Oil & Gas Stock Roundup: A Look at COP, EOG, PXD, MPC & OXY Q3 Earnings

It was a week wherein oil prices lost some more steam but natural gas futures ended higher.

On the news front, energy firms ConocoPhillips COP, EOG Resources EOG, Pioneer Natural Resources PXD, Marathon Petroleum MPC and Occidental Petroleum OXY reported September-quarter earnings. All the companies beat bottom-line estimates.

Overall, it was a mixed seven-day period for the sector. West Texas Intermediate (WTI) crude futures lost around 2.8% to close at $81.27 per barrel, while natural gas prices rose 1.7% to end at $5.516 per million British thermal units (MMBtu). In particular, the oil market extended its decline from the previous week.

Coming back to the week ended Nov 5, oil prices dipped after a report from the Energy Information Administration ("EIA") showed a much larger-than-expected addition to crude stockpiles. The commodity’s negative price reaction was also blamed on the OPEC+ cartel’s decision to stick to its planned easing of production cuts in December, defying U.S. calls for more output.

Meanwhile, natural gas finished up following a lower-than-expected increase in supplies and continued strong liquefied natural gas (“LNG”) feedgas deliveries for export.

Recap of the Week’s Most-Important Stories

1.  ConocoPhillips reported third-quarter 2021 adjusted earnings per share of $1.77, comfortably beating the Zacks Consensus Estimate of $1.53. The outperformance stemmed from increased production volumes due to the Concho acquisition and rising realized commodity prices.

Based in Houston, TX, one of the world’s largest independent oil and gas producers’ capital expenditures and investments totaled $1.3 billion, and dividend payments grossed $579 million. Net cash provided by operating activities was recorded at $4.8 billion, up from the year-ago figure of $868 million. The Zacks Rank #1 (Strong Buy) company generated a free cash flow of $2.8 billion in the third quarter.

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

ConocoPhillips reiterated its full-year production guidance at 1.5 million barrels of oil equivalent per day (MMBoe/d). The figure indicates an improvement from the 2020 level of 1.1 MMBoe/d. Fourth-quarter production will likely be within 1.53-1.57 MMBoe/d. For the full year, adjusted operating costs will likely be $6.1 billion. The company expects a 2021 capital budget of $5.3 billion, indicating an increase from the 2020 level of around $4.7 billion. (ConocoPhillips Q3 Earnings Beat on Higher Oil Prices)

2.   Upstream energy company EOG Resources reported third-quarter 2021 adjusted earnings per share of $2.16, beating the Zacks Consensus Estimate of $2.01 for earnings per share. The strong earnings were driven by increased production volumes and higher realization of commodity prices.

The company announced a quarterly dividend of 75 cents per share, indicating an 82% increase from the previous level. The dividend will be paid out on Jan 28, 2022, to shareholders of record as of Jan 14, 2022. The company also declared a special dividend of $2 per share. Moreover, its board of directors updated its share repurchase authorization to $5 billion.

As of Sep 30, EOG Resources had cash and cash equivalents of $4.3 billion, sequentially higher than $3.9 billion at the end of the second quarter. Long-term debt was reported at $5.1 billion, marginally down from the second-quarter level. The current portion of the long-term debt was recorded at $38 million. It had a debt to total capitalization of 19%. (EOG Resources Q3 Earnings & Revenues Beat Estimates)

3   Pioneer Natural Resources, a premier Permian producer, reported third-quarter 2021 earnings of $4.13 per share (excluding one-time items), beating the Zacks Consensus Estimate of $3.87 per share. The strong quarterly results can be attributed to higher oil equivalent production and price.

The upstream firm hiked its quarterly cash dividend to 62 cents per share, reflecting a sequential increase of 10.7%. The dividend is payable on Jan 14, 2022, to its stockholders of record at the close of business on Dec 31, 2021. Pioneer Natural also doubled its variable dividend payment to $3.02 per share.

The company continues to anticipate a total capital budget of $3.1-$3.4 billion for 2021. The company boasted that the capital spending will be fully funded by its $6.6-billion projected cash flow for this year. (Pioneer Natural Q3 Earnings Beat Estimates on Production)

4.   Independent oil refiner and marketer Marathon Petroleum reported adjusted earnings of 73 cents per share, which beat the Zacks Consensus Estimate of 72 cents. The company’s bottom line was favorably impacted by stronger-than-expected performance from both segments. Precisely, operating income from the Refining & Marketing and the Midstream units totaled $509 million and $1 billion, respectively, ahead of their Zacks Consensus Estimate of $484 million and $984 million.

Refining margin of $14.51 per barrel increased from $8.28 a year ago. Total refined product sales volumes were 3,539 thousand barrels per day (mbpd), up from the 3,201 mbpd in the year-ago quarter. Throughput rose from 2,536 mbpd in the year-ago quarter to 2,836 mbpd and beat the Zacks Consensus Estimate of 2,815 mbpd. Capacity utilization during the quarter was up from last year’s 84% to 93%.

In the reported quarter, Marathon Petroleum spent $464 million on capital programs (49% on Refining & Marketing and 41% on the Midstream segment) compared to $668 million in the year-ago period. As of Sep 30, the company had cash and cash equivalents of $5.9 billion and total debt, including that of MPLX, of $27.3 billion, with a debt-to-capitalization of 43.9%. (Marathon Q3 Earnings Top as Refining Margins Strengthen)

5.  Oil and gas producer Occidental Petroleum reported third-quarter 2021 earnings of 87 cents per share, beating the Zacks Consensus Estimate of 65 cents by 33.9% on the back of a rise in commodity prices.

As of Sep 30, 2021, Occidental had cash and cash equivalents of $2.1 billion compared with $2 billion on Dec 31, 2020. As of Sep 30, 2021, the company had long-term debt (net of current portion) of $30.9 billion compared with $35.9 billion on Dec 31, 2020. The debt level decrease was due to effective management of debt since the acquisition of Anadarko.

For the first nine months of 2021, cash from operations was $7 billion, up from $2.5 billion in the prior-year period. Free cash flow for the first nine months of 2021 was $5.9 billion. For the same period, Occidental’s total capital expenditure was $1.9 billion compared with $1.9 billion invested in the year-ago period. (Occidental Q3 Earnings and Revenues Surpass Estimates)

Price Performance

The following table shows the price movement of some major oil and gas players over the past week and during the last six months.

Company    Last Week    Last 6 Months

XOM                +0.9%               +5.3%
CVX                 +0.2%               +4.7%
COP                +1.3%               +33%
OXY                 -0.3%                +25.2%
SLB                 +3.9%               +7.6%
RIG                  +1.4%               -7%
VLO                 +0.8%               -3.4%
MPC                -0.2%                +9.5%

The Energy Select Sector SPDR — a popular way to track energy companies — was up 1.4% last week. The best performer was oilfield services biggie Schlumberger SLB whose stock gained 3.9%.

Over the past six months, the sector tracker has increased 9.6%. Upstream biggie ConocoPhillips was the major gainer during the period, experiencing a 33% price appreciation.

What’s Next in the Energy World?

As the global oil consumption outlook strengthens amid tightening fundamentals, market participants will closely track the regular releases to watch for signs that could further validate the upward momentum. In this context, the U.S. government’s statistics on oil and natural gas — one of the few solid indicators that come out regularly — will be on energy traders' radar. Data on rig count from the oilfield service firm Baker Hughes, which is a pointer to trends in U.S. crude production, is closely followed too. News related to coronavirus vaccine approval/rollout/distribution will be of utmost importance.

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