Independent oil and gas exploration and production company, Pioneer Natural Resources Company (PXD), is expected to report fourth-quarter 2014 earnings on Tuesday, Feb 10. Let’s see how things are shaping up prior to the announcement.
In the last quarter, the company’s earnings of $1.35 per share surpassed the Zacks Consensus Estimate of $1.25. The outperformance was mainly backed by higher production – which was favored by a robust drilling program in the Spraberry field and Wolfcamp Shale. Also, the quarter's results increased from the year-earlier earnings of $1.26 per share.
Factors Influencing the Fourth Quarter
Pioneer Natural Resources’ oil-weighted reserves base and large drilling inventory lost momentum in the October-December period owing to high crude stockpiles, as imports increased and refiners scaled down their utilization rates. As a result, Pioneer now expects production to average 200–205 thousand barrels of oil equivalent per day (MBOE/d) for the fourth quarter of 2014.
Moreover, in the said period, crude prices declined steadily owing to high crude stockpiles, as imports increased and refiners scaled down their utilization rates. The price of West Texas Intermediate (WTI) crude is now hovering around $50 per barrel and is expected to remain so in the near term. The southward march in crude prices provided little intensive to oil exploration and production companies to hire drilling rigs. This amplified the rig oversupply concern.
Earnings Whispers?
Our proven model does not conclusively show that Pioneer Natural is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Pioneer Natural has an Earnings ESP of -2.04%. This is because the Zacks Consensus Estimate of 98 cents per share is higher than the Most Accurate estimate of 96 cents.
Zacks Rank: Pioneer Natural has a Zacks Rank #5 (Sell). Not only do we caution investors against Sell-rated (Rank #4 or 5) stocks going into the earnings announcement, a negative ESP also complicates our surprise prediction.
Other Stocks to Consider
While earnings beat looks uncertain for Pioneer Natural, here are some firms you may want to consider on the basis of our model, which shows that these have the right combination of elements to post an earnings beat:
Global Partners LP (GLP) has an Earnings ESP of +18.33% and a Zacks Rank #2 (Buy). The partnership is slated to release earnings on Mar 30.
LRR Energy L.P (LRE) has an Earnings ESP of +3.13% and a Zacks Rank #2. The partnership is expected to release earnings on Mar 3.
Tesoro Corp. (TSO) has an Earnings ESP of +1.35% and a Zacks Rank #2. The company is likely to release earnings on Feb 11.
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