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Murphy Oil (MUR) Q1 Earnings: Disappointment in the Cards?

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Murphy Oil Corporation (MUR - Free Report) is scheduled to report first-quarter 2017 results after the closing bell on May 3. Last quarter Murphy Oil posted higher-than-expected earnings of 15.79%. Let’s see how things are shaping up for the first quarter.

Factors to Consider

The company’s production guidance for first-quarter 2017 is in the range of 166,000–170,000 barrels of oil equivalent which is much lower than the production per day during first-quarter 2016. This fall in production can primarily be attributed to the sale of several non-core properties during 2016.

Its sales guidance for first-quarter 2017 is in the range of 158,000–162,000 barrels of oil equivalent per day. Exploration expenses in the first quarter are expected to be $25 million.

During the early 2017, two Austin chalk wells started operating in the Karnes area, the construction of which had started during 2016. The results were encouraging with initial results showing the wells producing an excess of 1,000 barrels of oil equivalent each.

The co-mingling of two zones, the Gulf of Mexico and East Coast Canada business at the non-operating Kodiak field began early January, resulting in a well producing approximately 20,000 barrels of oil equivalent on a gross basis now.

In first-quarter 2017, Murphy Oil completed sell of its heavy oil sands in Canada to Baytex Energy Corp. The company will now be able to focus on its three unconventional onshore assets and offshore assets in Canada.

Earnings Whispers

Our proven model does not conclusively show that Murphy Oil 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Earnings ESP is -100% because the Most Accurate estimate is pegged at a loss of 4 cents while the Zacks Consensus Estimate is at a narrower loss of 2 cents.

Zacks Rank: Murphy Oil’s carries a Zacks Rank #4 (Sell), which along with its -100% Earnings ESP makes a positive surprise quite unlikely this season.
As it is, we caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Murphy Oil Corporation Price, Consensus and EPS Surprise


Stocks to Consider

Instead, here are a few players in the Zacks categorized Oil and Gas- Exploration and Production- United States that have the right combination of elements to post an earnings beat this quarter.

Bill Barrett Corporation BBG has an Earnings ESP of +3.85% and a Zacks Rank #3. The company is expected to release first-quarter 2017 results on May 2, after the market closes.

Chesapeake Energy Corporation CHK has an Earnings ESP of +5.26% and a Zacks Rank #3. The company is expected to release first-quarter 2017 results on May 4, before the market opens.
Cobalt International Energy, Inc. CIE has an earnings ESP of 15.39% and a Zacks Rank #3. It is expected to report first-quarter 2017 earnings on May 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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