Pioneer Natural Resources (PXD)
Posted: Thu May 19, 2016 2:48 pm
When quarterly results first come out, I do my best to get the forecasts and valuations for all of our model portfolio companies updated as soon as I can. The Sweet 16 is always my top priority because it is the EPG "Flag Ship" and where most of your money in this sector should be invested.
After the dust settles a bit, I go back and take a deep dive into the results of each company when we update the profiles. Our seven MBA Student Interns (6 from SMU and 1 from Texas Tech) really help me during this process. They draft the updated profiles and I review them carefully. This may be the best group of interns we've ever had and they often notice things about the companies that I miss.
I just finished working on PXD's profile.
I am increasing my valuation by $11.75/share to $185.00. This compares to First Call's price target of $182.60, which has also risen by more than $10 since Q1 results came out.
PXD is one of the Elite Eight. It has a strong balance sheet, strong cash flows (most of which are locked in by hedges), a fantastic leasehold position in the Permian Basin and technical teams that are doing a wonderful job of driving down completed well costs while they continue to get better well results. After you read our updated profile, I recommend that you go to the PXD website and go through their May presentation (under the Investor tab). They have some cool slides at the end of it.
I know many of you shy away from the companies with high prices per share, but there is a reason these companies trade at higher multiples; they have the assets and the track records that deserve it. They are also the first place that hedge fund managers go when they rotate money back into the sector.
Elite Eight = XEC, CXO, CLR, DVN, EOG, NFX, PXD and RRC
After the dust settles a bit, I go back and take a deep dive into the results of each company when we update the profiles. Our seven MBA Student Interns (6 from SMU and 1 from Texas Tech) really help me during this process. They draft the updated profiles and I review them carefully. This may be the best group of interns we've ever had and they often notice things about the companies that I miss.
I just finished working on PXD's profile.
I am increasing my valuation by $11.75/share to $185.00. This compares to First Call's price target of $182.60, which has also risen by more than $10 since Q1 results came out.
PXD is one of the Elite Eight. It has a strong balance sheet, strong cash flows (most of which are locked in by hedges), a fantastic leasehold position in the Permian Basin and technical teams that are doing a wonderful job of driving down completed well costs while they continue to get better well results. After you read our updated profile, I recommend that you go to the PXD website and go through their May presentation (under the Investor tab). They have some cool slides at the end of it.
I know many of you shy away from the companies with high prices per share, but there is a reason these companies trade at higher multiples; they have the assets and the track records that deserve it. They are also the first place that hedge fund managers go when they rotate money back into the sector.
Elite Eight = XEC, CXO, CLR, DVN, EOG, NFX, PXD and RRC