Pioneer Natural Resources (PXD)

[dan_s]

I am going to add PXD to the Sweet 16 in the next newsletter.

I have posted my forecast model for PXD to the EPG website.

My current valuation is $130/share, compared to First Call's price target of $154.51 and Stifel's valuation of $135 (from an updated report they sent out this morning).

PXD has slashed their capex budget to $2.0 Billion, dropping half their drilling rigs. However, they still expect to increase production by 10% YOY in 2016 with crude oil production expected to increase by 20%. Cash flow from operations ($1.6 Billion based on my forecast) and proceeds from an equity offering in January has their budget totally covered. With 85% of their oil and 70% of their natural gas hedged for 2016, solid cash flows are locked in. PXD is heavily weighted to oil. It is one of the premier companies in the Permian Basin.

If oil prices do rebound in the 2nd half of this year, PXD has a lot of upside beyond my valuation. Back in April the stock was trading at $180/share.

One of the smaller companies in the Sweet 16 will be moved to our Small-Cap Growth Portfolio. Eventually, I will replace SWN with another large-cap "gasser".

[dan_s]

The oil industry is in the midst of its deepest downturn in decades, but you wouldn't know that by Pioneer Natural Resources' (NYSE:PXD) fourth-quarter results. Despite very weak oil prices, the company handily beat the consensus estimate on the back of strong fourth-quarter production, and it's not pulling back the reins on 2016 production growth, either. Those were just a few of the surprises Pioneer unveiled in that report.

Read this: http://www.fool.com/investing/general/2 ... gn=article