Why Is Pioneer Natural Resources (PXD) Up 4.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Pioneer Natural Resources (PXD). Shares have added about 4.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Pioneer Natural Resources due for a pullback? 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 Q2 Earnings Beat Estimates, Revenues Fall Y/Y
Pioneer Natural Resources Company reported second-quarter 2023 earnings of $4.49 per share (excluding one-time items), which beat the Zacks Consensus Estimate of $4.12. However, the bottom line declined from the year-ago quarter’s level of $9.36.
Total quarterly revenues of $4,599 million missed the Zacks Consensus Estimate of $4,676 million. The top line declined from the year-ago quarter’s figure of $6,920 million.
Better-than-expected quarterly earnings were primarily driven by higher oil-equivalent production volumes. The positives were partially offset by lower realizations of commodity prices.
Dividend Cut
For the third quarter, Pioneer announced a dividend payment of $1.84 per share of common stock, which includes a variable dividend of 59 cents per share and a base dividend of $1.25. This indicates a 45% decline from the last paid-out second-quarter dividends of $3.34 per share, comprising base dividends of $1.25 and a variable dividend of $2.09. Thus, while the base dividend remained the same, the variable dividend declined.
The new dividend will likely be paid on Sep 21, 2023, to stockholders of record at the close of business on Sep 6, 2023.
Production
For second-quarter 2023, the total production was 710.7 thousand barrels of oil equivalent per day (MBoe/d), up from the year-ago quarter’s figure of 642.8 MBoe/d. The reported figure also came in higher than our estimate of 678.7 Mboe/d.
Oil production was recorded at 369.1 thousand barrels per day (MBbls/d), up from the year-ago quarter’s level of 347.9 MBbls/d and higher than our estimate of 357.9 MBbls/d. Natural Gas Liquid (NGL) production was 181.1 MBbls/d compared with the prior-year quarter’s 160.2 MBbls/d. The figure came in higher than our estimate of 169.9 MBbls/d. Natural gas production amounted to 963.1 million cubic feet per day (MMcf/d), up from the year-ago quarter’s number of 808.2 MMcf/d and higher than our estimate of 904.9 MMcf/d.
Price Realization
On an oil-equivalent basis, the average realized price was $46.03 per barrel for the reported quarter compared with $79.31 a year ago. Our estimate for the same was pinned at $49.57. The company reported an average realized crude price of $72.90 a barrel, down from $110.56 in the June-end quarter of 2022. The figure was also lower than our estimate of $74.65.
The average natural gas price declined to $1.81 per thousand cubic feet from $6.72 in the prior-year quarter. It was also lower than our estimate of $2.17. NGLs were sold at $22.43 a barrel, down from $44.21 a year ago and lower than our estimate of $29.18.
Operating Costs
Pioneer’s expenses for oil and gas production totaled $487 million, up from $478 million in the year-ago quarter. Yet, total costs and expenses declined to $3,192 million in the second quarter from $3,892 million in the year-ago period. The reported figure came in lower than our estimate of $3296.6 million.
Cash, Debt and Capex
As of Jun 30, 2023, Pioneer’s cash and cash equivalents totaled $91 million, while long-term debt was $5,010 million. In the Jun-end quarter, the company spent a total of $1.2 billion.
Outlook
For 2023, Pioneer raised its oil production guidance to 364-374 thousand barrels of oil per day (MBo/d). The company projects a total production of 697-717 MBoe/d, indicating an increase from 649.8 MBoe/d reported in 2022.
For the third quarter, Pioneer expects oil production in the range of 367-377 MBo/d and a total production of 705-725 MBoe/d.
The company gave a reduced drilling, completions, facilities and water infrastructure capital budget of $4.38-$4.58 billion for the year. Additionally, it allotted a capital budget of $150-$200 million for exploration, environmental and other capital.
PXD boasted that the capital spending would be fully funded by its $9-billion projected cash flow for this year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 9.52% due to these changes.
VGM Scores
Currently, Pioneer Natural Resources has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Pioneer Natural Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Pioneer Natural Resources belongs to the Zacks Oil and Gas - Exploration and Production - United States industry. Another stock from the same industry, Comstock Resources (CRK), has gained 3.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
Comstock reported revenues of $288.21 million in the last reported quarter, representing a year-over-year change of -69.5%. EPS of $0 for the same period compares with $1 a year ago.
Comstock is expected to post earnings of $0.10 per share for the current quarter, representing a year-over-year change of -91.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -37.9%.
Comstock has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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