{"id":2823,"date":"2023-10-18T17:33:26","date_gmt":"2023-10-18T17:33:26","guid":{"rendered":"https:\/\/infundpros.com\/markets\/chevron-exxon-mobil-and-other-oil-companies-earnings-dont-hinge-on-prices\/"},"modified":"2023-10-18T17:33:26","modified_gmt":"2023-10-18T17:33:26","slug":"chevron-exxon-mobil-and-other-oil-companies-earnings-dont-hinge-on-prices","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=2823","title":{"rendered":"Chevron, Exxon Mobil and Other Oil Companies\u2019 Earnings Don\u2019t Hinge on Prices"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-BAR-0000771989\">\n<div data-layout=\"wrap\n              \" data-layout-mobile=\"\" class=\"\n        media-object\n        type-InsetMediaIllustration\n          wrap\n  article__inset\n        article__inset--type-InsetMediaIllustration\n          article__inset--wrap\n    article__inset--lead\n  \"><\/p>\n<p>        <!-- eventually when we know what this card will be we can change it and leave this one --><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-wrap\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>Oil-and-gas companies will start reporting their third-quarter earnings this week, and the outlook isn\u2019t very rosy. <\/p>\n<p>Earnings are expected to decline by 38% year over year, more than any other sector of the<br \/>\n        S&amp;P 500<br \/>\n       by far. The biggest reason is oil and natural-gas prices declined by double digits, in percentage terms, from the same quarter a year ago. And yet, energy stocks are in relatively good shape, gaining 11% in the third quarter even as the broader market slumped. These stocks have more Buy ratings than any other sector, according to FactSet. <\/p>\n<div class=\"paywall\">\n<p>That split between earnings expectations and stock sentiment shows just how much energy companies have changed from a decade ago, when oil prices were pretty much the only thing that mattered. Now, the companies are increasingly valued for steady cash flow, strong dividends, and as a hedge against inflation. Oil-and-gas companies will start reporting third-quarter earnings this week from a position of strength: Independent American oil producers are producing more oil as major state-owned operators elsewhere have cut production. U.S. output hit all-time highs of 13.2 million barrels a day last week.\u00a0<\/p>\n<p>All that said, energy companies could have trouble convincing investors that they\u2019ll remain attractive investments after their stocks\u2019 recent strong performance and uncertainty about oil prices. <\/p>\n<p>Oil is trading in a range between $80 and $90 a barrel\u2014staying under $100 despite the Israel-Hamas war, OPEC\u2019s production cuts, and Russia\u2019s continuing invasion in Ukraine. Concerns about demand are currently outweighing those supply shocks. Natural-gas prices had risen above $3.30 earlier this month, but have since declined below $3.10. For energy stocks to rise further, commodity prices might have to break above their current ranges.<\/p>\n<p>Geopolitical uncertainty could outweigh most company-specific news as companies start reporting earnings, according to Mizuho analyst Nitin Kumar. <\/p>\n<p>\u201cWe believe investors will be more focused on macro trends (e.g., Israel-Gaza conflict, oil demand outlook, U.S. natural gas supply and pricing, shale M&amp;A etc.) and the messaging from companies on how they fit into those trends during this upcoming earnings season,\u201d Kumar wrote.<\/p>\n<p>Investors might get an answer to one big question hanging over the sector\u2014whether U.S. oil companies will spend less on drilling\u2014when oil services company<br \/>\n        SLB<br \/>\n       (ticker: SLB) reports earnings Friday morning. In the U.S., oil companies have been cutting the number of rigs they use as they stick to modest capital expenditure budgets and only drill their best wells. The U.S. rig count fell by 10% in the third quarter. That has hurt profits of oil services firms like<br \/>\n        Halliburton<br \/>\n       (HAL), which is dominant in the U.S. <\/p>\n<p>SLB, however, is more focused on the international market, including working on large offshore drilling projects. The company could provide insight on whether U.S. drilling has hit a bottom and whether international activity will keep rising. Raymond James analyst James Rollyson says international oil services should stay strong and that the U.S. market is \u201clikely nearing a bottom,\u201d making several of the oil services names attractive. He has Strong Buy ratings on Halliburton,<br \/>\n        Atlas Energy Solutions<br \/>\n       (AESI),<br \/>\n        Patterson-UTI Energy<br \/>\n       (PTEN), Select Water Solutions (WTTR),<br \/>\n        Tidewater<br \/>\n       (TDW), and<br \/>\n        Weatherford International<br \/>\n       (WFRD).<\/p>\n<p>Another trend investors will likely watch for this earnings season is M&amp;A, to see if other oil companies will follow<br \/>\n        Exxon Mobil<br \/>\n      \u2018s (XOM) lead and consolidate. Exxon announced last week that it will buy<br \/>\n        Pioneer Natural Resources<br \/>\n       (PXD) for about $65 billion, a deal that will make it the dominant shale-oil producer in the country by far. Analysts have speculated that more deals could be coming, as larger oil companies have technological and financial advantages over their smaller peers. <\/p>\n<p>Among the companies to monitor for M&amp;A signals is oil major<br \/>\n        Chevron<br \/>\n       (CVX), which could be a buyer. The company reports third-quarter results on Oct. 27.<br \/>\n        Diamondback Energy<br \/>\n       (FANG),<br \/>\n        Devon Energy<br \/>\n       (DVN) and<br \/>\n        Coterra<br \/>\n       (CTRA) have been mentioned by analysts as companies that could eventually be acquired because they are large enough to move the needle for a big oil company. They will report quarterly results in November. <\/p>\n<p>Still, some are skeptical that those companies have the right attributes to be targets right now.\u00a0Kumar wrote that no other major shale company has inventory that can compare with that of Pioneer: \u201cFor investors looking for the \u2018next Pioneer\u2019 the drop off in both market cap and reserves to the next independent large-cap E&amp;P [exploration and production company] is relatively sharp.\u201d <\/p>\n<p>Another big question for energy companies is the direction of gasoline prices. Refiners such as<br \/>\n        Valero<br \/>\n       Energy (VLO) and<br \/>\n        Phillips 66<br \/>\n       (PSX) have made wide margins selling expensive diesel fuel as Russia and other players export less of it to Europe. Refiner stocks rose 27% in the third quarter, according to Tudor, Pickering, Holt. But they\u2019re making much less money on gasoline now, as Americans are driving less and gas prices have been falling. Investors will want to know if refiners expect gasoline margins to pick back up and whether gas prices are likely to stay low for months, possibly hurting fourth-quarter earnings.<\/p>\n<p>Valero and Phillips will post quarterly results in late October.<\/p>\n<p>Write to Avi Salzman at avi.salzman@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/articles\/oil-gas-stock-earnings-prices-93353694?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Oil-and-gas companies will start reporting their third-quarter earnings this week, and the outlook isn\u2019t very rosy. Earnings are expected to decline by&#8230;<\/p>\n","protected":false},"author":1,"featured_media":2824,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25],"tags":[],"class_list":{"0":"post-2823","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Chevron, Exxon Mobil and Other Oil Companies\u2019 Earnings Don\u2019t Hinge on Prices | inFundPros<\/title>\n<meta name=\"description\" content=\"Oil-and-gas companies will start reporting their third-quarter earnings this week, and the outlook isn\u2019t very rosy. 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