Coterra Energy Inc. (CTRA Quick QuoteCTRA - Free Report) is set to release third-quarter results on Oct. 31. The Zacks Consensus Estimate for the to-be-reported quarter is a profit of 37 cents per share on revenues of $1.3 billion.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Let’s delve into the factors that might have influenced the oil and gas exploration and production firm’s performance in the September quarter. But it’s worth taking a look at CTRA’s previous-quarter performance first.

Highlights of Q2 Earnings & Surprise History

In the last reported quarter, the Houston, TX-based upstream energy company missed the consensus mark on weaker-than-expected natural gas prices. CTRA reported adjusted earnings per share of 37 cents, underperforming the Zacks Consensus Estimate of 40 cents. Revenues of $1.3 billion also missed the Zacks Consensus Estimate by 5.6%.

Coterra Energy beat the Zacks Consensus Estimate in two of the last four quarters and missed in the other two, resulting in an earnings surprise of 5.9%, on average. This is depicted in the graph below:

Trend in Estimate Revision

The Zacks Consensus Estimate for the second-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 26% drop year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 2.4% decline from the year-ago period.

Factors to Consider

Natural gas prices have plummeted, significantly reducing Coterra Energy's revenue streams. The surge in Permian oil drilling has created an abundance of affiliated gas, pushing prices down. This trend is expected to have continued throughout the third quarter, leading to a bearish outlook on Coterra’s financial performance in the short term. Low prices have led to a substantial cut in the company’s natural gas capital expenditures, especially in the Marcellus Shale operations, indicating a drop in the fuel’s production. 

Consequently, the Zacks Consensus Estimate for the company’s third-quarter natural gas volume is pegged at 2,574 million cubic feet (MMCF) per day, down significantly from the year-ago quarter’s level of 2,903 MMCF. Investors should note that natural gas accounts for around 70% of CTRA’s total output.

Regarding prices, our expectation for third-quarter natural gas realization is pegged at $1.31 per thousand cubic feet (Mcf), indicating a 27% drop from the year-ago quarter. This is likely to have weighed on the CTRA’s earnings and cash flows.

But giving some respite to the company, Coterra’s strategic shift toward its oil-rich assets in the Delaware Basin while reducing capex on natural gas, is expected to have positioned the company to capitalize on robust oil prices. In the second quarter, the company’s oil volumes surpassed the high end of guidance. We expect this uptick to have continued in the third quarter. As such, the consensus mark for Coterra Energy’s crude output is 110 thousand barrels per day, implying a 20% increase from the third quarter of 2023.

What Does Our Model Say?

The proven Zacks model does not conclusively show that CTRA is likely to beat estimates in the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -5.48%.

Zacks Rank: Coterra Energy currently carries a Zacks Rank #4 (Sell).

Stocks to Consider

While an earnings beat looks uncertain for Coterra Energy, here are some firms from the energy space that you may want to consider on the basis of our model:

Exxon Mobil Corporation (XOM Quick QuoteXOM - Free Report) has an Earnings ESP of +0.02% and a Zacks Rank #3. The firm is scheduled to release earnings on Nov. 1.

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

ExxonMobil beat the Zacks Consensus Estimate for earnings in two of the last four quarters and missed in the other two. It has a trailing four-quarter earnings surprise of roughly 1.8%, on average. Valued at around $475.9 billion, XOM has gained 10.7% in a year.

Cheniere Energy (LNG Quick QuoteLNG - Free Report) has an Earnings ESP of +12.21% and a Zacks Rank #3. The firm is scheduled to release earnings on Oct. 31.

Cheniere Energy beat the Zacks Consensus Estimate for earnings in two of the last four quarters and missed in the other two. It has a trailing four-quarter earnings surprise of roughly 55.9%, on average. Valued at around $41.3 billion, LNG has increased 8.8% in a year.

Murphy USA (MUSA Quick QuoteMUSA - Free Report) has an Earnings ESP of +0.94% and a Zacks Rank #3. The firm is scheduled to release earnings on Oct. 30.

Murphy USA beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of roughly 3.5%, on average. Valued at around $9.7 billion, MUSA has surged 32.8% in a year.