Pioneer Natural Resources (NYSE: PXD) continues to extract oil from the Spraberry trend, once considered to be the world's largest uneconomical oil field. This once-forgotten West Texas field is said to contain a whopping 10 billion barrels of oil. Pioneer has already tasted a lot of success, and there is no stopping the company as new methods of extraction are discovered.

Given the success it has tasted, it's worth considering how the stock looks to long-term investors. Where there was once a dry spot, it seems today there's potential.

Fundamentals
Total sales volumes remained flat in 2010 as compared to the year before, even as the Spraberry resources contributed to a 5% increase in the corresponding period. But, higher price realizations did contribute to higher revenues.

I don't hold the lack of rise in production against the company. In fact, consolidations and expansion plans more than offset this apparent failure.

Consolidation of assets & diversification
The highlight of last year's expansion activities was the 100% divestiture of the company's operations in Tunisia. While the transaction yielded $866 million in cash, Pioneer increased its acreage positions in the South Texas Eagle Ford shale play. This was a fantastic move by the management. Getting hold of properties with exciting prospects will ensure that the company is not left behind in the race to develop these hugely promising shale plays.

With an addition of $804 million worth of core assets (property, plant & equipment) in the last 12 months, there are some really exciting times ahead for Pioneer.

Solid balance sheet
Along with growth plans, management has brought down debt levels considerably. Current debt-to-equity stands at 56% -- a gradual drop from 92% three yeas ago. Consolidating on the balance sheet side of things always reflects well on the stock and stock holders.

Cash balances, too, rose to more than half a million dollars -- a historic high! Keep in mind that the oil and gas industry had gone through tumultuous times in between. A safe business strategy is always commendable in this industry.

How is the stock valued?
This is how Pioneer stacks up compared to its peers:

Company

EBITDA Margin (TTM)

TEV/EBITDA (TTM)

P/B

TEV/DFCF

Pioneer Natural Resources 51.1% 10.1 2.8 2.4
Denbury Resources (NYSE: DNR) 50.3% 10.7 2.2 2.0
Continental Resources (Nasdaq: CLR) 25.6% 45.0 6.9 3.3
Ultra Petroleum (NYSE: UPL) 87.5% 8.8 6.6 2.4
Noble Energy (NYSE: NBL) 52.9% 8.9 2.5 1.9

Source: Capital IQ, a Standard & Poor's company. TTM = Trailing 12 months; company filings.

While Pioneer's numbers are not the most compelling, they still reflect solid potential. There is a lot of hope looking into the future. And I believe that the overall market is yet to factor in the full potential of this company.

Foolish bottom line
Overall, this stock looks promising. The company's ability to extract oil from even uneconomical properties will always work to its advantage. Moreover, the experience will be of immense help when it comes to operating on the shale plays of Eagle Ford. Short term gains do not look attractive, but management seems to know what it's doing.

Fool contributor Isac Simon does not own shares of any of the companies mentioned in this article. The Motley Fool owns shares of Denbury Resources and Ultra Petroleum. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.