Oil and gas exploration and production company Noble Energy, Inc. (NBL) is slated to report its third-quarter 2014 results on Oct 28, before the opening bell.
Last quarter, Noble Energy reported a positive earnings surprise of 10.13%. Let’s see how things are shaping up for this announcement.
Factors at Play This Quarter
Noble Energy is systematically expanding its presence in the domestic as well as international fields. During the third quarter, Noble Energy expanded its operation in West Africa, thanks to the Production Sharing Contract (“PSC”) signed with the government of Gabon. Per the contract, Noble Energy will operate Block F15 in the Gabon Coastal Basin with a 60% stake.
Apart from West Africa, the company is expanding its operations in the Denver/Julesburg Basin and the Marcellus Shale in the U.S. and in the Eastern Mediterranean region. These initiatives will allow Noble Energy to boost its reserve base. Noble Energy’s offshore Eastern Mediterranean and West African assets could play a vital role in its growth story.
The company also announced impressive well results at the Katmai exploration well and the Dantzler appraisal well in the deepwater Gulf of Mexico (GoM). The company is pursuing an active exploration program in the region with the development of the Big Bend, Gunflint and Dantzler projects.
Noble Energy continues to benefit from its exposure in the Leviathan field offshore Israel. The company and its Leviathan partners signed non-binding Letter of Intent (LOI) with National Electric Power Company Ltd. (NEPCO) of Jordan to supply natural gas.
However, prices of Noble Energy‘s primary products, oil and natural gas, are often volatile. An economic slowdown can impact the worldwide demand for energy commodities, resulting in lower prices. The volatility in commodity prices can considerably affect the company’s financial performance.
Earnings Whispers?
Our proven model does not conclusively show that Noble Energy is likely to beat earnings this quarter. That 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. That is not the case here, as you will see below.
Zacks ESP: Noble Energy has a negative earnings ESP of -18.92%. This is because the Most Accurate estimate stands at 30 cents while the Zacks Consensus Estimate is pegged higher at 37 cents.
Zacks Rank: Noble Energy carries a Zacks Rank #5 (Strong Sell). We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Cobalt International Energy, Inc. (CIE) has an Earnings ESP of +11.11% and sports a Zacks Rank #1.
WPX Energy, Inc. (WPX) has an Earnings ESP of +100.00% and holds a Zacks Rank #2.
Stone Energy Corp. (SGY) has an Earnings ESP of +10.00% and carries a Zacks Rank #3.
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