Oil & Gas Stock Roundup: Exxon & Chevron's Q4 Earnings Miss, Shell Reports Strong Numbers
Zacks Investment Research | Feb 06, 2018 04:16AM ET
It was a week where both oil and gas prices tallied losses.
On the news front, U.S.-based integrated majors ExxonMobil Corp. (NYSE:XOM) and Chevron Corp. (NYSE:CVX) came up with weaker-than-expected earnings reports despite higher oil prices. However, their European counterpart Royal Dutch Shell (LON:RDSa) plc RDS.A bucked the trend and reported strong numbers, helped by rebounding commodity prices and cost cuts.
Overall, it was a dismal week for the sector. West Texas Intermediate (WTI) crude futures lost about 1% to close at $65.45 per barrel, while natural gas prices dived more than 10% to $2.846 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Valero and Marathon Hikes Dividends, Helmerich & Payne (NYSE:HP) Reports Q1 )
The U.S. oil benchmark recorded its second decrease in three weeks. The major culprit was the steady trend of rising domestic oil production that continues to be the biggest headwind for the market.
As per EIA’s latest data, U.S. output rose by 384,000 barrels per day in November to 10.038 million barrels per day – the first time in nearly 50 years that oil production broke through the 10 million barrels a day threshold. This has refueled concerns that the domestic supply glut is cancelling out cuts from OPEC and its allies.
Data showing the number of U.S. oil rigs climbing for a second straight week brought further downside.
Meanwhile, natural gas had a forgettable week of its own following a smaller-than-expected decrease in supplies. The 99 billion cubic feet (Bcf) withdrawal was also lower than the five-year (2013-2017) average net shrinkage of 160 Bcf for the reported week.
Recap of the Week’s Most Important Stories
1. Energy giant ExxonMobil posted lower-than-expected results in fourth-quarter 2017, thanks to weak refinery throughput. This was partially offset by higher liquid price realizations. The company reported adjusted earnings of 88 cents per share, which missed the Zacks Consensus Estimate of $1.06. Also, the bottom line fell from the year-ago quarter level of 90 cents.
Production averaged 3.991 million barrels of oil-equivalent per day (MMBOE/d), lower than 4.121 MMBOE/d in the year-ago quarter. Liquid production fell year over year to 2.251 million barrels per day. However, natural gas production was 10.441 MMCF/d (millions of cubic feet per day), up from 10.424 MMCF/d in the year-ago period.
During the quarter under review, ExxonMobil generated cash flow of $8.8 billion from operations and asset divestments. The energy giant returned $3.3 billion to shareholders through dividends. Capital and exploration spending surged more than 100% year over year to almost $7.6 billion. (Read more Marathon Petroleum Beats on Q4 Earnings, Revenues )
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Price Performance
The following table shows the price movement of some the major oil and gas players over the past week and during the last 6 months.
Company | Last Week | Last 6 Months |
XOM | -4.4% | -0.6% |
CVX | -9.2% | +2.3% |
COP | -3% | +22.8% |
OXY | -4.1% | +14.3% |
SLB | -4.7% | +5.4% |
RIG | -8.8% | +7.9% |
VLO | -4.1% | +30.9% |
ANDV | -10.1% | +1.4% |
In line with the week’s bearish oil market sentiment, the Energy Select Sector SPDR – a popular way to track energy companies – generated a -6% return last week. The worst performer was San Antonio, TX-based downstream operator Andeavor (NYSE:ANDV) , whose stock slumped 10.1%.
Longer-term, over 6 months, the sector tracker is up 5.8%. Independent refiner Valero Energy Corp. (NYSE:VLO) was the major gainer during this period, experiencing a 30.9% 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.
However, the 2017 Q4 earnings again remain the primary focus this week, with a number of S&P 500 members coming out with quarterly results.
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