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Analyst Blog

Pioneer Natural Resources Company (PXD - Analyst Report) reported third quarter 2013 adjusted earnings of $1.26 per share, missing the Zacks Consensus Estimate of $1.34. However, the results increased from the year-earlier adjusted income of 82 cents per share. The growth was mainly backed by higher price realization.

Revenues and other income in the quarter increased 34.3% year over year to $826.8 million from $615.4 million, but failed to match the Zacks Consensus Estimate of $969.0 million.

Production

Total production in the reported quarter averaged approximately 172.6 thousand barrels of oil equivalent per day (MBOE/d), up 8% 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 74 thousand barrels per day (MBbl/d), showing an improvement of 14.9% year over year. Natural gas liquids (NGLs) production surged 13.8% year over year to 37.4 MBbl/d. Natural gas production decreased to 367.8 million cubic feet per day (MMcf/d) from the year-ago level of approximately 376.4 MMcf/d.

Price Realization

On an oil equivalent basis, the average realized price was $57.23 per barrel in the reported quarter versus $48.70 in the year-ago quarter. The average realized price for oil was $101.83 per barrel compared with $89.88 in third quarter 2012.

Average natural gas price jumped 26.7% year over year to $3.32 per Mcf. Natural gas liquids were sold at $30.17 per barrel, down from $30.96 in the year-ago quarter.

Cash, Debt & Capex

At the end of the quarter, cash balance was $744.1 million. Long-term debt was $2,851.2 million, representing a debt-to-capitalization ratio of 26.9% (versus 27.0% in the preceding quarter).

Capital Outlay

During the quarter, an amount of $608 million was spent on drilling. The full-year budget is $3.0 billion. Of this, the planned drilling capex is $2.75 billion and capital for vertical integration is $0.24 billion.

Fourth Quarter Guidance

Pioneer expects production to average 179–184 MBOE/d for the fourth 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 $15.50 to $17.50 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 (Hold). However, there are other Zacks Ranked #1 (Strong Buy) stocks in the oil and gas industry like TransAtlantic Petroleum Ltd (TAT - Snapshot Report), Matador Resources Company (MTDR - Snapshot Report) and Northern Oil and Gas, Inc. (NOG - Snapshot Report) that appear attractive in the short term.

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