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Oil Sector's '24 Quarterly Earnings to Rise: 3 Stocks in Focus
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The 2024 crude pricing outlook appears conducive to exploration and production activities. According to the U.S. Energy Information Administration (“EIA”), the anticipated average spot price for West Texas Intermediate crude this year is expected to be $77.99 per barrel, slightly surpassing last year's $77.58. Ongoing production constraints by OPEC+ are bolstering commodity prices.
The EIA predicts that OPEC+ will produce an average of 36.4 million barrels per day of crude oil in 2024, indicating a decline from the pre-pandemic five-year average of 40.2 million barrels per day.
Energy Sector's Earnings to Improve in 2024
Thus, handsome crude price and improving well efficiency will continue to aid growth in production volumes of the commodity, albeit slowing production growth. Higher production will, in turn, increase demand for crude transportation and storage assets.
Following the backdrop, earnings in each of the quarters of 2024 may continue to improve. Per the latest Zacks Earnings Trends, the oil energy sector’s earnings in the first quarter of this year are likely to be $36.5 billion, higher than the forecasted $35.1 billion for the fourth quarter of 2023. For the second and third quarters of this year, the respective earnings are projected at $38 billion and $39.7 billion.
ExxonMobil is a leading integrated energy player. In the Permian Basin – the most prolific oil and gas resource in the United States – and offshore Guyana, the company has a solid pipeline of profitable projects. To further strengthen its presence in the Permian, ExxonMobil has entered into a staggering $59.5 billion all-stock deal to buy Pioneer Natural Resources . This is because Pioneer Natural is one of the foremost oil producers operating in the Permian Basin. With the deal closure expected in the first half of 2024, Permian production of the integrated energy major will more than double to 1.3 million barrels of oil equivalent per day.
This year, ExxonMobil will likely see earnings growth of 2.1%.
EOG Resources is a leading oil and natural gas exploration and production company. It is well-placed to capitalize on the promising business scenario. It has many undrilled premium locations, resulting in a brightened production outlook. With the employment of premium drilling, EOG can reduce its cash operating costs per barrel of oil equivalent, aiding its bottom line.
In 2024, EOG is likely to see earnings growth of 6.8%.
Enbridge is a leading midstream firm with a secured business model. With majority of its earnings backed by long-term contracts, the company generates stable fee-based revenues and predictable cash flows. In 2024, Enbridge is likely to witness earnings growth of almost 4%.
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Oil Sector's '24 Quarterly Earnings to Rise: 3 Stocks in Focus
The 2024 crude pricing outlook appears conducive to exploration and production activities. According to the U.S. Energy Information Administration (“EIA”), the anticipated average spot price for West Texas Intermediate crude this year is expected to be $77.99 per barrel, slightly surpassing last year's $77.58. Ongoing production constraints by OPEC+ are bolstering commodity prices.
The EIA predicts that OPEC+ will produce an average of 36.4 million barrels per day of crude oil in 2024, indicating a decline from the pre-pandemic five-year average of 40.2 million barrels per day.
Energy Sector's Earnings to Improve in 2024
Thus, handsome crude price and improving well efficiency will continue to aid growth in production volumes of the commodity, albeit slowing production growth. Higher production will, in turn, increase demand for crude transportation and storage assets.
Following the backdrop, earnings in each of the quarters of 2024 may continue to improve. Per the latest Zacks Earnings Trends, the oil energy sector’s earnings in the first quarter of this year are likely to be $36.5 billion, higher than the forecasted $35.1 billion for the fourth quarter of 2023. For the second and third quarters of this year, the respective earnings are projected at $38 billion and $39.7 billion.
3 Stocks to Watch
Employing our proprietary stock screener, we have selected three stocks – Exxon Mobil Corporation (XOM - Free Report) , EOG Resources (EOG - Free Report) and Enbridge Inc. (ENB - Free Report) – that may witness earnings growth in 2024. While Enbridgesports a Zacks Rank #1 (Strong Buy), ExxonMobil and EOG Resources carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
ExxonMobil is a leading integrated energy player. In the Permian Basin – the most prolific oil and gas resource in the United States – and offshore Guyana, the company has a solid pipeline of profitable projects. To further strengthen its presence in the Permian, ExxonMobil has entered into a staggering $59.5 billion all-stock deal to buy Pioneer Natural Resources . This is because Pioneer Natural is one of the foremost oil producers operating in the Permian Basin. With the deal closure expected in the first half of 2024, Permian production of the integrated energy major will more than double to 1.3 million barrels of oil equivalent per day.
This year, ExxonMobil will likely see earnings growth of 2.1%.
EOG Resources is a leading oil and natural gas exploration and production company. It is well-placed to capitalize on the promising business scenario. It has many undrilled premium locations, resulting in a brightened production outlook. With the employment of premium drilling, EOG can reduce its cash operating costs per barrel of oil equivalent, aiding its bottom line.
In 2024, EOG is likely to see earnings growth of 6.8%.
Enbridge is a leading midstream firm with a secured business model. With majority of its earnings backed by long-term contracts, the company generates stable fee-based revenues and predictable cash flows. In 2024, Enbridge is likely to witness earnings growth of almost 4%.