Risk/Reward Rating: Positive
Pioneer Natural Resources is sitting on one of the highest quality oil and gas resource bases in the United States. The company owns over one million acres in the sweet spot for oil and gas in the Texas Permian Basin. Incredibly, Pioneer has the lowest breakeven oil price amongst its US peers at under $30 per barrel. This provides an unusual margin of safety and positions the company as the market leader for the foreseeable future in the US.
The superb resource base and top-notch economics provide for a powerful cash flow machine in the current environment of stable to rising energy prices. In fact, the company is forecasting free cash flow for 2021 of $2.7 billion on $5.9 billion of cash flow from operations. The current valuation does not reflect its pole position in the US energy sector and is a fraction of the market averages.
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