Pioneer Natural Res (PXD) Updated Valuation - Feb 1

[dan_s]

At the time of this post, PXD was trading at $221.65.

I have updated my forecast/valuation model for PXD and posted it to the EPG website under the High Yield tab.
My valuation is now $250/share.

I lowered the multiple to value PXD from 7.0 to 6.5 X operating cash flow per share annualized for 2021 to 2023 just because the company has not provided detailed guidance for 2022. When it does and if it confirms my forecast model assumptions, a higher valuation multiple will be justified.

PXD now has a SUPER STRONG balance sheet and they are going to generate lots of FCF from operations. It is now viewed as a "High Yield Dividend Stock" because they are saying that they will focus on returning more money to shareholders in the form of dividends and stock buybacks.

They will report a big drop in production from Q4 2021 to Q1 2022 because the Delaware Basin sale to CLR closed on December 21. $3.1 billion from the sale will pay off a large percentage of their debt.

Based on my forecast, the fixed + variable dividends should be approximately $18 per share in 2022.
Their most recent dividend (for Q3) was $3.58/share.

TipRanks shows 10 energy sector analysts that have submitted updated price targets in January (adjusted for the impact of the sale to CLR) that range from $213 to $266 per share. The average is $236.40.

PXD is now a "Cash Flow Machine" that has a lot of options. One is to make more acquisitions.

It has very little production hedged after 2021, so if oil prices stay close to where they are today my valuation will be going a lot higher.