Will Higher Crude Price Boost VAALCO (EGY) Q1 Earnings?
VAALCO Energy, Inc. EGY is set to release first-quarter results on May 3. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 30 cents per share on revenues of $55.3 billion.
Let’s delve into the factors that might have influenced the West Africa-focused oil and gas finder’s results in the March quarter. But it’s worth taking a look at EGY’s previous-quarter performance first.
Highlights of Q4 Earnings & Surprise History
In the last-reported quarter, the Houston, TX-based international upstream operator beat the consensus mark on higher production and commodity prices. EGY had reported adjusted earnings per share of 21 cents, a penny above the Zacks Consensus Estimate. Revenues of $56.4 million generated by the firm also outperformed the Zacks Consensus Estimate by 20%.
VAALCO Energy beat the Zacks Consensus Estimate for earnings twice in the last four quarters and missed in the other two, resulting in an earnings surprise of 8.9%, on average. This is depicted in the graph below:
Vaalco Energy Inc Price and EPS Surprise
Vaalco Energy Inc price-eps-surprise | Vaalco Energy Inc Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the first-quarter bottom line has been revised 43.4% downward in the past seven days. The estimated figure indicates a 100% jump year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 39.1% increase from the year-ago period.
Factors to Consider
EGY is likely to have cashed in on the surge in hydrocarbon realizations. In the previous three-month period, VAALCO’s average realized unit price for oil was $77.31 per barrel – a substantial increase from $42.07 in the year-ago period. The increase in crude price is most likely to have continued in the to-be-reported quarter, with oil revisiting its multi-year highs following geopolitical tensions and the ongoing macroeconomic recovery. This price boost is likely to have buoyed the first-quarter revenues and cash flows of VAALCO.
The company is also expected to have benefited from higher production during the three-month period ended March period. In the fourth quarter of 2021, the company’s output averaged 7,554 barrels of oil per day, up 62% from a year ago. The uptick is most likely to have continued in the to-be-reported quarter, thanks to EGY’s impressive production profile from its assets in the Gabon offshore Etame license.
On a somewhat bearish note, a higher expense structure might have dampened some of the positive impact. VAALCO Energy’s total operating cost in the fourth quarter increased some 90% year over year to $30.5 million. The upward cost trajectory is likely to have continued in the first quarter due to spurring production and labor-related outgo.
What Does Our Model Say?
The proven Zacks model does not conclusively show that VAALCO Energy is likely to beat estimates in the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: VAALCO has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 30 cents per share each.
Zacks Rank: EGY currently carries a Zacks Rank #2, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult this earnings season.
Stocks to Consider
While an earnings beat looks uncertain for VAALCO, here are some firms from the energy space that you may want to consider on the basis of our model:
EOG Resources, Inc. EOG has an Earnings ESP of +0.89% and a Zacks Rank #1. The firm is scheduled to release earnings on May 5.
You can see the complete list of today’s Zacks #1 Rank stocks here.
For 2022, EOG has a projected earnings growth rate of 88.5%. Valued at around $66 billion, EOG has increased around 66% in a year.
Rattler Midstream LP RTLR has an Earnings ESP of +1.96% and a Zacks Rank #2. The firm is scheduled to release earnings on May 3.
For 2022, RTLR has a projected earnings growth rate of 34.9%. Valued at around $2 billion, Rattler Midstream has increased around 28.3% in a year.
Murphy USA MUSA has an Earnings ESP of +18.49% and is Zacks #2 Ranked. The firm is scheduled to release earnings on May 3.
MUSA is valued at around $5.6 billion. The company topped the Zacks Consensus Estimate by an average of 24.6% in the trailing four quarters. Murphy USA has gained around 72.8% in a year.
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EOG Resources, Inc. (EOG) : Free Stock Analysis Report
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