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Pioneer Natural (PXD): What's in Store this Earnings Season?
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Independent oil and gas exploration and production company, Pioneer Natural Resources Company (PXD - Free Report) , is expected to report third-quarter 2016 earnings on Nov 1.
Last quarter, the company’s adjusted loss of 22 cents per share was substantially narrower than the Zacks Consensus Estimate of a loss of 34 cents. Notably, the company had posted adjusted earnings of 10 cents per share in the year-earlier quarter. In fact, the company posted an average positive earnings surprise of 46.49% in the last four quarters.
Let’s see how things are shaping up prior to the announcement.
Pioneer Natural’s focus on oil and liquids-rich drilling is evidenced by the acceleration of activities in the horizontal Wolfcamp Shale play, where it holds the key position with more than 400,000 potential acres. The northern Wolfcamp/Spraberry acreage is expected to hold about 3 billion barrels of oil equivalent of resource potential. Moreover, the company’s recent purchase of 28,000 Midland acres from Devon emphasizes its intention to make profitable deals to augment its acreage.
Turning to cost efficiency, Pioneer Natural continues to lower its drilling and completion expenses, while its production cost is also on a downswing – an impressive achievement amid the low commodity price scenario.
However, Pioneer Natural uses certain derivative financial instruments (like hedging) from time to time to manage price risks associated with production. These hedging arrangements expose the company to the risk of financial loss and limit the benefit of increase in natural gas and oil prices.
Moreover, crude prices declined persistently owing to high crude stockpiles, as imports increased and refiners scaled down their utilization rates. The price of West Texas Intermediate crude is now hovering around $50 per barrel and is expected to stay there in the near term. The plunge in crude prices provided little incentive to oil exploration and production companies to hire drilling rigs. This amplified the rig oversupply concern.
Earnings Whispers
Our proven model does not conclusively show that Pioneer Natural is likely to beat estimates this quarter as it does not have the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 19 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Pioneer Natural Resources currently has a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s Earnings ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
While an earnings beat looks uncertain for Pioneer Natural Resources, here are some firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat this quarter:
Devon Energy Corp (DVN - Free Report) , which is expected to release earnings results on Nov 1, has an Earnings ESP of +20.00% and a Zacks Rank #2.
Spectra Energy Corp. (SE - Free Report) has an Earnings ESP of +12.50% and a Zacks Rank #3. The company is expected to release third-quarter earnings results on Nov 2.
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Pioneer Natural (PXD): What's in Store this Earnings Season?
Independent oil and gas exploration and production company, Pioneer Natural Resources Company (PXD - Free Report) , is expected to report third-quarter 2016 earnings on Nov 1.
Last quarter, the company’s adjusted loss of 22 cents per share was substantially narrower than the Zacks Consensus Estimate of a loss of 34 cents. Notably, the company had posted adjusted earnings of 10 cents per share in the year-earlier quarter. In fact, the company posted an average positive earnings surprise of 46.49% in the last four quarters.
Let’s see how things are shaping up prior to the announcement.
PIONEER NAT RES Price and EPS Surprise
PIONEER NAT RES Price and EPS Surprise | PIONEER NAT RES Quote
Factors Likely to Affect Earnings
Pioneer Natural’s focus on oil and liquids-rich drilling is evidenced by the acceleration of activities in the horizontal Wolfcamp Shale play, where it holds the key position with more than 400,000 potential acres. The northern Wolfcamp/Spraberry acreage is expected to hold about 3 billion barrels of oil equivalent of resource potential. Moreover, the company’s recent purchase of 28,000 Midland acres from Devon emphasizes its intention to make profitable deals to augment its acreage.
Turning to cost efficiency, Pioneer Natural continues to lower its drilling and completion expenses, while its production cost is also on a downswing – an impressive achievement amid the low commodity price scenario.
However, Pioneer Natural uses certain derivative financial instruments (like hedging) from time to time to manage price risks associated with production. These hedging arrangements expose the company to the risk of financial loss and limit the benefit of increase in natural gas and oil prices.
Moreover, crude prices declined persistently owing to high crude stockpiles, as imports increased and refiners scaled down their utilization rates. The price of West Texas Intermediate crude is now hovering around $50 per barrel and is expected to stay there in the near term. The plunge in crude prices provided little incentive to oil exploration and production companies to hire drilling rigs. This amplified the rig oversupply concern.
Earnings Whispers
Our proven model does not conclusively show that Pioneer Natural is likely to beat estimates this quarter as it does not have the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 19 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Pioneer Natural Resources currently has a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s Earnings ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
While an earnings beat looks uncertain for Pioneer Natural Resources, here are some firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat this quarter:
Vertex Energy Inc (VTNR - Free Report) , which is expected to release earnings results on Nov 3, has an Earnings ESP of +37.50% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Devon Energy Corp (DVN - Free Report) , which is expected to release earnings results on Nov 1, has an Earnings ESP of +20.00% and a Zacks Rank #2.
Spectra Energy Corp. (SE - Free Report) has an Earnings ESP of +12.50% and a Zacks Rank #3. The company is expected to release third-quarter earnings results on Nov 2.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>