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ConocoPhillips (COP) to Report Q1 Earnings: What to Expect?

Zacks Equity Research

ConocoPhillips COP is scheduled to report first-quarter 2020 results on Apr 30, before the opening bell.

In the last reported quarter, the upstream energy company’s earnings of 76 cents per share missed the Zacks Consensus Estimate of 81 cents, primarily due to lower production volumes and declined realized commodity prices, partially offset by reduced operating costs. The firm beat earnings estimates twice in the trailing four quarters, delivering average positive surprise of 1.2%.

ConocoPhillips Price and EPS Surprise

ConocoPhillips Price and EPS Surprise

ConocoPhillips price-eps-surprise | ConocoPhillips Quote

Let’s see how things have shaped up for this announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for first-quarter earnings per share of 30 cents has witnessed no upward movement but five downward revisions by firms in the past 30 days. This estimate is indicative of a 70% decline from the year-ago reported figure.

The Zacks Consensus Estimate for first-quarter revenues is pegged at $6.6 billion, suggesting a decline of 34.9% from the year-ago reported figure.

Factors to Note

Lower Commodity Prices

Being primarily involved in the exploration and production of oil and natural gas, ConocoPhillips’ earnings and revenues are directly related to commodity prices. As the demand for energy products was destroyed by coronavirus-induced lockdowns, commodity prices were significantly low in the first quarter. The Zacks Consensus Estimate for fourth-quarter average realized natural gas price is pegged at $3.59 per thousand cubic feet, indicating a decline from the year-ago level of $6. Similarly, average realizedcrude price in the Lower 48 is pegged at $43.80 per barrel, signalling a decrease from $53.15 in first-quarter 2019. Moreover, the Zacks Consensus Estimate for average realized price of bitumen is pegged at $21 per barrel, lower than the year-ago period’s $33.15.

Fall in Overall Production

The Zacks Consensus Estimate for first-quarter natural gas production is pegged at 2,454 million cubic feet per day (MMcfd), suggesting a decrease from 2,840 MMcfd in the prior-year period. The same for crude oil production is pegged at 669 thousand barrels per day (MBbls/d), indicating fall from 715 MBbls/d in first-quarter 2019.

Moreover, for the to-be-reported quarter, ConocoPhillips’ overall production is pegged at 1,264 thousand barrels of oil equivalent per day (MBoe/d), implying a decline from 1,361 MBoe/d in the year-ago period. Lower overall production and decline in commodity prices are expected to have affected the company’s profit levels in first-quarter 2020.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for ConocoPhillips this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The company’s Earnings ESP is -23.33% as the Most Accurate Estimate is currently pegged at 23 cents per share, while the Zacks Consensus Estimate stands at 30 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  

Zacks Rank: ConocoPhillips currently carries a Zacks Rank #3.

Energy Stocks With Favorable Combination

While earnings beat looks uncertain for ConocoPhillips, here are some companies from the Energy space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Southwestern Energy Company SWN has an Earnings ESP of +3.90% and is a Zacks #2 Ranked player. The company is scheduled to release first-quarter results after the market closes on Apr 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

DCP Midstream, LP DCP has an Earnings ESP of +2.99% and a Zacks Rank of 3. It is scheduled to report first-quarter results on May 6.

Viper Energy Partners LP VNOM has an Earnings ESP of +63.08% and holds a Zacks Rank #3. It is set to report first-quarter results on May 4.

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