Independent oil and gas exploration and production company, Pioneer Natural Resources Company PXD, is expected to report first-quarter 2015 earnings on Tuesday, May 5. Let’s see how things are shaping up prior to the announcement.
Last quarter, the company’s earnings of 80 cents per share missed the Zacks Consensus Estimate of 95 cents. The decline was mainly due to lower price realization. Also, the quarter's results decreased from the year-earlier earnings of $1.00 per share.
Factors Likely to Affect Earnings
Pioneer Natural Resources’ oil-weighted reserves base and large drilling inventory lost momentum in the January–March period owing to high crude stockpiles, as imports increased and refiners scaled down their utilization rates. As a result, Pioneer now expects first-quarter production to average 192–197 thousand barrels of oil equivalent per day (MBOE/d).
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 incentive 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 Resources is likely to beat earnings this quarter as it does not have the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%.
Zacks Rank: Pioneer Natural Resources currently has a Zacks Rank #3 (Hold). Though Zacks this increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
While an 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:
Callon Petroleum Co. CPE with an Earnings ESP of +50.00% and a Zacks Rank #2 (Buy). The company is expected to release earnings on May 6.
TC PipeLines LP TCP with an Earnings ESP of +10.67% and a Zacks Rank #2. The company is expected to release earnings on May 7.
Western Refining Inc. WNR with an Earnings ESP of +6.86% and a Zacks Rank #2. The company is slated to release earnings on May 5.
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