Pioneer Natural Resources Company (PXD) reported second-quarter 2014 adjusted earnings of $1.35 per share, beating the Zacks Consensus Estimate of $1.26. The results also marked an increase from the year-earlier adjusted income of $1.10 per share.
Revenues and other income in the quarter decreased 17.8% year over year to $953.0 million from $1,159.0 million and missed the Zacks Consensus Estimate of $960.0 million.
Production
Total production in the reported quarter averaged approximately 182.7 thousand barrels of oil equivalent per day (MBOE/d), up 11.8% year over year. The growth was attributable to robust yield in core growth assets – Spraberry field, Wolfcamp Shale and Eagle Ford Shale.
Oil production averaged 79.8 thousand barrels per day (MBbl/d), improving 14.8% year over year. Natural gas liquids (NGLs) production surged 32.2% year over year to 41.3 MBbl/d. Natural gas production decreased to 370.0 million cubic feet per day (MMcf/d) from the year-ago level of approximately 376.3 MMcf/d.
Price Realization
On an oil equivalent basis, the average realized price was $57.64 per barrel in the reported quarter versus $52.52 in the year-ago quarter. The average realized price for oil was $95.87 per barrel compared with $90.35 in second-quarter 2013.
Average natural gas price jumped 16.5% year over year to $4.38 per Mcf. Natural gas liquids were sold at $30.65 per barrel, up from $28.54 in the year-ago quarter.
Cash, Debt & Capex
At the end of the reported quarter, cash balance was $445.0 million. Long-term debt was $2,659.0 million, representing a debt-to-capitalization ratio of 28.3% (versus 27.0% in the preceding quarter).
Capital Outlay
The full-year budget is $3.3 billion. Of this, the planned drilling budget is $3.0 billion and allotted capital for vertical integration is $0.3 billion.
Third-Quarter Guidance
Pioneer expects production to average 181–186 MBOE/d for the third quarter of 2014.
Production costs are expected between $13.50 and $15.50 per BOE, and depletion, depreciation and amortization expense is expected to average $14.00 to $16.00 per BOE. The exploration expense guidance is $25–$35 million and the tax rate is projected to be 35–40%.
Our Take
Pioneer Natural Resources carries a Zacks Rank #2 (Buy). Other stocks in the oil and gas sector like Weatherford International plc (WFT), CNOOC Ltd (CEO) and Natural Gas Services Group Inc. (NGS), which sport a Zacks Rank #1 (Strong Buy), are expected to outperform the market.
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