Pioneer Natural Resources Co. dismissed speculation it’s spiffing up the company to entice potential buyers amid an escalating bidding war for fellow Permian Basin oil driller Anadarko Petroleum Corp. The stock plunged more than 8 percent.
Chief Executive Officer Scott Sheffield, who re-took the top job at Pioneer earlier this year following the abrupt retirement of protege Tim Dove, is shrinking spending, offloading assets and asking one-third of senior managers to retire. That led analysts to suggest during a conference call on Tuesday that the company may be on the auction block.
“I didn’t come back to sell the company,” said Sheffield, who founded the company and whose previous stint as CEO ended in 2016.
Sheffield’s remarks during the conference call came just 11 weeks after a boardroom shuffle that saw him replace Dove. Late Monday, the company disclosed plans to sell or find joint-venture partners for some oil fields, and announced the divestiture of its entire South Texas portfolio in a deal that’ll trigger a pre-tax, non-cash loss of $550 million.
“We view this as disappointing,” said Leo Mariani, an analyst at KeyBanc Capital Markets Inc., who had forecast Pioneer would reap a $400 million gain on the sale.
Sheffield is skeptical of any imminent consolidation wave in the Permian region.
“I personally don’t think there’s going to be a lot of M&A over the next 1-2 years,” Sheffield said. “Over the next five years I think the majors will definitely start running out of inventory. Things may happen but I don’t think there will be a wave of consolidation.”
He also dialed back Pioneer’s long-range annual output-growth target to 15 percent from 20 percent, a response to investor demands across the oil industry to restrain capital outlays in favor of fattening dividends and buybacks.
Pioneer was down 7.8 percent to $144.12 at 1:29 p.m. in New York trading after falling as much as 8.5 percent after Sheffield’s not-for-sale comment. The stock was one of the day’s worst performers in the S&P 500 Index.
Sheffield told analysts during the call that he was “surprised” the South Texas transaction had been negatively received. American shale drillers are pumping too much crude and need to rein it in to avoid a price-crushing glut, he added.
Pioneer provided few details on the scope of the voluntary executive retirements. The company’s headcount has declined in four of the past five years and ended last year at its lowest since 2010, according to data compiled by Bloomberg. Pioneer employed 3,177 people at the end of 2018, down from a peak of 4,203 in 2013, the year before the last oil-market collapse.