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Oil & Gas Stock Roundup: A Look at COP, EOG, PXD, MPC & WMB Q1 Earnings

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·9 min read
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It was a week when both oil and natural gas prices settled higher.

On the news front, energy firms ConocoPhillips COP, EOG Resources EOG, Pioneer Natural Resources PXD, Marathon Petroleum MPC and The Williams Companies WMB reported March-quarter earnings. All the companies beat bottom-line estimates and provided optimistic outlooks.

Overall, it was a good week for the sector. West Texas Intermediate (WTI) crude futures gained 2.1% to close at $64.90 per barrel, while natural gas prices inched up 0.9% in the week to end at $2.96 per million British thermal units (MMBtu). In particular, the oil markets managed to maintain their forward momentum from the previous week.

Coming back to the week ended May 7, oil prices moved up on vaccination success even as reopening efforts continued to gain traction in the United States and Europe. Crude is also finding support from an improving earnings picture that has further strengthened the demand outlook. Additionally, the dollar-denominated commodity got a boost from a weaker greenback.

Natural gas finished up too due to the ongoing strength in liquefied natural gas demand and pipeline exports to Mexico.

Recap of the Week’s Most-Important Stories

1.  ConocoPhillips reported first-quarter 2021 adjusted earnings per share of 69 cents, comfortably beating the Zacks Consensus Estimate of 57 cents. The outperformance stemmed from increased production and realized commodity prices.

Based in Houston, TX, one of the world’s largest independent oil and gas producers. ConocoPhillips’ capital expenditures and investments totaled $1,200 million, and dividend payments grossed $588 million. Net cash provided by operating activities was recorded at $2,080 million, down from the year-ago figure of $2,105 million. As of Mar 31, 2021, the oil giant had $2,831 million in total cash and cash equivalents, down from the fourth-quarter level of $2,991 million.

ConocoPhillips expects full-year production to be 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. Second-quarter production will likely be within 1.5-1.54 MMBoe/d. For the full year, adjusted operating costs will likely be $6.2 billion. The company reiterated its 2021 capital budget at $5.5 billion, indicating an increase from the 2020 level of around $4.7 billion. Importantly, ConocoPhillips intends to divest its stake in Cenovus Energy CVE in the open market within 2022-end. The proceeds will be utilized for share buybacks (ConocoPhillips Q1 Earnings Beat on Higher Crude Output)

2.   Upstream energy company EOG Resources reported first-quarter 2021 adjusted earnings per share of $1.62, beating the Zacks Consensus Estimate for earnings of $1.44. The strong earnings were driven by increased crude oil and condensates price along with a decline in lease and well expenses, partially offset by lower oil equivalent production volumes.  

The company’s board of directors announced a special dividend of $1 per share. The announcement came along with a regular dividend of 41.25 cents per share. In the quarter, the company generated $2,010 million in discretionary cash flow and $1,065 million of free cash flow. It incurred $945 million of cash capital expenditure before acquisition in the first quarter. At first-quarter end, EOG Resources had cash and cash equivalents of $3,388 million. Long-term debt was reported at $5,094 million. This represents a net debt to capitalization of 19.8%.

The company expects 2021 production in the range of 774.8- 831.9 MBoe/d. For this year, the leading upstream energy company projects capital spending in the range of $3,700 to $ 4,100 million. (EOG Resources Beats on Q1 Earnings as Oil Price Rebounds)

3.  Pioneer Natural Resources, a premier Permian producer, reported first-quarter 2021 earnings of $1.77 per share (excluding one-time items), beating the Zacks Consensus Estimate of $1.50 per share. The strong quarterly results can be attributed to increased oil equivalent production volumes and higher realizations of crude prices.

The company’s expenses for oil and gas production were $252 million, up from $176 million in the year-ago quarter. Moreover, total costs and expenses increased to $2,525 million for the first quarter from $1,892 million in the year-ago period. As of Mar 31, 2021, the cash balance totaled $668 million, while long-term debt summed $6,177 million. It had a debt to capitalization of 25.4%. In the March-end quarter, the company spent $605 million.

Pioneer Natural anticipates total capital budget for 2021 between 3.1 billion and $3.4 billion. Notably, it believes that capital spending will be fully funded by its $5.9 billion projected cash flow. Moreover, the company is planning to start distributing quarterly variable dividends from 2022. (Pioneer Natural Q1 Earnings and Revenues Top Estimates)

4.  Independent oil refiner and marketer Marathon Petroleum reported adjusted loss of 20 cents per share, narrower than the Zacks Consensus Estimate of a loss of 72 cents. The Zacks Rank #2 (Buy) company’s bottom line was favorably impacted by cost savings and stronger-than-expected performance from the Midstream segment. Precisely, operating income from the unit totaled $972 million, ahead of the Zacks Consensus Estimate of $929 million.

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

Refining margin of $10.16 per barrel decreased from $11.86 a year ago. Total refined product sales volumes were 3,067 thousand barrels per day (mbpd), down from the 3,588 mbpd in the year-ago quarter. Moreover, throughput fell from 2,994 mbpd in the year-ago quarter to 2,565 mbpd though it beat the Zacks Consensus Estimate of 2,509 mbpd. Capacity utilization during the quarter was down from last year’s 91% to 83%.

In the reported quarter, Marathon Petroleum spent $410 million on capital programs (33% on Refining & Marketing and 34% on the Midstream segment) compared to $1.1 billion in the year-ago period. As of Mar 31, the company had cash and cash equivalents of $758 million and total debt, including that of MPLX, of $32.6 billion, with a debt-to-capitalization ratio of 53.4%. (Marathon Q1 Loss Narrower Than Expected, Sales Beat)

5.  Energy infrastructure provider The Williams Companies reported first-quarter 2021 adjusted earnings per share (EPS) of 35 cents, beating the Zacks Consensus Estimate of 28 cents. This outperformance can be attributed to higher-than-expected contributions from its two segments. Precisely, adjusted EBITDA from the West and the Northeast G&P units totaled $315 million and $402 million each, ahead of their respective Zacks Consensus Estimate of $247 million and $397 million.

In the reported quarter, total costs and expenses increased 26.4% to $1.9 billion from $1.5 billion a year ago, primarily due to higher product expenses. Williams’ total capital expenditure was $277 million in the first quarter, down from $284 million a year ago. As of Mar 31, 2021, the company had cash and cash equivalents of $1.13 billion and long-term debt of $21.1 billion with a debt-to-capitalization of 64.3%.

The company updated full-year adjusted EBITDA to the band of $5.2-$5.4 billion from the prior guided range of $5.05-$5.35 million. It reiterates its growth capital spending in the band of $1-$1.2 billion. It expects to generate positive free cash flow, which will allow it to maintain financial stability. (Williams Q1 Earnings Beat Estimates, Increase Y/Y)

Price Performance

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

Company    Last Week    Last 6 Months

XOM                +9.1%             +66.7%
CVX                +6.7%             +37.3%
COP               +11.7%           +66.9%
OXY                +8%                 +117.9%
SLB                +17.9%            +68.4%
RIG                 +24.2%            +231.8%
VLO                +8.8%               +60.7%
MPC               +7.8%               +63%

The Energy Select Sector SPDR — a popular way to track energy companies — was up 8.6% last week. The best performer was offshore driller Transocean Ltd. RIG whose stock surged 24.2%.

Over the past six months, the sector tracker has surged 59.4%. Transocean was the major gainer during the period too, experiencing a 231.8% price appreciation.

What’s Next in the Energy World?

As global oil consumption outlook strengthens amid the OPEC+ led calibrated supply cuts and successful vaccine deployments, market participants will be closely tracking the regular releases to watch for signs that could further validate a rebound. 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 energy service firm Baker Hughes, which is a pointer to trends in U.S. crude production, is closely followed too. There will also be 2021 Q1 earnings, with a few S&P 500 components coming up with quarterly results. Finally, news related to coronavirus vaccine approval/rollout/distribution will be of utmost importance.

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Transocean Ltd. (RIG) : Free Stock Analysis Report
 
ConocoPhillips (COP) : Free Stock Analysis Report
 
Pioneer Natural Resources Company (PXD) : Free Stock Analysis Report
 
EOG Resources, Inc. (EOG) : Free Stock Analysis Report
 
Williams Companies, Inc. The (WMB) : Free Stock Analysis Report
 
Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report
 
Cenovus Energy Inc (CVE) : Free Stock Analysis Report
 
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