Pioneer Natural Resources Could Employ More Rigs

Pioneer Natural Resources PXD recently inked a highly strategic the Midland deal and could eventually exit the Eagle Ford, Wunderlich’s Irene O. Haas said in a report. She expects the company to “put more rigs to work and deliver more productivity and efficiency gains.”

Analyst Haas maintained a Buy rating on Pioneer Natural Resources, while raising the price target from $182 to $207.

More Rigs Coming Up

“The company plans to keep a stable rig count ramping up to 17 rigs generating 13% to 17% total production growth in 2017 (62% oil). We could envision PXD adding a few rigs per year and being able to sustain a long-term compound growth rate of 15%,” Haas wrote.

While cost increases are expected in the sector, PXD Pioneer Natural Resources should be able to curtail costs, with 40 percent of the company’s rigs coming off long-term contracts and the company having its own sand mine and frac crews.

Pioneer Natural Resources has the largest land base in the Midland Basin and the recent Midland deal appears very strategic and justifies the price paid, the analyst mentioned. The company may consider exiting the Eagle Ford in time and become a Midland Basin pure play.

“The company has managed its balance sheet well during this downturn and we expect PXD to work the Midland Basin growth machine for many years to come,” Haas added.

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