4 Energy Stocks Set To Top Earnings Estimates In Q4

Major energy players are gearing up to report Q4 results, with Kinder Morgan, Inc. (KMI) having released the numbers on Jan 16. The sector is expected to report year-over-year earnings growth of 68.3% on 14.6% revenue growth.

Before delving into details on stocks that are poised to trump estimates, let’s quickly discuss the crude and natural gas pricing scenario of Q4.

How Oil & Gas Fared in Q4

In fourth-quarter 2018, the West Texas Intermediate (WTI) crude plunged from a multi-year high of $76.40 a barrel in early October to below $45 in late December, per the U.S. Energy Information Administration (EIA).

Soft demand outlook on fears of global economic slowdown kept energy stocks under pressure. Notably, the enforcement of sanctions against Iran — one of the leading oil producers in the world — by the United States last November could not keep oil price from plunging. This was because Washington issued sanction waivers to several countries to continue importing oil from Iran, till mid-2019.

Despite the free fall, the average WTI oil prices for October and November of 2018 were recorded at $70.75 and $56.96 per barrel, higher than $51.58 and $56.64 for the respective months of 2017, EIA added. However, the average crude price for December 2018 declined year over year.

Natural Gas

Per EIA, the average natural prices for the months of October, November and December of 2018 were reported at $3.28 per Million Btu, $4.09 per Million Btu and $4.04 per Million Btu, higher than $2.88, $3.01 and $2.82 for the respective months of 2017.

What Awaits the Energy Players?

Although plummeting crude prices during the October-to-December quarter of 2018 should have hurt upstream businesses, a year-over-year uptick in prices in the initial two months may have helped explorers and producers.

It is to be noted that the largest oilfield service firm Schlumberger Limited SLB expects demand and pricing for North American oilfield services to have been weak in the October-to-December quarter, as the pipeline bottleneck problem in the prolific Permian Basin and declining well productivity are likely to have hurt crude production volumes.

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