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What's in the Cards for EOG Resources' (EOG) Q4 Earnings?

Zacks Equity Research

EOG Resources, Inc. EOG is expected to release fourth-quarter 2018 financial results on Feb 27, 2019.

The upstream energy player beat the Zacks Consensus Estimate for earnings in each of the last four reported quarters, recording a positive surprise of 18.1%. Let’s see how things are shaping up for this announcement.

EOG Resources, Inc. Price and EPS Surprise

EOG Resources, Inc. Price and EPS Surprise | EOG Resources, Inc. Quote

 

Which Way Are Estimates Trending?

Let’s take a look at estimate revisions to get a clear picture of what analysts are thinking about the company before the earnings release.

The Zacks Consensus Estimate for revenues is pegged at $4.5 billion for the to-be-reported quarter, reflecting an increase of 34.5% from the year-ago period.

The consensus estimate of $1.34 per share for the fourth quarter has seen two upward but seven downward revisions by firms in the past 30 days. It reflects a year-over-year rise of about 94.2%.

Factors Likely to Influence Upcoming Quarterly Results:

EOG Resources is among the leading oil and natural gas exploration and production players, with operations spreading across the United States, United Kingdom, China, Canada and Trinidad. The company has vast acres in the prospective domestic shale resources like Eagle Ford, Permian and Bakken. Like any other explorers and producers, the fate of EOG Resources is positively correlated to oil and gas prices and production volumes.

The Zacks Consensus Estimate for total Crude Oil and Condensate Volumes is pegged at 433 thousand barrels per day (MBbl/d), reflecting a rise from the year-ago figure of 368 MBbl/d and the last reported quarter’s tally of 415 MBbl/d. However, Other International volumes are projected at 3.83 MBbl/d, lower than 5.40 MBbl/d in the year-ago quarter. The Zacks Consensus Estimate for Average Crude Oil and Condensate Prices (Composite) is $70 per barrel, indicating a rise from the year-ago quarter’s tally of $57. The figure is expected to be flat sequentially.  

The Zacks Consensus Estimate for total Natural Gas Liquids Volumes is 122 MBbl/d, indicating a rise from the year-ago figure of 101 MBbl/d but a decline from the last reported quarter’s 128 MBbl/d. Average Natural Gas Liquids Prices (Composite) are expected at $29.77 per barrel, reflecting a rise from the year-ago figure of $26.92 but a decline from the last reported quarter’s tally of $30.09.

The Zacks Consensus Estimate for total Natural Gas Volumes is pegged at 1,286 million cubic feet per day (MMcfd), indicating a rise from the year-ago quarter’s tally of 1,160 MMcfd and the last reported quarter’s 1,236 MMcfd. The Zacks Consensus Estimate for Average Natural Gas Prices (Composite) is $2.78 per thousand cubic feet (Mcf), reflecting an increase from $2.31 in the year-ago period and $2.74 in the third quarter.

Although a significant increase in production and realized prices are expected in the fourth quarter, the growth in production volumes might get hurt owing to pipeline bottleneck problem in the prolific Permian Basin. Moreover, natural gas volumes in Trinidad are anticipated at 240 MMcfd, lower than 299 MMcfd in the year-ago quarter.

Earnings Whispers

Our proven model does not conclusively show that EOG Resources is likely to beat the Zacks Consensus Estimate in the quarter to be reported. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. EOG Resources’ Earnings ESP is pegged at -0.95% as the Most Accurate Estimate currently stands at $1.32, while the Zacks Consensus Estimate is pegged at $1.34. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: EOG Resources’ Zacks Rank #5 (Strong Sell) further decreases the predictive power of ESP, making us less confident of an earnings surprise call.

As it is, 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.

Energy Stocks with Favorable Combination

Here are some companies from the energy space, which, according to our model, have the right combination of elements to post an earnings beat in their respective quarters to be reported.

Par Pacific Holdings, Inc. PARR has a Zacks Rank #2 and an Earnings ESP of +21.70%. The company is scheduled to report quarterly earnings on Mar 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cactus, Inc. WHD has a Zacks Rank #3 and an Earnings ESP of +1.11%. The company will report quarterly earnings on Mar 6.

Goodrich Petroleum Corp. GDP has a Zacks Rank #3 and an Earnings ESP of +2.36%. The company is set to report quarterly earnings on Mar 5.

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