Pioneer Natural Resources Company (PXD) posted strong Q2 revenues, driven by global macroeconomic recovery, which has escalated oil demand and improved commodity prices. Shares of the oil and gas exploration and production company rose almost 2% in Monday’s extended trading session.
The company reported Q2 revenues of $2.68 billion, significantly up on a year-over-year basis, topping analysts’ expectations of $2.12 billion. However, adjusted earnings of $2.55 per share missed the Street estimates of $2.59 per share.
Additionally, total production surged 68% to 629.5 thousand barrels of oil equivalent per day (BOE/D) from 374.6 thousand. Also, the average realized price more than doubled to $46.82 per BOE year-over-year.
In more positive news, the company recorded a 68.9% year-on-year rise in average daily oil production, while the production of its Natural Gas Liquids (NGLs) and Gas increased 63% and 71.8%, respectively. Additionally, the average prices for Oil, Gas, and NGLs more than doubled on a year-over-year basis.
Happy with the improved financials, Pioneer Natural CEO Scott D. Sheffield said, “As a result of the improved commodity price outlook…we have accelerated and increased our variable dividend return framework with the declaration of our inaugural variable dividend. This inaugural variable dividend, combined with our base dividend, represents a significant return of capital to shareholders, with approximately 80% of our second quarter free cash flow being returned to shareholders.” (See Pioneer Natural stock charts on TipRanks)
Concurrent with the earnings release, the company’s board of directors announced a quarterly cash variable dividend of $1.51 per share on common stock. The dividend will be paid on September 17, 2021, to stockholders of record as of September 3.
Sheffield added, “Over the next six years, we expect to generate in excess of $23 billion of cumulative free cash flow based on current commodity prices, creating a compelling and durable value proposition for our shareholders.”
Supporting Sheffield’s statement about cash flow, the company’s prediction for Q321 is for oil production to average between 380 and 395 thousand (BOE/D), and total production to be in the range of 660 and 685 thousand (BOE/D).
Recently, Siebert Williams Shank & Co analyst Gabriele Sorbara reiterated a Buy rating and a price target of $239 (67.9% upside potential) based “on the discounted 2022 and 2023 EV/EBITDA valuation, especially following the recent underperformance likely from the selling shareholder’s overhang.”
“As the selling shareholders wind down, we expect PXD shares to begin outperforming as it screens attractively on a relative basis,” the analyst added.
Other analysts seem to agree, as consensus among analysts is a Strong Buy, based on 13 Buys and 4 Holds. The average Pioneer Natural price target of $209.94 implies 47.5% upside potential from current levels. Shares have gained 45.7% over the past year.
TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Pioneer Natural, with 12.6% of investors maintaining portfolios on TipRanks increasing their exposure to PXD stock over the past 30 days.
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