Pioneer Natural Resources (PXD, Financial) expects its total production to grow 10% in fiscal 2015. Also, it expects more than 20% growth in its oil production. This significant improvement in oil production should boost its top as well as bottom lines performance in 2015. The company remains on track with its plan to expand production in 2015 if the crude oil prices pick up the momentum. It has potential rigs in place that could come online and drive its production. It is focusing on those rigs that remain profitable and closing rigs that have lower profitability margins. It plans to close nearly 16 rigs in near future.
Making the right moves
Furthermore, Pioneer has recently received permission to export its oil equivalents in Asia and Europe. The company is obliged to export about 7,000 net to Pioneer of condensate in 2015 under two contracts in Asia. The company had exported nearly 10,000 barrels of oil equivalent per day in 2014. This move will certainly allow the company to take advantage of improving crude oil prices across the globe.
In fact, the usages of brackish water reduced its well costs by about $150,000 per well in Southern Wolfcamp area. Further, the company is working with the cities of Odessa and Midland to bring in affluent water to its fold. Also, it is purchasing more affluent water in these regions with enhanced infrastructure and sand. This should not only boost its growth but also save a lot of money for Pioneer Natural Resources, while returning handsome returns to investors in the future.
The company also plans to cut its Capital Expenditure by about 45% this year. It has planned spending of approximately $1.85 billion in 2015. The company plans to spend nearly $1.6 billion in drilling activities out of this forecasted spending. This is a smart move looking at the low crude oil prices in the United States.
Conclusion
Pioneer Natural Resources is making significant efforts to improve its bottom line performance. It has delivered positive operating margins even in the tough crude oil prices. The analysts expect its earnings to grow at CAGR of 4.60% for the next five years. This indicates healthy growth for its earnings looking at the declining oil prices.
However, the stock is little expensive. It is trading at the forward P/E of 92.96, which is higher than its trailing P/E of 25.65. Nevertheless, its profit and operating profit margins have been pretty good for last twelve months. It has profit and operating profit margins of 21.58% and 40.54% respectively. Its balance sheet carries total cash of $1.02 billion and has total debt of $2.67 billion. It has operating cash flow of $2.37 billion.
