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Pioneer Natural Boosts Buyback on Strong Permian Operations

Pioneer Natural Resources Company PXD recently got consent from board of directors to buy back shares worth $2 billion. The amount represents around 8% of its current market capitalization. This new share repurchase program will replace the previous $100-million authorization, which was announced in February.

The new buyback program is in line with the company’s 10-year plan of consistently returning capital back to the shareholders. This strong commitment is backed by Pioneer Natural’s focus on prolific Permian Basin where the company owns more than 20,000 drilling locations. The company expects this huge inventory of wells to generate significant free cashflows and hence will back its stock repurchases. Notably, in the trailing twelve months, Pioneer Natural generated $80 million of free cashflow, turning around from $259 million of negative free cashflow in 2017.

The company plans to use its cash flows and cash balance to fund the buyback. At the end of the third quarter, Pioneer Natural’s cash balance totaled $919 million. The company has a debt-to-capitalization ratio of only 16.1%, reflecting strong balance sheet. This enables the company to return value to its shareholders through the repurchase programs, which is a good way of building investors’ confidence. At the end of the third quarter, the company’s common shares outstanding were 171 million.

Price Performance

Dallas, TX-based Pioneer Natural, an independent oil and gas exploration and production company, has lost 11.5% over the past year compared with 30.4% collective fall of the industry it belongs to.

Zacks Rank and Stocks to Consider

Currently, the stock carries a Zacks Rank #3 (Hold). Investors interested in the energy sector can opt for some better-ranked stocks given below.

Cabot Oil & Gas Corporation COG is an exploration and production company that sports a Zacks Rank #1 (Strong Buy). The company’s bottom line for 2018 is likely to improve 113% year over year. You can see the complete list of today’s Zacks #1 Rank stocks here.

SilverBow Resources Inc. SBOW, another upstream company that holds a Zacks Rank #1, is expected to witness 19% top-line growth in 2018.

Approach Resources Inc. AREX is an upstream energy company, which carries a Zacks Rank #2 (Buy). The company’s bottom line for 2018 is anticipated to improve 33.3% year over year.

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Cabot Oil & Gas Corporation (COG) : Free Stock Analysis Report
 
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