Independent oil and gas exploration and production company, Pioneer Natural Resources Company PXD, is expected to report second-quarter 2015 earnings on Aug 4. Let’s see how things are shaping up prior to the announcement.
Last quarter, the company’s adjusted loss of 3 cents per share compared unfavorably with the Zacks Consensus Estimate of earnings of 6 cents. The underperformance stemmed primarily from lower price realization. Also, the quarter's results decreased from the year-earlier earnings of $1.28 per share.
Factors Likely to Affect Earnings
Pioneer Natural Resources’ oil-weighted reserves base and large drilling inventory lost momentum in the April–June period owing to high crude stockpiles, as imports increased and refiners scaled down their utilization rates. As a result, Pioneer now expects second-quarter production to average 198–203 thousand barrels of oil equivalent per day (MBOE/d).
Moreover, in the same period, crude prices declined persistently owing to high crude stockpiles, as imports increased and refiners scaled down their utilization rates. The price of West Texas Intermediate crude is now hovering around $48 per barrel and is expected to stay there 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 estimates 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 -50.00%. This is because the Most Accurate estimate stands at 2 cents and the Zacks Consensus Estimate is pegged higher at 3 cents.
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 -50.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 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 which have the right combination of elements to post an earnings beat:
Marathon Petroleum Corporation MPC has Earnings ESP of +1.12% and a Zacks Rank #2 (Buy).
Suncor Energy Inc. SU has an Earnings ESP of +20.00% and a Zacks Rank #3.
Cenovus Energy Inc. CVE has an Earnings ESP of +700.00% and a Zacks Rank #3.
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