Why Is Pioneer Natural (PXD) Down 20.6% Since the Last Earnings Report?

It has been about a month since the last earnings report for Pioneer Natural Resources Company PXD. Shares have lost about 20.6% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Pioneer Natural Q2 Earnings Top on Increased Drilling

Pioneer Natural Resources reported second-quarter 2017 earnings of $0.21 per share, excluding one-time items. The bottom line surpassed the Zacks Consensus Estimate of $0.11 per share. Notably, the company had incurred adjusted loss of $0.22 per share in the year-earlier quarter. 

Revenues and other income in the quarter surged 107.4% year over year to $1,630 million from $786 million. The top line also beat the Zacks Consensus Estimate of $1,309 million.

Significantly high commodity price realizations along with the Spraberry/Wolfcamp horizontal drilling program resulted in the strong quarterly performance.

Production

Total production in the reported quarter averaged 259.1 thousand barrels of oil equivalent per day (MBOE/d), up 12% year over year. The Spraberry/Wolfcamp horizontal drilling program of the company led to the outperformance.

Oil production averaged 146.9 thousand barrels per day (MBbl/d), up 9% year over year. Natural gas liquids (NGLs) production jumped 29.4% year over year to 53.3 MBbl/d. Natural gas productions increased to 353.6 million cubic feet per day (MMcf/d) from the year-ago level of 340.5 MMcf/d.  

Price Realization

On an oil equivalent basis, average realized price was $32.56 per barrel in the reported quarter as compared with $28.95 a year ago. The average realized price for oil was $45 a barrel compared with $41.43 in second-quarter 2016.   

Average natural gas price surged 56.8% year over year to $2.62 per thousand cubic feet (Mcf). Natural gas liquids were sold at $16.91 a barrel versus $14.21 in the year-ago quarter.

Cash, Debt and Capex

At the end of the quarter under review, cash balance was $660 million. Long-term debt totaled $2,281 million, reflecting a debt-to-capitalization ratio of 20.5%.     

Guidance

For 2017, Pioneer intends to spend $2.7 billion, lower than the prior projection of $2.8 billion. Of this, it has planned drilling and completion capex of $2.4 billion and spending budget for water infrastructure, vertical integration and field facilities of $275 million.

Pioneer expects production in the range of 274 MBOE/d to 279 MBOE/d for the third quarter of 2017.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to nine lower.

Pioneer Natural Resources Company Price and Consensus

 

Pioneer Natural Resources Company Price and Consensus | Pioneer Natural Resources Company Quote

VGM Scores

At this time, the stock has a strong Growth Score of A, though it is lagging a lot on the momentum front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.

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