ExxonMobil (NYSE:XOM) is set to report its third quarter earnings next week pre-market on November 1, 2007. What is curious to 24/7 Wall St. is whether or not the biggest integrated oil play will miss its earnings numbers. Before you read on, understand that the question about Exxon’s earnings here is merely based upon the analysis of its chart (see BigCharts.com chart below) and how its stock has been trading despite oil hitting $90 in two different weeks now.
First Call has estimates of $1.75 EPS and you just have to wonder when this will have a $100 Billion number to quarterly revenues. There are many questions here, but there are many other ways of looking at it as well. Valero (NYSE:VLO) missed earnings and its stock actually held up because traders believe the earnings power is monstrous here. Schlumberger (NYSE:SLB) managed to fall more than 10% last week on its earnings. These give very mixed readings and make the question seem almost rhetorical.
MarketWatch reported a Tesoro (NYSE:TSO) economist yesterday saying that “oil should be in the $60’s” because of its ease to buy oil. Some in the oil industry won’t be too happy about that, and it definitely isn’t what oil speculators will want to hear.
Despite the earnings result and the reaction to the stock, the good news is that the bulls will still have a case because this could fall down close to $85.00 and its long-term uptrend would still be intact. We’ll leave the outcome from that up to the company and the rest of the charting up to the pure technicians.
As a reminder, Exxon rarely gives real guidance and it is deemed one of the more naked oil companies in that it hasn’t been a large hedger of oil prices. As it is the largest fully integrated oil play in the world, it has the most exposure to rising oil prices on the production side of the equation and on the sales side of the equation.
If you look at the GasBuddy.com website you can type in your own city or province. If I type in “Houston” today it says an average is $2.61 per gallon of gasoline for regular, down from the $3.00-ish seen in May to June of this year. Gas prices are not chasing up crude prices. But if you watch the price per barrel, you might determine that there is a better chance of $100 being seen before $80 again.
- $90 today.. on the way to $100.
- PetroChina (NYSE:PTR) has surpassed GE to be the second largest company by market cap.
- Recently Goldman Sachs issued a higher “Super-Spike” target noting oil could hit $135/barrel and $4.50/gallon.
- GE is becoming a stealthy oil company.
- Anadarko up over 2% after filing for its MLP to come public.
- Valero rose recently even on an earnings warning.
- Ken Heebner is still quite bullish on black gold as well.
Jon C. Ogg
October 25, 2007
Jon Ogg is the editor of the 24/7 Wall St. Special Situation Investing Newsletter; he does not own securities in the companies he covers. Free email sign-ups can be accessed here.