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The Zacks Analyst Blog Highlights: BP, Apache, Concho Resources, Petrobras and Marathon Petroleum

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For Immediate Release

Chicago, IL – August 8, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include BP plc (BP - Free Report) , Apache Corporation (APA - Free Report) , Concho Resources (CXO - Free Report) , Petrobras (PBR - Free Report) and Marathon Petroleum Corporation (MPC - Free Report) .

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Here are highlights from Tuesday’s Analyst Blog:

Oil & Gas Stock Roundup: BP, Apache & Concho's Q2

Major energy players BP plc, Apache Corporation and Concho Resources reported strong second-quarter earnings.

Overall, it was a mixed week for the sector. While West Texas Intermediate (WTI) crude futures edged down 0.3% to close at $68.49 per barrel, natural gas prices were up 2.6% to $2.853 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Exxon, Chevron, Shell Earnings Miss Despite Oil Rally)

The U.S. crude benchmark slipped for the fourth time in five weeks on growing concerns about oversupply after the OPEC cartel hiked production by 340,000 barrels per day in July to 32.66 million barrels per day. The U.S. Energy Department's inventory release showing a shock weekly build in crude stockpiles also pressured oil futures.

Meanwhile, natural gas prices moved higher last week following a smaller-than-expected increase in supplies.

Recap of the Week’s Most Important Stories

1.                   British energy giant BP reported strong second-quarter 2018 results on increasing oil equivalent price realizations, ramped up key upstream projects and massive crude processing volumes.

The company’s adjusted earnings of 85 cents per American Depositary Share (ADS) – on a replacement cost basis, excluding non-operating items – matched the Zacks Consensus Estimate and improved from the year-ago quarter’s 21 cents. Total revenues were $76,907 million in the quarter, up from $57,366 million in the year-ago quarter.

Production averaged 2.465 million barrels of oil equivalent per day (MMBoe/d), 2% higher from the year-ago quarter. Moreover, Zacks Rank #3 (Hold) BP sold liquids at $67.24 a barrel in the second quarter as compared with $46.27 in the year-earlier quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2.                   U.S. energy firm Apache reported second-quarter earnings per share – excluding one-time items – of 50 cents, ahead of the Zacks Consensus Estimate of 35 cents and turned around from year-ago adjusted loss of 21 cents. The outperformance stems from higher oil realizations and strong volumes from the key Permian Basin region.

As of Jun 30, 2018, the oil giant, with a market capitalization of around $18 billion, had approximately $972 million in cash and cash equivalents. The company had long-term debt of $7.9 billion, representing a debt-to-capitalization ratio of 51.0%. (Read more Apache Q2 Earnings Beat on Oil Price, Permian Strength).

3.                   Concho Resources reported strong second-quarter 2018 revenues and earnings on the back of higher commodity-price realizations and robust production growth. The company reported adjusted net earnings per share of $1.24, comfortably beating the Zacks Consensus Estimate of 92 cents. The bottom line also improved significantly from the prior-year quarter’s adjusted income of 52 cents per share.

Considering the acquisition of RSP Permian, Inc., which got closed on Jul 19, 2018, Concho updated its full-year 2018 guidance. It expects production to average 260-263 MBoe/d in 2018. Notably, third-quarter output levels are expected between 280 MBoe/d and 285 MBoe/d. The company expects capex in the band of $2.5-$2.6 billion versus prior guidance of $2 billion. The increased capital expenditure budget reflects the company’s intention to drill several development projects in the second half of 2018. (Read Concho Q2 Earnings Beat on Price and Volume Gain).

4.                   Energy Transfer Partners L.P. recently inked an agreement to merge with its general partner Energy Transfer Equity L.P. in an all-stock deal. This marks a long-awaited move by the pipeline giant in the energy MLP industry.

The deal seems to be quite a prudent move, leading to several advantages for the Energy Transfer franchise. The move will simplify the organizational structure and boost the credit profile of the partnership, along with improving transparency of the investors. The merger seems to improve the combined partnership’s cost of capital by the elimination of IDRs of Energy Transfer Equity in its MLP. Elimination of IDRs will incentivize the combined partnership to manage operations efficiently, tap acquisition opportunities and improve cash generation from investments. (Read more Energy Transfer to Snap Up Its MLP in Consolidation Wave).

5.                   Brazil's state-run energy giant Petrobras announced second-quarter earnings per ADS of 44 cents, ahead of the Zacks Consensus Estimate of 31 cents and the year-ago profit of 2 cents.

The Rio de Janeiro-headquartered company’s total oil and gas production during the first half reached 2,669 thousand oil-equivalent barrels per day (MBOE/d) – 80% liquids – down from 2,791 MBOE/d in the same period of 2017. (Read more Petrobras Q2 Earnings Surge in Best Quarter Since 2011).

Price Performance

Reflecting the week’s negative oil market sentiment, the Energy Select Sector SPDR – a popular way to track energy companies – generated a -1.8% return last week. The worst performer was downstream operator Marathon Petroleum Corporation whose stock fell 2.3%.

Longer-term, over six months, the sector tracker is up 9.8%. Offshore drilling powerhouse Transocean Ltd. is far and away the major gainer during this period, experiencing a 34.4% price appreciation.

What’s Next in the Energy World?

As usual, market participants will be closely tracking the regular releases i.e. the U.S. government statistics on oil and natural gas – one of the few solid indicators that comes out regularly. Energy traders will also be focusing on the Baker Hughes data on rig count and monthly reports from the EIA and the IEA.

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Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.



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