A Chevron deepwater platform is assembled in Texas. Chevron, ConocoPhillips, and Exxon are slated to report second-quarter earnings later this week.
Chevron Corp., ConocoPhillips, and Exxon Mobil Corp. are set to report second-quarter earnings this week amid renewed concerns lower oil prices will unleash another round of capital spending cuts.
ConocoPhillips COP, +3.14% is expected to report on Thursday before the bell, while Exxon XOM, +4.06% and Chevron CVX, +3.66% are slated to report on Friday, also before the market opens.
While their second-quarter results are bound to be an improvement over first-quarter results — oil prices jumped 24% between April and June after falling 11% from January through the end of March — a renewed slide by oil futures has investors wondering whether energy companies will again feel pressured to slash their budgets.
Most companies started slashing their spending six months ago, when oil prices began a precipitous fall of about 45% amid slack demand and plentiful supplies. Some companies took their newfound austerity a step further as prices continued to fall in early 2015. As a result, more oil and gas rigs have been mothballed, more projects delayed, and nearly 50,000 oil workers have lost their jobs in just the past three months, according to Graves & Co., a Houston energy consultancy.
The impact of lower oil prices on cash flows and production volumes is also a key issue for all three companies, said Brian Youngberg, an analyst with Edward Jones.
Here’s what to expect:
Earnings: Chevron is expected to report second-quarter earnings of $1.15 a share, less than half the $2.59 a share it posted a year ago, according to analysts polled by FactSet.
ConocoPhillips is seen reporting earnings of just 4 cents a share in the second quarter, compared with $1.61 a share a year ago, analysts surveyed by FactSet said.
Exxon Mobil is expected to report earnings of $1.11 a share, down from $1.66 a share a year ago, also according to analysts polled by FactSet
Revenue: For Chevron, the same analysts have forecast revenue of $35.65 billion, down from $58 billion a year ago.
ConocoPhillips is seen reporting revenue of $8.68 billion, down from $14.7 billion a year ago.
Exxon Mobil is expected to report revenue of $63 billion, down from $112 billion a year ago.
Share price: The shares of all three companies have suffered double-digit losses so far this year, compared with gains of 1.4% for the S&P 500 SPX, +1.24% index in the same period. The shares have lost ground more sharply than the index in the last three months. The impact has been felt on the Dow Jones Industrial Average DJIA, +1.09% which includes Chevron and Exxon among its 30 components.
The decline for Chevron through July has topped 18%, while the company has lost 17% in the last three months. ConocoPhillips shares have lost 24% year-to-date, and 23% in the past three months. Exxon Mobil has fared somewhat better, with losses of 11% so far this year and 6.5% over the last three months.
Analysts polled by Factset have an average share-price target of $110 on Chevron, which is 23% higher than Monday’s close. The average price target for ConocoPhillips is $71.94, or 42% upside from Monday’s close. The average target for Exxon is $92.67, or 17% upside from Monday.
Other issues: For Chevron, all eyes will be on its Gorgon liquefied natural gas project in western Australia. Any updates about the $52 billion project, of which Chevron owns half, will be very important, said Pavel Molchanov, an analyst with Raymond James. The Gorgon field development has already run into numerous delays and cost overruns.
Chevron also has faced production hiccups in its $5 billion Gulf of Mexico Big Foot deepwater oil project, which ran into equipment trouble in June, so investors will be keen on getting an update on Big Foot as well, Edward Jones’ Youngberg said.
ConocoPhillips’ tight cash flow situation is the data point to watch, Youngberg said. ConocoPhillips could not only announce further cuts to its capital spending plan but also reduce its growth outlook, he said.
Investors will be watching whether Exxon Mobil gives any indication its share buyback program will continue, Youngberg said. In the first quarter, Exxon cut its buybacks to $1 billion from $3 billion in the fourth quarter.
Chevron has halted its stock buyback program for the year after repurchasing $5 billion in shares in 2014.