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Pioneer Natural Resources May Be a Good Stock, but Not at This Price

Stocks in this article: PXD SPY APA CXO EPD XOM CVX OXY XEC

(This an update from a story published Thursday at 11:58 a.m. EDT. This version adds details about Pioneer's production estimates in the second paragraph and in the last two paragraphs.)

NEW YORK (TheStreet) -- Pioneer Natural Resources (PXD) is eyeing a bright future in oil production growth, but it is an expensive stock.

Pioneer is the biggest player at the Spraberry and Wolfcamp shale rock formations, which are located in the Permian Basin in the western part of Texas. The area is one of the most prolific oil-producing regions in the U.S. The company’s core reserve base could more than double by 2016, while its output, which has been increasing at an accelerated pace, could double by 2018 from its output in 2013.

The company also stands to benefit from a recent Commerce Department ruling that will allow it to export a kind of oil known as condensates. Pioneer is the only company, besides Enterprise Products Partners  (EPD) that received this permission. The U.S. has banned the export of unrefined oil since the 1970s.

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Exporting some oil will allow Pioneer to tap into international markets where oil prices carry a premium of up to $20 a barrel over domestic crude prices. The higher prices can give a boost to Pioneer's profits in the future.

Shares of Pioneer, however, are trading close to its 52-week high of $234. Through Wednesday's close, they have risen 27.6% this year, outpacing the S&P 500 Index.

By one measure, the stock is trading at about twice the average of other energy companies operating in the Permian Basin, such as Chevron (CVX), Cimarex Energy (XEC), Exxon Mobil (XOM) and Occidental Petroleum (OXY).

So investors may want to wait for a pullback before getting into Pioneer.

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