We are now more than halfway through second-quarter earnings, with majority of S&P 500 energy companies already having reported results. With oil prices being higher remarkably than the year-ago quarter, the overall energy business scenario is likely to have been relatively solid in the second quarter.
The view has been strengthened by the recent earnings release of energy biggie Exxon Mobil Corporation XOM. Higher production in the upstream segment and higher crude realizations led to strong quarterly results. In the United States, ExxonMobil recorded crude price realization of $79.00 per barrel, higher than the year-ago quarter’s figure of $71.36.
Q2 Oil Price
According to the U.S. Energy Information Administration, the average spot prices for West Texas Intermediate (WTI) crude at Cushing, OK, were $85.35 per barrel in April, $80.02 per barrel in May and $79.77 per barrel in June. The commodity prices were significantly higher than last year’s prices of $79.45 per barrel, $71.58 per barrel and $70.25 per barrel, respectively. Thus, the crude pricing environment was favorable for oil exploration and production activities.
Natural gas prices were relatively low in the first two months of the quarter, unfavorable for gas exploration and production activities.
Midstream & Refining Business
By its very nature, midstream operations have lower exposure to volatility in oil and gas prices since pipeline networks are utilized by shippers for transporting oil and natural gas for a length of time. Thus, in the June quarter, midstream operations are likely to have generated stable fee-based revenues.
However, higher crude prices in the second quarter are expected to have raised input costs for refiners as they purchase oil as raw materials for producing end products like gasoline, jet fuel, etc.
Key Releases
Given the backdrop, let us look at how the following energy companies are placed ahead of their second-quarter earnings releases slated for Aug 6.
Per our proprietary model, a company needs to have 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 the odds of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
Devon Energy Corp. DVN is geared up to release second-quarter earnings after the closing bell.
Our proven model doesn’t predict an earnings beat for Devon Energy this time around, as it has an Earnings ESP of 0.00% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The Zacks Consensus Estimate for the firm’s earnings is pegged at $1.29 per share, suggesting an increase from the prior-year reported figure.
Devon Energy Corporation Price and EPS Surprise
Devon Energy Corporation price-eps-surprise | Devon Energy Corporation Quote
Marathon Petroleum Corp MPC is set to report quarterly earnings before the opening bell. The chances of Marathon Petroleum delivering an earnings beat this time around are low as it has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell).
The Zacks Consensus Estimate for the leading integrated, downstream energy company’s earnings is pegged at $3.04 per share.
Marathon Petroleum Corporation Price and EPS Surprise
Marathon Petroleum Corporation price-eps-surprise | Marathon Petroleum Corporation Quote
W&T Offshore Inc WTI is scheduled to report earnings after the closing bell. Similar to Devon Energy and Marathon Petroleum, the chances of W&T Offshore, an independent oil and natural gas producer, delivering an earnings beat this time around are low as it has an Earnings ESP of 0.00% and a Zacks Rank #3.
The Zacks Consensus Estimate for WTI’s loss is pegged at 3 cents per share.
W&T Offshore, Inc. Price and EPS Surprise
W&T Offshore, Inc. price-eps-surprise | W&T Offshore, Inc. Quote
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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.
