Pioneer Natural Resources Company PXD announced that it has priced an offering of a billion dollar worth of Senior Notes in two tranches. Of this, $500 million of 3.45% Senior Notes will mature on Jan 15, 2021, and $500 million of 4.45% Senior Notes will mature on Jan 15, 2026. The price to the public for the 2021 Notes was settled at 99.750% of the principal amount, and the price to the public for the 2026 Notes was settled at 99.889% of the principal amount.
Interest on both the 2021 Notes and the 2026 Notes are payable on Jan 15 and Jul 15 of each year. The first interest payment is due on Jul 15, 2016, and will consist of interest from the closing to that date. The offering is expected to close on Dec 7, 2015.
Pioneer Natural Resources intends to use the net proceeds of approximately $992 million from the offering for general corporate purposes, including funding the repayment or repurchase existing Senior Notes, and to pay the expenses related to the current offering.
Pioneer Natural Resources is a large independent oil and gas exploration and production company, headquartered in Dallas, TX with operations in the U.S. The company’s oil-weighted reserves base and large drilling inventory (over 20,000 liquids rich drilling locations in low-risk resource plays) with significant resource potential are catalysts to unlock value for shareholders. The company offers a deep inventory of high-return, liquids-leveraged drilling opportunities.
For 2015, Pioneer plans to spend $2.2 billion in total. Of this, the company has apportioned drilling capex of $1.95 billion and capital for the development of Spraberry/Wolfcamp water infrastructure and vertical integration of $250 million. An amount of $1,400 million has been allocated for the development of northern Spraberry/Wolfcamp area. Another $120 million has been set aside to develop the southern Wolfcamp joint venture area. The company will invest $390 million in Eagle Ford Shale and spend $40 million on other asset developments.
However, the company’s long-term production and reserve growth depends to a certain extent on its acquire-and-exploit mode. Pioneer may therefore find it difficult to complete accretive transactions in the future, which could negatively impact its growth rate.
Pioneer Natural Resources currently carries a Zacks Rank #3 (Hold). Meanwhile, one can consider better-ranked players in the energy sector like Energy Transfer Equity, L.P. ETE, Murphy USA Inc. MUSA and Boardwalk Pipeline Partners, LP BWP. Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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