Looking back on 31 years as CEO of Pioneer Natural Resources and its predecessor, Parker & Parsley, Scott Sheffield said he never imagined the company would become what it did—one of the largest U.S. independents and among the top shale companies in the world.

“It’s a total surprise,” he said, when asked about the success of the companies he’s led. “It’s really just hard work, hiring good people and making the right decisions at the right time.”

Sheffield is retiring at year-end, and Oil and Gas Investor bestowed upon him an industry leadership award at Hart Energy’s recent Executive Oil Conference in Midland.

Given the opportunity at the conference, I wanted to explore what’s made Pioneer so successful under his watch. The list is long but simple, with a common theme: people. It all starts with the corporate culture.

“We respect and treat everybody the same, down to the field level. We have a very open culture. The people you hire have to have those core values.”

Sheffield reflected back to when he was the sixth person hired at Parker & Parsley in 1979, and the first staff engineer coming off of his first job at Arco. “It’s just the way Joe [Parsley] and Howard [Parker] treated everybody. It’s the values you learn from your parents.”

That’s why even today, with 3,600 employees, Sheffield likes to hire people who someone on the inside knows, if possible, “because you already know their values.”

By 1989, Sheffield had risen to CEO, and he took Parker & Parsley public. Shortly thereafter he experienced his first “360 Degree Feedback,” a process in which the management team reversed roles and told him ways he could improve his management style while he sat quietly and listened. Now the process is embedded in Pioneer’s culture.

“A lot of companies tell their employees what to do instead of asking for feedback,” he said. At Pioneer, “feedback goes both ways. Instead of managers just giving feedback to subordinates, we try to have a two-way dialogue between subordinates and managers all the way up to the top. It’s something we still do today.”

In that first 360, Sheffield learned he dominated manager meetings by asking questions, “which I did to learn,” but he didn’t give others the opportunity to ask questions themselves.

“So I developed a style to be more of a listener. It’s hard to develop your people if you’re asking 90% of the questions. It’s important for everyone to understand what’s going on with an assignment or project.”

In 1997, Parker & Parsley famously merged with Mesa Petroleum, creating Pioneer. Once the company grew, a package of premier employee benefits kept top talent in the fold: a 2-for-1 401(k) match, a full workout facility, a cafeteria. Additionally, Sheffield held companywide quarterly meetings to go over the past quarter, hand out service awards and give employees the opportunity to ask questions. “We do it to engage employees.”

His words of wisdom extend beyond people. “Stay focused; don’t diversify,” he said. “We diversified all over the world because we thought the Permian Basin was drilled up. We did a full circle.

“Have a great balance sheet. Have zero debt. Even though universities tell you to use bank debt as the cheapest form of debt, don’t use it. And if you do, deleverage quickly thereafter.”

Also, “Know when to go to the equity markets and when to sell assets. Don’t listen to Wall Street—do what you think is best.”

Pioneer tapped the equities market a month before OPEC’s Thanksgiving Surprise meeting to the chagrin of analysts. “Everybody thought we were crazy, but it’s the smartest thing we ever did.”

And, “Don’t fall in love with the oil price. When it gets up there, don’t think it’s going higher and higher. Be prepared for that downturn.”

Sheffield believes oil markets will be choppy for the next 20 years, as OPEC has lost its ability to control the stability or upward movement of price, although it can still crater the price.

“There is no more OPEC,” he said. “They only control 30% of world production, and a cartel can’t control if they only own 30%.”

Finally, “Think long term. I used to think out a week or a month—that next rig or next well—maybe a year. Now we have a 10-year plan at Pioneer.”

Sheffield believes one of the biggest challenges the industry will face over the next 20 years regards how the world thinks about hydrocarbons.

“We’re living in a world where our industry is not favored and where people don’t appreciate what we’ve done. When you look on social media at which industries are viewed the least favorably, ours is at the bottom.

“The environmentalists talk about how dangerous it is; they don’t realize 70% of what is in their homes comes from our industry. We have to educate and change public opinion.” His legacy? “I just want to see this company continue to prosper through this same culture.” May it be so.

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