NEW YORK (TheStreet) -- Pioneer Natural Resources (PXD) stock is plummeting by 7.30% to $116 on heavy volume in afternoon trading on Wednesday, as the company will write down the value of its Eagle Ford Shale assets by $800 million to $1 billion in the fourth quarter.
Additionally, the company will book a $50 million to $70 million impairment on its pipe inventory.
Pioneer Natural Resources expects 2016 production to grow by 10% to 15%, but warned that it might reduce its rig count if low commodities prices continue to weigh on its returns.
Pioneer Natural Resources separately announced a 12 million share secondary offering at $117 per share. The company hopes the sale will help finance a 14% higher budget and sixth consecutive year of improved production, Bloomberg reports.
The company anticipates $2.4 billion to $2.6 billion in capital spending this year.
"The equity offering strengthens PXD's balance sheet and alleviates one of the main concerns weighing on shares, as the company is now pre-funded through most of 2017," based on current commodity price expectations, Topeka Capital Markets said in a note, Bloomberg adds.
Pioneer Natural Resources is an independent oil and gas exploration and production company based in Irving, TX.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate PIONEER NATURAL RESOURCES CO as a Hold with a ratings score of C. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, poor profit margins and a generally disappointing performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 72.3% when compared to the same quarter one year prior, rising from $375.00 million to $646.00 million.
- PXD's debt-to-equity ratio is very low at 0.30 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.30, which illustrates the ability to avoid short-term cash problems.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, PIONEER NATURAL RESOURCES CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The gross profit margin for PIONEER NATURAL RESOURCES CO is rather low; currently it is at 24.80%. It has decreased significantly from the same period last year. Despite the weak results of the gross profit margin, the net profit margin of 73.15% has significantly outperformed against the industry average.
- Net operating cash flow has decreased to $357.00 million or 41.95% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: PXD