Pioneer Natural Resources (PXD) reported strong second-quarter profits and cash flow after the bell Tuesday, but favorable revisions to its guidance shined the brightest. Pioneer’s oil-and-gas revenue totaled $2.98 billion, down nearly 36% from the year-ago period. It’s unclear how this figure stacks up to the Refinitiv estimate of $3.52 billion, which we think factors in oil and gas plus other income items. Adjusted earnings per share of $4.49 solidly outpaced the consensus EPS estimate of $4.19. As a reminder, Pioneer is one of the few companies that host its post-earnings conference call the day after releasing numbers, instead of the same night. Pioneer’s second-quarter call is set to kick off at 10 a.m. ET on Wednesday. PXD YTD mountain Pioneer Natural Resources’ year-to-date stock performance. Bottom line With its hearty earnings beat, Pioneer showcased its money-making ability during a quarter in which oil prices largely trended downward. Still, perhaps the best news in the report is what Pioneer expects to happen next: The company trimmed its full-year capital budget outlook, partially citing operational efficiencies, while also modestly raising its total-production forecast. That demonstrated the company’s operational quality. Wall Street also appears pleased, with the stock up more than 1% in after-hours trading. The combination of spending a bit less despite pumping a bit more is a very encouraging sign from the large Permian Basin producer. What’s more, Pioneer may see additional relief in spending in the quarters ahead as inflationary pressures on oilfield services ease. Pioneer’s after-hours move extends a more-than 12% advance for the stock since late June, which has coincided with a rebound in crude prices . The oil bounce pushed the commodity to levels last seen in April. After Tuesday’s report, we continue to feel comfortable owning Pioneer, knowing it’s the best-run independent oil producer with some of the lowest break-even costs, making it well-positioned to benefit from any future increases in oil prices that may occur into year-end. Capital allocation Pioneer on Tuesday declared a base-plus-variable dividend of $1.84 per share Tuesday, which annualizes to a 3.3% yield, based on the stock’s most recent close. Of course, with lower oil prices this year than we saw in 2022, we recognize Pioneer’s dividend yield is now far from the near-double-digit percentages it maintained for large stretches of last year. The updated payout — which includes a base dividend of $1.25 per share — is also $1.50-per-share less than what the company declared in April alongside its first-quarter results. But, at that time, the oil-and-gas producer tinkered with its capital-return framework in a way that suggested stock buybacks may receive a greater emphasis than the variable portion of the dividend. That’s a justifiable decision in our view if management believes crude will go higher in the future. In the second quarter, Pioneer said it…
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