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Alaska independents rise above peers As earnings season approaches, oil and gas companies doing business in the northernmost state beat average; outside Alaska only Apache expected to see an increase over second quarter Ray Tyson Petroleum News Houston Correspondent
Profits for seven of the largest U.S-based exploration and production independents that do business in Alaska should handily beat on average other sector-leading companies tracked by Petroleum News, according to Thompson-First Call earnings estimates for the 2005 second quarter ending June 30.
Supported largely by unprecedented strength in oil and gas prices, independents in Petroleum News’ 20-company survey, including those that have a presence in Alaska, are expected to report 2005 second-quarter profits on average roughly 4.5 percent above the previous quarter and around 37 percent higher than the same quarter last year.
Analysts’ estimates for individual companies can be higher or lower than the consensus and tend to change as the reporting season approaches. Estimates also generally exclude one-time charges against earnings and other special items.
Major U.S.-based exploration and production independents that do business in Alaska are Anadarko Petroleum, Kerr-McGee, Pioneer Natural Resources, Devon Energy, Unocal, XTO Energy and Forest Oil. They maintain positions in either the Cook Inlet or on the North Slope.
Others in the quarterly survey are big independents Apache, Burlington Resources, Chesapeake Energy, Noble Energy and EOG Resources, as well as smaller independents Newfield Exploration, Pogo Producing, Cabot Oil & Gas, St. Mary Land & Exploration, Stone Energy, Spinnaker Exploration, Remington Oil & Gas and Houston Exploration.
Several companies that make up the Alaska group are expected to report lower 2005 second-quarter earnings versus the prior quarter. However, the group on average should out-perform its peers by around 12 percent in the 2005 second quarter, according to analysts’ consensus estimates.
Pioneer is expected to turn in a 2005 second-quarter profit of about 68 cents per share compared to 58 cents per share in the previous quarter and 58 cents per share in the year-ago quarter. The company is expected to earn around 76 cents per share in the 2005 third quarter, up 11.7 percent from this year’s second quarter. Some down from first quarter Anadarko’s expected profit of $2.02 per share for the 2005 second quarter would be slightly below $2.05 per share earned in the previous quarter. But it would be up significantly from $1.59 per share earned in the year-ago period. Moreover, Anadarko’s 2005 third-quarter profit is expected to come in around $2.09 per share, up about 2 percent from the second quarter.
Kerr-McGee’s expected 2005 second-quarter profit of $2.28 per share would be significantly below the company’s $2.42 per-share performance in this year’s first quarter, but well above the company’s $1.09 per share in last year’s second-quarter. Kerr-McGee also could earn about $2.32 per share in the 2005 third quarter, up 4 cents per share from the second quarter.
Devon, largest of the U.S.-based independents, should earn about $1.20 per share in the 2005 second quarter, up from $1.12 per share in the previous quarter and up significantly from $1.01 per share in last year’s second quarter. However, the company’s profit could slip to $1.16 per share in the upcoming third quarter, down about 3 percent from the second quarter.
XTO’s profit for the 2005 second quarter should increase to 59 cents per share from 54 cents per share in the prior quarter and from 41 cents per share in the year-ago quarter. However, company earnings in the 2005 third quarter could be flat to the second quarter.
Forest should see a significant earnings improvement of 87 cents per share in the 2005 second quarter, up from 72 cents per share in the previous quarter and up from 52 cents per share in the 2004 second quarter. However, earnings could drop about 3 cents per share in the 2005 third quarter.
Meanwhile, 2005 second-quarter earnings for Alaska Cook Inlet-operator Unocal, which is weighing separate bids for the company from Chevron and Chinese state oil company CNOOC, is expected to turn in 2005 second-quarter earnings of $1.36 per share, down significantly from $1.62 per share in the previous quarter but also up significantly from 86 cents per share a year earlier. However, the company is expected to report earnings of around $1.31 per share in the 2005 third quarter, down about 4 percent from the second quarter. Outside Alaska Among the remaining large U.S. independents that do not operate in Alaska, Apache is the only one expected to see an increase in 2005 second-quarter earnings over the previous quarter, from $1.67 per share to roughly $1.73 per share. The company’s 2005 second-quarter profit also should be significantly above $1.21 in the year-ago quarter. However, Apache’s 2005 third-quarter earnings could drop to $1.65 per share, down about 6 percent from this year’s second quarter.
Chesapeake’s profit for the 2005 second quarter is expected to come in around 44 cents per share, down from 56 cents per share in the 2005 first quarter but up significantly from 33 cents per share in the 2004 second quarter. The company could post about 48 cents per share in the 2005 third quarter, up 9 percent from the previous quarter.
Burlington is expected to report a 2005 second-quarter profit of about $1.16 per share, down from $1.21 per share in the previous quarter but up significantly from 96 cents per share in the 2004 second quarter. The company’s expected 2005 third-quarter profit of $1.12 per share, down about 3.4 percent from the second quarter.
Noble Energy’s expected 2005 second-quarter earnings of $1.75 per share would be down from the prior quarter’s $1.83 cents per share but up from $1.22 per share in the year-ago quarter. The company could earn around $1.92 per share in the 2005 third quarter, up nearly 10 percent from the second quarter.
EOG is expected to earn about 85 cents per share in the 2005 second quarter, down slightly from 86 cents per share in the previous quarter and up significantly from 52 cents per share in the 2004 second quarter. The company’s third-quarter profit is expected to be roughly flat with the previous quarter.
For the most part, smaller independents included in Petroleum News’ 2005 second-quarter earnings survey are expected to surpass their financial performances in both the 2005 first quarter and 2004 second quarter, according to analysts’ consensus estimates.
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