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Will Focus on Oil Drive WPX Energy's (WPX) Q1 Earnings?

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WPX Energy, Inc.WPX is scheduled to release first-quarter 2018 results on May 2, after the closing bell. The company delivered a positive surprise in the trailing four quarters with an average beat of 30.59%.

Let's see how things are shaping up prior to this announcement.

Factors to Consider

During the first quarter, WPX Energy closed an agreement to sell its operations in the San Juan Basin and will now focus on its core oil-centric operations in the Delaware (Permian) and Williston basins.

At present, nearly 80% production of the company is liquids and the rest natural gas. It was simply the opposite five years ago. This transformation is a result of execution of the company's plan to produce more liquids. The Zacks Consensus Estimate for oil production for the first quarter is pegged at 72,000 barrels per day, reflecting year-over-year growth of nearly 56.2%.

Per the Zacks Consensus Estimate, nearly 64.3% of its total production in the first quarter will be oil. WPX Energy is likely to benefit from its focus on oil and improving commodity prices. In addition, WPX Energy has hedged a substantial volume of its oil and natural gas production to protect it from fluctuating prices.

The Zacks Consensus Estimate for total revenues of the company is pegged at $373 million, reflecting a decline of 19.1% from the year-ago quarter. The Zacks Consensus Estimate for the first quarter is pegged at negative earnings of 2 cents per share, much narrower than the prior-year quarter's negative earnings of 15 cents.

WPX Energy, Inc. Price and EPS Surprise

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

Earnings Whispers

Our proven model does not show that WPX Energy is going to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Zacks ESP : WPX Energy has an Earnings ESP of -3.82%.

You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter ..

Zacks Rank : Though WPX Energy's Zacks Rank #3 increases the predictive power of the ESP, the company also needs a positive ESP to be confident about an earnings surprise. Hence, this combination of negative ESP and a positive rank makes a positive surprise unlikely this season.

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

Stocks to Consider

Here are a few companies from the same industry that have the right combination of elements to beat on earnings this quarter.

EOG Resources, Inc. EOG is expected to report first-quarter 2018 earnings on May 3. It has an Earnings ESP of +3.33% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.

Comstock Resources Inc. CRK has an Earnings ESP of +51.83% and a Zacks Rank #2. It is slated to report first-quarter 2018 earnings on May 14.

Evolution Petroleum Corporation, Inc. EPM has an Earnings ESP of +12.00% and a Zacks Rank #2. It is scheduled to report third-quarter fiscal 2018 earnings on May 14.

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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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