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U.S. Shale Oil Q3 Earnings: Here's the Roundup of Results

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With the third-quarter energy earnings season essentially over, it’s time to sit back and analyze the bevy of shale bigwigs that put in their reports. All of them reported lower earnings than they did in the same quarter last year, hit by plunging oil prices even as they increased production. At the same time, a number of them missed the Zacks Consensus Estimate.

In this writeup, we dive into the results from EOG Resources, Inc. (EOG - Free Report) , Continental Resources, Inc. (CLR - Free Report) , Concho Resources Inc. (CXO - Free Report) , Diamondback Energy, Inc. (FANG - Free Report) , Pioneer Natural Resources Company (PXD - Free Report) and Marathon Oil Corporation (MRO - Free Report) .

EOG Resources

EOG Resources is the largest crude producer and acreage holder in Texas’ Eagle Ford shale, boasting more than 500,000 net acres. 

Earnings & Revenues: The company reported third-quarter adjusted net income per share of $1.13, marginally missing the Zacks Consensus Estimate of $1.14 and well below the comparable 2018 period profit of $1.75 on significantly lower realized prices.

Total revenues at the Houston, TX-based energy explorer was $4.3 billion, coming below the Zacks Consensus Estimate of $4.4 billion and decreased 10% year over year.

Production: The production of oil and natural gas averaged 834,200 BOE/d (56% oil), up 11.4% from last year. Moreover, overall volumes brushed past the Zacks Consensus Estimate of 819,000 BOE/d.

Realized Prices: At $56.66 per barrel, average realized oil prices were down from $69.55 in the prior-year quarter. It also missed the Zacks Consensus Estimate of $58. EOG Resources sold natural gas at an average of $2.13 per Mcf, compared to $2.74 in the third quarter of 2018 and the Zacks Consensus Estimate of $2.12 per Mcf.

Guidance: EOG Resources expects its 2019 average daily production to be between 810,100 and 819,200 BOE/d. The company also tightened its projection for the 2019 capital budget to $6.2-$6.4 billion from $6.1-$6.5 billion mentioned earlier.

Share Price Impact: While EOG Resources’ third-quarter results looked like a potential disaster at first glance, shares inched up 1% on higher-than-expected oil production (464,100 vs. 460,000 barrels per day) and a narrower capital spending range for 2019.

Continental Resources

Continental Resources is an independent oil and gas company with principal operations in the STACK & SCOOP plays in central Oklahoma and the Bakken/Three Forks formations of North Dakota and Montana.

Earnings & Revenues: The company reported third-quarter adjusted earnings per share of 54 cents, beating the Zacks Consensus Estimate of 44 cents. The outperformance was driven by higher oil production from the North Dakota Bakken region, which was up 13% year over year. However, Continental Resources’ bottom line deteriorated from the year-ago quarter's adjusted earnings of 90 cents per share due to substantially lower average realized commodity prices.

Total revenues at the Oklahoma City, OK-based energy explorer was $1.1 billion, down 13.9% from a year ago but just about managed to surpass the Zacks Consensus Estimate.

Production: The production of oil and natural gas averaged 332,315 BOE/d (60% oil), up 11.9% from last year. However, overall volumes fell short of the Zacks Consensus Estimate of 336,000 BOE/d.

Realized Prices: At $51.28 per barrel, average realized oil prices were down from $65.78 in the prior-year quarter. It also missed the Zacks Consensus Estimate of $53. Continental Resources sold natural gas at an average of $1.12 per Mcf, compared to $3.12 in the third quarter of 2018 and the Zacks Consensus Estimate of $1.59 per Mcf.

Guidance: Continental expects its 2019 average daily oil production to be between 195,000 and 200,000 barrels per day. Meanwhile, the Zacks Rank #3 (Hold) company reiterated its annual capital expenditure budget of $2.6 billion.

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

Share Price Impact: With few surprises in the release and the company choosing to keep its guidance intact, shares were little changed. The marginal 0.4% increase could be attributed to the relatively low capex projection of $550 million in the fourth quarter.

Concho Resources

Concho Resources focuses on growth through a combination of acquisitions and active drilling in the Permian Basin spread over west Texas and New Mexico.  

Earnings & Revenues: The company reported third-quarter adjusted net income per share of 61 cents, missing the Zacks Consensus Estimate of 66 cents and well below the comparable 2018 period profit of $1.42 on significantly lower realized prices.

Total revenues at the Midland, TX-based energy explorer was $1.1 billion, down 6.5% from a year ago but just about managed to surpass the Zacks Consensus Estimate on production gains.

Production: The production of oil and natural gas averaged 329,803 BOE/d (62% oil), up 15.1% from last year. Moreover, overall volumes surpassed the Zacks Consensus Estimate of 323,541 BOE/d.

Realized Prices: At $54.01 per barrel, average realized oil prices were down from $56.38 in the prior-year quarter but matched the Zacks Consensus Estimate. Concho Resources sold natural gas at an average of $1.34 per Mcf, compared to $4.18 in the third quarter of 2018 and the Zacks Consensus Estimate of $1.33 per Mcf.

Guidance: Concho Resources expects its fourth-quarter average daily production to be between 318,000 and 325,000 BOE/d (64% oil). Full-year capex budget is forecasted to be between $2.8 billion and $3 billion.

Share Price Impact: Notwithstanding the weak earnings performance, the company's shares rose 2.8% in the aftermath of the report. Apart from strong volumes, investors welcomed Concho Resources’ tight cost control. The company managed to lower its drilling, completion and equipment costs in the third quarter to $955 per feet, down from $1,023 and $1,355 in the first and second quarters, respectively.

Diamondback Energy

Diamondback Energy focuses on growth through a combination of acquisitions and active drilling in the Permian Basin spread over west Texas and New Mexico.

Earnings & Revenues: The company reported third-quarter adjusted net income per share of $1.47, below the Zacks Consensus Estimate of $1.71 and the comparable 2018 period profit of $1.67 on significantly lower realized natural gas prices.

Total revenues at the Midland, TX-based energy explorer was $975 million, coming below the Zacks Consensus Estimate of $1.1 billion but increased 81.6% year over year on overall production gains.

Production: The production of oil and natural gas averaged 287,138 BOE/d (65% oil), up 133.5% from last year. Moreover, overall volumes brushed past the Zacks Consensus Estimate of 286,386 BOE/d.

Realized Prices: At $51.71 per barrel, average realized oil prices were down from $55.96 in the prior-year quarter but essentially matched the Zacks Consensus Estimate of $52. Diamondback sold natural gas at an average of 62 cents per Mcf, compared to $1.86 in the third quarter of 2018 and the Zacks Consensus Estimate of $1.05 per Mcf.

Guidance: Diamondback narrowed its 2019 average daily production expectation to 281,000-282,000 BOE/d (66-67% oil) and capital expenditure guidance to $2.85 - $2.90 billion.

Share Price Impact: The company's shares plunged nearly 15% to 52-week lows following the earnings and revenue misses. Investors were also spooked by the declining oil mix and the lower-than-expected crude production (17,064 vs. 17,663 thousand barrels).

Pioneer Natural Resources

Pioneer Natural Resources is among the top Permian basin producers. In the Midland basin, the firm has amassed a large acreage position with operations across 750,000 gross acres of land.

Earnings & Revenues: The company reported third-quarter adjusted net income per share of $1.99, missing the Zacks Consensus Estimate of $2.02 and below the comparable 2018 period profit of $2.07 on lower realized prices.

Total revenues at the Irving, TX-based energy explorer was $2.3 billion, coming below the Zacks Consensus Estimate of $2.4 billion and decreased 6.1% year over year. 

Production: The production of oil and natural gas averaged 350,725 BOE/d (61% oil), up 9.4% from last year. Moreover, overall volumes surpassed the Zacks Consensus Estimate of 341,000 BOE/d.

Realized Prices: At $53.93 per barrel, average realized oil prices were down from $57.54 in the prior-year quarter. It also missed the Zacks Consensus Estimate of $55. Pioneer Natural Resources sold natural gas at an average of $1.54 per Mcf, compared to $2.21 in the third quarter of 2018 and the Zacks Consensus Estimate of $1.16 per Mcf.

Guidance: Pioneer Natural Resources expects its fourth-quarter average daily production to be between 345,000 and 360,000 BOE/d. The company lowered the top end of its 2019 capital budget, which is now forecasted to be between $3.05 billion and $3.1 billion.

Share Price Impact: Notwithstanding the top and bottom-line misses, the company's shares rose 6.5% in the aftermath of the report. Apart from strong volumes, investors welcomed Pioneer natural Resources’ strong operational efficiencies as it raised the mid-point of 2019 production guidance despite trimming capital spending. Third-quarter free cash flows of $250 million also contributed to the upside.

Marathon Oil

Marathon Oil is a leading energy explorer with its largest focus areas being Eagle Ford in South Texas and Bakken play in North Dakota. The company is also present in Oklahoma’s STACK and SCOOP plays, and the Permian Basin in New Mexico.

Earnings & Revenues: The company reported third-quarter adjusted earnings per share of 14 cents, beating the Zacks Consensus Estimate of 4 cents. The outperformance was driven by higher production from the U.S. shale plays. However, Marathon Oil’s bottom line deteriorated from the year-ago quarter's adjusted earnings of 24 cents per share due to substantially lower average realized crude prices.

Total revenues at the Houston, TX-based oil and gas producer was $1.3 billion, down 19.3% from a year ago but just about managed to surpass the Zacks Consensus Estimate.

Production: The production of oil and natural gas from its core shale oil operations in the United States averaged 339,000 BOE/d (59% oil), up 11.9% from last year. Moreover, overall volumes surpassed the Zacks Consensus Estimate of 337,000 BOE/d. Investors should note that Marathon Oil derives 80% of total output from its unconventional business in the United States.

Realized Prices: At $55.09 per barrel, average realized domestic oil and condensate prices were down from $68.51 in the prior-year quarter. It also missed the Zacks Consensus Estimate of $56. Marathon Oil sold natural gas in the U.S. at an average of $1.92 per Mcf, compared to $2.55 in the third quarter of 2018 and the Zacks Consensus Estimate of $1.89 per Mcf.

Guidance: Marathon Oil expects its fourth-quarter average daily oil production in the United States to be between 190,000 and 200,000 barrels per day. Meanwhile, the company’s 2019 capital expenditure is intact at $2.4 billion.

Share Price Impact: Despite the headline beat, the company's shares were little changed. The marginal 0.6% decrease could be attributed to slightly higher third-quarter capital expenditure, which offset the rise in production guidance.

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