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Pioneer Natural Resources: Recent Stock Offering Makes Sense In Light Of 3-Way Collars On 2016 Production
Michael Fitzsimmons • 59 Comments
Michael Fitzsimmons • 59 Comments
Wed, Nov. 30, 7:30 PM
- Analysts say today's agreement to curb oil production will elevate prices through at least H1 2017, and the first to pounce on higher prices by expanding drilling will be U.S. shale explorers.
- In shale fields across the U.S., production costs have been cut roughly in half since 2014, when Saudi Arabia raised output in an attempt to drive higher-cost shale producers out of the market, but instead of killing the U.S. shale industry, the ensuing price war made shale a leaner and meaner rival.
- As an example, Concho Resources (NYSE:CXO) CEO Tim Leach says his company is on track to raise production 5% by year’s end, even though it is spending 7% less than originally budgeted for 2016.
- Continental Resources' (NYSE:CLR) Harold Hamm says U.S. oil production will rise in the wake of OPEC’s cut, and rising prices could unlock some of the thousands of drilled but uncompleted wells in the U.S.; some of CLR's ~175 uncompleted wells now will be completed in light of OPEC’s decision and the improved price outlook but the company will not add rigs.
- “As you move up the price curve and you get more confident of the outlook for future pricing, we’ll be able to add activity as cash flows grow," says Newfield Exploration (NYSE:NFX) CEO Lee Boothby.
- Among other shale-focused companies that enjoyed huge gains today: WLL, PE, OAS, SN, CRC, FANG, RSPP, PXD, XEC, EPE, WPX.
Tue, Nov. 22, 12:58 PM
- The Railroad Commission of Texas has denied Pioneer Natural Resources’ (PXD -0.9%) request to reclassify several oil wells as gas wells, believing PXD may have been looking to take advantage of a tax exemption for gas wells, FuelFix.com reports.
- PXD reportedly argued that several of its oil wells in the Eagle Ford basin should be reclassified as gas wells, saying the presence of natural gas liquids in the wells makes them gas wells.
- The commission ultimately denied PXD’s request during its meeting last week, but one member raised the issue of creating a third classification to cover natural gas condensate, or liquids, according to the report.
Tue, Nov. 15, 10:49 AM
- West Texas' Permian Basin now holds nearly as many active oil rigs as the rest of the U.S. combined, including those offshore, the U.S. Energy Information Administration reports.
- The rig count has been rising since this summer, but the Permian began seeing rigs increase earlier than the U.S. as a whole, and is adding rigs more quickly; of the ~450 total U.S. rigs, the Permian now accounts for ~220.
- Permian production has reached 2M bbl/day of oil, while south Texas’ Eagle Ford and North Dakota’s Bakken have fallen to below 1M bbl/day.
- Top Permain producers include CVX, OXY, APA, PXD, CXO, DVN, EOG, MRO, FANG, XOM, ECA, RSPP, SM, EGN, PE, AREX, GPOR, XEC, LPI, CPE, ESTE, WPX, PDCE
Tue, Nov. 8, 4:48 PM
- Oil production from the Permian Basin is poised to grow by 300K-500K bbl/day over the next year and eventually could reach 10M bbl/day, says Pioneer natural Resources (NYSE:PXD) CEO Scott Sheffield.
- The Permian currently produces ~2M bbl/day and is the only major U.S. basin that has seen its production increase this year.
- While the Permian is generally considered a tight-oil basin, Sheffield is particularly bullish on the potential to grow natural gas production: "What most people don't realize is the Permian basin is the second largest natural gas field in this country - at 7B (cf/day) already," adding that he expects production to eventually reach 15B cf/day.
- The number of rigs working the Permian bottomed at 133 in mid-May and has since grown to 212 rigs today, and Sheffield sees operators adding another 75-100 rigs into the Permian in the next year if oil prices average $50/bbl.
Wed, Nov. 2, 4:58 PM
- Pioneer Natural Resources (NYSE:PXD) CEO Scott Sheffield predicts a 40% chance that OPEC members will agree later this month to curb crude oil production.
- "And even if they do, everyone will cheat," Sheffield said during today's earnings conference call. "I have seen this over my 42-year career."
- "With regard to oil prices, we are obviously not out of the woods yet," he said. Sheffield said he did not expect the oil market to rebalance until 2018.
Tue, Nov. 1, 6:56 PM
- Pioneer Natural Resources (NYSE:PXD) -3.9% AH after posting weaker than expected Q3 earnings on 46% lower revenues Y/Y, as expenses ticked higher.
- PXD the average price it received for its oil and natural gas during Q3 rose 2% Y/Y to $29.24/boe, but expenses rose ~1% during the quarter.
- PXD maintains its capital budget for 2016 at $2.1B, and expects 2016 production growth of at least 14% Y/Y, reflecting Spraberry/Wolfcamp output growing by 36% or more, partially offset by declines of 25% in the Eagle Ford and 10% across its other assets.
- PXD says Q3 average sales volumes rose 13% Y/Y to 238.8K boe/day, and it exported 610K barrels of oil from the Permian Basin to Europe during the quarter
Tue, Nov. 1, 4:11 PM
Mon, Oct. 31, 5:35 PM
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Thu, Oct. 13, 7:15 PM
- The biggest threat to the rally in oil stocks might be more production from E&P companies drilling in the U.S. shale, Credit Suisse analysts say.
- A clear benefit of the price cycle has been the vastly improved efficiency and productivity of shale, but shale "may ultimately be too productive as WTI approaches $70/bbl," the firm says as it lowers its long-term WTI forecast to $62.50/bbl from $67.50.
- Credit Suisse says names that continue to demonstrate resource improvement at the low-end of the cost curve, namely in the Permian and STACK plays, remain attractive, such as Concho Resources (NYSE:CXO), Devon Energy (NYSE:DVN), Newfield Exploration (NYSE:NFX) and Pioneer Natural Resources (NYSE:PXD).
- The firm downgrades Carrizo Oil & Gas (NASDAQ:CRZO) and Sanchez Energy (NYSE:SN) to Neutral from Outperform, and Laredo Petroleum (NYSE:LPI) to Underperform from Neutral, following relative outperformance vs. peers.
Wed, Sep. 28, 3:19 PM
- The energy sector (XLE +4%) bursts to the top of the leaderboard after OPEC announces a planned production cut to 32.5M bbl/day at the informal OPEC meeting in Algiers.
- Among individual energy stocks: XOM +3.8%, CVX +2.7%, RDS.A +2.8%, BP +3.4%, TOT +2.4%, PBR +4.5%, COP +6.4%, MRO +8%, MPC +1.4%, PSX +1.9%, VLO -0.1%, EOG +6.2%, PXD +6.4%, OXY +4.5%, DVN +7.9%, CLR +8.3%, APA +6.2%, NOV +8.1%, SLB +3.3%, BHI +3.6%, HAL +4.3%, KMI +3.4%, ENB +2.6%, EPD +1.9%, ETP +2.9%.
Thu, Sep. 22, 6:31 PM
- Pioneer Natural Resources (NYSE:PXD) CEO Scott Sheffield predicts that 100 oil rigs could be added in the Permian Basin, the most coveted U.S. oil field, over the next year.
- Sheffield says the Permian region can grow production by 300K bbl/day per year, and sees Permian production "really taking off" in H1 2017, with aggregate U.S. production beginning to grow again around the end of 2017 or the following year.
- Last week, oil rigs in the Permian rose by two to 202, representing nearly half the 416 oil rigs in operation across the U.S., according to Baker Hughes data.
Mon, Aug. 29, 6:25 PM
- Williams Capital believes oil industry fundamentals are solid despite current commodity price levels but is cautious overall and advises investors not to chase the recent run at current valuations.
- However, the firm recommends select underappreciated companies with lower expectations and re-rating potential, and thinks companies situated in core resource plays that can demonstrate further capital efficiency improvements with catalysts will continue to garner top valuations and M&A premiums.
- Two of Williams' favorites are SM Energy (NYSE:SM), which the firm says remains one of the cheapest names in the sector with a solid balance sheet and assets as well as a conservative management team, and Newfield Exploration (NYSE:NFX), which Williams sees thriving through the current downturn given its strong balance sheet, ample financial liquidity and strong hedge book.
- Also initiated with Buy ratings: Cabot Oil & Gas (NYSE:COG), Energen (NYSE:EGN), Gulfport Energy (NASDAQ:GPOR), Oasis Petroleum (NYSE:OAS), PDC Energy (NASDAQ:PDCE), Pioneer Natural Resources (NYSE:PXD).
- Driven largely by valuation, Williams assigns Hold ratings on Diamondback Energy (NASDAQ:FANG), Gastar Exploration (NYSEMKT:GST), Laredo Petroleum (NYSE:LPI), Parsley Energy (NYSE:PE), Rice Energy (NYSE:RICE) and Cimarex Energy (NYSE:XEC).
Mon, Aug. 29, 5:47 PM
- Crude oil markets will continue to be plagued by volatility in the short and medium term, according to executives from ConocoPhillips (NYSE:COP) and other oil companies at the ONS Conference in Norway.
- "Volatility is here to stay,” COP CEO Ryan Lance said at the conference, one of the industry's biggest. Market rebalancing “will extend into 2017. The inventory levels are still quite high."
- The huge global oil oversupply that has weighed on prices for the past two years may not clear until H2 2017, according to Royal Dutch Shell (RDS.A, RDS.B) chief energy adviser Wim Thomas.
- Not everyone is so pessimistic: IHS Markit's Daniel Yergin said oil supply and demand will balance this year, adding that spending on onshore oil and gas will increase in 2017.
- But that does not mean a turnaround is imminent, according to Pioneer Natural Resources (NYSE:PXD) CEO Scott Sheffield: “The downturn’s behind us, but the question is how long do we stay in a $45-$50 oil-price scenario? I think 2017 could be another tough year," adding that things could turn around in 2018.
- ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, USL, DNO, OLO, SZO, OLEM
Thu, Aug. 25, 4:25 PM
Wed, Aug. 24, 5:45 PM
- Deutsche Bank analysts offer a hopeful view for top oil E&P companies as capital efficiencies continue to improve, and raise their price targets on Pioneer Natural Resources (NYSE:PXD), Devon Energy (NYSE:DVN), Marathon Oil (NYSE:MRO) and EOG Resources (NYSE:EOG).
- Capital efficiency should improve through 2017, driven by cost concessions and continued well performance efficiency gains, and while acknowledging some near-term headwinds as rigs continue to be added in the Permian and STACK in H2, the firm says it remains constructive on a tightening market into 2017.
- The firm lifts its price target for PXD to $210 from $180, for DVN to $55 from $45, for MRO to $21 from $20, and for EOG to $105 from $96.
Wed, Aug. 24, 4:58 PM
- Pioneer Natural Resources (NYSE:PXD) is added to the US Focus List at Credit Suisse, which reiterates its Outperform rating and $212 price target.
- The firm expects PXD to enhance recoveries and returns, and says the company also stands to gain from control over the operating expenses as it continues to push capital.
- Credit Suisse says PXD "has de-rated relative to the peer group by 1.5x on 2018 strip estimates" and trades at an unwarranted discount to peers EOG Resources and Concho Resources given better leverage metrics and the firm's forecast for superior debt-adjusted cash flow per share growth through 2018.