Pioneer Natural Resources (PXD) Update - Nov 9

[dan_s]

Last but not least!

PXD was trading at $183 at the time of this post. First Call's Price Target is $221.85.
Since the company announced Q3 results, six analysts have submitted updated reports to TipRanks.
Their price targets range from $210 to $273 with average of $237.

I have update my forecast/valuation model for Q3 results, fresh guidance and the assumption that the Delaware Basin sale to CLR will close mid-December.
My valuation increases by $6 to $255.
> FCF + asset sales proceeds in Q4 could pay off 50% of PXD's debt; taking their balance sheet from "rock solid" to "pristine".
> PXD is going to be a pure play on the Midland Basin and almost a pure dividend play. Dividend yield in 2022 could exceed 12% based on today's share price.
> 2021 FCF from operations will be over $3 billion and adjusted proceeds from the Delaware Basin sale should add another $3.2 billion.
> Based on my forecast, operating cash flow should be over $9.8 billion in 2022 and PXD (if they wish) could be debt free by year-end 2022. My SWAG is that they hang on to a lot of cash and payoff senior debt as it becomes due. The rest of FCF will be paid out as very high variable dividends. I also expect them to make some bolt acquisitions in the Midland Basin. Larado Petroleum (LPI) would be a good target for PXD.

Heading into 2022 I may move Devon Energy (DVN) and PXD to our High Yield Income Portfolio.

[KGardiner]

Dan, given that many of the Sweet 16 are considering dividends and buybacks, could you add a dividend forecast column $/Share to the EPS Forecast tab on the spreadsheet?

Share buybacks seem much harder to quantify regarding the impact upon stock price.

Thanks
Kevin Gardiner

[dan_s]

I do highlight which companies pay dividends on the main Sweet 16 spreadsheet.

Estimating future dividends will take some work. I will have more time in December.