5 Oil & Gas Stocks Likely To Surpass Q4 Earnings Estimates

The fourth-quarter earnings season for energy sector kicked off recently with a host of companies expected to release results by this weekend. Notably, extreme volatility in oil and natural gas prices might affect the industry players’ fortunes this time around.

Q4 Report Card: Volatile Oil, Gas Realizations

So, how does the oil and gas price compare with the year-ago valuations?

Per the U.S. Energy Information Administration, WTI prices started the fourth quarter of 2018 at $75.30 per barrel and exited the period at a moderate $45.41. Meanwhile, in 2019, prices were $53.62 a barrel at the onset of the fourth quarter and scaled up to $61.06 at the end of December, reflecting a steady improvement in the fundamentals.

However, the news is not rosy on the natural gas front.

In fourth-quarter 2018, natural gas prices were $3.09 per MMBtu in the beginning and fell gradually to end December at $2.94 per MMBtu. Coming to 2019, the fuel was trading even lower at $2.28 per MMBtu at the inception of October and struggled throughout the quarter to close at $2.18 per MMBtu.

The divergent oil and natural gas prices in the fourth quarter cannot conclusively predict the earnings trajectory for the period. Let’s take a glance at the scenario to date.

Picture Thus Far

The latest Earnings Preview indicated that the energy sector’s fourth-quarter 2019 earnings are expected to have plunged 47.2% from the year-ago reported figure. At the same time, the top line is likely to have declined 4.5%.

Notwithstanding this gloomy outlook, oilfield services giants Schlumberger (SLB - Free Report) and Halliburton (HAL - Free Report) delivered better-than-expected fourth-quarter earnings, attributable to a robust international market activity. The two energy bigwigs put up an impressive show with respective end-of-year numbers.

Handful of Energy Players Poised to Tide Over Pricing Volatility

Clearly, energy investors have ample reasons to worry about. But pricing volatility does not necessarily suggest that all energy scrips have lost potential. In fact, there are a number of companies that are likely to beat on the bottom line, benefiting from the improving oil price environment.

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