Deutsche Bank Markets Research Rating Hold North America United States Industrials Oil & Gas Exploration & Production Company Pioneer Natural Resources Reuters PXD.N Bloomberg PXD UN Exchange Ticker NYS PXD Laying the Foundation Looking to set the stage into a 2H acceleration With arguably amongst the largest core positions in what could be the leading asset of the next oil cycle, the investment case at PXD largely rests on it ability to translate resource potential into leading, capital efficient growth. Despite encouraging signs, noisy 10 operations (weather downtime, ethane rejection, completion deferrals) prevent a clean look at improving operations. Going forward, we look for efficiency gains in a narrowed, focused Permian development program as an indicator for future broad asset potential as activity accelerates in 2H15. Hold. What to look for on the call? IILeading the charge? PXD expects to add two horizontal rigs per month in the northern Spraberry/Wolfcamp beginning in July contingent on continued strength in the oil markets and following a sale of its Eagle Ford midstream business. We look for timing of potential production impact and growth and capital implications for 2016. IICost Reductions: Look for detailed updates on the pace of remaining cost reductions. Realized D&C cost reductions of 15% vs. 2014 to date, with year-end target of 20%+. Lifting costs -8% YoY driving further profitability gains. Look for additional clarity on potential/timing of reductions, including 15% and 10% in facilities costs and lifting costs respectively. IIDeferring to Save: Expect some discussion on portfolio benefit of its decision to defer 25 hz well completions (of 90 planned in 1H15) in the Permian in order to exclusively utilize Pioneer Pumping Services. The shift will reduce 2Q volumes expectations (198-203 Mboe/d vs. Street 207), but increase and flatten 2H volumes (-200 Mboe/d). Also look for impact of shift on abilit