Pioneer Natural Resources Company PXD reported second-quarter 2015 adjusted earnings of 10 cents per share, which comfortably surpassed the Zacks Consensus Estimate of 3 cents on strong production growth.
However, the bottom line deteriorated substantially from the year-earlier adjusted income of $1.35. The decline was mainly due to lower price realizations.
Revenues and other income in the quarter decreased 30.5% year over year to $648 million from $932 million. The top line also fell short of the Zacks Consensus Estimate of $724 million.
Production
Total production in the reported quarter averaged approximately 196.6 thousand barrels of oil equivalent per day (MBOE/d), up nearly 12% year over year. The improvement was attributable to robust yield from core growth assets – Spraberry field and Wolfcamp Shale.
Oil production averaged 100.6 thousand barrels per day (MBbl/d) – an improvement of 26% year over year. Natural gas liquids (NGLs) production fell 5% year over year to 36.7 MBbl/d. Natural gas production increased to 356.4 million cubic feet per day (MMcf/d) from the year-ago level of 344.9 MMcf/d.
Price Realization
On an oil equivalent basis, the average realized price was $33.32 per barrel in the reported quarter compared with $58.63 in the year-ago quarter. The average realized price for oil was $51.64 per barrel as against $95.87 in second-quarter 2014.
Average natural gas price decreased 45.3% year over year to $2.37 per thousand cubic feet (Mcf). Natural gas liquids were sold at $14.03 per barrel, down from $30.24 in the year-ago quarter.
Cash and Debt
At the end of the quarter under review, cash balance was $219 million. Long-term debt was $2,672 million, thereby representing a debt-to-capitalization ratio of 24.3% (as against 23.9% in the preceding quarter).
Capital Outlay
For 2015, Pioneer increased capital spending projection to $2.2 billion from the prior guidance of $1.85 billion. The rise in capital spending is owing to the company’s plans of increasing its rig count in the northern Spraberry/Wolfcamp regions in the latter half of this year by an average of two rigs per month.
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 for Eagle Ford Shale and $40 million for other asset developments.
Guidance
Pioneer expects production to average between 205 MBOE/d and 210 MBOE/d for the third quarter of 2015. The company expects over 10% year-over-year production growth.
Production costs are expected between $11.50 per BOE and $13.50 per BOE. Depletion, depreciation and amortization expenses are expected to average between $18.00 per BOE and $20.00 per BOE.
The projected range is $80–$85 million for general and administrative expenses, $45–$50 million for interest expenses and $45–$55 million for other expenses. The expected tax rate is 35–40%.
Zacks Rank
Currently, Pioneer carries a Zacks Rank #3 (Hold).
Some better-ranked players from the oil and gas exploration and production industry are Linn Energy, LLC LINE, Anadarko Petroleum Corporation APC and Murphy Oil Corporation MUR. All these stocks hold a Zacks Rank #2 (Buy).
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