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Oil Stocks to Watch for Q1 Earnings on May 9: CNQ, LNG & More

Q1 Oil and Gas Price Report Card  Oil: Natural Gas: Picture Thus Far report Key Releases on May 9 Canadian Natural Resources Limited CNQ Earnings ESP Earnings ESP Filter Canadian Natural Resources Limited Price and EPS Surprise

Canadian Natural Resources Limited Price and EPS Surprise | Canadian Natural Resources Limited Quote

However, this time around, things are looking favorable for Canadian Natural according to our proven model, as the firm carries a Zacks Rank #1 and an Earnings ESP of +0.85%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for earnings is pegged at 39 cents a share on revenues of $3,726 million. However, the earnings and revenue expectation compares unfavorably with the year-ago figures of 62 cents a share and $4,538 million, respectively. 

The company anticipates first-quarter 2019 liquids production within 759,000-817,000 barrels per day (bbl/d), indicating a decline from 854,558 bbl/d reported in first-quarter 2018. Further, natural gas output is projected in the band of 1,490-1,520 million cubic feet per day (MMcf/d), lower than the year-ago level of 1,614 MMcf/d. Alberta government’s mandated oil production cuts during the first quarter of 2019 is likely to result in lower y/y output. While natural gas price realizations may provide some respite, the company is likely to bear the brunt of lower y/y realized prices for liquids, which forms more than 75% of the firm’s total output levels. 

Cheniere Energy, Inc. LNG: The largest U.S. liquefied natural gas exporter Cheniere Energy is slated to unveil quarterly numbers before the opening bell. In the last reported quarter, the company delivered a negative earnings surprise of 27.78% on high operating expenses. Coming to earnings surprise history, Cheniere Energy missed estimates in three of the last four quarters, delivering average negative earnings surprise of 15.76%. 

 

Cheniere Energy, Inc. Price and EPS Surprise

Cheniere Energy, Inc. Price and EPS Surprise | Cheniere Energy, Inc. Quote

Per our proven model, the company is unlikely to beat earnings estimates this time as well, as it has a Zacks Rank #3 and an Earnings ESP of -4.13%. The Zacks Consensus Estimate for earnings stands at 26 cents a share on revenues of $1,691 million. Notably, the earnings and sales projection suggests a y/y decline of 78% and 25%, respectively. 

With a first-mover advantage in the LNG export market, Cheniere Energy is expected to gain from increasing y/y volumes of LNG exports. However, exporting natural gas — by setting up large liquefaction plants — is a capital-intensive business. As it is, the company is bearing the brunt of high costs since the last several quarters. High operating expenses and interest payment obligations associated with huge debt burden are likely to limit its profits. 

Crescent Point Energy Corporation CPG: The Calgary-based upstream player is set to post quarterly results before the market opens. In the last reported quarter, the company delivered a negative earnings surprise of 122.22% on lower y/y output levels and weak crude price realizations. However, it managed to surpass earnings estimates in three of the preceding four quarters, delivering average positive surprise of 15.49%.

 

Crescent Point Energy Corporation Price and EPS Surprise

Crescent Point Energy Corporation Price and EPS Surprise | Crescent Point Energy Corporation Quote

However, our proven model does not predict an earnings beat for Crescent Point in the to-be-reported quarter because the company has an Earnings ESP of 0.00% and a Zacks Rank #1. The Zacks Consensus Estimate for earnings stands at 2 cents a share on revenues of $622 million. Notably, the earnings and sales expectation compares unfavorably with the year-ago reported figures of 9 cents a share and $740 million, respectively.

Crescent Point’s attractive light-oil reserves and new leadership bode well. Management’s recent emphasis on focusing more on strengthening financials and reducing costs versus its historical priority of simple volume growth provides a ray of hope. Initiatives like capex and dividend cuts, along with the initiation of a divestment program to shore up the balance sheet are likely to boost its prospects in the first quarter. However, the company’s results are likely to be affected by lower realized prices of liquids (constituting 91% of total volumes) and reduced output levels amid production cuts mandated by Alberta, as well as a shift in its strategic focus. Notably, the company envisions annual average production in 2019 in the band of 170,000-174,000 barrels of oil equivalent per day (Boe/d), implying a decline from 178,166 Boe/d recorded in 2018. 

Jagged Peak Energy Inc. JAG: This Denver-based Permian pure player is set to come out with quarterly results after the closing bell. The upstream explorer reported a negative earnings surprise of 18.75% in the last reported quarter amid weak commodity price realizations. Nonetheless, the firm managed to surpass estimates in three of the trailing four quarters, with average positive earnings surprise of 20.92%. 

 

Jagged Peak Energy Inc. Price and EPS Surprise

Jagged Peak Energy Inc. Price and EPS Surprise | Jagged Peak Energy Inc. Quote

However, an earnings beat seems unlikely for Jagged Peak in the quarter to be reported as it carries a Zacks Rank #3 and an Earnings ESP of -3.47%. The Zacks Consensus Estimate for earnings stands at 11 cents a share on revenues of $134 million. While the earnings estimate is a penny lower than the year-ago figure of 12 cents a share, the revenue estimate compares favorably with $129 million recorded in the corresponding quarter of 2018. 

Two major indicators — commodity price realizations and production growth — are sending mixed signals in regard to Jagged Peak’s first-quarter results. The company estimates total first-quarter production within 36,500-37,900 Boe/d, way higher than the output level of 27,596 Boe/d recorded in the year-ago period. While the surge in production levels is likely to aid earnings, lower price realizations for oil, which accounts for three-fourth of the firm’s total output, may dent overall results. 

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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.

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