Bigwigs from the Oil/Energy sector like ExxonMobil (XOM Quick QuoteXOM - Free Report) and Chevron (CVX Quick QuoteCVX - Free Report) are yet to report second-quarter earnings results. Before going into details, we need to analyze the extent of impact coronavirus has had on the sector.

Oil Price Recovers Partially Despite Coronavirus

Since April-end, the price of West Texas Intermediate (WTI) crude has improved more than 239% through the June quarter owing to partial recovery in fuel demand with the easing of lockdown measures. The recovered commodity pricing scenario is likely to have given some support to upstream businesses.

However, as compared to the year-ago quarter, the price of the commodity has declined sharply owing to the pandemic. Notably, for the month of April, May and June of 2020, average West Texas Intermediate (WTI) crude prices were recorded at $16.55 per barrel, $28.56 and $38.31, respectively, per data from the U.S. Energy Information Administration (EIA). The figures are considerably lower than the respective $63.86, $60.83 and $54.66 a year ago – per EIA’s data.

The price of natural gas also fell year over year. Per EIA, for the month of April, May and June of 2020, average natural gas prices were recorded at $1.74 per million Btu, $1.75 and $1.63, respectively. The figures are considerably lower than the respective prices of $2.65, $2.64 and $2.40 a year ago – per EIA’s data.

What Does it Mean for Energy Majors?

The partial recovery of oil price in Q2 is likely to have lent some support to the upstream business. But if we look at the year-ago picture, the considerable decline in oil and gas prices are likely to have hurt the upstream operations of energy majors.

The midstream business, is however, relatively less likely to get affected by the coronavirus-induced oil price volatility. This is because the midstream assets are being booked by shippers for the long term to transport liquids and refined products.

Notably, the refining operations are also likely to have been affected by the pandemic since global demand for refined products took a considerable hit compared to the year-ago quarter. However, a partial resumption of economic activity and thus some recovery in fuel demand since more people got back to work, especially in the months of May and June, are likely to have favored the downstream business partially.

Key Releases

Given the backdrop of coronavirus-induced energy business in the second quarter, let’s take a glance at how four energy players are placed ahead of their second-quarter results slated for release on Jul 31.

Our proprietary model indicates that a company needs to have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.  

Exxon Mobil Corporation is set to report results before the opening bell. In the last-reported quarter, the leading integrated energy company reported earnings of 53 cents per share that beat the Zacks Consensus Estimate of 4 cents, thanks to growth in production volumes from the prolific Permian and Guyana oil resources. Notably, ExxonMobil beat earnings in three of the past four quarters, the average surprise being 307.9%, as shown in the chart below.

The current Zacks Consensus Estimate for the to-be-reported quarter is pegged at a loss of 63 cents per share on revenues of $36.1 billion. This indicates a year-over-year earnings and revenue decline of 186.3% and 47.8%, respectively.

Our proven model does not conclusively predict an earnings beat for ExxonMobil this time around as it has an Earnings ESP of 0.00% and a Zacks Rank #3.

Chevron Corporation is scheduled to release results before the opening bell. The current Zacks Consensus Estimate for this leading integrated energy player’s to-be-reported quarter’s loss is pegged at 93 cents per share while the same for revenues stands at $20.5 billion. This indicates a year-over-year earnings and revenue decline of 141% and 47.3%, respectively.

Our proven model does not conclusively predict an earnings beat for Chevron this time around as it has an Earnings ESP of 0.00% and a Zacks Rank #1.

Phillips 66 (PSX Quick QuotePSX - Free Report) is scheduled to release results before the opening bell. The current Zacks Consensus Estimate for its to-be-reported quarter’s loss is pegged at 99 cents per share and the same for revenues stands at $14.9 billion. This indicates year-over-year earnings and revenue decline of 132.8% and 47.7%, respectively.

Our proven model does not conclusively predict an earnings beat for Phillips 66 this time around as it has an Earnings ESP of 0.00% and a Zacks Rank #4.

Imperial Oil Limited (IMO Quick QuoteIMO - Free Report) is scheduled to release results before the opening bell. The current Zacks Consensus Estimate for its to-be-reported quarter’s loss is pegged at 69 cents per share and the same for revenues stands at $3.1 billion. This indicates year-over-year earnings and revenue decline of 204.6% and 55.4%, respectively.

Our proven model does conclusively predict an earnings beat for Imperial Oil this time around as it has an Earnings ESP of +0.73% and a Zacks Rank #3.

5 Stocks Set to Double

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