Energy Prospectus

Pioneer Natural Resources Company (NYSE:PXD) ("Pioneer" or "the Company") today reported financial and operating results for the quarter ended June 30, 2021. Pioneer reported second quarter net income attributable to common stockholders of $380 million, or $1.54 per diluted share. These results include the effects of noncash mark-to-market adjustments and certain other unusual items. Excluding these items, non-GAAP adjusted income for the second quarter was $629 million, or $2.55 per diluted share. Cash flow from operating activities for the second quarter was $1.5 billion.< Adjusted Net Income compares to my forecast of $593 million.

My valuation was $240/share and it will probably be going up. I will post it tomorrow morning to the EPG website.

I have updated my forecast/valuation model for PXD and posted it to the EPG website home page.

PXD closed the acquisition of DoublePoint Energy on 5/4/2021, so Q3 will be the first full quarter of that deal's impact. Production will be up ~50,000 Boepd from Q2 to Q3 and the Company's operating cash flow should exceed $2 Billion.

PXD does have some "Bad Hedges" to work off in 2H 2021 and then it will be a "Cash Flow Machine". Their quarterly dividends go WAY UP in 2022.

My current valuation increases by $3 to $243, but a reasonable 12-month price target is over $300 assuming WTI averages $70/bbl in 2022.
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Now taking a hard look at FANG.

Stifel's take on PXD

Pioneer Natural Resources Company (PXD, $142.35, Buy; Target $197.00)
Delivers solid quarter and positive surprise with accelerated and increased variable dividend program - Derrick Whitfield
We view this release as positive. The positives include: i) a slight adjusted EBITDAX beat (0.4% above consensus) primarily due to lower than expected production costs and higher oil realizations, ii) the realization of $75mm of G&A/interest synergies from the DPE transaction, and, most notably, iii) the acceleration of and increase to the variable dividend return framework, with the first variable dividend payment in Q321 (previously Q122) based on Q221 FCF and a payout ratio of 75% (previously 50%) of quarterly FCF after the base dividend. If we reach, the only potential negative is lower than expected 2H21 oil volumes (1.4% below consensus). In our view, Pioneer provides investors exposure to acreage quality second to none, a fortress balance sheet, and a returns program that, on an annualized basis, is well above-average versus any other sector and has substantial upside based on our current forecast at strip.

PXD's production guidance is always conservative as they regularly beat the high end of their guidance.