uploads///Production

What Is Pioneer Natural Resources’ Production Trend?

By

Updated

Pioneer Natural Resources’ production

Pioneer Natural Resources (PXD) has outperformed the industry ETF and most of its industry peers over the past three years. In this article we will look closely at its production trend.

Pioneer Natural Resources’ total production has been on an uptrend in the past 13 quarters. In 2Q15, PXD’s total production increased marginally by 1.4% from 1Q15 to ~197 thousand barrels of oil equivalent per day (or MBoe/d). In comparison, Cenovus Energy (CVE), a Canadian energy producer, saw a 6.8% decrease in 2Q15 production over 1Q15. Suncor Energy’s (SU) 2Q15 production decreased 7.1% from a quarter ago. Parsley Energy (PE), PXD’s much smaller independent energy producer counterpart, increased its 2Q15 production by 17.6% over last quarter.

Pioneer Natural Resources makes up 3.1% of the Energy Select Sector SPDR ETF (XLE). You can also read Market Realist’s article on Parsley Energy’s 2Q15 Earnings.

Article continues below advertisement

Production may increase in 2015

Between 2Q12 to 2Q15, total production increased 31%, from ~151 MBoe/d to ~197 MBoe/d. Its 2Q15 year-over-year production growth is pegged at 12%. PXD wants to increase its 2015 production by 10% from the 2014 level. From 2016 to 2018, the company’s expected compounded annual production growth is more than 15%.

Pioneer Natural Resources has a wide production base in the US, including the liquids-rich Spraberry/Wolfcamp oil field located in the Permian in West Texas, Eagle Ford Shale in South Texas, and Texas Panhandle.

Crude oil share rises and natural gas share falls

As noted in the chart above, crude oil’s share in Pioneer Natural Resources’ total production remained strong in the past 13 quarters until 2Q15. It went up from 41% in 2Q12 to 51% in 2Q15. At the same time, the company’s natural gas share in production fell from 41% to 30%. Natural gas liquids (or NGLs) made up 19% of its 2Q15 production. According to PXD’s estimates, crude oil production growth is expected to be more than 20% during 2016-2018.

Is Pioneer Natural Resources tilting more towards crude oil?

In 2Q15, Pioneer Natural Resources placed 28 horizontal wells into production in the Northern Spraberry/Wolfcamp. However, its production in the Eagle Ford Shale and the West Panhandle field was less than expected. In 2H15, the company plans to add two rigs per month in the northern Spraberry/Wolfcamp. In 1Q16, it plans to add eight horizontal rigs. Given PXD’s higher crude oil production rate, crude oil’s share in production is likely to increase further.

Next, we will discuss Pioneer Natural Resources’ debt structure.

Advertisement

More From Market Realist