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Pioneer Natural Resources Company (PXD - Analyst Report) reported second quarter 2013 adjusted earnings of $1.10 per share, missing the Zacks Consensus Estimate of $1.12. However, the earnings increased from the year-earlier adjusted income of 78 cents per share. The growth was mainly backed by higher price realization.

Revenues and other income in the quarter increased 28.7% year over year to $1,181.7 million from $918.0 million, and comfortably surpassed the Zacks Consensus Estimate of $898.0 million.

Production

Total production in the reported quarter averaged approximately 176.2 thousand barrels of oil equivalent per day (MBOE/d), up 17.1% year over year. The growth was attributable to robust yield in core growth assets – Spraberry field, Wolfcamp Shale and Eagle Ford Shale.

Oil production averaged 75.1 thousand barrels per day (MBbl/d), showing a significant improvement of 22.2% year over year. Natural gas liquids (NGLs) production surged 27.7% year over year to 34.4 MBbl/d. Natural gas production increased to 400.3 million cubic feet per day (MMcf/d) from the year-ago level of approximately 372.7 MMcf/d.

Price Realization

On an oil equivalent basis, the average realized price was $52.71 per barrel in the reported quarter versus $46.86 in the year-ago quarter. The average realized price for oil was $90.82 per barrel compared with $88.32 in second quarter 2012.

Average natural gas price jumped 87% year over year to $3.74 per Mcf. Natural gas liquids were sold at $28.19 per barrel, down from $32.62 in the year-ago quarter.

Cash, Debt & Capex

At the end of the quarter, cash balance was $695.6 million. Long-term debt was $2,823.4 million, representing a debt-to-capitalization ratio of 27.0% (versus 29.3% in the preceding quarter).

Capital Outlay

In 2013, Pioneer plans to spend $3.0 billion in total. Of this, planned drilling capex is $2.75 billion and capital for vertical integration is $0.24 billion.

During the quarter, an amount of $717 million was spent on drilling.

Third Quarter Guidance

Pioneer expects production to average 174–179 MBOE/d for the third quarter of 2013.

Production costs are expected between $14.00 and $16.00 per BOE, and depletion, depreciation and amortization expense is expected to average $14.50 to $16.50 per BOE. The exploration expense guidance is $25–$35 million and the tax rate is expected at 35–40%.

Our Take

Pioneer carries a Zacks Rank #3 (short-term Hold rating). However, there are other Zacks Ranked #1 (Strong Buy) stocks in the oil and gas industry like Range Resources Corporation (RRC - Analyst Report), Gulfmark Offshore, Inc. (GLF - Snapshot Report) and Dril-Quip, Inc. (DRQ - Analyst Report) that appear attractive in the short term.
 

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