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Independents sparkle Nearly three-fold increase in earnings expected for U.S.-based companies Ray Tyson Petroleum News Houston Correspondent
U.S.-based exploration and production independents on average are expected to report over the coming weeks a nearly three-fold increase in earnings for the first quarter of 2004 versus the previous quarter, according to a Petroleum News survey of leading E&P companies based on Thompson-First Call estimates. (See related story on page 7.)
However, the consensus among industry analysts used in the survey also projected that earnings during the 2004 first quarter fell about 9 percent on average compared to the same quarterly period in 2003.
Moreover, analysts forecast that earnings for the 2004 second quarter will drop nearly 20 percent on average from the 2004 first quarter, due in part to a winding down of winter demand for natural gas and heating oil.
Nevertheless, it appears the E&P sector had a healthy 2004 first quarter resulting from oil and gas prices that began to surge during the latter half of the 2003 fourth quarter. In fact, all but one of the companies in the survey was expected to register an increase in profits during the recent quarter.
A consensus estimate represents the average earnings of all analysts polled on a particular company. Individual estimates can be higher or lower than the consensus and tend to change as reporting season approaches. Earnings estimates generally exclude special items and other charges taken by a company during a quarter. Kerr-McGee expected to be up 53 percent Among the large independents, Kerr-McGee is expected to report 2004 first-quarter net income of $1.32 per share, up 53 percent from 86 cents per share earned in the prior quarter and up 10 percent from $1.20 per share in last year’s first quarter.
Big natural gas producer Burlington Resources also is expected to report strong first-quarter earnings of around $1.57 per share, up about 35 percent versus $1.16 per share in the previous quarter but down slightly compared to the same period last year, according to analysts’ consensus estimates.
Anadarko Petroleum, compared to $1.17 per share in the 2003 fourth quarter, could see a 16 percent jump in 2004 first-quarter earnings to about $1.36 per share. But earnings could be about 6 percent below the $1.45 per share the company earned for the same period last year.
Apache also is expected to see its 2004 first-quarter profit increase roughly 16 percent to $1.01 per share from 87 cents per share in the previous quarter. That would put Apache’s net 4 cents above the 97 cents per share earned in the year-ago period. Devon could be up 7 percent, down nearly 30 percent from last year Devon Energy, the largest independent producer in the United States, could see 2004 first-quarter earnings of $1.74 per share, a 7 percent increase from reported 2003 fourth-quarter earnings of $1.62 per share. However, based on consensus estimates, Devon’s 2004 first-quarter profit would be down nearly 30 percent compared to the same period last year.
Unocal’s profit for the 2004 first quarter is expected to come in around 77 cents per share, up about 22 percent from the previous quarter’s 63 cents per share, but down 11 percent from 87 cents per share in the year-ago quarter.
Noble Energy should turn in a strong performance across the board. The company could see its 2004 first-quarter profit rocket 48 percent to 92 cents per share from 62 cents per share in the previous quarter, and increase 29 percent per share from 71 cents in last year’s first quarter, according to analysts’ estimates.
EOG Resources, another big natural gas producer, is expected to weigh in with 2004 first-quarter earnings of about 88 cents per share, up 20 percent from 73 cents per share in the prior quarter, but about 30 percent below year-ago earnings of $1.25 per share.
Pioneer Natural Resources should post a modest 4 percent increase in earnings to around 50 cents per share in the 2004 first quarter, compared to 48 cents per share in the previous quarter. But compared to the year-ago quarter’s 58 cents per share, the company’s net income would be down about 14 percent.
XTO Energy, largely on production increases from acquisitions, also is among the few larger independents expected to post gains in the 2004 first quarter versus the previous quarter and the year-ago quarter. Analysts project the company will report about 51 cents per share in the first quarter, compared to 39 cents per share in the prior quarter and 31 cents per share a year ago.
Chesapeake Energy’s 2004 first-quarter net income is expected to increase slightly to 38 cents per share from 37 cents per share in the previous quarter. However, the company’s profit could be up about 65 percent versus 23 cents per share in the year-ago period. Newfield could jump 70 percent from last quarter By far, Newfield Exploration is expected to turn in the best performance among the middle-sized independents surveyed by Petroleum News. Newfield’s 2004 first-quarter net income could jump 70 percent to $1.34 per share, compared to 79 cents in the previous quarter, and increase 12 percent from $1.20 per share in the year-ago quarter.
Forest Oil’s net income in the 2004 first quarter is expected to rise 35 percent to 42 cents per share from 31 cents per share in the 2003 fourth quarter, but to decrease 42 percent compared to 73 cents per share in last year’s first quarter.
Tom Brown’s 2004 first-quarter profit could increase 40 percent to 76 cents per share from 54 cents per share in the previous quarter and increase 49 percent when compared to 51 cents per share in the year-ago quarter.
Coalbed methane producer Evergreen Resources is expected to check in with earnings of 43 cents per share for the 2004 first quarter, down slightly from 45 cents per share in the previous quarter and 45 cents per share compared to the same period last year.
Spinnaker Exploration’s 2004 first-quarter earnings are expected to come in around 40 cents per share, versus 19 cents per share in the previous quarter and 56 cents per share in the year-ago quarter.
Pogo Producing should post earnings of about 98 cents per share in the 2004 first quarter, compared to 86 cents per share in the previous quarter and $1.44 per share a year earlier.
Cabot Oil & Gas’ net income for the 2004 fourth quarter is expected to be around 50 cents per share, compared to 60 cents per share in the previous quarter and 69 cents per share in last year’s first quarter, according to consensus estimates.
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