Rich Dealy
President and Chief Operating Officer at Pioneer Natural Resources
Thanks, Scott, and good morning, everybody. I'm going to turn and start on Slide 6. where you can see the development of our high-return assets compared with our peer-leading margins is expected to generate approximately $27 billion of free cash flow over the next five years at $80 WTI. As Scott mentioned, we are modifying how we return free cash flow to improve our financial flexibility and balance sheet while also maintaining a significant return of capital to shareholders. The modified framework provides the flexibility to allocate capital returns after the base dividend between variable dividends and share repurchases based on what provides the best value for shareholders. Under the refined capital framework, 75% of our quarterly free cash flow, starting with the second quarter, will return to shareholders through a combination of base dividends, variable dividends and opportunistic share repurchases. A strong and growing base dividend remains our highest return of capital priority.
In total, 75% of our quarterly cash flow will be directed towards capital returns, while the remaining 25% will be used to increase financial flexibility and further strengthen our balance sheet. As you can see on the slide, we expect to return a significant amount of free cash flow to investors over the next five years. Turning to Slide 7. We are further strengthening the foundation of our capital return strategy by increasing our quarterly base dividend by 14% to $1.25 per share or $5 per share on an annualized basis. This increase is incorporated into this quarter's base plus variable dividend that will be paid in June and reflects the -- or sixth consecutive years of base dividend increases. With this increase, our base dividend yield of greater than 2% surpasses the average S&P 500 dividend yield. Turning to Slide 8. During the first quarter, Pioneer repurchased $500 million of stock at an average price of $206 per share, demonstrating our willingness to step into the market during dislocations such as we saw in March.
In total, Pioneer has repurchased $2.1 billion in equity since the beginning of 2022, reducing shares outstanding by approximately 4%, which has benefited long-term shareholder returns and per-share metrics. Further enhancing our strong shareholder returns, the Board of Directors has approved a new $4 billion share repurchase authorization, providing additional capacity to return capital through opportunistic share repurchases. This replaces the previous authorization, which had $1.9 billion remaining. Turning to Slide 9. Pioneer's return of capital framework, which returns at least 75% of quarterly free cash flow remains amongst the strongest when compared to peers as illustrated by the graph on the left. Our modified framework provides the flexibility to allocate capital returns after our strong base dividend between variable dividends and share repurchase based on what provides the best value for shareholders. This peer-leading return capital strategy is sustained by our disciplined reinvestment rate and our deep inventory of high rate of return wells.
Turning to Slide 10. The graphic on the right illustrates the compelling free cash flow generation that our program is expected to produce over the next five years at various oil prices. The combination of our world-class assets top-tier margins and moderate oil growth generates cumulative free cash flow of approximately $27 billion through 2027, assuming an $80 WTI oil price. As you can see, our return of capital framework is expected to return about approximately 40% of our current market cap to shareholders during the same time frame also at $80. Even at $60 WTI, our program is expected to generate approximately $13 billion in cumulative free cash flow over the next five years, demonstrating the durability of our program even at lower oil prices. Our robust and durable free cash flow generation paired with our commitments to substantial capital returns delivers compelling value to shareholders through cycle. Turning to Slide 11.
You can see here that we are reiterating our 2023 outlook with full-year production and capital guidance remaining unchanged. The company plans to deliver 2023 full-year oil production ranging from 357,000 to 372,000 barrels of oil per day and total production ranging from 670,000 to 700,000 barrels of oil equivalent per day, resulting in moderate production growth consistent with our investment framework. Both our drilling, completions and facilities capital budget of $4.45 billion to $4.75 billion, and our exploration, environmental and other capital budget of $150 million to $200 million are unchanged. As we've discussed previously, key projects within the exploration, environmental and other category includes exploration drilling of four wells targeting the Barnett and Woodford formations in the Midland Basin as well as continued appraisal of our enhanced oil recovery project. Based on the midpoints of our capital and production ranges, at strip pricing, we expect to generate greater than $4 billion of free cash flow in 2023 from approximately $9 billion of projected operating cash flow. Turning to Slide 12.
You can see it provides additional detail on our 2023 capital program. During 2023, we expect to operate between 24 and 26 drilling rigs and placed between 500 and 530 wells on production. Our 2023 drilling and completion activity continues to be distributed across our large and contiguous Midland Basin acreage position with approximately three drilling rigs operating in our joint venture area in the South. This unmatched acreage position provides a scalable operational advantages such as drilling, completing our 15,000-plus foot laterals with greater than 100 of these wells expected to be placed on production throughout the year. We also benefit from the continued utilization of simulfrac operations as well as localized sand mines, which both reduce costs and provide incremental operational efficiencies. Additionally, our significant water infrastructure provides a diversified disposal and reuse network that spans across most of our acreage position.
Turning to Slide 13. As previously discussed, we are continuing to realize improved return, strong productivity from drilling our 15,000-foot lateral wells. Developing these long laterals drive significant efficiency gains to reduce capital costs with drilling and completion savings of approximately 15% per lateral foot. The combination of these savings and strong productivity drive increased returns with IRRs increasing by more than 20 percentage points when compared to a 10,000-foot lateral. To date, we have identified more than 1,000 locations for long lateral development, supported by our highly contiguous acreage position and expect more than 100 of these wells we placed on production in 2023. Turning to Slide 14 and looking at the chart on the left, you can see Pioneer's peer-leading completions efficiencies and multiyear track record of efficiency improvement. We are now operating three full-time simulfrac fleets with which continues to be a major contributor to our high efficiencies and cost savings. Additionally, during the second quarter of 2023, Pioneer will add its second localized sand mine for completions operations.
The use of localized sand is providing average savings of approximately $200,000 per well, principally due to reduced trucking costs resulting from the mine's close proximity to our wells. Pioneer expects 100% of our completions place to be either electric or dual fuel powered by the second half of 2023, both reducing emissions and capturing cost savings opportunities based on fuel prices. Turning to Slide 15 on the left, Pioneer has the deepest inventory of high-return Permian drilling locations when compared to peers. This third-party analysis presents Pioneer as a premier independent oil and gas operator across North America with decades of high-quality inventory in the core of the Midland Basin at breakeven oil price of less than $50 WTI.
With that, I'll turn it over to Neal.
