Shares of ExxonMobile (XOM) have gained 1.8% to $90.41 today after the energy behemoth reported better-than-expected earnings.
Agence France-Presse/Getty Images Reuters has the details on Exxon’s numbers:
Third-quarter oil and natural gas output rose 1.5 percent from a year earlier to 4 million barrels oil equivalent per day, helped by the start-up of new projects, the Irving, Texas, company said.
Natural gas from Australia’s Kipper Tuna Turrum project and accelerated output from projects in Nigeria and Canada also contributed to the higher production.
Profit in the third quarter was $7.87 billion, or $1.79 per share, compared with $9.57 billion, or $2.09 per share, a year earlier.
Analysts on average had expected $1.77 per share, according to Thomson Reuters I/B/E/S.
“Weaker margins, mainly in refining, decreased earnings by $2.4 billion,” Exxon said in a statement.
S&P Caiptal IQ’s Michael Kay says not to worry about refining:
Q3 EPS of $1.79, vs. $2.09, falls $0.08 short of our view, on upstream price realizations. Downstream and chemicals were better than we projected. Overall oil and gas production met forecasts and the mix was more favorable, as oil volumes (up 3%) beat and natural gas (down 1%) fell. XOM highlights its 41-rig onshore U.S. program, noting production of 65 MBOE/day at Bakken and over 90 MBOE/d from Permian. The Kearl project (58% complete) is producing 100 MBOE/d. We see onshore liquids growth and several expected project start-ups driving production gains between ’14-’17.
Kay maintained his buy rating on Exxon.
Exxon’s not the only strong energy stock today. Hess (HES) has gained 1.7% to $81.784 after it was upgraded by Credit Suisse, while ConocoPhillips (COP) has risen 1.1% to $74.07 after beating earnings estimates.
Credit Suisse explains why it raised Hess to Outperform from Neutral:
We are raising our NAV to $112/sh for HES on the basis of (1) better Bakken Well costs; (2) higher Bakken drilling activity; and (3) more credit for the Utica. With disposal proceeds still to come, the balance sheet is being derisked and growth through 2018 looks assured. The pro forma EV/CF multiple in 2014 looks too low. HES should outperform the Majors. While HES is not a pure play shale company and the returns on the Bakken are not as good as other plays, supporting a lower overall multiple, we see 25% upside through the next 6 months. Our $100/sh target represents a 12% discount to NAV, the typical point at which SOTP stories run out of steam.
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