On Aug 21, 2014, we issued an updated research report on the
third largest driller in the country,
Pioneer Natural Resources Company
). The Irving, TX-based independent oil and gas exploration and
production company is focused on enhancing its operational
effectiveness. The asset base of the company is mainly located in
the Spraberry oil field in West Texas, the Hugoton gas field in
Southwest Kansas and the West Panhandle gas field in Texas
Management's focus on improving operational effectiveness is
reflected in the company's reported output. Total production in the
second quarter of 2014 averaged approximately 182.7 thousand
barrels of oil equivalent per day (MBOE/d), up 11.8% year over
Pioneer Natural Resources has delivered positive earnings
surprises in two of the last four quarters, with an average beat of
5.52%. The company reported mixed financial results for the second
quarter of 2014 with earnings beating estimates, but revenues
lagging the same. Earnings were boosted by higher price
realization. On an oil equivalent basis, the average realized price
was $57.64 per barrel versus $52.52 in the year-ago quarter.
Going forward, Pioneer Natural Resources' oil-weighted reserve
base and large drilling inventory (over 20,000 liquids-rich
drilling locations in low-risk resource plays) with significant
resource potential would be catalysts to unlock value for
shareholders. The company offers a deep inventory of high-return,
liquids-leveraged drilling opportunities.
Pioneer expects production to average 181-186 MBOE/d for the
third quarter of 2014. Production costs are expected between $13.50
and $15.50 per BOE, and depletion, depreciation and amortization
expense is expected to average $14.00 to $16.00 per BOE. The
projected range is $70-$75 million for general and administrative
expense, $44-$49 million for interest expense and $25-$35 million
for other expenses. Exploration and abandonment expense guidance is
$25-$35 million while the expected tax rate is 35-40%. We see the
guidance as a positive, given encouraging results from its
horizontal Wolfcamp program.
However, as is the case with other independent exploration and
production companies, results of Pioneer Natural Resources are
directly exposed to oil and gas prices, which are inherently
volatile and subject to complex market forces. Realized prices
could differ significantly from our estimates, thereby affecting
the company's revenues, earnings and cash flow.
Stocks that Warrant a Look
Pioneer Natural Resources carries a Zacks Rank #3 (Hold). Some
better-ranked stocks in the oil and gas sector include Weatherford
International plc (
), Sanchez Energy Corporation (
) and Sunoco Logistics Partners L.P (
). All of these sport a Zacks Rank #1 (Strong Buy) and would offer
above-average returns to investors.
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PIONEER NAT RES (PXD): Free Stock Analysis
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SANCHEZ ENERGY (SN): Free Stock Analysis Report
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