| Derivative loss, net | (281) | — | — | (281) | ||||||||||||||||||||||
| Gain on disposition of assets, net | 9 | 4 | — | 13 | ||||||||||||||||||||||
| 6,685 | 1,762 | — | 8,447 | |||||||||||||||||||||||
| Costs and expenses: | ||||||||||||||||||||||||||
| Oil and gas production | 682 | 334 | — | 1,016 | ||||||||||||||||||||||
| Production and ad valorem taxes | 242 | 116 | — | 358 | ||||||||||||||||||||||
| Depletion, depreciation and amortization | 1,639 | 666 | (263) | (o) | 2,042 | |||||||||||||||||||||
| Purchased commodities | 3,633 | — | — | 3,633 | ||||||||||||||||||||||
| Impairment of oil and gas properties | — | 4,374 | — | 4,374 | ||||||||||||||||||||||
| Exploration and abandonments | 47 | 611 | — | 658 | ||||||||||||||||||||||
| General and administrative | 244 | 172 | — | 416 | ||||||||||||||||||||||
| Accretion of discount on asset retirement obligations | 9 | 2 | — | 11 | ||||||||||||||||||||||
| Interest | 129 | 164 | (13) | (p) | 280 | |||||||||||||||||||||
| Other | 321 | 107 | 183 | (g), (h) | 611 | |||||||||||||||||||||
| 6,946 | 6,546 | (93) | 13,399 | |||||||||||||||||||||||
| Income (loss) before income taxes | (261) | (4,784) | 93 | (4,952) | ||||||||||||||||||||||
| Income tax benefit (provision) | 61 | 563 | (20) | (m) | 604 | |||||||||||||||||||||
| Net income (loss) | (200) | (4,221) | 73 | (4,348) | ||||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests | — | 404 | (404) | (q) | — | |||||||||||||||||||||
| Net loss attributable to common stockholders | $ | (200) | $ | (3,817) | $ | (331) | $ | (4,348) | ||||||||||||||||||
| Basic and diluted net loss per share attributable to common stockholders (r) | $ | (1.21) | $ | (20.07) | ||||||||||||||||||||||
| Basic and diluted weighted average shares outstanding (r) | 165 | 52 | (s) | 217 | ||||||||||||||||||||||
3
Exhibit 99.2
NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
NOTE 1. Basis of Presentation
The unaudited pro forma combined financial information has been derived from Pioneer’s Annual Report on Form 10-K for the year ended December 31, 2020 and the audited financial statements of Parsley which are filed as Exhibit 99.1 to this current report on Form 8-K. Certain of Parsley’s historical amounts have been reclassified to conform to Pioneer’s financial statement presentation. See Note 4 for additional information. The pro forma balance sheet is presented as if the Parsley Acquisition had been completed on December 31, 2020. The pro forma statements of operations are presented as if the Parsley Acquisition had been completed on January 1, 2020.
In Pioneer's opinion, the pro forma financial statements reflect pro forma adjustments that are described in the accompanying notes and are based on currently available information. All adjustments have been made that are necessary to present fairly the pro forma financial statements. The pro forma financial statements do not purport to represent what the combined company’s financial position or results of operations would have been if the Parsley Acquisition had actually occurred on the date indicated, nor are they indicative of Pioneer’s future financial position or results of operations. Actual results may differ materially from the assumptions and estimates reflected in these pro forma financial statements.
NOTE 2. Purchase Price Allocation
Pioneer has determined it is the accounting acquirer in the merger, which will be accounted for under the acquisition method of accounting for business combinations in accordance with Accounting Standards Codification 805, "Business Combinations". The allocation of the purchase price to the fair value of assets acquired and liabilities assumed is based upon Pioneer management’s estimates of and assumptions as of January 12, 2021, using currently available information. The purchase price allocation and the resulting effect on Pioneer's financial position and results of operations may be subject to change as the Company monitors and interprets the impact that new information may have on the fair value of assets acquired and liabilities assumed. The Company expects to finalize the purchase price allocation as soon as practicable.
4
Exhibit 99.2
Based upon the merger consideration transferred, the fair value of the assets acquired and liabilities assumed is recorded as follows (shown in millions, except exchange ratio and price per share data):
| Consideration transferred: | |||||
| Total Parsley shares/units convertible to or settled in Pioneer common stock (a) | 413 | ||||
| Exchange ratio (a) | 0.1252 | ||||
| Shares of Pioneer common stock issued | 52 | ||||
| Share price of Pioneer common stock on January 12, 2021 (b) | $ | 132.74 | |||
| Fair value of Pioneer common stock to be issued as consideration | $ | 6,857 | |||
| Additional consideration (c) | 26 | ||||
| Total consideration transferred | $ | 6,883 | |||
| Fair value of assets acquired: | |||||
| Cash and cash equivalents | $ | 58 | |||
| Accounts receivable | 160 | ||||
| Proved properties | 5,104 | ||||
| Unproved properties | 5,573 | ||||
| Other property and equipment, net | 133 | ||||
| Operating lease right-of-use assets | 201 | ||||
| Other assets | 22 | ||||
| Total assets acquired | $ | 11,251 | |||
| Fair value of liabilities assumed: | |||||
| Accounts payable | $ | 541 | |||
| Interest payable | 46 | ||||
| Derivatives | 220 | ||||
| Operating leases | 201 | ||||
| Deferred income taxes | 148 | ||||
| Long-term debt | 3,112 | ||||
| Other liabilities | 100 | ||||
| Total liabilities assumed | $ | 4,368 | |||
| Assets acquired and liabilities assumed | $ | 6,883 | |||
____________________
(a)Under the merger agreement, each Parsley Class A stockholder and Parsley LLC unitholder was entitled to receive 0.1252 shares of Pioneer common stock for, as applicable, (i) each eligible share of Parsley Class A common stock, (ii) each eligible Parsley LLC unit and (iii) each Parsley equity award converted or settled as part of the merger.
(b)Represents the market price of Pioneer Common Stock on January 12, 2021, the closing date of the Parsley Acquisition. This price is the final price used in the Company's calculation of merger consideration.
(c)Additional consideration represents (i) cash paid to settle fractional shares and (ii) the fair value of Pioneer shares that will replace Parsley equity awards that are attributable to pre-merger services provided.
5
Exhibit 99.2
NOTE 3. Pro Forma Adjustments
Adjustments included in the columns labeled “Transaction Accounting Adjustments” in the pro forma financial statements are as follows:
(a) Reflects transaction accounting adjustments resulting in an increase in the amount of accounts receivable - trade, net and accounts receivable - due from affiliates, net. The increase in the accounts receivable is partially offset by an adjustment to allowance for doubtful accounts in accordance with Pioneer's policy.
(b) Reflects a purchase price allocation adjustment to record Parsley's inventories at their estimated fair value.
(c) Reflects transaction accounting adjustments related to counterparty netting and associated valuation reserves under Pioneer's derivative policy.
(d) Reflects transaction accounting adjustments to record Parsley's other current assets and other noncurrent assets at their estimated fair value.
(e) Reflects transaction accounting adjustments resulting in (i) an increase to Parsley's proved oil and gas properties to record the properties at their estimated fair value, (ii) the elimination of Parsley's historical accumulated depletion, depreciation and amortization ("DD&A") balances, (iii) an increase to Parsley's unproved oil and gas properties to record the properties at their estimated fair value and (iv) a decrease to the value of other property and equipment to record these assets at their estimated fair value.
(f) Reflects transaction accounting adjustments to record Parsley's operating right-of-use assets, and related current and noncurrent operating lease liabilities at their estimated fair value.
(g) Represents nonrecurring transaction costs of approximately $69 million that were incurred by Pioneer and Parsley for advisory, legal, regulatory, accounting, valuation and other professional fees that are not capitalized as part of the merger. These transaction costs are not representative of the total amount that Pioneer and Parsley will incur in connection with the Parsley Acquisition and the final amounts and the resulting effect on Pioneer's financial position and results of operations may differ significantly.
(h) Represents nonrecurring severance costs of $114 million. $33 million of this represents expense associated with the accelerated vesting of Parsley restricted stock awards and performance units upon completion of the Parsley Acquisition, and $81 million represents cash severance payments to certain former employees of Parsley.
(i) Reflects a transaction accounting adjustment of $181 million to record accounts payable - due to affiliates in connection with the tax receivable agreement ("TRA") termination payments that became payable to TRA holders at the closing of the merger.
(j) Reflects transaction accounting adjustments to record other current liabilities at their estimated fair value.
(k) Reflects transaction accounting adjustments to eliminate Parsley historical equity balances in accordance with the acquisition method of accounting and record the impact of the issuance of consideration in connection with the Parsley Acquisition, which also includes cash of $1 million related to the settlement of partial shares of stock. The impact of pro forma merger adjustments on total equity are summarized below (shown in millions):
| Elimination of Parsley's Historical Equity | Issuance of Pioneer Common Stock | Pro Forma Equity Adjustments | |||||||||||||||
| Common stock | $ | (4) | $ | — | $ | (4) | |||||||||||
| Additional paid-in capital | (7,038) | 5,644 | (1,394) | ||||||||||||||
| Treasury stock | 15 | 1,238 | 1,253 | ||||||||||||||
| Accumulated deficit | 3,264 | — | 3,264 | ||||||||||||||
| Total stockholder's equity | (3,763) | 6,882 | 3,119 | ||||||||||||||
| Noncontrolling interests (q) | (229) | — | (229) | ||||||||||||||
| Total equity | $ | (3,992) | $ | 6,882 | $ | 2,890 | |||||||||||
(l) Reflects a purchase price allocation adjustment to record Parsley's long-term debt at its estimated fair value.
6
Exhibit 99.2
(m) Reflects an adjustment to deferred income taxes to record the estimated deferred income tax effects of combining Pioneer’s and Parsley’s operations. The deferred tax adjustment assumes a forecasted blended Parsley statutory tax rate of 21.6%. The pro forma income tax adjustments included in the pro forma statement of operations for the period ended December 31, 2020 reflects the income tax effects of the transaction accounting adjustments presented. Because the tax rates used for these pro forma financial statements are an estimate, the blended rate will likely vary from the actual effective rate in periods subsequent to completion of the merger.
(n) Reflects transaction accounting adjustments to record Parsley's other noncurrent liabilities at their estimated fair value, the majority of which is related to the estimated fair value of the assumed Parsley asset retirement obligations.
(o) Reflects the pro forma DD&A expense based on the purchase price allocation. DD&A for oil and gas properties was calculated in accordance with the successful efforts method of accounting for oil and gas properties using the combined companies estimated proved reserves. DD&A expense for other property and equipment was based on the estimated useful lives of the assets.
(p) Reflects the impact of the amortization of the debt premium resulting from the purchase price allocation adjustment to record Parsley's outstanding debt at fair value.
(q) Reflects the elimination of the noncontrolling interest attributable to the membership interests of Parsley LLC unitholders. Each Parsley LLC unitholder was entitled to receive 0.1252 shares of Pioneer common stock for each Parsley LLC unit owned.
(r) The pro forma merger adjustments on Pioneer common stock and basic and diluted earnings per share are summarized below:
| Year Ended December 31, 2020 (in millions, except per share data) | |||||
| Numerator | |||||
| Basic and diluted combined pro forma net loss attributable to Pioneer common stockholders | $ | (4,348) | |||
| Denominator | |||||
| Historical basic and diluted weighted average Pioneer shares outstanding | 165 | ||||
| Shares of Pioneer common stock to be issued | 52 | ||||
| Pro forma basic and diluted weighted average Pioneer shares outstanding | 217 | ||||
| Pro forma basic and diluted net loss per share attributable to common Pioneer stockholders | $ | (20.07) | |||
(s) Represents the approximate number of shares of Pioneer common stock that are to be issued as merger consideration in exchange for Parsley Class A common stock and Parsley LLC units.
NOTE 4. Parsley Historical Financial Statement Presentation
Certain reclassifications have been made to the historical presentation of Parsley to conform to the financial statement presentation of Pioneer as follows:
7
Exhibit 99.2
PARSLEY ENERGY INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA BALANCE SHEET
AS OF DECEMBER 31, 2020
(in millions)
| Parsley Historical | Reclassification Adjustments | Parsley Historical, As Adjusted | |||||||||||||||
| ASSETS | |||||||||||||||||
| Current assets: | |||||||||||||||||
| Cash and cash equivalents | $ | 54 | $ | 4 | $ | 58 | |||||||||||
| Accounts receivable: | |||||||||||||||||
| Trade, net | — | 156 | 156 | ||||||||||||||
| Joint interest owners and other | 35 | (35) | — | ||||||||||||||
| Oil, natural gas and NGLs | 174 | (174) | — | ||||||||||||||
| Inventories | — | 17 | 17 | ||||||||||||||
| Derivatives | 24 | — | 24 | ||||||||||||||
| Other | 14 | — | 10 | ||||||||||||||
| Total current assets | 301 | (36) | 265 | ||||||||||||||
| Oil and gas properties, using the successful efforts method of accounting: | |||||||||||||||||
| Oil and natural gas properties, successful efforts method | 7,562 | (7,562) | — | ||||||||||||||
| Proved properties | — | 4,847 | 4,847 | ||||||||||||||
| Unproved properties | — | 2,755 | 2,755 | ||||||||||||||
| Accumulated depletion, depreciation and amortization | (382) | — | (382) | ||||||||||||||
| Total oil and gas properties, net | 7,180 | 40 | 7,220 | ||||||||||||||
| Other property and equipment, net | 184 | (21) | 163 | ||||||||||||||
| Operating lease right-of-use assets | 209 | 3 | 212 | ||||||||||||||
| Derivatives | — | — | — | ||||||||||||||
| Other assets | 7 | (5) | 2 | ||||||||||||||
| $ | 7,881 | $ | (19) | $ | 7,862 | ||||||||||||
| LIABILITIES AND EQUITY | |||||||||||||||||
| Current liabilities: | |||||||||||||||||
| Accounts payable: | |||||||||||||||||
| Accounts payable and accrued expenses | $ | 246 | $ | (246) | $ | — | |||||||||||
| Trade | — | 357 | 357 | ||||||||||||||
| Due to affiliates | — | 3 | 3 | ||||||||||||||
| Interest payable | — | 46 | 46 | ||||||||||||||
| Derivatives | 240 | — | 240 | ||||||||||||||
| Revenue and severance taxes payable | 171 | (171) | — | ||||||||||||||
| Operating leases | 45 | — | 45 | ||||||||||||||
| Other | 4 | — | 4 | ||||||||||||||
| Total current liabilities | 706 | (11) | 695 | ||||||||||||||
| Long-term debt | 2,963 | (6) | 2,957 | ||||||||||||||
| Derivatives | 9 | — | 9 | ||||||||||||||
| Deferred income taxes | 8 | — | 8 | ||||||||||||||
| Operating leases | 175 | (3) | 172 | ||||||||||||||
| Financing lease liabilities | 1 | (1) | — | ||||||||||||||
| Asset retirement obligations | 28 | (28) | — | ||||||||||||||
| Other liabilities | — | 29 | 29 | ||||||||||||||
| Equity: | |||||||||||||||||
| Common stock: | |||||||||||||||||
| Common stock | — | 4 | 4 | ||||||||||||||
| Class A | 4 | (4) | — | ||||||||||||||
| Additional paid-in capital | 7,038 | — | 7,038 | ||||||||||||||
| Treasury Stock | (15) | — | (15) | ||||||||||||||
| Retained earnings / (accumulated deficit) | (3,265) | 1 | (3,264) | ||||||||||||||
| Total equity attributable to common stockholders | 3,762 | 1 | 3,763 | ||||||||||||||
| Noncontrolling interest in consolidated subsidiaries | 229 | — | 229 | ||||||||||||||
| Total equity | 3,991 | 1 | 3,992 | ||||||||||||||
| Commitments and contingencies | |||||||||||||||||
| $ | 7,881 | $ | (19) | $ | 7,862 | ||||||||||||
8
Exhibit 99.2
PARSLEY ENERGY INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2020
(in millions)
| Parsley Historical | Reclassification Adjustments | Parsley Historical, As Adjusted | |||||||||||||||
| Revenues and other income: | |||||||||||||||||
| Oil and gas | $ | — | $ | 1,688 | $ | 1,688 | |||||||||||
| Oil sales | 1,473 | (1,473) | — | ||||||||||||||
| Natural gas sales | 60 | (60) | — | ||||||||||||||
| Natural gas liquids sales | 155 | (155) | — | ||||||||||||||
| Interest and other | 12 | 58 | 70 | ||||||||||||||
| Gain (loss) on disposition of assets, net | — | 4 | 4 | ||||||||||||||
| 1,700 | 62 | 1,762 | |||||||||||||||
| Costs and expenses: | |||||||||||||||||
| Oil and gas production | — | 334 | 334 | ||||||||||||||
| Lease operating expenses | 255 | (255) | — | ||||||||||||||
| Transportation and processing costs | 75 | (75) | — | ||||||||||||||
| Production and ad valorem taxes | 116 | — | 116 | ||||||||||||||
| Depletion, depreciation and amortization | 666 | — | 666 | ||||||||||||||
| Impairment of long-lived assets | 4,374 | — | 4,374 | ||||||||||||||
| Exploration and abandonments | 611 | — | 611 | ||||||||||||||
| General and administrative | 172 | — | 172 | ||||||||||||||
| Accretion of discount on asset retirement obligations | 2 | — | 2 | ||||||||||||||
| Interest | — | 164 | 164 | ||||||||||||||
| Other | — | 107 | 107 | ||||||||||||||
| Acquisition costs | 22 | (22) | — | ||||||||||||||
| Rig termination costs | 15 | (15) | — | ||||||||||||||
| (Gain) loss on sale of property | (4) | 4 | — | ||||||||||||||
| Restructuring and other termination costs | 46 | (46) | — | ||||||||||||||
| Other operating expenses | 15 | (15) | — | ||||||||||||||
| 6,365 | 181 | 6,546 | |||||||||||||||
| Operating Loss | (4,665) | (119) | (4,784) | ||||||||||||||
| Other Income (Expense) | |||||||||||||||||
| Interest expense, net | (164) | 164 | — | ||||||||||||||
| Loss on early extinguishment of debt | (21) | 21 | — | ||||||||||||||
| Change in TRA liability | 71 | (71) | — | ||||||||||||||
| Other income (expense) | (5) | 5 | — | ||||||||||||||
| Total other income (expense), net | (119) | 119 | — | ||||||||||||||
| Loss before income taxes | (4,784) | — | (4,784) | ||||||||||||||
| Income tax benefit | 563 | — | 563 | ||||||||||||||
| Net loss | (4,221) | — | (4,221) | ||||||||||||||
| Net loss attributable to noncontrolling interests | 404 | — | 404 | ||||||||||||||
| Net loss attributable to common stockholders | $ | (3,817) | $ | — | $ | (3,817) | |||||||||||
NOTE 5. Supplemental Pro Forma Oil, NGL and Gas Reserves Information
The following tables present (i) the estimated pro forma combined net proved developed and undeveloped, oil, NGL and gas reserves as of December 31, 2020, (ii) the estimated pro forma combined standardized measure of discounted future net cash flows as of December 31, 2020 and (iii) the estimated sources of changes in pro forma combined standardized measure of discounted future net cash flows during the year ended December 31, 2020. The amounts below were derived from Pioneer’s Annual Report on Form 10-K for the year ended December 31, 2020 and the audited financial statements of Parsley which are filed as Exhibit 99.1 to this Current Report on Form 8-K. The following estimated pro forma combined supplemental pro forma oil, NGL and gas reserves information is not necessarily indicative of the results that might have occurred had the merger been completed on December 31, 2020 and is not intended to be a projection of future results. Future results may vary significantly from the results presented.
9
Exhibit 99.2
Pro Forma Combined Net Proved Developed and Undeveloped, Oil, NGL and Gas Reserves
The proved undeveloped reserves of Parsley are based on Parsley's development plans and reserve estimation methodologies. Because Pioneer will develop such proved undeveloped reserves in accordance with its own development plan and, in the future, will estimate proved undeveloped reserves in accordance with its own methodologies, the estimates presented herein for Parsley may not be representative of Pioneer’s future proved reserve estimates. The following tables present the estimated pro forma combined net proved developed and undeveloped oil and gas reserves information as of December 31, 2020, along with a summary of changes in quantities of net remaining proved reserves during the year ended December 31, 2020:
| Oil Reserves (MBbls) | Pioneer Historical | Parsley Historical | Pro Forma Combined | ||||||||||||||
| Total Proved Reserves: | |||||||||||||||||
| Balance, January 1, 2020 | 603,750 | 326,463 | 930,213 | ||||||||||||||
| Production | (77,095) | (41,816) | (118,911) | ||||||||||||||
| Revisions of previous estimates | (68,300) | (77,486) | (145,786) | ||||||||||||||
| Extensions and discoveries | 111,239 | 35,135 | 146,374 | ||||||||||||||
| Sales of minerals-in-place | (1,480) | (5,353) | (6,833) | ||||||||||||||
| Purchases of minerals-in-place | 670 | 79,212 | 79,882 | ||||||||||||||
| Balance, December 31, 2020 | 568,784 | 316,155 | 884,939 | ||||||||||||||
| Proved Developed Reserves: | |||||||||||||||||
| Balance, January 1 | 571,293 | 206,849 | 778,142 | ||||||||||||||
| Balance, December 31 | 539,320 | 268,352 | 807,672 | ||||||||||||||
| Proved Undeveloped Reserves: | |||||||||||||||||
| Balance, January 1 | 32,457 | 119,614 | 152,071 | ||||||||||||||
| Balance, December 31 | 29,464 | 47,803 | 77,267 | ||||||||||||||
| NGL Reserves (MBbls) | Pioneer Historical | Parsley Historical | Pro Forma Combined | ||||||||||||||
| Total Proved Reserves: | |||||||||||||||||
| Balance, January 1, 2020 | 281,983 | 147,664 | 429,647 | ||||||||||||||
| Production | (31,376) | (14,500) | (45,876) | ||||||||||||||
| Revisions of previous estimates | 73,107 | (20,553) | 52,554 | ||||||||||||||
| Extensions and discoveries | 55,952 | 11,874 | 67,826 | ||||||||||||||
| Sales of minerals-in-place | (803) | (1,701) | (2,504) | ||||||||||||||
| Purchases of minerals-in-place | 324 | 15,055 | 15,379 | ||||||||||||||
| Balance, December 31, 2020 | 379,187 | 137,839 | 517,026 | ||||||||||||||
| Proved Developed Reserves: | |||||||||||||||||
| Balance, January 1 | 268,468 | 96,202 | 364,670 | ||||||||||||||
| Balance, December 31 | 362,584 | 122,321 | 484,905 | ||||||||||||||
| Proved Undeveloped Reserves: | |||||||||||||||||
| Balance, January 1 | 13,515 | 51,462 | 64,977 | ||||||||||||||
| Balance, December 31 | 16,603 | 15,518 | 32,121 | ||||||||||||||
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Exhibit 99.2
| Gas Reserves (MMcf) | Pioneer Historical | Parsley Historical | Pro Forma Combined | ||||||||||||||
| Total Proved Reserves: | |||||||||||||||||
| Balance, January 1, 2020 | 1,499,513 | 709,242 | 2,208,755 | ||||||||||||||
| Production | (166,863) | (69,835) | (236,698) | ||||||||||||||
| Revisions of previous estimates | 342,720 | (89,755) | 252,965 | ||||||||||||||
| Extensions and discoveries | 267,497 | 55,623 | 323,120 | ||||||||||||||
| Sales of minerals-in-place | (4,434) | (9,360) | (13,794) | ||||||||||||||
| Purchases of minerals-in-place | 1,667 | 73,478 | 75,145 | ||||||||||||||
| Balance, December 31, 2020 | 1,940,100 | 669,393 | 2,609,493 | ||||||||||||||
| Proved Developed Reserves: | |||||||||||||||||
| Balance, January 1 | 1,429,417 | 472,160 | 1,901,577 | ||||||||||||||
| Balance, December 31 | 1,855,607 | 584,888 | 2,440,495 | ||||||||||||||
| Proved Undeveloped Reserves: | |||||||||||||||||
| Balance, January 1 | 70,096 | 237,082 | 307,178 | ||||||||||||||
| Balance, December 31 | 84,493 | 84,505 | 168,998 | ||||||||||||||
| Total Reserves (MBOE) | Pioneer Historical | Parsley Historical | Pro Forma Combined | ||||||||||||||
| Total Proved Reserves: | |||||||||||||||||
| Balance, January 1, 2020 | 1,135,652 | 592,334 | 1,727,986 | ||||||||||||||
| Production | (136,282) | (67,955) | (204,237) | ||||||||||||||
| Revisions of previous estimates | 61,927 | (112,997) | (51,070) | ||||||||||||||
| Extensions and discoveries | 211,774 | 56,280 | 268,054 | ||||||||||||||
| Sales of minerals-in-place | (3,022) | (8,614) | (11,636) | ||||||||||||||
| Purchases of minerals-in-place | 1,272 | 106,513 | 107,785 | ||||||||||||||
| Balance, December 31, 2020 | 1,271,321 | 565,561 | 1,836,882 | ||||||||||||||
| Proved Developed Reserves: | |||||||||||||||||
| Balance, January 1 | 1,077,997 | 381,744 | 1,459,741 | ||||||||||||||
| Balance, December 31 | 1,211,172 | 488,155 | 1,699,327 | ||||||||||||||
| Proved Undeveloped Reserves: | |||||||||||||||||
| Balance, January 1 | 57,655 | 210,590 | 268,245 | ||||||||||||||
| Balance, December 31 | 60,149 | 77,406 | 137,555 | ||||||||||||||
Pro Forma Combined Standardized Measure of Discounted Future Net Cash Flows
The following table presents the pro forma combined standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves as of December 31, 2020:
| Pioneer Historical | Parsley Historical | Pro Forma Combined | |||||||||||||||
| Oil and gas producing activities: | |||||||||||||||||
| Future cash inflows | $ | 30,357 | $ | 13,716 | $ | 44,073 | |||||||||||
| Future development costs | (1,124) | (699) | (1,823) | ||||||||||||||
| Future production costs | (14,784) | (7,789) | (22,573) | ||||||||||||||
| Future income tax expenses | (494) | (123) | (617) | ||||||||||||||
| Standardized measure of future net cash flows | 13,955 | 5,105 | 19,060 | ||||||||||||||
| Ten percent annual discount factor | (6,753) | (1,779) | (8,532) | ||||||||||||||
| Standardized measure of discounted future net cash flows | $ | 7,202 | $ | 3,326 | $ | 10,528 | |||||||||||
11
Exhibit 99.2
Sources of Changes in Pro Forma Combined Standardized Measure of Discounted Future Net Cash Flows
The principal changes in the pro forma combined standardized measure of discounted future net cash flows relating to proved reserves for the year ended December 31, 2020 are as follows:
| Pioneer Historical | Parsley Historical | Pro Forma Combined | |||||||||||||||
| Oil and gas sales, net of production costs | $ | (2,566) | $ | (1,242) | $ | (3,808) | |||||||||||
| Revisions of previous estimates: | |||||||||||||||||
| Net changes in prices and production costs | (3,971) | (3,634) | (7,605) | ||||||||||||||
| Changes in future development costs | 152 | 93 | 245 | ||||||||||||||
| Revisions in quantities | (27) | (232) | (259) | ||||||||||||||
| Accretion of discount | 809 | 566 | 1,375 | ||||||||||||||
| Extensions, discoveries and improved recovery | 2,366 | 499 | 2,865 | ||||||||||||||
| Development costs incurred during the period | 105 | 348 | 453 | ||||||||||||||
| Sales of minerals-in-place | (9) | (104) | (113) | ||||||||||||||
| Purchases of minerals-in-place | 7 | 1,450 | 1,457 | ||||||||||||||
| Change in present value of future net revenues | (3,134) | (2,256) | (5,390) | ||||||||||||||
| Net change in present value of future income taxes | 602 | 620 | 1,222 | ||||||||||||||
| (2,532) | (1,636) | (4,168) | |||||||||||||||
| Balance, beginning of year | 9,734 | 4,962 | 14,696 | ||||||||||||||
| Balance, end of year | $ | 7,202 | $ | 3,326 | $ | 10,528 | |||||||||||
12