Update: Pioneer's Participation In Condensate Exports, And Mexico?
- The allowing of condensate exports for all producers is a bonus to a select group of producers when good news has been hard to find.
- The interim step of condensate exports may further open the door to lifting the crude oil export ban, in which Pioneer is a leading voice.
- As an Eagle Ford heavy weight (and Permian too), Pioneer's intrinsic value is starting to shine once again.
Liquidity And Hedging: Reasons To Be Bullish On Pioneer Natural Resources
- Pioneer Natural Resources is likely to generate $1 billion in cash from the potential mid-stream asset sale.
- 85% of the company's 2015 production is hedged at $73.54 per barrel and this will ensure that OCF remains robust.
- Current financial flexibility allows for robust asset development in 2015 even at current oil prices.
- The 35% drop in PXD over the past 6 months is an opportunity for investors.
- PXD is growing production by nearly 20%, but with a well-timed stock sale and planned divestiture, PXD should be cash positive next year.
- Its hedge profile also partially insulates PXD from lower oil.
- PXD is a compelling value compared to its 11 billion barrel resource potential.
- With the strength to withstand low prices in the near term and a massive long term asset base, PXD is attractive here.
Pioneer Natural Resources: A Reasonable Choice For An Energy Play
- Pioneer is well positioned to weather the low price environment.
- PXD has an extremely prudent 2-year hedging program, surpassing many competitors.
- A stellar balance sheet and a pending midstream asset sale in the Eagle Ford are clear strengths.
Pioneer Natural Resources: Market May Be Ignoring 3 Key Offsets To Drop In Oil Prices
- Diversification and hedging will offset a substantial portion of the short-term impact of the recent drop in oil prices.
- Macroeconomic data suggests oil prices will rebound in 2015.
- PXD has a lower cost structure than its peers.
- Pioneer raised $1 billion in a new equity offering designed to scale up infrastructure and cost efficiencies for the long haul.
- Pioneer's production forecasts have remained largely unchanged.
- Pioneer's seemingly defensive moves also are really smart offensive maneuvers.
- The magnitude of the Spraberry/Wolfcamp shale infrastructure build out is compared to that of the Alaskan North Slope efforts.
Fundamentals Of Pioneer, The Permian Basin And Oil Prices
- Leading oil producers continue to see their stocks decline.
- Fundamentals point to possible market overreaction.
- Producers are not panicking, just markets.
- "Holding the fort" may be the best investor strategy, if one is able.
Update: Pioneer Sale Potential In Eagle Ford Is JV Partner's Interest
- Bloomberg noted Pioneer's willingness to sell Eagle Ford assets for $4-4.5 billion; this news has been corrected to reflect JV partner Reliance's interests, not Pioneer's.
- Industry oil production and E&P re-organizations are combining for interesting opportunities.
- Pioneer Eagle Ford production was 47,000 boe p/d in the second quarter, up from 43,000 in the first quarter.*.
Pioneer Natural Resources Will Benefit From Production Growth
- During the second quarter of 2014, Pioneer was able to beat its own production guidance primarily due to the successful increase of its horizontal drilling program.
- The company also plans to double the number of wells from 68 in the first half of 2014 to 125 wells in the second half of the current year.
- The increased operational efficiency coupled with management’s commitment to drill more wells means the company has revised the lower side of its production guidance.
- Given the fact that the company has also allocated 63 percent of its $3 billion capital budget to its horizontal drilling program.
- In addition, the company stands to benefit from the recent export approval by the U.S. Department of Commerce.
Pioneer Natural Resources - Great Potential, But What About The Recent Revenue Shortfall And Hedging Losses?
- Pioneer Natural Resources posted disappointing second-quarter results.
- While results are typically volatile, hedging losses appear quite large, bigger than should be expected.
- While I see the long-term potential, I am still left with many valuation questions to be answered.
Don't Underestimate The Condensate: Pioneer's Holistic Rich-Liquids Model
- The condensates export allowed for Pioneer were little appreciated by the market.
- Pioneer's holistic approach and vertical integration is becoming more in focus, and an identifiable source of value.
- Other upstream and midstream firms will benefit from Pioneer's leadership in the condensate space.
Pioneer Natural Resources: 12 Different Insiders Have Sold Shares This Month
- 12 insiders sold Pioneer stock within one month.
- The stock was not purchased by any insiders in the month of intensive selling.
- 4 of these 12 insiders decreased their holdings by more than 10%.
Exporting Crude Oil: A Short-Tem Windfall And A Long-Term Question Mark For Pioneer Natural Resources
- Wall Street Journal reports that U.S. Department of Commerce will allow Pioneer Natural Resources (PXD) to export crude oil. White House denies any change to ban on crude oil.
- Exemption to oil export ban would allow PXD to capitalize on the significant spread between price of domestic and foreign crude oil.
- Department of Commerce's action is a short-term windfall for PXD.
- Long-term implications to PXD of lifting the ban on exporting oil depends on whether investors and refiners still view expanding refineries' capacity as attractive.
Federal Approval Of Condensate Exports By Pioneer And Enterprise Products Should Give Eagle Ford E&P Companies A Lift
- The US Department of Commerce ruled June 25, 2014 to allow PXD and EPD to export condensates (an ultra light crude oil).
- This should mean greater profits for PXD and EPD.
- PXD produces about 43,000 boepd of condensates. EPD is a midstream company that can export directly or use its splitters to refine condensates beforehand.
- What other effects will there be?.
Permian Basin's Robust Growth Also Means Managing Gas, Water For Pioneer
- Pioneer Natural Resources continues to reveal more Permian Basin upside.
- Its vertical integration strategy indicates support for robust production.
- Pioneer's transparency about all aspects of production are likely helping other peers and their valuations.
- Pioneer’s stock had a great run since 2009.
- The company has experienced strong production growth.
- However, the stock is currently rich in value and due for a pullback.
- I would consider it a buy at a better valuation, since strong production growth is expected to continue.
Mon, Jan. 12, 3:17 PM
- Goldman Sachs upgrades a few energy stocks even as it cast a pall of gloom over most of the sector today (I, II, III), raising Chesapeake Energy (CHK -3.6%) to Buy from Neutral and Parsley Energy (PE -4.2%) to Neutral from Sell as potential "shale sale" winners.
- Despite PE's relative vulnerability to lower oil prices because of its weak balance sheet and negative projected free cash, Goldman has more confidence that its core Permian Basin position makes it an attractive M&A target.
- Among potential "shale scale" winners - companies that either can build positions in the core and reduce costs of capital - the firm's favorites remain EOG Resources (NYSE:EOG), Range Resources (NYSE:RRC), Pioneer Natural Resources (NYSE:PXD), Cabot Oil & Gas (NYSE:COG) and Concho Resources (NYSE:CXO).
- However, Goldman cuts Bill Barrett (BBG -8.3%) to Sell from Neutral, seeing greater downside risk to its production in a lower oil price environment, and lowers Eclipse Resources (ECR -1.5%) to Neutral from Buy due to a persistently wide funding gap through 2017 coupled with a weak balance sheet.
Tue, Jan. 6, 4:38 PM
- Pioneer Natural Resources (NYSE:PXD) -3.2% AH after saying severe winter weather in west Texas has significantly disrupted production and drilling operations in the Spraberry/Wolfcamp area; PXD expects an extensive recovery period, with several weeks needed before the full impact can be determined.
- The area suffered from heavy icing and freezing temperatures at the start of January that has resulted in extensive power outages, facility freeze-ups, trucking curtailments and limited access to production and drilling facilities; Q4 production was not affected.
- Separately, PXD says it has converted ~85% of its 2015 oil derivative contracts from three-way collars to fixed-price swaps, and its 2015 fixed-price oil swaps cover 82K bbl/day of production at an average of $71.18/bbl.
Dec. 22, 2014, 10:45 AM
- Natural gas prices fall 9.5% to near two-year lows at $3.133/mmBtu, in the biggest one-day percentage loss since February and the lowest intraday price since January 2013, on mild weather forecasts and inventory that is above year-ago levels.
- Prices are now down more than 15% in three straight losing sessions and are 30% lower than the six-month high closing price of $4.489/mmBtu it hit just a month ago.
- Weather has been unseasonably warm for December, limiting demand for home heating and allowing relatively low stockpiles to catch up to where they were a year ago and encouraging traders to sell based on the belief that supply is relatively healthy.
- Gas producers are among the biggest early decliners: XOM -1.1%, CHK -7.3%, APC -2.6%, SWN -6%, DVN -2.2%, COP -2.3%, BP -1.5%, COG -4%, BHP -1.9%, CVX -1.3%, ECA -5.1%, EQT -4.3%, RDS.A -1.7%, UPL -12%, WPX -6.9%, EOG -1%, OXY -1.1%, RRC -6.1%, APA -2.3%, AR -3.2%, CNX -3%, QEP -4.8%, LINE -4.9%, NBL -1.6%, SM -2.6%, XEC -4.2%, PXD -2.9%, NFX -5.1%.
- ETFs: UNG, DGAZ, UGAZ, BOIL, GAZ, FCG, GASL, KOLD, UNL, NAGS, DCNG
Dec. 3, 2014, 11:32 AM
- The energy sector (XLE +1.5%) continues its momentum from yesterday, leading the way again as the best performing sector in early trading with crude oil rising 1.2% so far today and reports that U.S. well permits fell 40% last month.
- Top performers include Clayton Williams (CWEI +7.7%), Transocean Partners (RIGP +10.6%), Gaslog (GLOG +13.8%) and Energy XXI (EXXI +15.7%).
- Other leading energy names are showing stronger recoveries as they clear last Friday's bearish gap zone: XOM +0.2%, CVX +0.4%, COP +2.5%, OXY +2.5%, DVN +2.9%, EOG +2.5%, HES +2.2%, MUR +1.5%, NBL +2.3%, PXD +4.2%, SU +3%, CNQ +1.9%.
- Some analysts warn that the worst may not be over, however, as much of the advance is being driven by investors repurchasing ETFs they used to make short bets; investors also could opt to sell oil shares at a loss in coming weeks to reduce tax burdens.
Nov. 28, 2014, 7:25 AM
- OPEC yesterday decided to hold production numbers despite the bear market in oil. WTI crude is down about $5 per barrel to $69.
- A premarket look at the top 10 holdings of the XLE: Exxon Mobil (NYSE:XOM) -4.1%, Chevron (NYSE:CVX) -4.1%, Schlumberger (NYSE:SLB) -4.6%, ConocoPhillips (NYSE:COP) -4.4%, EOG Resources (NYSE:EOG) -4.3%, Pioneer Natural Resources (NYSE:PXD) -4.8%, Occidental Petroleum (NYSE:OXY) -4.3%, Haliburton (NYSE:HAL) -4.7%, Anadarko Petroleum (NYSE:APC) -5%, Williams Companies (NYSE:WMB) -1.6%.
- ETFs: ERX, VDE, OIH, XOP, ERY, FCG, DIG, PBW, GASL, DUG, IYE, XES, IEO, QCLN, IEZ, PXE, PXI, FENY, PXJ, PSCE, RYE, PUW, FXN, DDG, HECO
Nov. 5, 2014, 8:32 AM
- Pioneer Natural Resources (NYSE:PXD) -4.2% premarket after announcing plans to sell its Eagle Ford Shale Midstream venture with India’s Reliance Industries (OTC:RLNIY); the two companies will sell their stakes in a joint process.
- PXD says the divestment will allow it to redeploy capital to its core oil-rich Spraberry/Wolfcamp assets in the Permian Basin of west Texas.
- Based on a $100M cash flow estimate from the Midstream venture for next year, PXD's interest could be valued as high as $1.2B.
- PXD says it is not selling its Eagle Ford exploration business it owns with Reliance, in which PXD holds a 46% stake, Reliance 45%, and Newpek LLC the remaining 9%.
- Separately, PXD said Q3 earnings rose to $2.58/share from $0.65 a year earlier, and announces plans to sell 5.75M common shares in a public offering.
Sep. 8, 2014, 12:32 PM
- The day's five biggest decliners in the S&P 500 are all energy companies - Newfield Exploration (NFX -5.6%), EOG Resources (EOG -3.6%), Anadarko Petroleum (APC -2.9%), Cimarex Energy (XEC -3.3%) and Pioneer Natural Resources (PXD -3.4%) - as crude oil prices slide to new lows, including Brent crude's first move below $100/bbl in more than a year.
- Brent crude dropped $1.12, or 1.1%, to $99.70/bbl after falling to as low as $99.36, a 16-month low, while U.S. crude slipped more than a percent to below $92 after settling at $93.29 on Friday for its sixth weekly drop in seven.
- Traders are concerned crude demand won't keep up, with data from the U.S. and China, the world's top oil consumers, suggesting their economies aren't growing as quickly as had been hoped.
- ETFs: USO, OIL, UCO, SCO, XOP, BNO, DTO, DBO, IEO, CRUD, PXE, USL, DBE, UWTI, DWTI, DNO, RJN, SZO, OLO, JJE, ONG, RGRE, OLEM, UBN
Aug. 5, 2014, 2:48 PM
- Pioneer Natural Resources (PXD -5%) is defended by Goldman Sachs analyst Brian Singer, who maintains a Buy rating on the shares and lifts his price target to $266 from $257 after a "noisy" Q2 but with 2015 growth on track.
- While total production beat expectations, oil was lighter as vertical Permian wells that were returned to production at flush rates in Q1 declined in Q2; oil comprised 63% of Permian production vs. 68% in Q1, but the firm views the 67% 2013 average as more normal and expects an oilier mix as horizontal growth rises.
- The firm remains confident in PXD's growth, with H2 ramp-up the first key test; PXD raised its 2014 production growth to 16%-19% from 14%-19% and maintained its three-year compound annual growth rate at 16%-21%, warranting a double-digit multiple.
Jun. 25, 2014, 10:18 AM
- Refiners take a beating in early trading, as a lift of the ban on U.S. oil exports is expected to narrow the WTI-Brent spread, which could cause refiners' profits drop if they are forced to pay higher prices to compete with international buyers for U.S. crude.
- “We don’t think the current system needs to be changed,” Valero Energy tells Bloomberg.
- Yesterday's rulings gave Pioneer Natural Resources (PXD +2.6%) and Enterprise Products Partners (EPD +1.4%) permission to ship ultralight oil to foreign buyers - a narrow ruling, but one that is likely to spark similar requests from other companies, and increase lobbying for a full lifting of the 40-year-old ban on exporting crude oil.
- Refining stocks are broadly lower: VLO -7.4%, PBF -5.8%, MPC -5.7%, WNR -5.5%, DK -5.4%, HFC -4.6%, ALDW -4.6%, TSO -3.8%, NTI -3.5%, PSX -2.9%, ALJ -2.7%, CVI -2.3%.
Jun. 24, 2014, 6:20 PM
- Pioneer Natural Resources (PXD) +4.2% AH and Enterprise Products Partners (EPD) +1% after WSJ reports the U.S. government has taken steps to allow the two companies to export condensate that could be turned into jet fuel or diesel.
- Under current rules, companies can export refined fuel, such as gasoline and diesel, but not oil itself; the government's new approach reportedly redefines some ultra-light oil as fuel after it has been minimally processed, making it eligible for sale abroad.
- The first shipments - which could begin as soon as August - likely will be small but ultimately could include much of the 3M bbl/day of oil energy companies are pumping from shale, industry experts say, depending on how regulators define what qualifies for export.
May. 29, 2014, 2:56 PM
- Pioneer Natural Resources (PXD +3.9%) powers higher after FBR Capital raises its price target to $275 from $250 to reflect expectations of positive drilling results.
- FBR says its visit with the company added to its comfort with the existing assessment of material NAV and production growth upside for the platform; FBR believes production growth over the next three to five years could be materially higher than guidance and expectations.
- Jim Cramer reminds viewers that PXD owns ~20K potential drilling locations, ensuring it can sustain high production growth rates for years.
May. 6, 2014, 6:59 PM
- Pioneer Natural Resources (PXD) +2.7% AH after posting better than expected Q1 earnings and revenues thanks to continued success at tight-oil fields in Texas.
- Q1 production rose 5% Y/Y to 172K boe/day, primarily driven by successful Spraberry/Wolfcamp and Eagle Ford Shale horizontal drilling programs and the full recovery of weather-related production curtailments during Q4; continues to forecast 2014 production growth of 14%-19% based on $3B planned drilling capex.
- Increased its drilling rig program in the northern Spraberry/Wolfcamp to 16 horizontal rigs from five at year-end 2013; total horizontal wells placed on production in the Spraberry/Wolfcamp and Eagle Ford Shale are expected to increase to 175 in H2 from 125 in H1.
Feb. 11, 2014, 9:57 AM
- Pioneer Natural Resources (PXD -2.4%) opens sharply lower after Q4 earnings beat estimates but said production would grow 14%-19% in 2014.
- Nevertheless, Goldman Sachs maintains its Buy rating on the shares, noting PXD's 2014 growth is expected to be back-end loaded due to horizontal pads ramping up in the Permian during H2; the firm believe PXD should exceed its 18.5% guidance midpoint through 2016 and maintains its outlook for 20% 2015-17 growth.
Feb. 10, 2014, 5:09 PM
- Pioneer Natural Resources (PXD) -2.1% AH after reporting an unadjusted Q4 loss of $1.37B, or $9.82/share, including of $1.5B loss related to discontinued operations and assets held for sale, vs. a year-ago profit of $28M, or $0.22/share, a year earlier.
- Forecasts 14%-19% production growth from continuing operations in 2014 based on planned drilling capital expenditures of $3B; growth will be second-half weighted as PXD ramps up its drilling program in the northern Spraberry/Wolfcamp from five rigs at year-end 2013 to 16 rigs by the end of Q1.
- Added proved reserves of 141M boe during 2013, equating replacement of 211% of PXD's FY 2013 production of 67M boe.
Jan. 21, 2014, 3:49 PM
- Pioneer Natural Resources (PXD +2.8%) says its Q4 production averaged 173K boe/day, missing earlier estimates of 179K-184K boe/day following winter storms stretching from November through January that knocked out power across much of west Texas.
- PXD says more than 50% of its wells were shut in during the period, and some wells were without power for weeks, but all wells are now operational.
Dec. 10, 2013, 11:18 AM
- Pioneer Natural Resources (PXD +2.4%) and its Pioneer Southwest Energy Partners (PSE +3.2%) unit say their Q4 results could fall short of expectations after severe weather in Texas hurt production, but shares are higher as the impact may be less than investors had feared.
- PXD had forecast average production of 179K-184K boe/day for Q4, and PSE had forecast output of 8.7K-9.2K boe/day.
- The Spraberry/Wolfcamp area was "especially hard hit" in late November, but another bout of severe weather that began Dec. 4 "did not cause a significant amount of incremental damage."
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