By the second half of this month, energy players will start releasing third-quarter 2023 earnings. Thus, investors are keeping an eye on these companies. In the meantime, Exxon Mobil Corporation (XOM Quick QuoteXOM - Free Report) announced its expectations for a rise in sequential profit, citing handsome commodity prices and higher margins from energy products as the key reasons.

Thus, companies from the energy space that are expected to beat third-quarter earnings are PBF Energy Inc. (PBF Quick QuotePBF - Free Report) , ConocoPhillips (COP Quick QuoteCOP - Free Report) and EOG Resources, Inc. (EOG Quick QuoteEOG - Free Report) .

Oil & Gas Prices Impressive

The pricing scenario of oil and natural gas was impressive in the third quarter of this year. Per data provided by the U.S. Energy Information Administration (“EIA”), the average West Texas Intermediate crude prices per barrel in July, August and September were $76.07, $81.39 and $89.43, respectively. Although the prices were not as high as in the year-ago quarter, the commodity prices were impressive and healthy.

Like oil, natural gas prices in the September quarter were healthier than in the second quarter, aiding the exploration and production activities of the major energy players.

ExxonMobil Expresses Optimism About Q3 Earnings

Leading integrated energy player, ExxonMobil, in its recent SEC filing, expressed optimism over higher oil and natural gas prices aiding its third-quarter earnings. XOM projects its upstream business’s earnings in the third quarter to be supported by $1.1-$1.9 billion sequentially, thanks to increased liquid and gas prices. ExxonMobil expects its Energy Products business unit to be aided by $0.9-$1.1 billion in the September quarter, owing to higher industry margins.

How to Pick the Right Stocks?

Amid the positive backdrop, several energy stocks seem well-positioned to beat earnings estimates in the third quarter. However, it is by no means an easy task for investors to arrive at picks that have the potential to deliver better-than-expected earnings.

While there is no fool-proof method of picking outperformers, our proprietary methodology — the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — helps identify stocks that have high chances of delivering a surprise in their upcoming earnings announcement. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.

The Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Our Choices

PBF Energy, a leading North American refiner, is likely to have benefited from higher gross refining margin.

PBF Energy currently has an Earnings ESP of +18.34% and a Zacks Rank #2. The company is scheduled to release results on Nov 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

ConocoPhillips is a well-known name in the upstream energy space and is likely to have benefited from the favorable commodity prices. COP, scheduled to report earnings on Nov 2, has an Earnings ESP of +4.57% and a Zacks Rank of 3.

EOG Resources is also likely to have benefited from favorable commodity prices. EOG, scheduled to release earnings on Nov 2, has an Earnings ESP of +3.15% and a Zacks Rank #3.