Pioneer Natural Divests Alaska Unit - Analyst Blog

 Oil and gas company Pioneer Natural Resources Company PXD announced the divestment of its Alaska subsidiary to Caelus Energy Alaska LLC for cash proceeds of $300 million. The company expects to recognize a non-cash loss of about $30 million associated with the sale when it reports earnings for the first quarter of 2014.

Pioneer Natural Resources is a large independent oil and gas exploration and production company, headquartered in Dallas, TX with operations in the U.S. The company's oil-weighted reserves base and large drilling inventory (over 20,000 liquids rich drilling locations in low-risk resource plays) with significant resource potential are catalysts to unlock value for shareholders. The company offers a deep inventory of high-return, liquids-leveraged drilling opportunities.

For 2014, Pioneer plans to spend $3.3 billion in total. Of this, the company has planned drilling capex of $3 billion and capital for vertical integration of $0.3 billion. An amount of $2.2 million has been allocated for the northern Spraberry/Wolfcamp area; $205 million has been set aside for the southern Wolfcamp joint venture area, $545 million for Eagle Ford shale and $100 million for other assets.

However, the company's long-term production and reserve growth depends to a certain extent on its acquire-and-exploit mode. Pioneer might therefore find it difficult to complete accretive transactions in the future, which could negatively impact its growth rate.

Pioneer Natural Resources currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider better-ranked players in the energy sector like Flotek Industries Inc. FTK, Helmerich & Payne Inc. HP and Exterran Holdings, Inc. EXH. All these stocks sport a Zacks Rank #1 (Strong Buy).