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Can BP plc (BP) Q3 Earnings Tide Over Oil Price Decline?

Oil giant BP plcBP is expected to report third-quarter 2015 earnings on Oct 27, before the opening bell.

In the last reported quarter, the company delivered a negative earnings surprise of 21.82%. Over the last four quarters, the company's average earnings surprise was a positive 58.15%. Let's see how things are shaping up for this announcement.

Factors to Consider This Past Quarter

BP expects third-quarter 2015 production to be broadly flat with the second quarter, after accounting for seasonal maintenance activity. The company also projects reduced refining margins and lower levels of turnaround activity.

The company's overall picture for the third quarter remains closely tied to the persistent fall in crude prices. WTI and Brent witnessed similar declines owing to an oversupplied market. The strength of the dollar against other currencies also made oil dearer for importers, thus contributing to the slump.

The overall market remained jittery purely due to a declining rig count, soft Chinese demand and weak jobs numbers from the domestic space. Also, the threat of a White House veto is hanging over the lift of the oil export ban.

BP's activities during the quarter proved inadequate to win analysts' confidence. As a result, the Zacks Consensus Estimate declined to 33 cents from 51 cents per share over the last 90 days.

What Our Model Indicates

Our proven model does not conclusively show that BP is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat estimates. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because the Most Accurate estimate is in line with the Zacks Consensus Estimate of 33 cents.

Zacks Rank: BP has a Zacks Rank #3 which increases the predictive power of ESP. But we need a positive ESP to be confident of a beat.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions.

Stocks That Warrant a Look

Here are some companies in the energy sector with the right combination of elements to post an earnings beat this quarter:

Exterran Partners, L.P. EXLP has Earnings ESP of +19.23% and a Zacks Rank #1. The company is slated to release earnings results on Nov 3.

Callon Petroleum Company CPE has Earnings ESP of +100.00% and a Zacks Rank #2. It will be reporting results on Nov 4.

PennTex Midstream Partners, LP PTXP has Earnings ESP of +114.29% and a Zacks Rank #2. The company is scheduled to release results on Nov 6.

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BP PLC (BP): Free Stock Analysis Report

EXTERRAN PTNRS (EXLP): Free Stock Analysis Report

CALLON PETE-DEL (CPE): Free Stock Analysis Report

PENNTEX MIDSTRM (PTXP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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