Marathon Petroleum’s refinery in Los Angeles. The oil company has benefited from the increase in demand for petroleum products like diesel fuel.
Robyn Beck/AFP/Getty Images
Some energy companies have already reported first-quarter earnings, but the bulk of the releases will come in the next few weeks. With oil and gas prices rising to multi-year highs, it’s expected to be another very profitable quarter for the industry.
Exxon Mobil (ticker: XOM), the largest of the bunch, reports on Friday.
Some large-cap companies are heading into earnings with particularly strong momentum, as analysts have steadily increased their estimates. We screened for energy companies in the S&P 500 whose earnings estimates have been upgraded the most by analysts since the start of the year. These five topped the list.
High Hopes
Analysts are increasingly optimistic about earnings for these energy stocks
| Company / Ticker | Price | Market Cap (B) | Latest Q1 EPS estimate | EPS Estimate Growth* |
|---|---|---|---|---|
| Marathon Petroleum / MPC | $87.08 | $49 | $1.32 | 144.0% |
| Occidental Petroleum / OXY | 56.62 | 53 | 1.99 | 88.0 |
| Marathon Oil / MRO | 25.00 | 18 | 0.94 | 74.9 |
| APA Corp./ APA | 40.71 | 14 | 2.23 | 54.8 |
| Hess/HES | 106.45 | 33 | 1.12 | 52.2 |
*Change in analyst estimates from start of year through April 22
Source: Factset
Marathon Petroleum
(MPC) is one of the country’s largest oil refiners, and it’s benefited from the increase in demand for petroleum products like diesel fuel. Like other U.S. refiners, Marathon has access to relatively cheap and plentiful domestic natural gas, which the company uses to power its operations. With Europe increasingly dependent on oil products from the United States, Marathon is well-situated to pump out cash. Its shares are up 40% this year.
Occidental Petroleum (OXY) is a multifaceted energy company, with chemicals and pipelines operations along with oil production. The company has also pushed ahead aggressively with low-carbon businesses including carbon capture projects. While its ill-timed purchase of Anadarko Petroleum in 2019 loaded the company with debt ahead of the pandemic, oil price increases have helped it pay off the debt. Shares have jumped 72% in 2022.
APA Corp. (APA) is a producer with operations in the U.S. and overseas, including in Europe and off the coast of Suriname in South America. That gives the company exposure to resources all over the world, including projects that could remain productive for many years–a plus at a time when some analysts are anxious that too few U.S. producers are investing in future supply. Earlier this year insiders at the company bought shares, which is often a bullish sign for stocks.
Marathon Oil (MRO) is another producer that has benefited from price increases. Marathon is focused on four major U.S. oil and gas plays, primarily in Texas, Oklahoma and North Dakota. Its stock has more than doubled over the past year.
Like APA, Hess (HES) has projects in the U.S. and overseas, including a major offshore deal in Guyana and projects in Malaysia and Libya. The Guyana project, a deal that also involves Exxon Mobil, could lead to oil production for a decade or more. Bank of America analyst Doug Leggate recently wrote that “we see the value of Hess’ portfolio improving over time, and the sustainability of free cash flow extending well beyond 2030.”
Write to Avi Salzman at [email protected]
