Top Stocks To Watch As The U.S. Opens Up To Condensate Exports

This article was first published by Seeking Alpha on January 7, 2015

By Sarfaraz A. Khan. Research Asst. Iffat Zehra

Since 1970s, the U.S. oil companies have been mostly prohibited from exporting locally produced crude oil. The ban was aimed at safeguarding the U.S.'s national interest as a reaction to the Arab oil embargo in that period which undermined crude supplies in the U.S., given the embargo came at a time when U.S. was already struggling with deteriorating oil production.

Pioneer Natural Resources Goes Where Others Don’t in Tough Market

This article was originally published by TheStreet on November 12, 2014

By Sarfaraz A. Khan. Research Asst. Daniel L. 

NEW YORK (TheStreet) -- As oil producers mull scaling back their operations in the face of a double-digit drop in oil prices, Pioneer Natural Resources (PXD) has gone the other way by ramping up its 2014 capital spending budget, and analysts are expecting further increases for next year.

Pioneer released third-quarter results last week that were better than the market's expectations, as per data compiled by Thomson Reuters.

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

This article was originally published by TheStreet on July 24, 2014

By Sarfaraz A. Khan

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.

This Permian-Focused MLP Can Be a Healthy Addition to Your Portfolio

This article was originally published by TheStreet.com

NEW YORK (TheStreet) -- Legacy Reserves (LGCY_) is a Texas based small-cap MLP that is engaged in exploration and production from oil and gas properties located in the Permian Basin, Mid-Continent and Rocky Mountain regions. However, Legacy Reserves is essentially a Permian Basin-focused MLP. It has amassed a healthy liquids-rich portfolio on the back of a history of successful acquisitions. Over the last few years, the business has increased its liquid production and has reported reasonable growth of its revenues and income. Moreover, Legacy Reserves has rewarded its unit holders through consistent growth of cash distributions and a healthy dividend yield of 8.4%.

Its units are trading at 118 times its trailing earnings but Wall Street is expecting double-digit growth of its revenues in the next two years, which will be followed by earnings growth. Therefore, due to its growth prospects, attractive yield and growing cash distributions, this Permian-focused exploration and production MLP can be a healthy addition to your portfolio.

Low-Risk Acquisitions

Since 2006, Legacy Reserves has spent as much as its current market cap ($1.6 billion) on 119 acquisitions. The company now boasts an impressive 83.2 million barrels of reserves, which are weighted 68% toward oil and natural gas liquids.

Over the last few years, Legacy has spent an average of $200 million annually on acquisitions. Then in 2012, it spent a record level of $635 million, which includes a single purchase of $503 million at the Permian Basin. This year, Legacy has spent $100 million on acquiring properties through 11 transactions. Most of these have been fairly low-risk acquisitions as the company generally buys assets that are located around its existing acreage. By the end of 2012, Legacy's net developed and undeveloped acreage was 349,836 acres and 70,108 acres respectively.

What Is the Permian Basin?

The Permian Basin is at the heart of Legacy's overall operations. It is one of the oldest and largest oil and gas producing areas in the world. Last year, Occidental Petroleum (OXY_) was the leading operator here in terms of oil production, followed by Pioneer Natural Resources(PXD_) and Apache Corp. (APA_).

Oil production from this region peaked out in the 1970s but following the arrival of new and sophisticated drilling techniques, like horizontal drilling and fracturing, the oil production started rising from 2008. Last year, the crude oil production from Permian stood at 312 million barrels, still below the production in the early 1990s, but 24% above the lowest levels of the mid-2000s ... read full article at TheStreet

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Pioneer Is Eyeing Significant Growth But Has A Tough Road Ahead

Pioneer Natural Resources (NYSE:PXD) is eyeing significant growth on the back of its impressive acreage but the high cost of drilling at the Permian and the weakness in oil prices pose a significant challenge

The Permian Basin focused Pioneer Natural Resources (PXD) has recently announced the sale of its wholly owned subsidiary in Alaska, called Pioneer Natural Resources Alaska, to privately held Caelus Energy for $550 million cash. The transaction is expected to close by the year end. The proceeds from the sale will be used to fund its promising shale oil field at Spraberry-Wolfcamp field of Permian Basin. Pioneer Natural Resources is eying significant growth from this region, which, it believes, is hiding one of the biggest oil and gas discoveries of the world. However, relatively expensive operations at the Permian Basin, coupled with the weakness in oil prices, will make things difficult for the operator. 

So What Is the Permian Basin?

The 250-miles wide and 300-miles long Permian Basin, located in West Texas, is home to some of the biggest oil reserves in North America and is the biggest oil producing region of the U.S. According to the Texas Railroad Commission, so far, more than 75 trillion cubic feet of natural gas and 29 billion barrels of oil has been produced from here. Various producing formations such as the Spraberry, Wolfcamp, Yeso, San Andres, Bone Spring, are part of the Permian Basin. In 2010 this region produced more the 270 million barrels of oil, which rose to 280 million barrels in 2011 and a staggering 312 million barrels in 2012. According to the U.S Energy Information Administration, Permian’s oil production rose to 1.3 million barrels per day in October, easily ahead of any other oil play in the U.S. Some analysts think Permian can touch 2 million bpd in the …. Read full article at GuruFocus