Tags: Pioneer | aggressive | growth | PXD

Pioneer Natural Resources: Aggressive Growth

By Tim Plaehn   |   Wednesday, 02 Nov 2011 11:18 AM

Energy drilling company Pioneer Natural Resources (PXD) has put out an aggressive plan for production and cash flow growth through the year 2014. The company is taking the necessary steps to make the production goals; however, the cash flow goals may be more dependent on the market prices of oil and natural gas.

Pioneer Natural Resources is an oil and gas exploration and production company. It has small drilling operations in South Africa and on the north slope of Alaska, but the company's production is focused mainly on the south-central United States. The major locations for growth are Spraberry in western Texas, where the company has 20,000 drilling locations, the Barnett Shale in northern Texas, with 600 drilling locations, and the Eagle Ford Shale in southern Texas, with 2,000 locations.

For the second quarter of 2011, the company reported adjusted income of $115 million or 94 cents per share, up from $84 million and 74 cents a year earlier. Daily production for the quarter was 119 thousand barrels of oil equivalent (MBOE) up from 113.5 MBOE in 2010. Production rates were at the mid-point of company guidance for the quarter.

For the 2011 third quarter, management is projecting production of 125 to 131 MBOE per day.

Strong forecasts

Pioneer Natural Resources has initiated an aggressive drilling program with the goal of increasing production growth by 20 percent in 2012 and 18 percent compounded annually through 2014.

The result of this planned production growth is an expected doubling of operating cash flow to $3.1 billion in 2014 from $1.5 billion in 2011. With the projected cash flow growth to $2.0 billion in 2012 from $1.5 billion in 2011, the Wall Street consensus earnings estimates for the two years are $3.33 and $4.28, respectively.

The growth will be facilitated by vertically integrating some of the companies drilling services vs. contracting out and increasing the number of working drill rigs. The number of active rigs should grow to 68 in 2012 from 49 at mid-year 2011.

The analysts at Barclays Capital have been flip-flopping on their rating of PXD due to changing energy prices. In August they reiterated their overweight rating, then in October downgraded the stock to equal weight.

The company reports next on Nov. 2.

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Energy drilling company Pioneer Natural Resources (PXD) has put out an aggressive plan for production and cash flow growth through the year 2014. The company is taking the necessary steps to make the production goals; however, the cash flow goals may be more dependent on...
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