Q1 2015 A Total Bloodbath For Oil & Gas Sector: Oppenheimer
Oppenheimer says look for a poor first quarter, but that things may start looking up for the O&G sector in the second half of 2015
A new report from Oppenheimer Holdings Inc. (NYSE:OPY) Equity Research pulls no punches in calling for losses from the large majority of the oil & gas exploration and production firms in the first quarter of 2015, but it also suggests that stabilizing oil prices and reduced costs could mean that things are looking up from here.
Oppenheimer analysts Fidel Gheit and Luis Amadeo highlight that first quarter earnings for the oil & gas sector are going to be a bloodbath. “The only good thing about 1Q15 is that it is over as we expect earnings to be at the lowest levels since 1Q09, with 11 of the largest 15 E&P companies we follow likely to report losses. Producers highly leveraged to oil prices, such as HES, MRO and MUR, are expected to report deep losses.”
Overview of the Oil & Gas sector
Major integrated companies are projected to report EPS that is 68% lower YOY and 45% lower sequentially, but no losses.Gheit and Amadeo note Exxon Mobil Corporation (NYSE:XOM) and Shell could see losses from operations in the Americas. In the Oppenheimer coverage universe, BP is anticipated to see the steepest declines followed by CVX because of their high leverage to oil prices. The analysts also project more capex and opex cuts in 2016 even if oil prices do stabilize.
The refiners are likely to be a mixed bag in the first quarter. The report points out that the Brent-WTI differential averaged $5.36/b in the first quarter, relative to $9.31/b a year ago and $2.98/b in the fourth quarter of 2014, and $5.84/b in 2014, compared with $5.43/b based on the current strip. For the first quarter, MPC is expected to report the highest year over year increase among peers followed by TSO. HFC and PSX are likely to report lower YOY earnings....MORE
