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Output, Price Gain to Aid Eclipse Resources (ECR) Q3 Earnings

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Eclipse Resources Corporation ECR is set to report third-quarter 2018 results on Oct 31, after the closing bell. The Zacks Consensus Estimate for the quarter to be reported is pegged at a loss of 3 cents per share on revenues of $113 million. The anticipated revenues reflect an increase of 22.8% from the year-ago figure. However, the company’s earnings estimates compare unfavorably with the year-ago loss of 2 cents per share. Further, the Zacks Consensus Estimate for loss has widened by a penny in the past seven days.

In the preceding three-month period, the State College, PA-based upstream player delivered better-than-expected earnings on improved year-over-year production and higher crude price realizations, partially offset by lower gas price levels. Coming to earnings surprise history, Eclipse Resources has a solid record. It has not missed estimates in any of the trailing four quarters, delivering an average positive earnings surprise of 183.33%.

Eclipse Resources Corporation Price and EPS Surprise

Eclipse Resources Corporation Price and EPS Surprise | Eclipse Resources Corporation Quote

Let’s see how things are shaping up prior to the announcement.

Why a Likely Positive Surprise?

Our proven model shows that Eclipse Resources is likely to beat earnings estimates in the to-be-reported quarter, as it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +3.03%. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.

Zacks Rank: Eclipse Resources currently holds a Zacks Rank #2. A Zacks Rank #2, when combined with a positive ESP, makes us confident of an earnings beat.

We caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

What is Driving the Better-Than-Expected Earnings?

Eclipse Resources has a huge acreage in Ohio and Utica shale play in the Appalachian Basin. Extended laterals, along with innovative and improved completions techniques have been boosting well economics across the company’s assets. Higher output levels are likely to fuel overall revenues and performance of the company. As it is, the company’s total production witnessed a whooping CAGR of 187.9% over the past five years ending 2017. For 2018, Eclipse Resources forecasts its total output within 325-335 million cubic feet equivalent per day (MMcfe/d), reflecting another 6.2% year-over-year increase from the midpoint of the guided range.

The company’s production volumes, consisting of more than 70% gas, are likely to benefit from improved year-over-year price realizations. Natural gas fared well in the July-September quarter on the back of improving clean energy demand. The average monthly spot prices of the commodity for the respective months of third-quarter 2018 were $2.83 per Million Btu, $2.96 per Million Btu and $3.00 per Million Btu, representing healthier prices than third-quarter 2017.

On a further encouraging note, average West Texas Intermediate (WTI) crude prices were recorded at $70.98, $68.06 and $70.23 per barrel in the month of July, August and September 2018, respectively, per data from the U.S. Energy Information Administration (EIA). These prices were considerably higher than the year-ago respective prices of $46.63, $48.04 and $49.82.

The improved commodity price realizations along with higher output levels are expected to buoy the company’s third-quarter results.

Other Energy Stocks With Favorable Combination

Eclipse Resources is not the only energy firm poised to deliver an earnings beat in the quarter to be reported. Here are some other companies from the energy space, which, according to our model, also have the right combination of elements to post an earnings beat in the upcoming releases.

NOW Inc. DNOW has an Earnings ESP of +5.61% and a Zacks Rank #2. The firm is expected to release third-quarter earnings on Nov 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock, Inc. AROC has an Earnings ESP of +57.9% and carries a Zacks Rank #2. The firm is expected to report third-quarter earnings on Nov 1.

Enbridge Inc. ENB has an Earnings ESP of +5.26% and a Zacks Rank #1. The firm is expected to release third-quarter earnings on Nov 2.

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