Earnings Reports

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Big earnings for big oil companies this week. Royal Dutch Shell, ExxonMobil, Eni, Total, Chevron and ConocoPhillps all report second quarter earnings. With oil seeing a WTI $75 high positive news is expected for $RDS.A, $XOM $COP $ENI $TOT and $CVX


Oil Gas Sunset

Royal Dutch Shell $RDS.A, Total Fina SA $TOT and ConocoPhillips $COP will lead off Thursday, ExxonMobil $XOM and Eni Spa $E will report Friday with Chevron $CVX.

Guidance on exploration and production spending will be key as oil prices have picked up recently, with U.S. drilling and production have near record highs with oil service giants  Schlumberger $SLB and Baker Hughes, a GE Co $BHGE having reported surging activity metrics while Haliburton warned about the Permian bottleneck.

Royal Dutch Shell-A (NYSE: $RDS.A) Reports Before Open Thursday

Analysts consensus is $1.39 in earnings per share (EPS) and $ billion in revenue 

 

What Analysts Will Be Watching

Analysts will be looking for updates on segments such as BG Group Plcs oil projects in Brazil and LNG in Australia. With the BGG price tag  excessive being bought at the oil price preak it and impact on Shell borrowing's, cost cutting and its sell off of assets and folllowed by cutting spending it is always at the top of the list. 

Updates on the Forties pipeline in the North Sea and the Enchilada platform in the Gulf of Mexico (50-60,000 boepd) are ongoing updates.  Look to see if any upstream decline is offset by the two new fields, Gorgon and Schiehallion, and expansion in Brazil. 

Earnings are expected to benefit from rising LNG contract prices, stronger ‘spot’ markets and trading activity.

2017 was a good year for oil companies with growth in WTI crude prices aided their margins, and Royal Dutch Shell in particular benefited from its massive divestments. In  2018, the WTI crude oil price reached $75 a huge jump from the 2017 average. This should bode well for the company’s upstream operations in Q2 2018, and the company’s $5 billion annual divestment target will further aid its overall performance.

 

Total Fina SA. (NYSE: $TOT) Reports Before Open Thursday

Analysts consensus is $1.55 in earnings per share (EPS) and $ billion in revenue 

 

What Analysts Will Be Watching

Divestments and production are key focuses for Total as with all the majors. $TOT is preparing to sell up to $1.5 billion in assets in Britain's North Sea, including one-third of its stake in the Laggan-Tormore gas fields. The divestment will include stakes in several smaller fields that Total acquired when it took over A.P. Moller-Maersk's oil-and-gas business in 2017.

Updates on renewable energy are important for the French company. Petróleo Brasileiro S.A. or Petrobras announced last month they have joined with Total S.A. to assess the opportunities related to renewable energy sources in Brazil. The companies, through a memorandum of understanding (MoU), decided to analyze the solar and onshore wind energy segments in the country.

Total SA explores, develops, produces and markets oil and gas. It is also engaged in trading and shipping of crude oil and petroleum products. The company operates through the following business segments: Upstream, Refining & Chemicals and Marketing & Services.

The Upstream segment includes the activities of exploration & production and gas. The Refining & Chemicals segment encompasses refining, petrochemicals and specialty chemicals operations. This segment also includes the activities of trading & shipping. The Marketing & Services segment includes worldwide supply and marketing activities in the oil products and services field as well as the activity of New Energies. The company was founded on March 28, 1924 and is headquartered in Courbevoie, France.

 

Conoco Phillips Inc. (NYSE: $COP) Reports Before Open Thursday

Analysts consensus is $1.02 in earnings per share (EPS) and $ billion in revenue 

 

What Analysts Will Be Watching

ConocoPhillips explores for, produces, transports, and markets crude oil, bitumen, natural gas, LNG, and natural gas liquids (NGLs) worldwide.

ConocoPhillips' first quarter production,averaged 1.224 million barrels of oil equivalent per day (BOE/D) and was above the high end of its 1.18 million to 1.22 million BOE/D guidance range. Heading into the second quarter, the company anticipates output averaging 1.17 million to 1.21 million BOE/D, which is lower due to seasonal maintenance activities.

Should ConocoPhillips match ot beat then it is on schedule to produce between 1.2 million to 1.24 million BOE/D for the full year, which would be 5% higher than 2017 and slightly above its initial forecast. This is despite the third-party gas pipeline issue in Malaysia will keep output from that region offline all year. 

Investors will focus on $COP's share repurchase program. Conoco Phillips recently announced a 50% increase in this year's share buyback plan to $3 billion. The company also reported it reduced debt by $2.1 billion during Q2 and has already reached its 2019 year-end debt target of $15 billion.

ConocoPhillips set its capital budget at $5.5 billion for 2018, which has seen production growt 5% versus last year. With Crude over $70 Brent and $65 WTI look for the company to increase CapEx.

ConocoPhillips' big three shale plays, Bakken, Eagle Ford, and Permian Basin are its key growth drivers in 2018, delivering 20% production growth versus last year. Haliburton in their earnings report warned that pipeline constraints in the Permian have had producers rethinking their plans.

ConocoPhillips also hinted that it might reduce its drilling activities in the Permian due to the pipeline issues. CEO Ryan Lance said last month he is "not sure it makes sense to drill into that headwind."  Will $COP reallocate capital away from the Permian and toward the Bakken and Eagle Ford.

Conoco’s portfolio includes resource-rich North American tight oil and oil sands assets; lower-risk legacy assets in North America, Europe, Asia and Australia; various international developments; and an inventory of conventional and unconventional exploration prospects. $COP has reloaded portfolio depth in the Bakken and Eagle Ford, and with visibility on future growth from a sizable position in the Permian.

Previous Earnings: 

ENI SPA ADR (NYSE: $E) Reports Before Open Friday

Analysts consensus is $0.66 in earnings per share (EPS) and $ billion in revenue 

 

What Analysts Will Be Watching

The Italian major Eni S.p.A. engages in the oil and gas, electricity generation and sale, and petrochemicals businesses. The company is involved in the oil and natural gas exploration, and field development and production activities, as well as liquefied natural gas (LNG) operations in 46 countries, including Italy, Libya, Egypt, Norway, the United Kingdom, Angola, Congo, Nigeria, the United States, Kazakhstan, Algeria, Australia, Venezuela, Iraq, Indonesia, Ghana, and Mozambique.

Recent analyst action gives us an insight what to expect. Jefferies Financial Group issued Q2 2018 EPS estimates for ENI in a research note issued to investors on Thursday, July 19th. Jefferies nalyst J. Gammel expects that the oil and gas exploration company will post earnings of $0.66 per share for the quarter. Jefferies Financial Group also issued estimates for ENI’s FY2018 earnings at $2.97 EPS.

  • Zacks Investment Research lowered ENI from a “strong-buy” rating to a “hold” rating in a report on Tuesday, July 10th.
  • Barclays upgraded ENI from an “underweight” rating to an “equal weight” rating in a report on Thursday, May 17th.
  • Credit Suisse Group upgraded ENI from a “neutral” rating to an “outperform” rating in a report on Thursday.
  • UBS Group upgraded ENI from a “neutral” rating to a “buy” rating in a report on Friday, May 18th.
  • Goldman Sachs Group reiterated a “buy” rating on shares of ENI in a report on Tuesday, May 29th.

 

ExxonMobil Inc. (NYSE: $XOM) Reports Before Open Friday

Analysts consensus is $1.29 in earnings per share (EPS) and $72.67 billion in revenue 

 

What Analysts Will Be Watching

Exxon Mobil Corporation principal business is energy exploration and production of, crude oil and natural gas; manufacture of petroleum products; and transportation and sale of crude oil, natural gas, and petroleum products, $XOM.operates as a manufacturer and marketer of commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics; and various specialty products.

Look for capex, cash and Permian bottleneck and Syncrude breakdown impact. Dividends are huge with oil majors. Exxon's capex budget was $22 billion for 2017, updates on this are key with oil recovering so far this year.

JPMorgan's Phil Gresh reiterated a Neutral rating and an $88 price target on Exxon last week, In his note he said his earnings estimates are in line with consensus, but that "it feels like upside could be fairly limited." He notes that on the upstream (exploration) side, earthquake-recovery efforts likely hurt volumes, prices, and cash flows at the PNG LNG project that Exxon is spearheading, while maintenance and production issues in areas from Canada to Kazakhstan may also weigh on the quarterly results. Overall Gresh warns that Exxon could $XOM another year-over year and quarter-over-quarter production decline, the eighth quarterly production decline in the last 10 quarters.

Watch for $XOM  operating cash flow and how much goes in dividend payments. 

Permian updates are what we want. After the huge acerage buys at the start of last year Exxon announced last quarter another 22,000 net acres in the Permian Basin since split between the Midland Basin and the Delaware Basin. Guyana is another region we want to hear updates on. LNG and natural gas updates along with its massive polyethylene production expansion in Mont Belvieu are all areas to watch in this intergrated major.

Previous Earnings: 

 

Chevron Inc. (NYSE: $CVX) Reports Before Open Friday

Analysts consensus is $2.10 in earnings per share (EPS) and $45.45 billion in revenue 

 

What Analysts Will Be Watching

Chevron Corp. is a U.S.-based integrated oil and gas company with worldwide operations in exploration and production, refining and marketing, transportation and petrochemicals. It has large exposure to the Permian and to LNG with the  Wheatstone Chevron LNG Facility production starting in Western Australia

The Permian Basin remains a key source of capital flexibility, and it is a key issue behind many analysts preference for Chevron versus some of the other majors. Chevron’s liquids-rich upstream segment is likely to benefit from higher crude price realizations. This segment is expected to record higher production volumes on the back of major capital projects including Gorgon, and core developments in the Gulf of Mexico and Permian Basin.

The Zacks Consensus Estimate for the total output of oil and gas is pegged at 2,860 thousand oil-equivalent barrels per day (MBOE/d), around 3% higher than the prior-year quarter. Driven by production and pricing gains, the Zacks Consensus Estimate for its upstream segment’s profit is pegged at $2,909 million, reflecting massive growth from second-quarter 2017’s figure of $853 million.

However, Chevron’s downstream segment is anticipated to limit overall earnings. Even in the last reported quarter, the segment’s income declined 21.4% year over year. The downstream unit is likely to bear the brunt of lower refinery input per day and reduced refined products sales margins in the second quarter as well.

Previous Earnings: 

Sources: TradersCommunity, XOM, CVX, COP, Zacks

From The TradersCommunity Research Desk

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