Energy Stocks' Q1 Earnings Lineup For May 1: CXO, DVN & More

The Q1 earnings season is past the halfway mark, with 267 S&P 500 members having already reported their quarterly numbers. Per the latest Earnings Preview, total earnings for these companies are up 25.1% from the same period last year on 10% higher revenues, with 76.8% delivering positive earnings surprises and 73.8% beating revenue estimates.

Near about half of the S&P listed energy companies have released their first-quarter results. These include Halliburton Company (NYSE:HAL), Kinder Morgan (NYSE:KMI), Inc., Schlumberger Limited, Baker Hughes, Hess Corporation (NYSE:HES), Valero Energy Corporation (NYSE:VLO), Range Resources Corporation (NYSE:RRC), Phillips 66 (NYSE:PSX), National Oilwell Varco (NYSE:NOV), Helmerich & Payne (NYSE:HP), Inc., EQT Corporation (NYSE:EQT), ExxonMobil (NYSE:XOM) Corporation, Cabot oil & Gas Corporation, Chevron Corporation (NYSE:CVX) and ConocoPhillips (NYSE:COP).

Two biggies — ExxonMobil and Chevron — reported their results on Apr 27. While Chevron delivered earnings beat on higher oil prices and volumes, ExxonMobil missed estimates amid output and refinery throughput decline, along with lower margins at chemicals business.

Bullish Results & Expectations

In the last reported quarter, earnings for the energy sector saw the strongest growth, recording a massive 136.6% year-over-year gain on 23.6% higher revenues.

Also, for the first quarter of 2018, we expect the energy sector to eclipse all the 16 Zacks sectors. Per our expectations, earnings for the sector are expected to jump 70.8% from first-quarter 2017, while the top line is likely to witness an improvement of 15.4% from the year-ago levels.

Q1 Oil and Gas Price Report Card

Oil: The first quarter of the year saw the U.S. oil benchmark attain its highest settlement since December 2014, despite record high domestic production. Per EIA data, the commodity rose about 7.5% in the first three months of 2018 to finish the quarter at $64.87 per barrel. Crude was supported by various catalysts, including strong demand and continued production curb from OPEC and its allies. Needless to say, such favorable developments have buoyed investors’ optimism surrounding the sector’s first-quarter results.

It goes without saying that all oil-producing companies are thus poised to benefit from recovering commodity prices, as they will be able to extract more value for their products. However, the recent oil price rally has made the commodity costlier for refiners, leading to higher input cost for them.

Natural gas: However, price of natural gas dropped about 7.4% in the January-March period. Along with the sequential fall, natural gas prices also remained unfavorable compared with the corresponding period of 2017. Commodity futures were $2.73 per MMBtu at the end of the quarter, down more than 14% from the Mar 31, 2017 settlement of $3.19 per MMBtu.

Energy Stocks Reporting Q1 Earnings on May 1

Let’s find out what’s in store for the below-mentioned five energy companies that are slated to release their quarterly numbers on May 1.

Headquartered in Midland, TX, Concho Resources Inc. (NYSE:CXO) is an upstream energy player focused mainly on the lucrative Permian Basin. The company is expected to release results after the closing bell.

According to our quantitative model, a company needs the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase its odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Note that we caution against Sell-rated stocks (Zacks Ranks #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

In the last reported quarter, Concho delivered an impressive 43.48% positive earnings surprise on the back of higher commodity price realizations and robust production growth. As far as earnings beat is concerned, the company has an excellent history. Over the trailing four quarters, it surpassed estimates in each of the last four quarters, delivering an average positive surprise of 48.89%.

It looks like Concho is all set to keep its earnings streak alive in the first quarter, as it has the right combination of two key ingredients. The company has an Earnings ESP of +1.86% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for daily production is currently pegged at 218.2 thousand barrels of oil equivalent (MBOE), higher than 181.4 MBOE reported in the year-ago quarter and 211.1 MBOE in the prior quarter. Moreover, analysts also envision higher price realizations that will further buoy its top line. The Zacks Consensus Estimate for average oil price is expected to jump 20.2% and 11.3% from the first quarter and fourth quarter of 2017, respectively.

Next up, we have Oklahoma-based independent energy producer Devon Energy Corporation (NYSE:DVN) , which is slated to release numbers after the closing bell.

In the fourth quarter, the company delivered a negative earnings surprise of 36.67% amid higher impairment charges. Nonetheless, the company surpassed earnings estimates in three out of the trailing four quarters.

However, our proven model does not show that Devon Energy is likely to beat earnings estimates this quarter as it has a Zacks Rank #4 and an Earnings ESP of 0.00%.

Weather-related issues are expected to affect first-quarter production of the firm. The company estimates total production from its assets in the first quarter of 2018 to be in the range of 530,000-554,000 barrels of oil equivalent (Boe) per day, compared with 548,000 Boe achieved in fourth-quarter 2017. The Zacks Consensus Estimate for total revenues is $3,852 million for the first quarter, exhibiting a sequential decline of 3.33%.

Newfield Exploration Company (NYSE:NFX) , — an oil and gas producer with operations focused in the Gulf of Mexico — is set to unveil results after the closing bell.

The company surpassed the Zacks Consensus Estimate in the last reported quarter, with the positive earnings surprise being 18.3%. Moreover, it has topped earnings estimates in three out of the trailing four quarters, with an average positive earnings surprise of 15.9%.

However, our proven model does not show conclusively that the company will be able to beat estimates in the to-be-reported quarter, as it carries an Earnings ESP of -0.76% and Zacks Rank #3.

While the Zacks Consensus Estimate for average sale price of natural gas is $2.70 per thousand cubic feet (Mcf), implying a year-over-year decline from $2.93 per Mcf, the estimate for gas production is pegged at 35.7 billion cubic feet (Bcf), reflecting an improvement from 29.4 Bcf in the year-ago quarter.

Next in line we have Noble Energy Inc. (NYSE:NBL) , slated to release results before the opening bell. The independent oil and gas producer mainly operates in the Rocky Mountains, Mid-Continent and Gulf of Mexico regions.

In the last reported quarter, the company pulled off a positive earnings surprise of 700%. The company boasts an excellent track record of having outperformed estimates in each of the last four quarters, with an average positive earnings surprise of 246.16%.

However, our model indicates that Noble Energy’s earnings streak might come to a halt this time around, as the company does not have the right combination of the two key ingredients. While the company carries a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.

The Zacks Consensus Estimate for the first quarter’s total sales volume stands at 361 thousand barrels of oil equivalent per day (MBOE/d), indicating a decline on both yearly and sequential basis. However, estimates for first-quarter total revenues increased 21.54% to $1.2 billion from the same period last year.

Lastly, we have independent oil refiner and marketer Marathon Petroleum Corporation (NYSE:MPC) , slated to release results before the opening bell.

In the preceding three-month period, the company delivered a positive earnings surprise of 9.37% on higher refining margin. As far as earnings surprises are concerned, the Findlay, OH-based downstream operator has a good history. It went past the Zacks Consensus Estimate thrice in the last four reports.

However, this time around, our model does not predict earnings beat for the stock, as it has an Earnings ESP of 0.00% and a Zacks Rank #3. While Marathon Petroleum’s retail and midstream segment bodes well, a more conservative refining outlook is likely to affect the company’s bottom line. In fact, the Zacks Consensus Estimate for the refining segment’s bottom line stands at a loss of $112 million. This is also wider than the year-ago operating loss of $70 million.

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Marathon Petroleum Corporation (MPC): Free Stock Analysis Report

Devon Energy Corporation (DVN): Free Stock Analysis Report

Newfield Exploration Company (NFX): Free Stock Analysis Report

Noble Energy Inc. (NBL): Free Stock Analysis Report

Concho Resources Inc. (CXO): Free Stock Analysis Report

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