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It's Earnings Time for Big Oil Stocks: Here's What to Expect

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Big Oil will be in focus this week and the next with the so-called ‘supermajors’ reporting. Below we highlight four such firms coming out with earnings in the next few days:

ExxonMobil (XOM - Free Report) : ExxonMobil, one of the world's largest publicly traded oil producers, is set to report earnings on Friday. The current Zacks Consensus Estimate for earnings is 47 cents, which has been revised 7.8% downward in the last 7 days. In the fourth quarter of 2018, EPS came in at $1.51. As far as earnings surprises are concerned, the Irving, TX-based company is on a solid footing, having gone past the Zacks Consensus Estimate in three of the last four reports, with the average positive surprise being 7.5%. ExxonMobil's revenues are expected to fall slightly to $68.9 billion as compared to the year-ago quarter’s $71.9 billion figure.

As per a regulatory filing by the Zacks Rank #3 (Hold) company earlier this month, ExxonMobil expects a gain of $3.4-$3.6 billion from the divestment of Norwegian assets. This is likely to have boosted its fourth-quarter 2019 results and offset lower margins from chemicals and refining businesses. Regarding the upstream business, ExxonMobil’s Permian holdings and assets in Guyana are likely to have ensured steady production growth. Consequently, the Zacks Consensus Estimate for fourth-quarter output is pegged at 4,044 thousand oil-equivalent barrels per day (MBOE/d), indicating an increase of 1% from the year-ago reported figure.

Chevron (CVX - Free Report) : Another U.S. oil and gas biggie, Chevron, will also be reporting on Friday, with the Zacks Consensus Estimate pointing toward a considerable decline in earnings. A year ago, EPS came in at $2.06 and for the fourth quarter of 2019, earnings are forecasted to be $1.44. Notably, the Zacks Consensus Estimate for earnings moved 4% south over the past 7 days. As far as earnings surprises are concerned, this San Ramon, CA-based Chevron boasts an excellent record, having surpassed the Zacks Consensus Estimate in all the trailing four reports, the average beat being 14.78%. Revenues, meanwhile, are expected at $38.8 billion – down 8.4% year over year.

Chevron has already informed that it is set to write down billions of dollars’ worth of assets during the fourth quarter. Management projects an estimated $10-$11 billion write-down for the period, majorly from the Appalachian natural gas assets due to the commodity’s price plunge. Meanwhile, shale assets in the prolific Permian Basin will help the Zacks Rank #2 (Buy) company ramp up its domestic volumes. As a proof of this, the Zacks Consensus Estimate for fourth-quarter U.S. production is pegged at 958 MBOE/d, indicating an increase of 11.7% from the year-ago reported figure. However, Chevron’s downstream unit will bear the brunt of heavy refinery turnarounds.

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

Royal Dutch Shell (RDS.A - Free Report) : This European major is scheduled to report fourth-quarter earnings on Thursday. The Zacks Consensus Estimate for earnings is 80 cents per share – revised 9.1% downward in the last 7 days – which is significantly lower than year-ago quarter’s profit of $1.37. Regarding earnings surprises, the company is on a solid footing, having gone past the Zacks Consensus Estimate in three of the last four reports, the average beat being 5%.

Like Chevron, #2 Ranked Shell is also forced to take a write-down in the fourth quarter. The Hague, Netherlands-based global energy company envisioned its post-tax impairment charges between $1.7 billion and $2.3 billion for the period. Moreover, upstream production – at the midpoint of Shell-provided projections – should be 2,800 MBOE/d, lower than the 2,809 MBOE/d churned out in the fourth quarter of 2018. The ‘Integrated Gas’ unit’s production is forecast in the 920-970 MBOE/d band. However, in the year-earlier period, Shell had produced 979 thousand boe/d. Finally, a continuation of challenging macro environment is likely to have resulted in disappointing downstream results.

BP plc (BP - Free Report) : Starting out next week, this London-based company is set to report earnings on Tuesday. The Zacks Consensus Estimate for earnings have decreased 4.7% in the last 7 days, and are significantly lower than last year’s earnings. EPS is now expected to come in at 61 cents, down from the year-ago quarter’s $1.04. BP, carrying a Zacks Rank of 3, beat earnings estimates in each of the last four quarters. Earnings surprise was 16.8%, on average. Revenues, however, are expected to remain essentially unchanged. The Zacks Consensus Estimate for revenues is pegged at $76.3 billion, compared to $76.9 billion in the fourth quarter of 2018.

Looking ahead to the fourth quarter, BP’s downstream unit earnings is expected to have suffered due to turnarounds and margin weakness. On the other hand, the upstream segment is expected to have benefited from production growth. In the third quarter of 2019, the company’s output of oil and natural gas increased 4.4% compared with previous year’s corresponding period to 2,568 MBOE/d. The trend most likely continued in the fourth quarter on contribution from key projects.

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