Oil Majors Are Primed For A Massive Earnings Season

Posted by Alex Kimani, oilprice.com

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Earnings season is here with us once again, with a quarter of S&P 500 companies having reported second-quarter 2021 earnings. According to FactSet data, 88% of S&P 500 companies have reported a positive EPS surprise, while 86% have reported a positive revenue surprise.

The good news for oil and gas investors: The long-suffering sector is on course for a repeat of a stellar first quarter by posting blowout earnings, again, in large part due to an increase in oil and gas prices.

Three-quarters of energy companies that have reported earnings have exceeded expectations, while half have managed to surpass revenue expectations.

Even better: The energy sector’s expected revenue growth of 92.1% is a high watermark for the entire U.S. market.

The energy sector is expected to report earnings of $13.9 billion for Q2 2021 compared to a loss of -$10.6 billion in Q2 2020, thanks to vast improvements in commodity prices especially crude, which averaged $$66.17/bbl in Q2 2021 compared to $28/bbl in Q2 2020 and $61/bbl in Q1 2021.

All five sub-industries of the energy sector, namely Integrated Oil & Gas, Oil & Gas: Exploration & Production, Oil & Gas Refining & Marketing, Oil & Gas Equipment & Services and Oil & Gas Storage & Transportation, are reporting (or are projected to report) a year-over-year increase in earnings.

Here’s where it gets interesting: American oil and gas supermajor ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) are expected to be the largest contributors to the improved earnings for the sector, with the two companies expected to account for $13.3 billion of the $24.6 billion year-over-year increase in earnings for the sector...read more.