Energy Stocks' Q2 Earnings Roster for Aug 2: MRO, WMB, SUN
We are now in the middle of second-quarter earnings, with many S&P 500 energy companies already having reported and some major players yet to come up with their numbers. With oil price being lower remarkably than the year-ago quarter, the overall energy business scenario is likely to have been relatively hurt.
The view has been strengthened by the recent earnings release of energy biggie Exxon Mobil Corporation XOM. Lower realizations of crude prices not only led ExxonMobil to miss second-quarter estimates, but its bottom line also declined year over year. In the United States, ExxonMobil recorded crude price realization of $71.36 per barrel, significantly lower than the year-ago quarter’s $107.78 and missed our estimate of $73.20.
Q2 Oil Price
The pricing scenario of oil in second-quarter 2023 was not as healthy as in the prior-year quarter. Per data from the U.S. Energy Information Administration, the monthly WTI crude spot prices for this year’s April, May and June were $79.45 per barrel, $71.58 per barrel and $70.25 per barrel, respectively. The commodity prices were significantly lower than last year’s prices of $101.78 per barrel, $109.55 per barrel and $114.84 per barrel, respectively. Fear of recession and economic slowdown probably hurt the pricing environment.
Natural gas price was also relatively unhealthier. Thus, lower commodity prices are likely to have hurt upstream operations in the June quarter. However, looking at crude prices in the second quarter of this year, it has been clear that oil price was still highly favorable for exploration and production activities.
Midstream Business
By its very nature, midstream operations have lower exposure to volatility in oil and gas prices since pipeline networks are utilized by shippers for transporting oil and natural gas for a length of time. Thus, in the June quarter, too, it is expected that midstream operations were likely to have generated stable fee-based revenues.
However, compared with the prior-year quarter, midstream business might have been relatively unhealthy. This is because, since commodity prices were lower in the June quarter, it was probably leading to lower production. This is likely to have hurt demand for pipeline and storage assets.
Per the latest Zacks Earnings Trends report, earnings for the Zacks oil/energy sector are expected to be below the year-earlier level by 51.4%. Supporting the overall analysis, the figure also reflects that the energy business as a whole was not as favorable as it was in the prior-year quarter.
Key Releases
Given the backdrop, let us look at how the following energy companies are placed ahead of their second-quarter earnings releases slated for Aug 2.
Our proprietary model indicates that a company needs to have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
Marathon Oil Corporation MRO is geared up to release second-quarter earnings after the closing bell.
Our proven model doesn’t predict an earnings beat for Marathon Oil this time around, as it has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The Zacks Consensus Estimate for the firm’s earnings is pegged at 43 cents per share, suggesting a massive decline from the prior-year reported figure.
Marathon Oil Corporation Price and EPS Surprise
Marathon Oil Corporation price-eps-surprise | Marathon Oil Corporation Quote
Williams WMB is set to report quarterly earnings after the closing bell. The chances of Williams delivering an earnings beat this time around are low as it has an Earnings ESP of 0.00% and a Zacks Rank #3.
Being a leading pipeline operator, operating more than 33,000 miles of the pipeline system, it is likely to have been aided by stable fee-based revenues from long-term contracts.
Williams Companies, Inc. (The) Price and EPS Surprise
Williams Companies, Inc. (The) price-eps-surprise | Williams Companies, Inc. (The) Quote
Sunoco LP SUN is scheduled to report quarterly earnings before the opening bell. Similar to Marathon Oil and Williams, the chances of Sunoco, a leading distributor of motor fuel, delivering an earnings beat this time around are low as it has an Earnings ESP of 0.00% and a Zacks Rank #3.
The Zacks Consensus Estimate for Sunoco’s earnings is pegged at $1.02 per share.
Sunoco LP Price and EPS Surprise
Sunoco LP price-eps-surprise | Sunoco LP Quote
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Williams Companies, Inc. (The) (WMB) : Free Stock Analysis Report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Marathon Oil Corporation (MRO) : Free Stock Analysis Report
Sunoco LP (SUN) : Free Stock Analysis Report
