Q&A: Pioneer’s Sheffield still waiting for Biden call

Scott Sheffield, chief executive of leading Permian oil producer Pioneer Natural Resources, was interviewed by Argus' Stephen Cunningham at the World Petroleum Congress in Houston on 7 December. Edited highlights follow:

What's your response to the White House call for US oil firms to boost output?

I have not found a US chief executive that's had a call from the Biden administration to raise production. That includes us.

The Permian is forecast to grow at record pace this month. Is this sustainable?

We've seen a rebound in activity. Most companies started adding rigs in late 2020, early 2021. The Permian, I'm a firm believer, can easily grow by 4-5pc/yr over the next several years if oil prices stay in the $70/bl-plus range or higher. The public independents are adding one to two rigs per year. The majors will probably be your biggest adds. It wouldn't surprise me if ExxonMobil and Chevron add several rigs. I don't see the privates really adding many rigs at this point.

When does the era of capital discipline end?

It's basically a contract we have with shareholders. And every chief executive I've talked to that's public is not going to change. We're going to limit growth to 5pc/yr.

What would you need to hear from investors to make you happy to ramp up?

They want to see consistent returns. If we deliver good, consistent returns for the next couple of years, I think you'll see more investors buy into our industry.

Does ExxonMobil's Permian net zero target put pressure on independents?

It gives us a new goal, it doesn't really pressure us. We were already ahead of ExxonMobil, but they put another bar out there. I've already talked to our people to see how we can get to net zero by 2030. We have to read Exxon's data and see how they're going to get there. It's hard to get there without the grid going to net zero.

What's your ideal oil price?

Around $75-80/bl. I wish it would just stay there for the next five years — it would be good for the consumers, it would be good for the oil and gas companies.

Was the market rout over the Omicron variant overdone?

Definitely overdone. Cases were spiking in South Africa and everybody was worried about the number of mutations. So far, the data have been very positive.

What's your view on hedging?

We have essentially unwound almost all our hedges. We'll be going into 2022 with a great balance sheet — with our divestiture of Delaware — and we'll be unhedged.

What's your take on recent warnings that the industry is vastly under-invested?

Definitely. We've had two collapses in commodity prices. US shale grew too much competing against Opec and Opec+ and, secondly, ESG pressure.

Is shale M&amp;A over for now? What would make Pioneer do more M&amp;A?

A lot of it's over, the good stuff has been bought. There'll be another round as firms de-lever over the next three years. For us, it would have to be a super-type deal, but it's hard to make deals like that. In the downturn, we were able to buy Parsley then DoublePoint. I'd rather not see downturns, but that's the best time to buy.

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