Chief Executive Officer at Pioneer Natural Resources
Thank you, Neal. Good morning. We'll be starting on Slide 3. Pioneer delivered strong results, generating $2.7 billion in free cash flow in the second quarter. Additionally, this quarter, we increased our base dividend by more than 40%, which is supported by our high-quality assets, deep inventory, peer-leading margins and strong balance sheet. This is the third base dividend increase in the previous 4 quarters and represents a greater than 95% increase to the base dividend over the previous 12 months. This annualized base dividend of $4.40 per share has a yield that exceeds the S&P 500 average at our current share price.
Inclusive of this base increase, the quarter's base plus variable dividend results in a total dividend payout of $8.57 per share to be paid in mid-September. As I have always said, we would aggressively repurchase shares when the market presented opportunity. Consistent with this, we repurchased $750 million since the end of the first quarter, including $500 million during the second quarter, an additional $250 million repurchased in July at an average share price of $213.
Since reinitiating stock buybacks in the fourth quarter of last year, we have retired approximately 2.5% of our shares outstanding. Additionally, we recently published our 2022 sustainability report, which highlights our focus and significant progress on ESG initiatives including accelerating our target to end routine flaring to 2025 and joining the Oil and Gas Methane Partnership 2.0. Pioneer places a high priority on environmental stewardship and continues to make progress towards our goals.
Going to Slide 4. Pioneer's strong execution continued during the second quarter with total production in the upper half of our guidance range, supporting significant free cash flow generation of $2.7 billion. Our horizontal LOE continues to be low and our strong balance sheet is one of the best in this sector.
Going to Slide 5. We believe that maintaining a strong and growing base dividend is the foundation of our capital return strategy. As I mentioned earlier, we have further strengthened our base dividend with a significant increase of greater than 40% from last quarter. This material increase is underpinned by our balance sheet strength and our durability of our cash flow across commodity price cycles. Inclusive of this increase, our base dividend has grown by an average of 95% annually over the previous 6 years. This increase significantly outpaces both peers and majors over the same period, many of which have cut or suspended their dividend.
Going to Slide 6. Complementing our strong shareholder cash returns through dividends, we continue to repurchase our shares opportunistically. We have executed $1.25 billion since the fourth quarter of 2021, at an average share price of $218. This represents a reduction of total shares outstanding by approximately 2.5%.
Consistent with our statements to be aggressive during market opportunities, we repurchased an additional $250 million in stock during the market pullback in July at an average share price of $213. As evidenced by the repurchase during July, we will continue to utilize 10b-5 programs to take advantage of market opportunities. To-date, we have utilized one quarter of our current $4 billion authorization, leaving $3 billion remaining.
Going to Slide 7. We remain committed to our core investment thesis underpinned by low leverage, strong corporate returns and lower reinvestment rate. This delivers oil production growth of up to 5% annually and generates significant free cash flow. The majority of this free cash flow was returned to shareholders in the form of base plus variable dividends, with total cash returned in dividends representing approximately 80% of our free cash flow. This compelling cash return is enhanced by opportunistic share repurchases and continued balance sheet fortification. When including second quarter share repurchase, we returned greater than 95% of second quarter free cash flow which equates to an annualized yield of approximately 19%.
Going to Slide 8. Pioneer's capital return framework remains best-in-class. With the return of capital framework described on the prior slide, you can see here Pioneer's forecasting lead all peers in the percentage of free cash flow being returned to shareholders through dividend and share repurchases.
Going to Slide 9. Dividends grew cycle, Pioneer high-quality assets, low breakeven, disciplined oil growth of up to 5% provides ability to return significant free cash flow through dividends over a wide range of commodity prices, inclusive of the impact of expected cash taxes.
As seen on the graph, if oil prices were to average $60 per barrel over the next 5 years, Pioneer shareholders will receive approximately 5% annual yield at current share prices. This yield is over 2.5 times more than the S&P 500 average. Again, that is $60 WTI flat. At $100 WTI flat, which I believe will be the most likely outcome over the next 5 years as we march forward, as demand continues to increase with minimal supply increases, the yield is 12%. So, significant upside.
On to Slide 10. The third quarter dividend payments outlined previously resulted in an extremely compelling annualized yield of approximately 15%. This yield exceeds all peers, majors in the average yield of the S&P 500.
Going to Slide 11. Pioneer's 15% annualized dividend yield surpasses the S&P 500 average by greater than 7 times. When looking beyond our peer group to the broader market, Pioneer's dividend yield exceeds every S&P 500 sector and remains higher than any individual company in the S&P 500, with our double-digit dividend yield, complement share repurchases and up to 5% oil growth, the case for owning Pioneer stock is compelling.
I will now turn it over to Rich.