Hess Corp. (NYSE: HES) started things off Wednesday by reporting Q4 Non-GAAP EPS of $0.85, which beat the Wall Street consensus by $0.12, and revenue of $2.26B (+59.2% Y/Y), which beat by $290M.
When Chevron Corp. and Phillips 66 reported their earnings on Friday, they did very well. Chevron made a huge $5.1 billion profit and made more money than it has since 2014. Phillips 66 made $1.3 billion in profit in the fourth quarter and made $1.8 billion in operating cash flow. It also agreed to spend $1.9 billion on new projects. For the whole year of 2021, PSX made a record $6 billion in operating cash flow and made more money than ever.
Hess and a company called EOG Resources (NYSE: EOG) have broken with the industry trend of giving shareholders extra cash. A lot of money will be spent on capital projects in the next few years in order to increase production. Hess has set aside $2.6 billion for capital projects in 2022; that’s a 37% increase. Bakken will spend $790 million on capital projects in the next few years, up 75%. Hess plans to run three rigs in the Bakken to meet its goal of 168kb/d production. This is an increase of about 14% from the 148kb/d production rate in the third quarter.
Oil and gas prices have gone up, which means that the energy sector is likely going to have a great quarter.
There will be $28.5 billion in profits in Q4 2021, compared to a loss of $-0.1 billion in Q4 2020, FactSet says. A year-over-year growth rate isn’t being used because of the Energy sector’s loss in Q4 2020. Over the last year, the price of oil has gone up. This has led to a rise in earnings for the company over the last year.
This is because the average price of oil in Q4 2021 ($77.10) was 81 percent higher than the average price for oil in Q4 2020 ($42.70) in this area.
Every one of the five sub-industries in the sector is expected to report a rise in earnings over the last 12 months. For two of these five industries, growth is not being calculated because they lost money last year, so no growth rate is being calculated for them. However, both Integrated Oil Gas and Oil Gas Refining Marketing are expected to make money in the fourth quarter of 2021. Expect the oil and gas exploration and production, oil and gas equipment service, and oil and gas storage transportation subindustries to grow more than any other subindustries this year over the last year.
Expect Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX), and ConocoPhillips (NYSE: COP), as well as other oil and gas companies, to make more money than they did last year. The combined value of these three companies is $16.7 billion, which is a lot of money.
There was a $28.6 billion year-over-year rise in earnings for the sector.
For the “Big 3” in the U.S. oil and gas business, these are the predictions from Wall Street.
#1. ExxonMobil
Exxon Mobil Corporation (NYSE: XOM) is expected to report its earnings on Feb. 2 before the market opens, which is when the company does business. In December of 2021, the report will be out. Zacks Investment Research says that based on eight analysts’ predictions, the consensus EPS forecast for the quarter is $1.9. This is a big change from the EPS of $0.03 that was reported for the same quarter last year. Exxon has made more money than expected in each of the last four quarters.
When Exxon Mobil announced its quarterly dividend on Wednesday, it was the same as the last one and had a 4.75 percent yield in the future, which is the same as the previous one. This is the same as the last dividend.
Exxon Mobil plans to start making oil from its second oil platform in Guyana next month, Reuters says.
The second floating production storage and offloading vessel, Liza Unity, is reportedly going to almost triple production this year to 340K boe/day from 120K boe/day. It will include oil and gas from the Fangtooth-1 and Lau Lau-1 wells, which were both made public this month, as well as oil and gas from other wells.
A third FPSO vessel, called Prosperity, is being built and is expected to deliver its first oil in 2024. The Exxon-led consortium wants to put 7 to 10 platforms in Guyana.
One of our partners, Hess Corp. (NYSE: HES), has said that by 2027, the Stabroek oil and gas field in Guyana will be producing 1 million barrels of oil and gas a day. This is a lot of oil and gas!
It’s been a good year for XOM shares.
#2. Chevron
People who own shares of Chevron Corporation (NYSE: CVX) saw their earnings before the market opened on Friday. In this case, the consensus EPS estimate was $3.13, and the consensus revenue estimate was $45.22B (+79.1% Y/Y). Shares of Chevron fell on Friday because some expectations were not met. The company had its best quarter since 2014.
It earned $2.56 per share, which was less than the $3.12 per share analysts thought it would. But revenue was higher than expected, coming in at $48.13 billion, instead of the expected $45.69 billion. So, it’s a mix. During the whole year, the company made $21.1 billion in free cash flow and paid off $12.9 billion in debt. This is how it looked: For the whole year, Chevron made $15.6 billion, while 2020 lost $5.5 billion.
It has also decided to raise its quarterly dividend by 8 cents, or 6 percent, to $1.42 per share. This means that shareholders will get more money.
This is how CVX has done over the last two years: It has beaten EPS estimates 63% of the time and beaten revenue estimates 25% of the time.
Most of the money was spent by Chevron at a federal auction of oil leases in the Gulf of Mexico in November. They spent $47 million. There were more than 300 drilling blocks that covered more than 1.7 million acres of federal waters that were sold.
After cutting back on spending in 2020, Chevron has announced a $15B capex budget for FY22, which is up 20% from the budget for 2021 but falls short of its $15B-$17B range. This includes $8 billion for the company’s upstream business, which will go toward assets that are already producing and new projects in the company’s Permian Basin, as well as other projects.
CVX shares have risen 8.4% this year.
#3. ConocoPhillips
ConocoPhillips, a company based in Houston, Texas, is expected to report its earnings on Feb. 3 before the market opens, which is when the company does business. In December of 2021, the report will be out.
If eight analysts agree on a figure for the company’s earnings per share (EPS), Zacks Investment Research says that figure is $2.2. EPS for the same quarter last year was $-0.19. ConocoPhillips has made more money than expected in each of the last four quarters.
