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Oil & Gas Stock Roundup: Q1 Earnings From SHEL, BP, COP, EOG & PXD

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It was a week wherein oil prices rose back close to $110 and natural gas futures reached a 14-year high.

On the news front, some well-known energy companies like Shell plc SHEL, BP plc BP, ConocoPhillips COP, EOG Resources EOG and Pioneer Natural Resources Company PXD reported March-quarter earnings.

Overall, it was a good seven-day period for the sector. West Texas Intermediate (WTI) crude futures gained around 4.9% to close at $109.77 per barrel, while natural gas prices surged some 11% to end at $8.043 per million British thermal units (MMBtu).

Oil prices settled higher on concerns about supplies from Russia, which is one of the world's largest producers of the commodity. Speculation has it that the European Union could shortly follow the United States in blocking imports of Russian energy to protest Moscow’s invasion of Ukraine.

Natural gas finished up even more strongly, reflecting hotter-than-normal early summer weather, restricted domestic output, strong LNG shipments and high coal prices.

Recap of the Week’s Most-Important Stories

1. Europe’s largest oil company Shell reported first-quarter earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) — of $2.38. The bottom line came in above the Zacks Consensus Estimate of $2.12 and surged from the year-earlier quarter’s earnings of 82 cents per ADS, backed by stronger commodity prices.

Meanwhile, Shell repurchased $3.5 billion of shares in the first quarter. The energy group also announced that it has already bought back shares worth $4 billion of the total $8.5 billion scheduled for the first half of 2022. The remaining $4.5 billion will be completed before SHEL comes out with second-quarter earnings. On another positive note, Shell boosted its quarterly dividend by some 4% to 25 cents per share.

During the quarter under review, Shell generated cash flow from operations of $14.8 billion, returned $2 billion to its shareholders through dividends and spent $4.2 billion cash on capital projects. The company’s cash flow from operations increased 78.6% from the year-earlier level. Meanwhile, the group raked in $10.5 billion in free cash flow during the first quarter compared to $7.7 billion a year ago. (Shell Q1 Earnings Beat on Oil Price, Bumps Dividend)

2.   Smaller rival BP reported first-quarter adjusted earnings of $1.92 per American Depositary Share (“ADS”) on a replacement-cost basis, excluding non-operating items. The bottom line beat the Zacks Consensus Estimate of earnings of $1.41 per share and rose from 78 cents reported a year ago. The strong quarterly earnings were driven by higher realizations of commodity prices.

BP announced plans to execute a $2.5-billion share buyback, which is expected to complete before reporting the second-quarter results. The company anticipates buying back $1 billion worth of shares every quarter, considering Brent crude price at $60 per barrel.

BP's net debt, including leases, was $36,129 million at the end of the first quarter versus $42,380 million in the prior-year quarter. Gearing was recorded at 31.5% compared with 31.9% in the prior-year quarter. (BP Beats Q1 Earnings Estimates, Announces Share Buyback)

3   ConocoPhillips — one of the world’s largest independent oil and gas producers — reported first-quarter 2022 adjusted earnings per share of $3.27, beating the Zacks Consensus Estimate of $3.24. Further, the bottom line significantly improved from the prior-year quarter’s 69 cents per share. The strong quarterly results have been aided by increased oil-equivalent production volumes and realized commodity prices.

As of Mar 31, 2022, ConocoPhillips had $6.4 billion in cash and cash equivalents. The company had a total long-term debt of $17.6 billion. COP had a debt-to-capitalization ratio of 0.28. At the first-quarter end, the company had short-term debt of $1.2 billion.

ConocoPhillips revised higher its expected 2022 return of capital to shareholders. The new guidance is $10 billion versus the prior projection of $8 billion. COP’s incremental returns to stockholders will get distributed through share repurchases and variable returns of cash tiers. (ConocoPhillips Q1 Earnings Beat on Higher Oil Prices)

4   Another upstream giant EOG Resources reported first-quarter adjusted earnings per share of $4.00, beating the Zacks Consensus Estimate of $3.69. The bottom line significantly improved from the year-ago quarter’s earnings of $1.62. EOG’s strong earnings were driven by higher oil equivalent production and commodity prices.

For the quarter under review, EOG Resources’ volumes increased 13.4% year over year to 883,300 BOE/d on higher U.S. output. Committed to shareholder returns, the Zacks Rank #1 (Strong Buy) company announced a special dividend of $1.80 per share.

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

As of Mar 31, EOG Resources had cash and cash equivalents of $4 billion. Long-term debt was reported at $3.8 billion. The current portion of the long-term debt was recorded at $1.3 billion. It had a debt to total capitalization of 19.1%. In the reported quarter, the company generated $2.4 billion in free cash flow and incurred $1 billion of capital expenditure. (EOG Resources Q1 Earnings Top Estimates on Higher Price)

5.  Finally, we have shale biggie Pioneer Natural Resources Company, which reported first-quarter earnings of $7.74 per share (excluding one-time items), beating the Zacks Consensus Estimate of $7.32. The bottom line surged from the year-ago quarter’s profit of $1.77 per share. PXD’s robust bottom line can be attributed to higher oil-equivalent production volumes and commodity price realizations.

As of Mar 31, Pioneer Natural’s cash and cash equivalents totaled $2.4 billion, while long-term debt summed at $5.4 billion. It had a debt to capitalization of 19.4%. In the March-end quarter, the company spent $852 million.
For the second quarter, Pioneer Natural announced a dividend payment of $7.38 per share of common stock, which includes a variable dividend of $6.60 per share and a base dividend of 78 cents. This suggests a 95.2% increase from the prior dividend of $3.78 per share. (Pioneer Natural Tops Q1 Earnings Estimates, Ups Dividend)

Price Performance

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

Company    Last Week    Last 6 Months

XOM                 +7.6%            +32.5%
CVX                  +8.9%            +40.9%
COP                 +12.7%          +34.3%
OXY                  +17.9%          +86.7%
SLB                  +10.3%          +15.8%
RIG                   +9.6%            +1.2%
VLO                  +15.9%          +57.4%
MPC                 +9.9%            +40%

The Energy Select Sector SPDR — a popular way to track energy companies — surged 10.3% last week. Over the past six months, the sector tracker has increased 33.6%.

What’s Next in the Energy World?

With real-life activities returning to normalcy, gasoline and diesel have reached record highs. Amid this backdrop, market participants will closely track the regular releases to look for direction. 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 the oilfield service firm Baker Hughes, which is a pointer to the trends in U.S. crude production, is closely followed too. News related to the ongoing Russia-Ukraine geopolitical conflict and the potential demand hit from the coronavirus lockdowns in China will be other factors that will dictate the near-term price movement for oil.

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BP p.l.c. (BP) : 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
Shell PLC Unsponsored ADR (SHEL) : Free Stock Analysis Report
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