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Oil Stocks' Q3 Earnings: Key Predictions for DVN, APC, CXO
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The third-quarter earnings season passed the half way mark last week. Total earnings for the 272 S&P members, that have already released results, are up 8.7% year over year on 6.7% higher revenues, with 75.7% beating earnings and 66.2% topping revenue estimates.
This is going to be another busy week with 900 companies expected to release earnings including 134 members of the S&P 500. Combining the results of the 272 S&P 500 members with the index’s 228 members yet to report, we expect total earnings to be up 5.4% year over year on 5.5% higher revenues.
Amid this positive backdrop let us focus on Zacks Oil and Energy Sector this earnings season. Earnings from this sector are expected to be up 148.2% from the same period last year on 19.7% higher revenues. Read more details in our weekly Earnings Preview.
The primary reason behind the performance is the improvement in oil prices. Oil price at the end of third quarter was $51.67 per barrel, reflecting a sequential improvement of 10.5%. Oil prices also improved on a year-over-year basis.
Few oil and gas companies had to cope with the impact of hurricanes that disrupted operation during the quarter. Gradually these companies are going back to pre-hurricane production levels. At the same time, sudden outages of the refineries and production cuts has pushed up the prices due to the fear of supply shortage.
Let us focus on the oil companies scheduled to release third-quarter earnings on Oct 31.
Devon Energy’s production is driven by contribution from its domestic resource plays. Per the Zacks Consensus Estimate, the average daily production in the quarter from the United States will be 412,000 barrels of oil (boe) per day.
However, Hurricane Harvey had an adverse impact on company’s production from Eagle Ford and adjoining areas. Devon expects its net U.S. liquids production to decline 15,000 barrels per day in the quarter due to the hurricane.
For the quarter, the Zacks Consensus Estimate for Devon Energy’s revenues is pegged at $3,615 million, indicating 25.2% year-over-year and 3.3% sequential decline. The likely drop in production and estimated fall in realized price are expected to adversely impact financial performance of the company in the quarter.
Devon Energy’s Earnings ESP is -0.02%. According to our proven model, stocks with the combination of a positive Earnings ESP and a Zacks Rank #1, 2 (Buy) or 3 have higher chances of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Anadarko Petroleum Corporation reported a negative earnings surprise of 126.47% in the previous quarter. The company currently carries a Zacks Rank #3.
Anadarko Petroleum reaffirmed production guidance range for the deepwater Gulf of Mexico, DJ and Delaware basin assets. During the second quarter, the U.S. operations have been the major contributor in both Oil and Natural gas production. We can expect the same in the to-be-reported quarter as well. The company's high-quality assets and infrastructure will help it come out with strong performance, despite challenges caused by Hurricane Harvey.
The Zacks Consensus Estimate for total sales volume stands at 59 million barrels of oil equivalent (MMBOE) for third quarter that is within the company’s guidance range of 58-60 MMBOE.
The Zacks Consensus Estimate for total revenues is $2,316 million, which reflects a sequential decline of 14.7%.
Anadarko Petroleum Corporation Price and EPS Surprise
Anadarko Petroleum’s Earnings ESP is 0.00%. Hence, the company is unlikely to beat earnings as it does not have the right combination of the two key ingredients (read more: What's in Store for Anadarko Petroleum in Q3 Earnings?).
Concho Resources Inc. reported a positive earnings surprise of 20.93% in the previous quarter on higher commodity prices and strong production growth. The company currently carries a Zacks Rank #3.
We note that the Zacks Consensus Estimate of daily production for the company, which is currently pegged at 189.7 thousand barrels of oil equivalent (MBOE), is up from 184.7 MBOE reported in the second quarter and reflects year-over-year growth of 24%.
Per the Zacks Consensus Estimate, the average natural gas price is expected to jump 16.1% from the year-ago quarter to $2.81 per thousand cubic feet while average oil price realization is set to go up 9.4% to $45.41 per barrel.
The Zacks Consensus Estimate for total revenues is $622 million, which reflects a year-over-year and sequential increase of 44.3% and 9.7%, respectively.
Concho Resources’ Earnings ESP is +0.63%. Hence, the company is likely to beat earnings as it does have the right combination of the two key ingredients (read more: Why Concho Resources is Set to Beat in Q3 Earnings).
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
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Oil Stocks' Q3 Earnings: Key Predictions for DVN, APC, CXO
The third-quarter earnings season passed the half way mark last week. Total earnings for the 272 S&P members, that have already released results, are up 8.7% year over year on 6.7% higher revenues, with 75.7% beating earnings and 66.2% topping revenue estimates.
This is going to be another busy week with 900 companies expected to release earnings including 134 members of the S&P 500. Combining the results of the 272 S&P 500 members with the index’s 228 members yet to report, we expect total earnings to be up 5.4% year over year on 5.5% higher revenues.
Amid this positive backdrop let us focus on Zacks Oil and Energy Sector this earnings season. Earnings from this sector are expected to be up 148.2% from the same period last year on 19.7% higher revenues. Read more details in our weekly Earnings Preview.
The primary reason behind the performance is the improvement in oil prices. Oil price at the end of third quarter was $51.67 per barrel, reflecting a sequential improvement of 10.5%. Oil prices also improved on a year-over-year basis.
Few oil and gas companies had to cope with the impact of hurricanes that disrupted operation during the quarter. Gradually these companies are going back to pre-hurricane production levels. At the same time, sudden outages of the refineries and production cuts has pushed up the prices due to the fear of supply shortage.
Let us focus on the oil companies scheduled to release third-quarter earnings on Oct 31.
Devon Energy Corporation (DVN - Free Report) reported a positive earnings surprise of 3.03% in the previous quarter. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Devon Energy’s production is driven by contribution from its domestic resource plays. Per the Zacks Consensus Estimate, the average daily production in the quarter from the United States will be 412,000 barrels of oil (boe) per day.
However, Hurricane Harvey had an adverse impact on company’s production from Eagle Ford and adjoining areas. Devon expects its net U.S. liquids production to decline 15,000 barrels per day in the quarter due to the hurricane.
For the quarter, the Zacks Consensus Estimate for Devon Energy’s revenues is pegged at $3,615 million, indicating 25.2% year-over-year and 3.3% sequential decline. The likely drop in production and estimated fall in realized price are expected to adversely impact financial performance of the company in the quarter.
Devon Energy Corporation Price and EPS Surprise
Devon Energy Corporation Price and EPS Surprise | Devon Energy Corporation Quote
Devon Energy’s Earnings ESP is -0.02%. According to our proven model, stocks with the combination of a positive Earnings ESP and a Zacks Rank #1, 2 (Buy) or 3 have higher chances of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The company is unlikely to beat earnings because it does not have the right combination of the two key ingredients (read more: Will Hurricane Harvey Hurt Devon Energy's Q3 Earnings?).
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Anadarko Petroleum Corporation reported a negative earnings surprise of 126.47% in the previous quarter. The company currently carries a Zacks Rank #3.
Anadarko Petroleum reaffirmed production guidance range for the deepwater Gulf of Mexico, DJ and Delaware basin assets. During the second quarter, the U.S. operations have been the major contributor in both Oil and Natural gas production. We can expect the same in the to-be-reported quarter as well. The company's high-quality assets and infrastructure will help it come out with strong performance, despite challenges caused by Hurricane Harvey.
The Zacks Consensus Estimate for total sales volume stands at 59 million barrels of oil equivalent (MMBOE) for third quarter that is within the company’s guidance range of 58-60 MMBOE.
The Zacks Consensus Estimate for total revenues is $2,316 million, which reflects a sequential decline of 14.7%.
Anadarko Petroleum Corporation Price and EPS Surprise
Anadarko Petroleum Corporation Price and EPS Surprise | Anadarko Petroleum Corporation Quote
Anadarko Petroleum’s Earnings ESP is 0.00%. Hence, the company is unlikely to beat earnings as it does not have the right combination of the two key ingredients (read more: What's in Store for Anadarko Petroleum in Q3 Earnings?).
Concho Resources Inc. reported a positive earnings surprise of 20.93% in the previous quarter on higher commodity prices and strong production growth. The company currently carries a Zacks Rank #3.
We note that the Zacks Consensus Estimate of daily production for the company, which is currently pegged at 189.7 thousand barrels of oil equivalent (MBOE), is up from 184.7 MBOE reported in the second quarter and reflects year-over-year growth of 24%.
Concho Resources Inc. Price and EPS Surprise
Concho Resources Inc. Price and EPS Surprise | Concho Resources Inc. Quote
Per the Zacks Consensus Estimate, the average natural gas price is expected to jump 16.1% from the year-ago quarter to $2.81 per thousand cubic feet while average oil price realization is set to go up 9.4% to $45.41 per barrel.
The Zacks Consensus Estimate for total revenues is $622 million, which reflects a year-over-year and sequential increase of 44.3% and 9.7%, respectively.
Concho Resources’ Earnings ESP is +0.63%. Hence, the company is likely to beat earnings as it does have the right combination of the two key ingredients (read more: Why Concho Resources is Set to Beat in Q3 Earnings).
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>