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Pioneer Natural (PXD) Q2 Earnings Top on Increased Drilling

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Leading upstream energy company Pioneer Natural Resources Company reported second-quarter 2017 earnings of 21 cents per share, excluding one-time items. The bottom line surpassed the Zacks Consensus Estimate of 11 cents per share. Notably, the company had incurred adjusted loss of 22 cents 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.

Share Performance

Pioneer Natural has lost 14.3% during the April-to-June quarter of this year versus the 16.9% decline of its industry.

Zacks Rank & Stocks to Consider

Currently, Pioneer Natural carries a Zacks Rank #4 (Sell). A few better-ranked players in the energy sector are TransCanada Corporation (TRP - Free Report) , Range Resources Corporation (RRC - Free Report) and Pembina Pipeline Corporation (PBA - Free Report) . TransCanada and Range Resources sport a Zacks Rank #1 (Strong Buy), while Pembina Pipeline carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

TransCanada posted average positive earnings surprise of 4.06% over the last four quarters.

Range Resources’ 2017 earnings are projected to grow almost 116%.

Pembina Pipeline’s 2017 earnings are estimated to grow more than 90%.

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