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Here's How the Big Oil Companies Look Ahead of Q1 Earnings

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

For the three-month period ending Mar 31, WTI prices fell 66.5% -- the largest quarterly percentage decline on record -- as coronavirus induced a massive slump in oil demand amid a supply glut. With major cities under lockdown and travel restrictions in place, the consumption of crude dropped substantially. In fact, the commodity ended the quarter at just over $20 a barrel (as against $60 in the year-ago period), which does not bode well for the upcoming earnings season.

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 4 cents, which has been revised 100% upward in the last 7 days. In the first quarter of 2019, EPS came in at 55 cents. As far as earnings surprises are concerned, the Irving, TX-based company beat estimates on two occasions for as many misses, the average positive surprise being -4.21%. ExxonMobil's revenues are expected to have fallen 15.4% to $53.8 billion as compared to the year-ago quarter’s $63.6 billion figure. On the other hand, the Zacks Consensus Estimate for total production is pegged at 3,949 MBOE/d, unchanged year over year.

Amid the fierce commodity price downturn, the Zacks Rank #3 (Hold) ExxonMobil’s upstream segment results – the primary contributor to its earnings - are expected to have taken a beating. For the unit’s U.S. arm, the Zacks Consensus Estimate for first-quarter 2020 is pegged at a loss of $461 million, compared with a profit of $96 million in the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for the segment’s international business for the first quarter is pegged at $1.1 billion, indicating year-over-year decline of 59%.

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 $1.39 and for the first quarter of 2020, earnings are forecasted to have been 64 cents. Notably, the Zacks Consensus Estimate for earnings moved 4.9% north 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 12.58%. Revenues, meanwhile, are expected at $29.9 billion – down 15.1% year over year.

Confirming its integrated structure, the Zacks Rank #5 (Strong Sell) company generated 51% of its 2019 earnings from its upstream unit and 49% from its downstream unit. For the to-be-reported quarter, the Zacks Consensus Estimate for upstream segment is pegged at $2 billion, indicating a decline of 35% from the prior-year quarter. Further, the Zacks Consensus Estimate of income from the refining arm is pegged at $256 million, essentially flat year over year. Meanwhile, shale assets in the prolific Permian Basin will help the company ramp up its volumes. As a proof of this, the Zacks Consensus Estimate for first-quarter production is pegged at 3,083 MBOE/d, indicating an increase of 1.5% from the year-ago reported figure.

Royal Dutch Shell (RDS.A - Free Report) : This European major is scheduled to report first-quarter earnings on Thursday. The Zacks Consensus Estimate for earnings is 51 cents per share – revised 4.1% upward in the last 7 days – which is significantly lower than year-ago quarter’s profit of $1.30. Over the trailing four quarters, the #3 Ranked company surpassed the Zacks Consensus Estimate on two occasions and missed in the other two, the average positive surprise being 1.80%.

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

The Hague, Netherlands-based global energy company assured that it will face a ‘relatively minor’ impact from the coronavirus-induced soft demand for oil products. It further envisioned its post-tax impairment charges between $400 million and $800 million for the period. Management projects first-quarter 2020 upstream production between 2,650 and 2,720 MBOE/d. The year-ago production level was at 2,901 thousand MBOE/d. The Integrated Gas unit’s production is forecast in the 920-970 MBOE/d band. However, in the year-earlier period, Shell had produced 851 MBOE/d.

BP plc (BP - Free Report) : Starting out the week, this London-based company is set to report earnings on Tuesday. The Zacks Consensus Estimate for earnings have increased 12% in the last 7 days, but are significantly lower than last year’s earnings. EPS is now expected to come in at 28 cents, down 60% from the year-ago quarter’s 70 cents. BP, carrying a Zacks Rank of 3, beat earnings estimates in each of the last four quarters. Earnings surprise was 12.7%, on average. Revenues, however, are expected to fall less steeply. The Zacks Consensus Estimate for revenues is pegged at $64.4 billion, compared to $67.4 billion in the first quarter of 2019.

Notably, the Zacks Consensus Estimate for the upstream segment’s quarterly revenue is pegged at $6.3 billion, significantly lower than the year-ago quarter’s $14.6 billion. The Zacks Consensus Estimate for first-quarter production is pegged at 2,591 MBOE/d, indicating a decrease from the year-ago reported figure of 2,656 MBOE/d. But the revenue for the downstream segment is estimated at $71.8 billion, indicating a 23% rise year over year. However, the pandemic is likely to have hurt the integrated firm’s refinery throughputs in the first quarter. The Zacks Consensus Estimate for the same is pegged at 1,718 thousand barrels per day, suggesting a 1.2% decline from the March quarter of 2019.

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