PXD Update 3-23-2018

[dan_s]

PXD Update from TPH on 3/22/2018

Re-iterate Buy as vertical integration should allow for insulation from basin-wide concerns

Sector: NAm E&P | Ticker: PXD | Recommendation: BUY | Target: $253.00 | Close: $169.34

With investor concerns around Permian logistics ramping, PXD stands out as well positioned as years of significant strategic investments should shine in 2018. Equity in gas processing systems should allow PXD to be well ahead of any gas curtailment issues vs. 3rd party operators and the company has been aggressive in securing FT to the Gulf with >90% currently contracted and a LT target of 70-80%. Additionally, pressure pumping and sand mine ownership (notably accessed by trucks vs. rail) softens the impacts of service tightness / logistic issues. '18 catalysts to come from non-core asset sales (TPHe $1-1.5B), with the Eagle Ford seeing an uptick in offset A&D activity. With an already under-levered balance sheet (TPHe <0.5x by YE'18) and FCF generation 2019+, we'd expect proceeds to be returned to shareholders. Moving PXD to our top large-cap growth list alongside CXO and EOG.