Water Management for the 21 st Century September 24, 2015 SPE – Ft. Worth Chapter

 Resource-focused strategy, with activity concentrated in 2 of the most active U.S. fields  Operating in core Spraberry/Wolfcamp asset since early 1980s – PXD holds ~825,000 acres in Spraberry/Wolfcamp – Largest producer in Spraberry/Wolfcamp – Preeminent, low-cost operator benefitting from vertical integration strategy  Best performing energy stock in S&P 500 since 2009  2nd most active driller in Texas  4th most active driller in the U.S. Pioneer At A Glance Total Enterprise Value ($B) ~$ Drilling Capex ($B) $3.1 Q Production (MBOEPD) Reserves + Resource (BBOE) >11.0 Total Enterprise Value ($B) ~$ Drilling Capex ($B) $3.1 Q Production (MBOEPD) Reserves + Resource (BBOE) >11.0 Top U.S. Fields By Rig Count (Pioneer Operated Count in Green – 38 rigs) Baker Hughes Rig Count (10/31/14) and PXD Internal Spraberry/Wolfcamp Gross Production By Operator 3 (MBOEPD) 3) August 2014 DrillingInfo data, gross reported oil and wet gas

Developing the Permian Basin  The largest oil field in the U.S.  20,000 drilling location inventory  $200B to fully develop this field over the next 50+ years  Infrastructure needs: pipeline capacity, gas processing, water, electric power and roads  300,000 barrels of water used in a typical horizontal hydraulic fracture job  Moving away from using fresh water is the right thing to do 3

Outline  Formation of Pioneer Water Management, LLC (PWM)  Supply Diversification  Infrastructure Build Out  Disposal & Recycling  Conclusions 4

5 “Great Water Balance”

Establishing a Sustainable “Water Business” 6 Supply sufficient water for drilling & completions Source lower cost “non-fresh” water supplies Study and plan for potential disposal limitations Develop recycling projects in support of “Water Balance” Reduce transfer costs and trucks on road

WHY was PWM Created ?  Sustainable Water Solutions – Significant ramp-up of D&C requirements (1,000,000 BPD) – Reduce reliance on fresh water sources – Mitigate need for disposal of produced water (Recycling)  Develop in house water expertise to support growth in West Texas – “Cradle to Grave” water planning and handling – “One Stop Shop” supporting Drilling, Completions & Operations  Long term planning to increase water handling efficiency – Fewer trucks – Smaller footprint – Lower cost 7

WHAT ? “In House Expertise” 1.Establish and maintain a profitable “water business” 2.Supply sufficient water for hydraulic fracturing 3.Source lower cost “non-fresh” water supplies 4.Study and plan for potential disposal limitations 5.Develop recycling projects in support of “Water Balance” 6.Develop 3 rd party business to enhance PWM’s profitability 7.Reduce transfer costs and trucks on road 8

HOW ? “One Stop Shop”  Supply – Diversification of supply to meet growing demand Local and external sources Decreased reliance on fresh water  Distribution/Storage – Permanent infrastructure planning Truck traffic (238,000 BWPD equates to ~2,000 fewer truck loads/day) Smaller footprint & lower cost 400,000 bbl. impoundments for storage of water Storage used to meet “Peaks and Valleys” of demand  Recycling/Disposal – Utilize produced water to meet drilling and completion demand Minimize need to dispose of produced water Monitoring of disposal wells 9

Supply Diversification 10

West Texas Growth Increases Water Demand 11 Drilling & Frac. Water Needs Horizontal Rigs Rig Count Demand = 2 × City of Irving Geographic Extent = Delaware

Supply (Diversify Water Sourcing) 12 Small Volume Minimal Infrastructure Short Lead Time Sustainable? PXD Water Wells Local “Fresh” Water Wells Medium Volume Minimal Infrastructure Short Lead Time PXD Santa Rosa Well Local Santa Rosa “Brackish” Wells Medium Volume Reliant on Infrastructure Medium Lead Time Reduces Disposal Gradient/Fountain Quail Local Recycling Large “Effluent” Supply Source Large Volume Long Term Deal Reliant on Infrastructure 3 rd Party Source Large “Brackish” Supply Source Large Volume Long Term Deal Reliant on Infrastructure Non-Political Odessa Effluent Minimize “Discounted” BBL Cost and Meet Asset Demands

Infrastructure Build Out 13

Philosophy Change Required to Support Increased Rig Count 14

Infrastructure Planning Infrastructure Elements: − Mainline − Ponds − Subsystems − Source pipelines Optimize Based On: − Rig count − Locations of sources − % Recycling − Minimized headcount (automation) 15 Mainline Subsystem Source Pipeline Ponds Pump Station

Storage “Frac. Ponds” 16  400,000 BBL ponds  Standard design increase life and make ponds safer  Covers minimize evaporation

Disposal and Recycling 17

Water Disposal Plans  Monitoring disposal program  Evaluating recycling technologies and increasing recycling volumes  Monitoring regulatory environment & legislation on recycling, fresh water, and brackish water  Balancing disposal and recycling 18

Current Recycle Operational Overview  Allows produced water to be used for D&C operations  Multiple Options – Clean Brine – De-Sal  Minimizes need to dispose of produced water  Operationally challenging – Currently working on 2 recycling projects – With all in operation ~20,000 BBL/Day Recycled 19

Recycling Cost Discussion  Source and dispose approaching parity with minimal treatment  Recycling reduces disposal needs, lowering drilling costs  Desal costs significantly more than minimal treatment  Water quality required drives recycling costs 20

Recycling Challenges Operations Logistical coordination Linking of disposal network Flow-back volume peaks Continuous flow into recycle plant Backup SWD for recycling 21 Recycle Plant Produced Water Useable Product Unusable Product (Operations) (D&C/Res.) D&C & Reservoir Water quality/gelling Sufficient supply to meet schedule Formation compatibility Multi-department incremental costs/savings PWM Infrastructure Blending Changing technology Manpower Balancing with other take-or- pay requirements Environmental (storage/transport) PXD Aggressively Pursuing Integrated Solutions to Recycling Challenges

Conclusions 22

PWM the “One Stop Shop” for Water  Achieving strong success in sourcing – Odessa, Santa Rosa, (Midland)  Infrastructure build-out underway – Significant progress on design and construction – Sized to accommodate 3 rd party sales and transport – Permanent infrastructure provide significant cost savings for all parties  Continue to balance disposal and recycling – Recycling implementation is complex – Balance volume, logistics, and added infrastructure – Storage and transport of minimally treated produced water adds environmental challenges 23