2022 has been an interesting year for oil.
In 2021, a barrel of crude oil cost about $68.17 on average. And in the height of the pandemic in 2020, the price of crude oil was about $39.68 on average.
Today, a barrel of oil can reach almost $130 in the U.S. Internationally, brent crude oil prices averaged almost $117 per barrel in March, according to the U.S. Energy Information Administration’s (EIA) Short-Term Energy Outlook
The war in Ukraine has played a big part in the climbing oil prices. Big energy giants, like Shell plc (SHEL), BP p.l.c. (BP) and Exxon Mobil Corporation (XOM), all of which we’ll look at today, pulled out of their Russian oil deals. The U.S. banned imports of Russian oil and petroleum products, causing a supply shortage. Because of this, consumers have suffered at the gas pumps.
While the energy sector struggled during the height of the COVID-19 pandemic, it’s staged a stunning turnaround this year. As you can see in the chart below, the Energy Select Sector SPDR Fund (XLE), which tracks energy stocks, is up a whopping 48% year-to-date, while the S&P 500 is down 12% over the same time period.
Oil prices have leveled off a bit recently, as just last week, oil fell more than 6% to $95.25 per barrel, a level it hasn’t seen since April 12. Overall, though, energy is still trouncing the S&P 500.
Recently, several big oil companies released their latest earnings reports. So, in today’s Market360, let’s see how their numbers stack up.
Exxon Mobil Corp (XOM): Earnings Announced on Friday, April 29
Exxon reported earnings for its first quarter in fiscal year last Friday. The company posted earnings of $2.07 per share, missing analysts’ estimates of $2.12 per share by 2.4%. However, earnings still grew 218% year-over-year, up from earnings of $0.65 per share in the same quarter of last year. Revenue came in at $90 billion, up from revenue of $59.147 billion in the same quarter a year ago.
“Earnings increased modestly, as strong margin improvement and underlying growth was offset by weather and timing impacts,” said CEO Darren Woods in the company’s earnings statement.
CFO Kathy Mikells cited some unexpected weather issues and the changes the spike in oil prices made to the energy derivatives markets as the chief reasons for the earnings miss.
The company also announced that it will increase its share buyback program to $30 billion in 2023, up from $10 billion this past October. It also reported a $3.4 billion after-tax charge after abandoning its Russian Sakhalin-1 project.
Looking forward, XOM is planning to build a world-scale blue hydrogen plant as part of its efforts for lower emissions. The project is supported by one of the largest carbon capture and storage projects located in Texas.
For the next quarter, analysts are calling for earnings of $2.52 per share on revenue of $99.61 billion.
The stock dipped just over 2% after earnings but has since gained XX% over the past week.
BP plc (BP): Earnings Announced on Tuesday, May 3
BP reported earnings for the first-quarter 2022. The company posted earnings of $1.92 per share, beating analysts’ estimates of $1.35 per share by 42%. Revenue came in at $51.22 billion.
The company also updated investors on its ties to Russia. BP took a hit of over $24 billion for abandoning its business with Russian oil companies, namely its nearly 20% stake in Russian oil giant Rosneft. It cost the company $24.4 billion in an after-tax charge and the company reported a loss of $20.4 billion.
“We took the decisions to exit Russia within 96 hours of the invasion happening and today you’re seeing the financial implications of that decision,” BP CEO Bernard Looney told CNBC on Tuesday.
But the real news came in the company’s profits. Profits soared over 138% to $6.2 billion, up from last year’s $2.6 billion. This is the highest profit the company has seen in a decade and the results can be attributed to the higher oil and natural gas prices, as well as good performance in the buying and selling of such things.
The company announced an increase in its dividend to $5.46 per share, payable in June 2022 and up from $5.25 per share a year ago. It also announced a further $2.5 billion in share buybacks, up from $1.6 billion.
The stock spiked almost 8% after earnings. Looking to the next quarter, analysts estimate earnings of $1.6 per share on revenue of $66.56 billion.
Devon Energy Corporation (DVN): Earnings Announced on Tuesday, May 3
Devon Energy reported strong production figures, which led to stunning earnings results for the first quarter. The company produced an average 575,000 barrels of oil equivalent during the quarter, and oil accounted for about 50% of volume.
For the first quarter, Devon Energy also achieved core earnings of $1.88 per share, or 317.8% year-over-year earnings growth. The consensus estimate called for earnings of $1.75 per share.
The company added 65 new wells to the Delaware Basin, a big help to the company’s earnings.
Devon Energy also announced that it will pay a dividend of $1.27 per share on June 30. That represents a 27% increase from the previous quarter’s dividend. All shareholders of record on June 13 will receive the dividend.
The stock jumped 9.7% after earnings were announced. For the second-quarter 2022, analysts are calling for earnings of $2.2 per share on revenue of $4.57 billion.
ConocoPhillips (COP): Earnings Announced Thursday, May 5
ConocoPhillips has benefitted immensely from the rising crude oil prices in 2021 – at the end of 2021, it had 6.1 billion barrels of oil equivalent in its reserves.
And on Thursday, COP smashed analysts’ expectations for its first quarter in fiscal year 2022. First-quarter earnings soared 480% year-over-year to $5.8 billion, or $4.39 per share, up from $1.0 billion, or $0.75 per share, in the same quarter a year ago. First-quarter adjusted earnings jumped 373.9% year-over-year to $3.27 per share, which beat estimates for $3.03 per share by 7.9%.
ConocoPhillips noted that it produced 1.75 million barrels of oil equivalent per day in the first quarter. For the second quarter, the company expects production to be between 1.67 million and 1.73 million barrels of oil equivalent per day.
During the quarter, ConocoPhillips returned $2.3 billion to shareholders. The company also plans to pay a dividend of $0.46 per share on June 1. All shareholders of record on May 17 will receive the dividend. The company will also pay a variable third-quarter dividend of $0.70 per share on July 15 to all shareholders of record on June 28.
For the next quarter, analysts expect earnings of $3.50 on revenue of $17 billion.
Shell PLC (SHEL): Earnings Announced on Thursday, May 5
Shell reported blowout results for the first quarter. The company reported earnings of $0.94 per share, up 29% from earnings of $0.82 per share a year ago. Revenue came in at $83 billion.
The company’s adjusted earnings of $9.1 billion reflect its biggest ever quarterly profit, nearly tripling last year’s $3.2 billion for the same quarter a year ago. Shell cut costs during the pandemic and coupled with the higher energy prices it was able to see these stunning results.
The oil giant also increased its share buybacks to $4.5 billion, up from $4 billion in the first quarter. These buybacks are forecasted to be completed before the second-quarter earnings announcement for the quarter ending in June 2022.
Like many of the other big oil companies, Shell was impacted by its business in Russia. The company took a $4.2 billion hit in pretax write-offs after exiting its business with Russia. Shell plans to cease all of its long-term Russian crude oil contracts by the end of the year and end importing refined Russian oil products, though it does plan to remain in contracts with two “small, independent Russian producers.”
Ben van Beurden, the company’s chief executive, said in a statement that the war in Ukraine has shown “secure, reliable and affordable energy simply cannot be taken for granted.”
Shell also upped its dividend by 4% to $0.25 per share.
For the next quarter, analysts expect earnings of $1.99 per share on revenue of $110.08 billion in revenue
EOG Resources Inc (EOG): Earnings Announced on Friday, May 6
EOG Resources, Inc. opened slightly higher Friday morning after the company posted better-than-expected earnings for its latest quarter. First-quarter adjusted earnings soared 148% year-over-year to $2.35 billion, or $4.00 per share, compared to $946 million, or 1.62 per share. Analysts expected adjusted earnings of $3.72 per share, so EOG Resources topped estimates by 7.5%.
EOG Resources also noted that it will pay a quarterly dividend of $0.75 per share on July 29 to all shareholders of record on July 15. The company will also pay a special dividend of $1.80 per share on June 30 to all shareholders of record on June 15.
“EOG is off to a great start in 2022. We extended our track record of reliable execution with strong first quarter results…Despite challenges from rising inflation and supply chain constraints since we announced our 2022 plan at the start of the year, we remain well positioned to deliver within our production and capital expenditure targets,” CEO Ezra Yacob said in the company’s earnings release.
For the next quarter, analysts call for earnings of $4.15 per share on revenue of $6.24 billion.
Folks using my Portfolio Grader would have known that these oil giants were good buys heading into their earnings announcements. As you can see below, all but BP hold an A-rating. BP has a B-rating, so it’s still a good buy.
The reality is the oil and energy industries are offering great investment opportunities in the current inflationary environment. It’s why I’ve been steadily adding new oil and energy-related names to my Growth Investor Buy Lists. In fact, just last Friday I revealed five exciting new buys in my Growth Investor Monthly Issue for May – two energy-related stocks and one chemical company, as well as an oil and gas company and a metals company. I also shared my latest Top Stock lists.
So, if you’re not sure where to look for other good buys, you’ll want to consider my Growth Investor Buy Lists. If you join me at Growth Investor today, you’ll still be able to invest in these names while they still trade below my buy limits.
P.S. On Tuesday, my InvestorPlace colleague Luke Lango called for an urgent briefing – Divergence 2022 – in order to show folks how to prepare for what could be the biggest wealth-building opportunity of the century. I was fortunate enough to be able to join Luke by patching in from my Florida home. Luke calls this opportunity the “Divergence Window,” and he says these once-a-decade events are able to produce massive gains on the back of market volatility.
In fact, these “Divergence Windows” are when I’ve locked in some of my best gains, too. Also during the briefing, Luke revealed his top pick to play the emerging Divergence Window of 2022 for the shot at up to 1,000% gains within the next 12 months. If you missed the event, you can click here to watch the 1,000% Divergence Window Official Broadcast.
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below: