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Pioneer Natural to Dispose Entire Raton Stake: Here’s Why


Pioneer Natural Resources Company PXD announced plans to sell its entire stake in Colorado’s Raton Basin.

The divestment to Evergreen Natural Resources LLC is expected to fetch $79 million. The transaction, which needs to meet customary closing conditions, will likely conclude in July 2018. Through the January-to-March quarter of 2018, the to-be-divested properties produced 84 million cubic feet of natural gas every day.

The sale is in line with Pioneer Natural’s focus to operate only in the Permian Basin. To become a pure play firm in the Permian, Pioneer Natural also divested certain Eagle Ford assets – spreading across 10,200 net acres. The company believes that operating on the low-cost and prospective drilling locations in the Permian Basin will help generate high cashflow for shareholders.

Headquartered in Irving, TX, Pioneer Natural is an oil and gas explorer with operations in U.S. resources. Although constraint in pipeline capacity, labor shortage and higher production cost are hindering activities in the Permian Basin, these problems will be resolved once expanded pipeline capacity in the Basin commence operations starting 2019.

Overall, the company’s plan to operate exclusively in the Permian seems profitable. Over the past year, Pioneer Natural has rallied 22.1%, outperforming the17.9% cumulative gain of all the stocks belonging to the industry.

Currently, Pioneer Natural carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the energy space are Anadarko Petroleum Corporation APC, Eclipse Resources Corporation ECR and Wildhorse Resource Development Corporation WRD. While Anadarko carries a Zacks Rank #2 (Buy), Eclipse and Wildhorse sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

We expect Anadarko Petroleum to witness year-over-year earnings growth of 229.6% in 2018.

Eclipse is expected to record revenue growth of 13.5% through 2018.

Wildhorse will likely see year-over-year earnings growth of 309.3% in 2018.

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