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Oil & Gas Stock Roundup: Q4 Earnings From XOM, CVX, PSX, VLO & HES

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It was a week when both oil and natural gas prices settled higher.

On the news front, some well-known energy companies like ExxonMobil (XOM - Free Report) , Chevron (CVX - Free Report) , Phillips 66 (PSX - Free Report) , Valero Energy (VLO - Free Report) and Hess Corporation (HES - Free Report) reported December-quarter earnings.

Overall, it was a good seven-day period for the sector. West Texas Intermediate (WTI) crude futures gained around 2% to close at $86.82 per barrel, while natural gas prices surged almost 23% to end at $4.639 per million British thermal units (MMBtu). In particular, the oil market managed to maintain its forward momentum from the previous five weeks.

The positive oil price action could be attributed to recent geopolitical headlines that could impact production. For example, the Russia-Ukraine tensions and the attack by Yemen's Houthi group on OPEC-member UAE gave a boost to oil by threatening supply disruptions.

Meanwhile, natural gas tallied a massive weekly gain, spurred by chilly temperatures that should drive the fuel’s heating demand.

Recap of the Week’s Most-Important Stories

1. Energy major ExxonMobil’s fourth-quarter 2021 earnings per share of $2.05 — excluding identified items — beat the Zacks Consensus Estimate by nine cents. The better-than-expected earnings were due to improved realized oil and natural gas prices as well as higher refining and chemical margins. The results reflect a significant recovery in fuel demand compared to last year, thanks to the rolling out of coronavirus vaccines at a massive scale.

The Zacks Rank #1 (Strong Buy) company’s upstream segment reported quarterly earnings of $6.1 billion against a loss of $18.5 billion in the year-ago comparable quarter. Meanwhile, the downstream unit recorded a profit of $1.5 billion, turning around from the loss of $1.2 billion a year ago. ExxonMobil’s chemical business recorded a $1.9-billion profit, skyrocketing from earnings of $691 million in the year-ago quarter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

During the quarter under review, America’s biggest energy group generated a cash flow of $19.7 billion from operations and asset divestments. XOM's capital and exploration spending increased 21.7% year over year to $5.8 billion. At the end of 2021, ExxonMobil’s total cash and cash equivalents were $6.8 billion and debt amounted to $47.7 billion. (ExxonMobil Q4 Earnings and Revenues Beat Estimates)

2.   Smaller rival Chevron reported adjusted fourth-quarter earnings per share of $2.56, missing the Zacks Consensus Estimate of $3.11 on weaker-than-expected performance from both segments. Precisely, income from the Upstream and the Downstream units totaled $5.2 billion and $760 million, respectively, below their Zacks Consensus Estimate of $5.3 billion and $1 billion.

Keeping the bottom-line disappointment aside, CVX recorded $9.5 billion in cash flow from operations compared to just $2.3 billion a year ago. The soaring cash flow could be attributed to strong price realizations in the upstream business. Importantly, Chevron’s free cash flow for the quarter was a record $6.9 billion. Chevron's cash flow for the full-year 2021 was $29.2 billion, up 175.5% from 2020. Further, Chevron paid $10.2 billion in dividends and bought back $1.4 billion worth of its shares.

CVX spent $3.7 billion in capital and exploratory expenditures during the quarter compared to the year-ago period’s $3.2 billion. Some 79% of the total outlays pertained to upstream projects. (Chevron Misses on Q4 Earnings Despite Strong Prices)

3   Downstream operator Phillips 66 reported fourth-quarter 2021 adjusted earnings per share of $2.94, beating the Zacks Consensus Estimate of $1.93. The bottom line also turned around from a loss of $1.16 in the year-ago quarter. The strong quarterly results were driven by wider refining margins on a worldwide basis.

PSX’s margins improved to $11.60 per barrel from the year-ago quarter’s $2.18. The same in the Central Corridor and Atlantic Basin/Europe increased to $12.60 and $11.00 per barrel from the year-ago level of $4.27 and $2.99, respectively. In the Gulf Coast, the metric registered an improvement to $9.19 per barrel from a loss of 78 cents in the prior-year quarter. The West Coast witnessed an increase in margins from $1.79 per barrel in the year-ago quarter to $15.41 for the December quarter of 2021.

For the reported quarter, Phillips 66 generated $1.8 billion of net cash from operations, up from $639 million a year ago. Its capital expenditures and investments totaled $597 million. PSX paid dividends of $403 million in the reported quarter. As of Dec 31, 2021, cash and cash equivalents were $3.1 billion. The company’s total liquidity was $8.8 billion. Consolidated debt was $14.4 billion, reflecting a debt to capitalization of 40%. (Phillips 66 Q4 Earnings & Revenues Beat Estimates)

4.   Another refining giant Valero Energy reported fourth-quarter 2021 adjusted earnings of $2.47 per share, improving from a loss of $1.06 in the year-ago quarter. The bottom line also beat the Zacks Consensus Estimate of $1.79 per share. VLO’s strong quarterly results were supported by increased refinery throughput volumes and a higher refining margin.

For the quarter, refining throughput volumes were 3,033 thousand barrels per day (MBbls/d), up from 2,550 MBbls/d in third-quarter 2020. Meanwhile, Valero Energy’s refining margin per barrel of throughput increased to $10.73 from the year-ago level of $4.64.

The fourth-quarter capital investment totaled $752 million. Of the total amount, $353 million was allotted for sustaining the business. Through the December quarter, the leading independent refiner and marketer of petroleum products returned $401 million to stockholders as dividend payments. At the quarter-end, Valero Energy had cash and cash equivalents of $4.1 billion. As of Dec 31, 2021, it had total debt and finance lease obligations of $13.9 billion. (Valero Energy Q4 Earnings & Revenues Beat Estimates)

5.   Hess — primarily an energy explorer — reported adjusted fourth-quarter 2021 earnings per share of 85 cents, beating the Zacks Consensus Estimate of 76 cents on the back of higher commodity price realizations.

Net cash flow from operations was $899 million for the fourth quarter, reflecting a significant improvement from the year-ago figure of $486 million. Hess’ capital expenditure for exploration and production activities totaled $593 million, up from $371 million in the prior-year quarter.

As of Dec 31, 2021, Hess had $2.7 billion in cash and cash equivalents, up from $2.4 billion in the previous quarter. Its long-term debt was recorded at $7.9 billion at the fourth-quarter end, down sequentially from $8 billion. The current maturity of the long-term debt is $517 million. Hess’ debt to capitalization at the quarter end was 55.3%. (Hess Q4 Earnings Beat Estimates on Surging Oil Prices)

Price Performance

The following table shows the price movement of some major oil and gas players over the past week and during the last six months.

Company    Last Week    Last 6 Months

XOM                 +4.3%               +31.9%
CVX                  +2.9%               +29%
COP                 +7.9%               +58.1%
OXY                  +11.3%             +44.3%
SLB                  +9.1%               +35.5%
RIG                   +4.5%               -12.7%
VLO                  +2.7%               +23.9%
MPC                 +1.6%               +29.9%

The Energy Select Sector SPDR — a popular way to track energy companies — was up 5.1% last week. Over the past six months, the sector tracker has increased 33.5%.

What’s Next in the Energy World?

As the global oil consumption outlook strengthens amid tightening fundamentals, market participants will closely track the regular releases to watch for signs that could further validate the upward momentum. In this context, the U.S. government’s statistics on oil and natural gas — one of the few solid indicators that come out regularly — will be on energy traders' radar. Data on rig count from the oilfield service firm Baker Hughes, which is a pointer to trends in U.S. crude production, is closely followed. News related to coronavirus vaccine approval/rollout/distribution will be of utmost importance too. Investors will also keep an eye on the potential demand hit from the Omicron variant. Finally, there will be 2021 Q4 earnings, with a number of S&P 500 components coming up with quarterly results.