Shale oil producer, Pioneer Natural Resources’ stocks are trading 10% below its peak prices, while the S&P 500 broad market index has lost 15%. The company’s business is in great shape and this was confirmed by the Q3 2022 earnings report. Nevertheless, PXD stocks lost 5% after the release of the report. Such dynamics are not consistent with the current market situation and the company’s perspectives.

The company is paying generous dividends of $5.7 per share and is planning to increase dividend to $10 in 2023 and to $19 in 2024. This increase is linked to the WTI price forecast that could gradually reach $140 per barrel by 2027. Management is taking advantage of lower PXD stock prices by conducting a buy back on $500 million in Q3 2022 of $4 billion reserved for this program in total. The company expects a free cash flow of $8 billion in 2022.

So why do the company’s stock prices keep falling? The reason is not only the general market correction, but the overall sentiment of investors. Many believe in cyclical movements in the oil market, and that good times would soon change to bad. However, there are no reasons for such pessimism. China is expected to lift its lockdowns soon, while the United States is likely to stop releasing oil from strategic reserves.

The expected recession could hardly undermine oil demand to 2020 levels. Even then demand dropped only by 10%. In other words, the current negative sentiment is seen to be too exaggerated. On the other hand, there are plenty of reasons to follow the company’s management that continues to buy back PXD stocks.