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Pioneer Earnings Drop Y/Y, Tops Est

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Pioneer Natural Resources Company (PXD - Free Report) reported first quarter 2013 adjusted earnings of $1.02 per share, surpassing the Zacks Consensus Estimate of 97 cents. The quarterly earnings plunged from the year-earlier adjusted income of $1.23 per share. The decline was mainly due to lower price realization.

Revenues and other income in the quarter increased 6% year over year to $831.6 million from $784.5 million in the prior-year quarter, and comfortably surpassed the Zacks Consensus Estimate of $821.0 million.


Total production in the reported quarter averaged approximately 170.9 thousand barrels of oil equivalent per day (MBOE/d), up 16.5% 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 73.9 thousand barrels per day (MBbl/d), showing a significant improvement of 28.2% year over year. Natural gas liquids (NGLs) production surged 20.0% year over year to 33.0 MBbl/d. Natural gas production increased to 383.8 million cubic feet per day (MMcf/d) from the year-ago level of approximately 369.4 MMcf/d.

Price Realization

On an oil equivalent basis, the average realized price was $51.22 per barrel in the reported quarter versus $53.85 in the year-ago quarter. The average realized price for oil was $88.57 per barrel, compared with $100.97 in first quarter 2012.

Average natural gas price grew 25.1% to $3.14 per Mcf from the year-earlier level. Natural gas liquids were sold at $30.36 per barrel, down from $41.81 in the year-ago quarter.

Cash, Debt & Capex

At the end of the quarter, the cash balance was $430.3 million. Long-term debt was $3,017.3 million, representing a debt-to-capitalization ratio of 29.3% (versus 38.8% in the preceding quarter).

Capital Outlay

In 2013, Pioneer plans to spend $3.0 billion in total. Of this, the company has planned drilling capex of $2.75 billion and capital for vertical integration of $0.25 billion.

An amount of $70 million has been allocated for the expansion of the Brady, Texas sandmine and $145 million has been set aside for the company’s several new field buildings, including the Midland office. However, the budget excludes acquisitions, asset retirement obligations, capitalized interest and geological and geophysical G&A.

During the quarter, an amount of $759 million was spent on drilling.

Second Quarter Guidance

Pioneer expects its production to average between 174 MBOE/d and 179 MBOE/d for the second 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 $14.00 to $16.00 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 Harvest Natural Resources Inc. , Newpark Resources Inc. (NR - Free Report) and EPL Oil & Gas, Inc. that appear more attractive in the short term.

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