Back to top

Image: Bigstock

Pioneer Natural (PXD) Closes Delaware Basin Asset Divestiture

Read MoreHide Full Article

Pioneer Natural Resources Company (PXD - Free Report) recently announced that its divesture of Delaware Basin assets to Continental Resources (CLR - Free Report) has been completed. Following normal closing adjustments, the transaction was closed for cash proceeds of $3.1 billion.

Pioneer Natural initially assumed that its fourth-quarter and full-year guidance will include the asset in financial results. But, now, Pioneer Natural announced that it will not include any results related to Delaware Basin in its December quarter after Dec 20. This was due to the fact that Pioneer Natural has completed the divesture on Dec 21.

Continental Resources earlier mentioned that the transaction, signaling its entrance in Permian – the most prolific basin in the United States – will significantly boost its free cashflows. The acquisition has brightened Continental Resources’ long-term production outlook. This is because Continental Resources expects more than 1000 locations in the area.

The latest deal closure signifies that with recovering crude prices from the coronavirus pandemic's low mark reached last year, Continental Resources has taken advantage of closing the accord to ramp up production. The Delaware Basin assets that Continental Resources has purchased spread over 92,000 net acres.

Pioneer Natural is representing the deal closure as its prime intention of diverting its entire focus to more profitable Midland Basin assets. Thus, in the lucrative Midland Basin, Pioneer Natural has established itself as the only large-cap exploration and production pure play.

Currently, both Pioneer Natural and Continental Resources carry a Zacks Rank #3 (Hold). Meanwhile, two better-ranked players in the energy space are PDC Energy, Inc. (PDCE - Free Report) and SM Energy (SM - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PDC Energy is focusing on significant value creation with a strong presence in the Delaware Basin – a sub-basin of Permian – where the company’s operations spread across roughly 25,000 net acres. This year, PDC Energy has done pretty well despite the coronavirus pandemic and is projecting a 2021 free cash flow of more than $900 million.

PDC Energy also focuses on debt reduction. To strengthen its balance sheet, PDC Energy is anticipating reducing its debt load by more than 40% in 2021.

SM Energy is also a leading upstream player with a strong footprint in top-tier assets. SM Energy is delivering the best-in-class well performances. Since the beginning of 2021 to the third quarter-end, SM Energy has completed 78 net wells with the projection for the completion of 82 net wells.

Over the past seven days, SM Energy has witnessed upward earnings estimate revisions for 2021. So far this year, SM Energy has gained 373.9%, outpacing the surge of 98.7% of the composite stocks belonging to the industry.