Pioneer Natural Resources (PXD) Down 4.7% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Pioneer Natural Resources (PXD). Shares have lost about 4.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Pioneer Natural Resources due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Pioneer Natural Q3 Earnings Beat Estimates on Production

Pioneer Natural Resources reported third-quarter 2021 earnings of $4.13 per share (excluding one-time items), beating the Zacks Consensus Estimate of $3.87. The bottom line surged from the year-ago quarter’s profit of 17 cents.

Total quarterly revenues of $4,463 million lagged the Zacks Consensus Estimate of $4,505 million. The top line, however, improved from the year-ago quarter’s $1,731 million.

The strong earnings can be attributed to higher oil equivalent production and price.

Dividend

Pioneer Natural's variable dividend payment of $3.02 per share of common stock represents a sequential increase of 100%. The dividend is payable on Dec 14, 2021, to its stockholders of record at the close of business on Nov 30, 2021.

Looking at the dividend history, the upstream firm’s quarterly base dividend of 62 cents per share reflects a sequential increase of 10.7%. The dividend is payable on Jan 14, 2022, to its stockholders of record at the close of business on Dec 31, 2021.

Production

For third-quarter 2021, total production was 675.8 thousand barrels of oil equivalent per day (MBoe/d), up from the year-ago figure of 354.9 MBoe/d.

Oil production was 388.8 thousand barrels per day (MBbls/d), up from the year-ago quarter’s 200.7 MBbls/d. NGLs production was 156.9 MBbls/d compared with the prior-year quarter’s 82.6 MBbls/d. Natural gas production amounted to 780.6 million cubic feet per day (MMcf/d), up from the year-ago quarter’s 430.1 MMcf/d.

Price Realization

On an oil-equivalent basis, the average realized price was $52.79 per barrel for the reported quarter compared with $28.22 a year ago. The company reported an average realized crude price of $69.24 a barrel, up from $39.22 reported in the September-end quarter of 2020.

Average natural gas price improved to $4.05 per thousand cubic feet from $1.74 in the prior-year quarter. Natural gas liquids were sold at $35.66 a barrel, up from $16.93 a year ago.

Operating Costs

The company’s expenses for oil and gas production were $323 million, up from $163 million in the year-ago quarter. Total costs and expenses increased to $3,127 million for the third quarter from $1,831 million in the year-ago period.

Cash, Debt and Capex

As of Sep 30, 2021, the cash and cash equivalents totaled $581 million, while long-term debt summed $6,685 million. It had a debt to capitalization of 23%.

In the September-end quarter, the company spent $982 million.

Outlook

For 2021, Pioneer Natural projects oil production of 356-359 thousand barrels of oil per day (MBo/d). It projects a total production of 613-619 MBoe/d.

For fourth-quarter 2021, the company expects oil production of 388-403 MBo/d and a total production of 670-695 MBoe/d.

The company continues to anticipate a total capital budget of $3.1-$3.4 billion for 2021. The company boasted that the capital spending will be fully funded by its $6.6-billion projected cash flow for this year.

Pioneer Natural has strengthened its 2030 goals for emission reductions. Compared to its 2019 baseline, the company has set a target to lower greenhouse gas (GHG) emission intensity by 50% and methane emission intensity by 75%.

Asset Divestment

In a separate release, the independent oil and gas exploration and production company announced an accord with Continental Resources. Per the definitive agreement, Pioneer Natural will divest all of its assets in the prolific Delaware Basin. The cash transition, likely to close at fourth-quarter-end, has been valued at $3.25 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Pioneer Natural Resources has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Pioneer Natural Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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