Why this stock could benefit from rising oil prices – Pioneer Natural Resources Company (PXD)

Oil prices traded higher this week amid growing concerns about both oversupply and weak demand. The Biden administration has not shown its willingness to address the supply and demand problem, according to Virtus Investment Partners. Joe Terranova.

“So with that in mind, the price of oil is going up,” Terranova said Wednesday in CNBC’s “Fast Money Halftime Report”.

In order to position itself in the face of rising oil prices, Terranova bought shares of Pioneer Natural Resources Co (NYSE: PXD).

“If the price of oil goes up, the name you want to own is Pioneer Natural Resources,” he said.

Only 22% of the company’s book is hedged against the price of oil for 2022, Terranova said: “So they will benefit significantly from a rising oil price environment. “

See also: Oil stocks jump after Biden releases 50 million barrels of US strategic oil reserve

He expects Pioneer Natural Resources to generate a lot of free cash flow as oil prices rise. This will allow the company to strengthen its balance sheet and initiate a strong capital allocation strategy, Terranova said.

Pioneer Natural Resources is an independent oil and gas exploration and production company focused on the Permian Basin in Texas.

PXD Price Action: Pioneer Natural Resources traded at $ 196.64 and $ 97.30 over a 52 week period.

The stock was up 1.18% to $ 190.27 at the time of publication.

Photo: jp26jp from Pixabay.


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Felix J. Dixon