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Pioneer Natural (PXD) Q2 Earnings Beat on Permian Volumes

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Pioneer Natural Resources Company (PXD - Free Report) reported second-quarter 2019 earnings per share of $2.01, excluding one-time items, beating the Zacks Consensus Estimate of $1.88 and improving from the year-ago quarter’s $1.41.

Revenues and other income declined 9% year over year to $1,923 million from $2,111 million a year ago. The top line also missed the consensus mark of $2,378 million.

The strong quarterly earnings were attributed to ramped-up Permian operations, offset partially by lower oil equivalent price realizations.

Dividend Hike, Share Buyback

The company announced that it has received approval from the board of directors to hike quarterly dividend to 44 cents per share.  The new dividend, representing a 175% sequential increase, is likely to be paid on Oct 10 to shareholders of record as of Sep 27.

Through the June quarter, the explorer bought back $200 million of shares as part of its $2-billion repurchase program.

Production

Total production in the reported quarter averaged 334.2 thousand barrels of oil equivalent per day (MBOE/d), up almost 2% year over year. The upside can be attributed to higher activities in the Permian Basin.

Oil production averaged 207.4 thousand barrels per day (MBbl/d), up 12% year over year. Natural gas liquids (NGLs) production of 67.1 MBbl/d was higher than the year-ago quarter figure of 64.5 MBbl/d. However, natural gas production amounted to 357.9 million cubic feet per day (MMcf/d) but was down from the year-ago quarter’s 466.4 MMcf/d.

Price Realization

On an oil equivalent basis, average realized price was $39.35 per barrel in the reported quarter compared with $43.12 a year ago. The company reported average realized crude price at $55.50 a barrel, down from $61.20 in the June quarter of 2018.   

Average natural gas price dropped 55% year over year to 89 cents per thousand cubic feet (Mcf). Natural gas liquids were sold at $19.63 a barrel, down from $28.83 a year ago. 

Cash, Debt and Capex

At the end of the quarter under review, cash balance totaled $643 million. Long-term debt summed $1,837 million, reflecting a debt-to-capitalization ratio of 16.2%.

Through the June quarter, the company spent $730 million for operations in the Permian basin.

Guidance

Pioneer Natural continues to project production in the Permian Basin at the range of 320-335 MBOE/D for 2019. This suggests a year-over-year increase of 12% to 17%.

For the September quarter, the company projects production at the band of 333-348 MBOE/D.

For 2019, the upstream energy player’s recently revised capital budget is at the band of $3.05 billion to $3.25 billion.

Zacks Rank & Stocks to Consider

Pioneer Natural currently carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include World Fuel Services Corporation (INT - Free Report) , MPLX LP (MPLX - Free Report) and Oasis Midstream Partners LP (OMP - Free Report) . While World Fuel sports a Zacks Rank #1 (Strong Buy), MPLX and Oasis carry a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.   

World Fuel beat the Zacks Consensus Estimate in each of the prior four quarters, the average positive earnings surprise being 16.4%.

MPLX is likely to see earnings growth of 23.6% through 2019.

Oasis Midstream has an average positive earnings surprise of 0.3% for the past four quarters.

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