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What's in Store for WPX Energy (WPX) in Q2 Earnings?

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WPX Energy Inc. will release second-quarter 2016 financial results before the market opens on Aug 4. Last quarter, this independent oil and gas operator reported a positive earnings surprise of 10.53%. Let’s see how things are shaping up prior to this announcement.

Factors to Consider

WPX Energy is well poised to benefit from ongoing investments in its core assets in the Permian, Williston and San Juan basins. This will help the company to enhance production and build reserves. The company now expects oil production to be in the range of 39,000–41,000 barrels of oil per day in 2016, up from the earlier expectation of 37,000–39,000 barrels per day.

WPX Energy continues to reshape its portfolio by monetizing non-core assets, an initiative that is helping it to lower its debt levels and develop oil-based generation assets. Despite its initiative to lower its existing debts, the current debt-to-capital ratio of the company is still higher than its industry peers.

The company operates in a highly competitive field. The transient recovery in oil prices during the second quarter will make it even more competitive.

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 conclusively show that WPX Energy is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a 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: The Most Accurate estimate stands at a loss of 23 cents while the Zacks Consensus Estimate is pegged at a loss of 21 cents, resulting in an Earnings ESP of -9.52%.

Zacks Rank: WPX Energy carries a Zacks Rank #2. Though the Zacks Rank #2 increases the possibility of a beat, a -9.52% ESP makes it 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

Instead, here are a few players in the oil and gas sector that have the right combination of elements to post an earnings beat this quarter.

Continental Resources, Inc. has an Earnings ESP of +5.56% and a Zacks Rank #2. It is expected to report second-quarter earnings on Aug 3.

Spectra Energy Corp. (SE - Free Report) has an Earnings ESP of +12.00% and a Zacks Rank #2. It is slated to report second-quarter 2016 earnings on Aug 3.

Northern Oil and Gas, Inc. (NOG - Free Report) has an Earnings ESP of +25.00% and a Zacks Rank #1. It is slated to report second-quarter earnings on Aug 4.


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