Scott Sheffield, a CEO who helped transform the domestic production of oil and gas, announced Thursday that he will step down from the helm of Irving-based Pioneer Natural Resources.
Under his leadership, Pioneer helped transform the Texas Permian Basin from a minor producer of conventionally drilled oil and gas into one of the world’s major players in shale-fracked petro products. He bet the company on Texas in 2005, selling off international assets. And after 2011, he bet the company on fracking, turning Pioneer into the first big “pure play” company working only in shale fields.
Both bets paid off handsomely for Pioneer, and many other companies followed its lead. The American shale revolution that Sheffield was part of is responsible for relatively low oil and gas prices across the globe. Sheffield was also one of the most visible industry leaders who pushed successfully for an end to the U.S. ban on oil exports in 2015.
“Any time you have somebody who has been that transformational a CEO as he has been, he will be missed,” said Bruce Bullock, director of the Maguire Energy Institute at the SMU Cox School of Business.
Sheffield, 63, led Pioneer and one of its predecessor companies through more than three decades of ups and downs. He will step down as CEO at the end of this year and plans to remain board chairman through 2017 and a director after that.
Pioneer said Sheffield will be replaced by Timothy Dove, its current president and chief operating officer.
Sheffield said the board had been asking him every couple of years how long he wanted to stay, so the company could plan for the transition. This seemed like the right time, he said.
Pioneer hasn’t been immune to the worldwide price slump in oil and gas. The company lost $266 million last year on $3.1 billion in income. But Sheffield said Pioneer is in great shape for the future, with plenty of proven reserves ready for production.
“We are really back on top of the world,” he said.
Sheffield joined Pioneer’s predecessor company, Parker & Parsley, as a petroleum engineer in 1979. In 1981, he was promoted to vice president, and in 1985, he was elected president and a director.
He became Parker & Parsley’s chairman and chief executive in 1989. After the company merged with Mesa Petroleum in 1997, Sheffield became CEO of the newly formed Pioneer Natural Resources. In 1999, he was named chairman.
Asked Thursday about the most important moments running Pioneer, he looked back to 2005 and 2011. The first was that decision to pull back from international oil fields and accumulate land in the Permian Basin and Eagle Ford. The second came after he and other company officials realized that oil companies working the Barnett Shale near Fort Worth were making money from fields that had long been considered impossible to work economically.
Pioneer’s geologists took a look at years of data the company had accumulated drilling the Permian and investigated whether fracking would work there. They told Sheffield the company was sitting on 10 billion barrels of resources.
“That was when we all woke up and said we have a home run underneath our acreage,” he said.
That wasn’t just a big moment for Sheffield and Pioneer, Bullock said. Eventually, Pioneer was able to devote all of its resources to figuring out the changes in technology and infrastructure needed to make fracking successful. Other companies followed suit.
Sheffield also gets credit for staying focused on the Permian.
“That’s the one area of production in the U.S. that is still growing, despite being in a down cycle,” Bullock said.
Oil prices will need to come up to at least $60 a barrel to spur full production in the Permian, Sheffield said Thursday. And if that happens, he said Pioneer is in better shape than many of its peers to take advantage because it’s carrying little debt.
“We can apply our first dollars to applying new rigs,” he said.
What’s in Sheffield’s future? For starters, a move with his wife to Santa Fe, N.M.
“When you’re the CEO of a company, you spend a lot of time on that,” he said. “I definitely plan to spend more time with my children and grandchildren.”
|Pioneer Natural Resources||By the numbers|
|Market cap||$26.6 billion|
|2015 income||$3.1 billion|
|2015 net income||-$266 billion|
|Number of employees||3,732|
|Thursday close stock price||$162.84|
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