Permian Play Pioneer Natural Resources Earnings Higher but Misses on Revenue

Pioneer Natural Resources reported better than expected first quarter earnings after the close Wednesday. However, PXD missed estimates with revenue. Pioneer Natural Resources is pure Permian basin play and has been subject to takeover speculation from ExxonMobil in the past month. First quarter oil production averaged near the top end of guidance at 361,316 B/D and still expects full year production at 670,000 To 700,000 BOE/D.

Pioneer is the largest oil producers in the Permian Basin and was conservative in a low oil price environment. 

Pioneer Natural Resources NYSE: $PXD

Pioneer Natural Q1 23 Earnings:

Highlights

  • Adj EPS $5.21 (est $4.95)
  • Rev $4.54B (est $3.18B)
  • First quarter oil production averaged near the top end of guidance Avg Oil Production 361,316 B/D (est 359,830)
  • First quarter total production averaged 680 thousand barrels of oil equivalent per day (MBOEPD), near the top end of guidance
  • Generated strong first quarter free cash flow of $948 million
  • Declared a quarterly base-plus-variable dividend of $3.34 per share to be paid in June 2023, reflecting a 14% increase to the base dividend component
  • Repurchased $500 million of shares during the first quarter (2.4 million shares)
  • Refreshed share repurchase program with a new $4 billion authorization, replacing the prior program
  • Sees Q2 Production 674,000 To 702,000 BOE/D (est 685,852)
  • Still Sees FY Production 670,000 To 700,000 BOE/D

PXD: Stock Market Reaction

  • $212.315 -10.165 (4.57%) After Hours
  • $212.315 -19.315 (8.34%) past year
  • $212.315 +11.585 (5.77%) past 5 years
  • 52wk High $267.20
  • 52wk Low $177.27

First quarter Production and Prices

  • For the first quarter of 2023, the average realized price for oil was $75.15 per barrel.
  • Average realized price for natural gas liquids (NGLs) was $27.30 per barrel,
  • Average realized price for gas was $3.79 per thousand cubic feet.
  • These prices exclude the effects of derivatives.

Costs

  • Production costs, including taxes, averaged $10.82 per barrel of oil equivalent (BOE).
  • Depreciation, depletion and amortization (DD&A) expense averaged $10.84 per BOE.
  • Exploration and abandonment expense was $15 million.
  • General and administrative (G&A) expense was $84 million.
  • Interest expense was $28 million.
  • The net cash flow impact related to purchases and sales of oil and gas, including firm transportation, was a loss of $54 million.
  • Other expense was $41 million, or $30 million excluding unusual items.
  • Current income tax expense was $225 million.
  • The Company paid its estimated first quarter cash tax payment in April 2023 based on the Safe Harbor provision. The Company’s effective tax rate was 22% for the quarter.

2023 Outlook

  • 2023 drilling, completions, facilities and water infrastructure capital budget to range between $4.45 to $4.75 billion
  • Ccapital budget for exploration, environmental and other capital to range between $150 million to $200 million, principally related to drilling four Barnett/Woodford formation wells in the Midland Basin, additional testing of the Company’s enhanced oil recovery (EOR) project and adding electric power infrastructure for future drilling, completions and production operations.
  • Pioneer expects its capital program to be fully funded from 2023 cash flow, which is projected to be approximately $9 billion.
  • Pioneer expects 2023 oil production of 357 to 372 MBOPD and total production of 670 to 700 MBOEPD.

During 2023, the Company plans to operate an average of 24 to 26 horizontal drilling rigs in the Midland Basin, including a three-rig average program in the southern Midland Basin joint venture area. The 2023 capital program is expected to place 500 to 530 wells on production.

Second Quarter 2023 Guidance

  • Second quarter 2023 oil production is forecasted to average between 357 to 372 MBOPD and total production is expected to average between 674 to 702 MBOEPD.
  • Production costs are expected to average $11.00 per BOE to $12.50 per BOE. DD&A expense is expected to average $10.50 per BOE to $12.00 per BOE.
  • Total exploration and abandonment expense is forecasted to be $10 million to $20 million. G&A expense is expected to be $78 million to $88 million.
  • Interest expense is expected to be $39 million to $44 million.
  • Other expense is forecasted to be $20 million to $40 million.
  • The cash flow impact related to purchases and sales of oil and gas, including firm transportation, is expected to be a loss of $30 million to a loss of $70 million, based on forward oil price estimates for the quarter.

The Company’s effective income tax rate is expected to be between 22% to 27%, with current income tax provision for the quarter expected to be $200 million to $275 million, representing estimated federal and state taxes based on forecasted 2023 taxable income. The Company expects its cash tax rate for the full-year 2023 to approximate a mid-to-high teens percentage of book income.

About Pioneer

Pioneer is a large independent oil and gas exploration and production company, headquartered in Dallas, Texas, with operations in the United States

Exxon Mobil in Talks to Buy Shale Giant Pioneer Natural Resources

Permian Basin

Source: Pioneer Natural Resources

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