Can Noble (NBL) Surprise this Earnings Season?

Zacks Equity Research

We expect oil and gas exploration and production operator, Noble Energy Inc. (NBL) to outpace our expectation in the third quarter, results of which are scheduled to be released before the market bell on Oct 24.

Why a Likely Positive Surprise?

Our proven model shows that Noble Energy is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: The Earnings ESP (Expected Surprise Prediction), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +3.16%. This is a meaningful and leading indicator of a likely positive earnings surprise for the shares.

Zacks Rank #3 (Hold): The company presently has a Zacks Rank #3 (Hold). The stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings. The Sell rated stocks (#4 and #5) should never be considered going into an earnings announcement.  

The combination of Noble Energy’s Zacks Rank #3 (Hold) and +3.16% ESP makes us confident of a positive earnings beat.

What is Driving the Better than Expected Earnings?

The early operation start-up in the Alen prospect in Equatorial New Guinea is expected to be a key sales driver for Noble Energy. In addition, ongoing production ramp-up in the Tamar play will support the sales momentum.

The company’s prime asset play, the Gulf of Mexico will continue to fetch substantial returns. Noble Energy’s aggressive development activities in the Niobrara formation might also drive earnings.

Following the Colorado flood, in Sep 2013, Noble Energy’s competent restoration skills have allowed it to effectively bring back drilling activities to normal levels, limiting the average production loss in the third quarter to only 2 thousand barrels of oil equivalent per day.

Other Stocks to Consider

Noble Energy is not the only firm looking up this earnings season. We also see likely earnings beats coming from these three industry peers:

Stone Energy Corp.: (SGY), Earnings ESP of +6.76% and Zacks Rank #1 (Strong Buy).

Matador Resources Company: (MTDR), Earnings ESP of +34.48% and Zacks Rank #2 (Buy).

Abraxas Petroleum Corp.: (AXAS), Earnings ESP of +25.00% and Zacks Rank #2 (Buy).

Read the Full Research Report on NBL
Read the Full Research Report on SGY
Read the Full Research Report on MTDR
Read the Full Research Report on AXAS

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