Energy Business

Earnings Previews: Exxon, Conoco, BP

Exxon

Exxon Mobil Corp. (NYSE: XOM) also is expected to report earnings Tuesday morning. Exxon may have had the toughest year of all the big oil companies. The stock was booted from the Dow Jones industrial average and dropped more than a third of its value in 2020.

Over the weekend, the Wall Street Journal reported that Exxon and Chevron discussed a merger early last year as demand for oil plunged due to the COVID-19 pandemic. Whether such a combination would have made it through regulators is questionable. The company also reportedly faces an SEC investigation regarding alleged overvaluation of some of Exxon’s acreage holdings in the Permian Basin.

Consensus estimates for the fourth quarter call for EPS of $0.01 on revenue of $48.8 billion. For the full-year, analysts are looking for a net loss of $0.34 on revenue of $180.6 billion. The revenue estimates are about 27% lower year over year for the quarter and 32% lower for the full year. Shares are trading at roughly 24 times expected EPS for 2021 and 13 times estimated earnings for 2022. The 52-week range is $30.11 to $63.01, and the 12-month price target is $50.78. Exxon’s dividend yield is 7.76%.

Conoco

ConocoPhillips (NYSE: COP) is a pure-play oil and gas exploration and production company, unlike Exxon, BP or Chevron, all of which have downstream segments. The company just completed its $13 billion acquisition of Concho Resources to boost Conoco’s enterprise value to some $60 billion.

Shares dropped 36% of their value in 2020 and, after soaring to a year-to-date increase of nearly 20% in mid-January, have given back all but a small part of that gain. The sharp two-week drop is down to the more aggressive environmental agenda of the Biden administration signaled by the halting of the Keystone XL pipeline and the threat to dozens of other executive orders that the previous administration had released favoring fossil-fuel production.

Analysts expect Conoco to report a fourth-quarter net loss of $0.28 per share on revenue of $5.13 billion. Last year the fourth quarter produced EPS of $0.76 and sales of $8.14 billion. For the full year, Conoco is expected to post a net loss per share of $0.98, compared with a profit of $3.59 in 2019. Revenue is forecast to be lower by 49% at $18.7 billion.

Shares trade at a multiple of around 32 times expected 2021 earnings and 18 times expected 2022 earnings. The 52-week trading range is $20.84 to $61.15, and the stock traded on Monday at around $40. The consensus price target is $54.96, and Conoco pays a dividend yield of 4.3%.

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