Pioneer Natural Resources Company (PXD) reported its fourth quarter results of 18 cents per share, easily beating the Zacks Consensus Estimate of 5 cents and the year-earlier quarter loss of 15 cents. Including one-time items, earnings were 48 cents per share.
Pioneer’s quarterly earnings topped the Zacks Consensus Estimate significantly. The company’s experience of an earnings surprise for the preceding four quarters varies between negative 266.7% and positive 50.0%, with the average being negative 61.5%.
Despite lower production volumes, the company’s aggressive cost reduction initiatives and overall higher commodity price realizations helped Pioneer to post solid quarterly results. Revenue for the quarter was $461.5 million, up 2.6% from the year-earlier level.
Total production for the quarter averaged approximately 106.4 thousand barrels of oil equivalent per day (MBOE/d), down more than 9% year over year. Oil production averaged 31.5 thousand barrels per day (MBbl/d), down approximately 5% year over year. Natural gas production also decreased 15.3% to 337.7 MMcf/d. However, natural gas liquids production increased 6.3% to 18.6 MBbl/d.
On a per BOE basis, production costs were 22% lower than the year-earlier period due to reduced electricity, water disposal, well servicing and compression costs.
On an oil equivalent basis, average realized price was $47.15 per barrel versus $41.77 per barrel in the year-ago quarter. Average realized price for oil in the quarter was $88.16, compared to $55.94 in the fourth quarter of 2008. Average natural gas price was $4.56 per Mcf, down from the year-earlier level of $6.26 per Mcf.
At the end of the quarter, cash balance was $27.4 million. Long-term debt balance stood at $2.76 billion, representing a debt-to-capitalization ratio of 43.1%.
Pioneer is guiding towards a first quarter production ranging from 112 MBOE/d to 117 MBOE/d. Production costs are expected to average between $11.50 to $13.50 per BOE and DD&A (depletion, depreciation and amortization) expense is expected to average around $14.50 to $16.00 per BOE.
Based on the uptrend in oil prices and the solid hedging position, management is guiding towards $1 billion and $1.3 billion operating cash flow in 2010 and 2011, respectively. Capital budget for this year is expected to be in the range of $800 million–$900 million. The company will ramp up its production activity in West Texas’ Spraberry field and will continue its successful oil development program in Alaska.
Pioneer is actively pursuing the development of its substantial acreage position in the Eagle Ford Shale play. It is now expecting a joint venture to accelerate the development in this play. We believe that the liquids content may be one of the keys to the competitiveness of the Eagle Ford play, compared to the other shale plays. We are currently neutral on Pioneer shares.
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