With oil prices improving remarkably, the overall energy business scenario is likely to have gained in the December quarter. This is expected to have aided upstream operations.
Oil Price Surge
Per data provided by the U.S. Energy Information Administration (“EIA”), the average West Texas Intermediate crude prices in October, November and December were recorded at $87.55 per barrel, $84.37 per barrel and $76.44 per barrel, respectively. In comparison, in the year-ago respective months, average oil prices were reported at $81.48 per barrel, $79.15 per barrel and $71.71 per barrel, per the EIA’s data.
Higher oil prices favored exploration and production activities, and convinced more explorers and producers to return to oil patches. The pricing scenario of natural gas was also healthy, depicting that the upstream business was lucrative in the fourth quarter.
Improved commodity prices have also led to an increase in drilling activities in U.S. resources. Rig count data, as reported by Baker Hughes Company BKR, revealed that the monthly total count of rigs in the United States in the December quarter of 2022 was significantly higher than the year-earlier quarter.
Baker Hughes also publishes monthly rig count data. The rotary rig count, issued by BKR, usually gets published in major newspapers and trade publications.
Baker Hughes’ data, issued at the end of every week since 1944, helps energy service providers gauge the overall business environment of the oil and gas industry. The number of active rigs compared with the prior-week figure indicates the demand trajectory for Baker Hughes’ oilfield services from exploration and production companies.
Quarterly Earnings to Surge
Amid increased oil prices and higher drilling activities, upstream energy companies are likely to have generated handsome earnings in the fourth quarter of 2022. Per the latest Zacks Earnings Trends report, the energy sector is likely to have generated earnings of $47.6 billion for the December quarter, indicating a significant improvement year over year.
Given the backdrop, let us look at how the following energy companies are placed ahead of their fourth-quarter earnings releases slated for Feb 22.
Our proprietary model indicates that a company needs to have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
Pioneer Natural Resources Company PXD is geared up to release fourth-quarter earnings after the closing bell.
Our proven model doesn’t predict an earnings beat for Pioneer Natural this time as it has an Earnings ESP of -2.74% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The Zacks Consensus Estimate for Pioneer Natural’s earnings is pegged at $5.83 per share, suggesting a significant improvement from the prior-year reported figure.
APA Corporation APA is scheduled to report quarterly earnings after the closing bell. The chances of APA delivering an earnings beat this time are low as it has an Earnings ESP of -6.61% and a Zacks Rank #3.
The Zacks Consensus Estimate for APA’s earnings is pegged at $1.50 per share.
SM Energy Company SM is scheduled to report quarterly earnings after the closing bell. The chances of SM Energy delivering an earnings beat this time are low as it has an Earnings ESP of -4.86% and a Zacks Rank #5.
The Zacks Consensus Estimate for SM Energy’s earnings is pegged at $1.21 per share.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.