2016 Energy Earnings Seen Down 86%

Print Email

There’s little question that the first three-quarters of 2016 was a rocky period for energy companies. The election of Donald Trump in November lit a fire under the sector, however, as the new president has promised to open more federal lands for drilling and to lighten regulatory controls on carbon emissions. He may even be responsible for a coal company initial public offering (IPO) scheduled for this Friday.

Beginning last Friday with Chevron Corp. (NYSE: CVX), energy companies large and small are going to be reporting what FactSet forecasts as one of the worst year-over-year declines for any sector since 2008.

Analysts expect annual earnings for 2016 to be down 86% compared with 2015. And 2015 was no high point — energy sector earnings dropped 60% year over year in 2015. Chevron’s 2016 unadjusted loss per share was $0.27, compared with a profit of $2.45 per share in 2016.

Next up is Exxon Mobil Corp. (NYSE: XOM), scheduled to report results Tuesday morning. Analysts are looking for full-year earnings of $2.19, compared with earnings per share (EPS) of $3.85 in 2015, a decline of 43%. Total sales are forecast to fall 14% to $230.9 billion.

CONSOL Energy Inc. (NYSE: CNX) is also scheduled to report results Tuesday morning and analysts have forecast a net loss for the year of $0.45 per share, compared with a net loss of $0.39 in 2015. That’s down more than 15%. The natural gas and coal producer is also expected to post a 25% decline in revenues.

One of the country’s biggest refiners, Valero Energy Corp. (NYSE: VLO) also reports Tuesday morning, with analysts looking for 2016 EPS of $3.69, down from $9.24 in 2015, a decline of 60%. Revenues have been forecast down more than 18%.

Anadarko Petroleum Corp. (NYSE: APC) reports results after markets close Tuesday. The company is pegged to post a net loss per share of $3.05 for 2016, compared with a loss of $2.00 per share in 2015, a year-over-year decline of 52.5%. Revenues are expected to slip about 10%.

Marathon Petroleum Co. (NYSE: MPC), another big refiner, reports results before markets open on Wednesday and is expected to post 2016 EPS of $1.96, compared with $5.86 in 2015, down nearly 67%. Revenues have been forecast to fall more than 17%.

After markets close Wednesday, services firm Weatherford International Inc. (NYSE: WFT) is expected to report a net loss of $1.30 per share, compared with a loss of $0.33 per share in 2015. That’s a decline of some 290%. Revenues of forecast to be 39% lower than 2015.

ConocoPhillips (NYSE: COP) is on tap for Thursday morning and is expected to post a net loss of $2.81 per share, double the 2015 net loss of $1.40 a share. Revenues are forecast to fall 21.5% year over year.

Royal Dutch Shell PLC (NYSE: RDS-A) also reports Thursday morning. The Europe-based supermajor is expected to post 2016 EPS of $1.88, a drop of nearly 44% from EPS of $3.34 in 2015. Revenues have been forecast to fall 10.5%.

Finally, Friday morning, refiner Phillips 66 is scheduled to report results. Analysts are expecting EPS of $3.09 compared with $7.67 in 2015, a decline of nearly 60%. Revenues are forecast to fall 14.5% year over year.

The good news, according to FactSet, is that 2017 is expected to be better, both because oil prices are rising and because the year-over-year comparisons should make it easy for 2017 earnings to beat 2016. Of course higher crude prices are not much help to refiners, but the services firms like Weatherford should see a boost.

One final note on coal. An Appalachian-based coal company, Ramaco Resources, is expected to price its IPO on Thursday and begin trading Friday. Ramaco is offering 6 million shares in an expected price range of $12 to $15, raising $81 million at an implied market cap of $527 million. Given that 2016 saw two of the country’s largest coal miners, Arch Coal and Peabody Energy, file for bankruptcy protection early last year, an IPO in the coal industry may be a good test of how investors view President Trump’s promises to the industry and its workers.

I'm interested in the Newsletter