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Is Disappointment Likely for Occidental (OXY) in Q2 Earnings?

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Occidental Petroleum (OXY - Free Report) is scheduled to report second-quarter 2017 results after the closing bell on Aug 2. Last quarter, this independent oil and gas operator reported a positive earnings surprise of 7.14%.

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

In the second quarter, the price of oil has dropped from the highs it achieved in the first quarter of this year. The choppy recovery of oil price could adversely impact Occidental Petroleum’s plan to benefit from producing more oils from Permian Resources.

Occidental Petroleum expects production volume from its oil & gas segments to be the range of 580,000–595,000 barrels of oil equivalents (BOE) per day in second quarter. The company expects exploration expenses to increase from $11 million in the last quarter to $30 million in second-quarter 2017 and interest expense to increase from $ 81 million to $85 million.

Prices of average domestic spot prices of caustic soda increased nearly $190 per dry short ton since Mar 2016, and that of export prices have improved nearly $250 per dry short ton. Being the largest marketer and exporter of liquid caustic soda in the U.S., the company anticipates pre-tax earnings of about $200 million for the second quarter as a result of continued improvement in caustic soda prices.

Occidental Petroleum Corporation Price, Consensus and EPS Surprise

 

Earnings Whispers

Our proven model does not conclusively show that Occidental Petroleum 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: Occidental Petroleum has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 12 cents.

Zacks Rank: Occidental Petroleum carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Investors can consider these stocks from the Oils-Energy sector, which have the right combination to beat estimates beat this quarter.

Crestwood Equity Partners LP (CEQP - Free Report) has an earnings ESP of +160.00% and a Zacks Rank #2. It is expected to report second-quarter 2017 earnings on Aug 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Atwood Oceanics, Inc. (ATW - Free Report) has an earnings ESP of +66.67% and a Zacks Rank #3. It is expected to report second-quarter 2017 earnings on Aug 7.

Canadian Natural Resources Limited (CNQ - Free Report) has an Earnings ESP of +19.05% and a Zacks Rank #3. It is slated to report second-quarter results on Aug 3.

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