Advertisement
Canada markets closed

  • S&P/TSX

    21,969.24
    +83.86 (+0.38%)
     

  • S&P 500

    5,099.96
    +51.54 (+1.02%)
     

  • DOW

    38,239.66
    +153.86 (+0.40%)
     

  • CAD/USD

    0.7316
    -0.0007 (-0.09%)
     

  • CRUDE OIL

    83.66
    +0.09 (+0.11%)
     

  • Bitcoin CAD

    85,720.00
    -2,436.30 (-2.76%)
     

  • CMC Crypto 200

    1,305.96
    -90.58 (-6.49%)
     

  • GOLD FUTURES

    2,349.60
    +7.10 (+0.30%)
     

  • RUSSELL 2000

    2,002.00
    +20.88 (+1.05%)
     

  • 10-Yr Bond

    4.6690
    -0.0370 (-0.79%)
     

  • NASDAQ

    15,927.90
    +316.14 (+2.03%)
     

  • VOLATILITY

    15.03
    -0.34 (-2.21%)
     

  • FTSE

    8,139.83
    +60.97 (+0.75%)
     

  • NIKKEI 225

    37,934.76
    +306.28 (+0.81%)
     

  • CAD/EUR

    0.6838
    +0.0017 (+0.25%)
     

Is Pioneer Natural Poised for Growth Despite Pricing Woes?

Zacks Equity Research
Updated

We issued an updated research report on independent oil and gas exploration and production company, Pioneer Natural Resources Company PXD on Aug 17, 2015.

Pioneer Natural Resources reported better-than-expected second-quarter 2015 earnings. Moreover, it continues to deliver strong production growth. However, being a firm in the upstream energy space, its financials depend on commodity prices that remain weak. This is reflected in Pioneer Natural Resources’ current Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.

On Aug 4, the company’s quarterly earnings of 10 cents per share comfortably surpassed the Zacks Consensus Estimate of 3 cents. Strong production from its core growth areas – Spraberry field and Wolfcamp Shale – led to the beat. Moreover, the company maintained its production growth projection for 2015 of over 10%.

Despite the weak pricing environment, the company maintained its decision of adding rigs for the development of its key growth areas and has also increased capital spending projection for the same.

Moreover, Pioneer Natural Resources’ strong hedging position cushions it from commodity price fluctuations. The company has hedged most of its 2015 and 2016 production at promising levels.

However, we remain concerned about the company’s prospect if the weakness in commodity prices persists for long. Low realizations mar the benefits from production growth as was evident from the company’s quarterly results. Earnings and revenues in the reported quarter declined substantially from that in the prior-year quarter.

Also, with low realizations hampering profits and the company increasing capital spending, cash flows could come under pressure.

Stocks to Consider

Some better-ranked players from the oil and gas exploration and production space are QEP Resources, Inc. QEP, Sanchez Energy Corporation SN and Cobalt International Energy, Inc. CIE. All these stocks hold a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
PIONEER NAT RES (PXD): Free Stock Analysis Report
 
QEP RESOURCES (QEP): Free Stock Analysis Report
 
COBALT INTL EGY (CIE): Free Stock Analysis Report
 
SANCHEZ ENERGY (SN): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research