Scott Sheffield, one of the US oil industry’s most colourful and longstanding leaders, will retire as head of shale giant Pioneer Natural Resources.
Sheffield founded Pioneer in 1997 and oversaw its transformation into the biggest crude producer in Texas. He will remain at the helm until the end of this year, when Richard Dealy, currently chief operating officer, will succeed him.
“It’s time for me to go back into a second retirement,” Sheffield told the Financial Times in an interview, referring to his initial departure from running the company in 2016 before returning to the helm three years later.
“Most people knew that I wasn’t coming back forever, because I’ve been running the public company and its predecessor for almost 35 years as CEO.”
Sheffield’s tenure has spanned some of the US oil sector’s most tumultuous years, including two Opec price wars as Saudi Arabia tried to bankrupt the prolific US shale patch — whose rapid growth over the past decade upended the global energy order — and a crash in crude prices to below zero in 2020. And it has come as the sector contends with growing investor pressure to address climate change.
The Pioneer boss has been among the executives that responded to Wall Street pressure in recent years by executing an operating model designed to win back investors who had fled an industry wracking up colossal debts even while achieving spectacular production growth.
The shift involved Pioneer and other publicly listed oil groups reducing capital spending and scaling back drilling plans, while handing cash back to investors in the form of dividends and buyback schemes.
For Pioneer, it marked a change of direction for a company once labelled by hedge fund boss David Einhorn as the industry’s “mother-fracker” for its desire to increase hydraulic fracturing in a quest for growth.
Dealy, a 30-year veteran at Pioneer, will take over as chief executive from January. “I really don’t see any changes,” Dealy said in an interview. “I think the strategy that we put in place is working well.” Sheffield will remain on the company’s board.
A surge in oil prices since economies around the world reopened in 2021 after the height of the pandemic has combined with the restrained spending model to trigger a cash windfall for the sector.
Last year, Pioneer reported record net income of $7.8bn as Russia’s full-scale invasion of Ukraine fuelled another surge in oil and gas prices. Free cash flow, a crucial industry metric, was also a record, at $8.4bn. The company returned $8bn to shareholders.
The cash haul marks a dramatic change from 2020, when an oil price crash forced shale operators to idle rigs, fire workers and rip up spending plans. Sheffield was among oil bosses who called for US operators to curb production in a bid to prop up prices.
Pioneer took advantage of the sector’s trauma to buy rival Permian producers Parsley Energy — founded by Sheffield’s son, Bryan — and private operator Double Point Energy in 2021 in deals worth a combined $11bn.
The acquisitions made Pioneer the biggest oil producer in Texas. Its market capitalisation has increased from about $13bn in late 2020 to more than $52bn today.
Sheffield said the new model meant the shale sector could weather a recession or any further attempt by Saudi Arabia to push down prices.
“The balance sheets are better than I’ve ever seen them,” he said. “Companies can survive it more than they ever have. The shale patch and services industry in general is more resilient than it ever has been to shocks.”