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Upcoming Oil Earnings to Watch: DO, USAC, GPOR


We have crossed the half-way mark of the Q4 earnings season, with 322 S&P 500 members having reported their numbers. This accounts for 78.1% of the index’s total market capitalization. Per the latest Earnings Trends, total earnings for these companies are up 15.3% from the same period last year on 9.4% higher revenues, with 79.6% companies delivering positive earnings surprises and 76.9% beating revenue estimates.

Among the 16 Zacks sectors, we expect only energy to witness triple-digit earnings growth of 150.1%, way ahead of 43.5% growth for basic materials standing next in the que. Partial recovery in crude prices supported this massive improvement.

Q4 Oil & Gas Prices Encouraging

West Texas Intermediate (WTI) crude increased almost 20% in the fourth quarter of 2017, per The U.S. Energy Information Administration (EIA). Through most of November and the entire month of December, the commodity traded above the $55-per-barrel psychological mark. The extension of the production cut deal by OPEC players supported the rally.

On Nov 30, 2017, OPEC members met non-OPEC players to decide on an extension of the crude production cut accord, first signed in late 2016, beyond the first quarter of 2018. More than 20 oil producers, including leading exporters like Russia and Saudi Arabia, attended the meeting. As expected by most analysts, all crude exporters decided to extend the deal through 2018-end. Saudi Arabia, Russia, and their allies have pledged to put 1.8 million barrels a day of crude oil out of the market through the end of this year.

Like oil, natural gas prices also reflected a gain of 25.5% through the fourth quarter of 2017.

Which Energy Players Could Benefit?

The improvement in crude prices is favorable for upstream energy players. During fourth-quarter 2017, there was more production of crude and natural gas in the United States as compared to the prior year, per EIA. Higher upstream activities may call for more contracts for drillers and to the companies that provide natural gas compression services.

Stocks to Watch for Earnings on Feb 12

Headquartered in Houston, TX, Diamond Offshore Drilling, Inc. DO is a leading offshore contract driller with services across the globe.

Last quarter, the company delivered earnings of 25 cents per share that surpassed the Zacks Consensus Estimate of 19 cents. Earnings also increased from 10 cents recorded a year ago. Diamond beat the Zacks Consensus Estimate in all the prior four quarters, the average positive surprise being 208.4%.

However, our proven model does not conclusively show that the company is likely to beat earnings in the quarter under review. This is because the company has a Zacks Rank #3 (Hold) and an Earnings ESP of -1,387.88%. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 for a beat.

USA Compression Partners, LP USAC — headquartered in Austin, TX —is the leading provider of services related to compression works to energy players.

Last quarter, the partnership reported earnings of 7 cents per unit, in line with the Zacks Consensus Estimate and higher than the year-ago profit of 6 cents. However, the company’s earnings surprise history is not impressive, wherein it delivered an average negative earnings surprise of 6.7% for the last four quarters.

An earnings beat looks unlikely for USA Compression Partners. For the to-be-reported quarter, the partnership has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Headquartered in Oklahoma City, Gulfport Energy Corporation GPOR is primarily involved in oil and natural gas exploration and production operations.

The company surpassed the Zacks Consensus Estimate for earnings in three of the last four quarters, the average positive surprise being 40.8%. Our proven model does not conclusively show a beat for the company this earnings season. This is because the company has a Zacks Rank #4 (Sell) and an Earnings ESP of -2.02%. Please note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

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