EOG Resources, Inc. EOG is set to release third-quarter 2015 financial results after the closing bell on Nov 5.
Last quarter, the company’s earnings of 28 cents per share decreased from $1.45 earned in the prior-year quarter. This was due to weak commodity prices. The results however came above the Zacks Consensus Estimate of 5 cents. Let’s see how things are shaping up for this announcement.
Factors Influencing This Past Quarter
EOG Resources’ large portfolio of high-return projects and strong technical competence are its key long-term drivers. Increased production volumes supported results in the last reported quarter and the trend is expected to have continued.
For the third-quarter, EOG’s total production is expected between 542 thousand barrels of oil equivalent per day (MBoe/d) and 567.9 MBoe/d. For the full year, EOG expects total volume between 562.6 MBoe/d and 579.4 MBoe/d. The company lowered its total capital expenditure budget by $200 million. It now ranges between $4.7 billion and $4.9 billion for 2015, down over 40% from 2014. This is likely to have been felt in third quarter too.
Overall, the company’s activities during the July–September period were inadequate to win analysts’ confidence. The Zacks Consensus Estimate for the third quarter deteriorated to a loss of 30 cents from loss of 9 cents per share over the last 90 days.
Earnings Whispers
Our proven model does not conclusively show that EOG Resources is likely to beat results this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
Zacks ESP: EOG Resources has an Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 30 cents.
Zacks Rank: EOG Resources carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, we also need a positive ESP to be confident of a likely beat.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the announcement of the results, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies in the energy space that have the right combination of elements to post an earnings beat this quarter:
Callon Petroleum Company CPE has Earnings ESP of +66.67% and a Zacks Rank #2 (Buy). It will be reporting results on Nov 4.
PennTex Midstream Partners, LP PTXP has Earnings ESP of +114.29% and a Zacks Rank #3. The company is scheduled to release results on Nov 6.
Seadrill Partners LLC SDLP has an Earnings ESP of +12.00% and a Zacks Rank #1 (Strong Buy). The partnership is expected to release earnings results on Nov 25.
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