Oil futures are trading higher on Wednesday, with Brent futures gaining $1.18 at $107.82 a barrel and the United States West Texas Intermediate futures adding $1.15 to trade at $103.08 a barrel. Oil prices climbed as the United States and its allies prepared new sanctions against Russia over civilian killings in northern Ukraine, adding to supply concerns.
Furthermore, the United Nations has orchestrated a two-month truce between the Saudi-led coalition and the Houthi group aligned with Iran. The conflict has led to attacks on Saudi oil facilities, thereby adding to the existing supply disruption from Russia.
With the U.S. Energy Information Administration (EIA) expecting the Brent Crude to surge up to $116 per barrel in the second quarter of 2022, we think oil and gas stocks Exxon Mobil Corporation (XOM), TotalEnergies SE (TTE), Shell plc (SHEL), Schlumberger Limited (SLB), and Diamondback Energy, Inc. (FANG) might be solid additions to one’s portfolio this month.
Exxon Mobil Corporation (XOM)
XOM engages in the exploration and production of crude oil and natural gas in the United States and globally. The Irving, Tex., company operates through the broad segments of Upstream; Downstream; and Chemical. It also manufactures, trades, transports, and sells crude oil, natural gas, and petrochemicals.
On April 4, XOM announced its final investment decision for the Yellowtail development offshore Guyana after receiving government and regulatory approvals. The Stabroek Block is expected to produce approximately 250,000 barrels per day starting in 2025. This might create long-term benefits for the company.
On March 2, XOM announced its plan to construct a hydrogen production plant at its integrated refining and petrochemical site at Baytown, Tex. This is expected to help the company reduce emissions from its operations. Also, on February 25, XOM announced that it had made a final investment decision for expanding carbon capture and storage at its LaBarge, Wyo., facility. The expansion is expected to reduce emissions and help the company continue its large-scale capability.
For its fiscal fourth quarter of 2021, XOM’s total revenues and other income increased 82.6% year-over-year to $84.97 billion. Its net income attributable to XOM rose 144.2% from the prior-year quarter to $8.87 billion, while earnings per common share improved 144.3% from the same period in the prior year to $2.08.
The $2.11 consensus EPS estimate for the quarter ended March 31, 2022, indicates a 224.6% year-over-year increase. The $93.40 billion consensus revenue estimate for the same quarter reflects an improvement of 71.1% from the prior-year period. Furthermore, XOM has an impressive surprise earnings history; it has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 46.4% in price over the past year and 35.2% year-to-date to close yesterday’s trading session at $82.73.
XOM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
XOM has an A Momentum grade and a Growth and Quality grade of B. In the 96-stock Energy – Oil & Gas industry, it is ranked #37. The industry is rated B.
Click here to see the additional POWR Ratings for XOM (Value, Stability, and Sentiment).
TotalEnergies SE (TTE)
TTE is an integrated oil and gas company that operates through five segments: Exploration & Production; Integrated Gas; Renewables & Power; Refining & Chemicals, and Marketing & Services. The company is headquartered in Paris, France.
On March 31, TTE and Sempra (SRE) announced the expansion of their North American strategic alliance by signing two Memoranda of Understanding (MoU). The agreement aligns with the company’s goal of becoming a global multi-energy company.
On February 10, TTE announced that it had signed a definitive agreement with SunPower Corporation (SPWR), a solar technology and energy services provider with TTE as the majority shareholder, to purchase its Commercial & Industrial Solutions (CIS) business for $250 million. The acquisition is expected to allow TTE to extend its distributed generation business footprint to the U.S. and develop more than 100 MW of additional capacity per year.
TTE’s revenues from sales increased 70.9% year-over-year to $55.30 billion in its fiscal fourth quarter of 2021. Its adjusted net income and adjusted EPS came in at $6.83 billion and $2.55, respectively, up 423.4% and 454.3% from the prior-year quarter.
The $2.55 consensus EPS estimate for its fiscal quarter ended March 31, 2022, indicates a 131.8% year-over-year increase. Likewise, the $55.13 billion consensus revenue estimate for the same quarter reflects a rise of 52.8% from the prior-year quarter. Furthermore, TTE has an impressive surprise earnings history; it has topped consensus EPS estimates in three out of the trailing four quarters.
Over the past year, the stock has gained 9% in price to close yesterday’s trading session at $50.19. It has gained 1.5% year-to-date.
It is no surprise that TTE has an overall B grade, which translates to Buy in our POWR Ratings system. TTE has a Momentum grade of A. It is ranked #9 in the Energy – Oil & Gas industry.
Click here to see the additional POWR Ratings for TTE (Growth, Value, Stability, Sentiment, and Quality).
Shell plc (SHEL)
SHEL, which is headquartered in London, operates as an energy and petrochemical company in several parts of the world. The company operates through the segments of Integrated Gas; Upstream; Marketing; Chemicals and Products; and Renewables and Energy Solutions.
On February 3, SHEL announced the commencement of an $8.50 billion share buyback program for the first half of 2022. The company intends the program to finish before its second quarter results, and it might increase shareholder value.
For its fiscal fourth quarter of 2021, SHEL’s revenue increased 93.9% year-over-year to $85.28 billion. Its adjusted earnings rose 1,526.2% from the prior-year quarter to $6.39 billion. And its adjusted EPS improved 1,560% from the same period in the prior year to $0.83.
The $1.85 consensus EPS estimate for the quarter ended March 31, 2022, indicates a 125.6% year-over-year increase. The $88.28 billion consensus revenue estimate for the same quarter reflects a 58.6% improvement from the prior-year period. In addition, SHEL has topped consensus EPS estimates in three out of the trailing four quarters.
Over the past year, SHEL has gained 37.9% in price and 11.2% over the past month to close yesterday’s trading session at $54.91.
This promising outlook is reflected in SHEL’s POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
SHEL has a Momentum grade of A and a Sentiment grade of B. It is ranked #19 in the Energy – Oil & Gas industry.
Click here to see the additional POWR Ratings for Growth, Value, Stability, and Quality for SHEL.
Schlumberger Limited (SLB)
Paris, France-based SLB operates as a technology provider for the global energy industry. The company operates through four broad divisions of Digital & Integration; Reservoir Performance; Well Construction; and Production Systems.
On March 10, SLB announced the expansion of its INNOVATION FACTORI network with the opening of a new center in Houston, Tex. Rajeev Sonthalia, president, Digital & Integration, SLB, said, “Through INNOVATION FACTORI, customers can turn promising concepts into fully deployed digital solutions that extract maximum value from data to drive a major leap in business performance and, in turn, sustainability.”
On March 8, SLB declared the launch of the Schlumberger End-to-end Emissions Solutions (SEES), which can offer a comprehensive set of services and technologies to provide operators a solution for measuring, monitoring, reporting, and eliminating methane and routine flare emissions from their operations. The new solution might add to the company’s revenue stream.
SLB’s revenue increased 12.5% year-over-year to $6.23 billion in its fiscal fourth quarter, ended December 31. Its net income and EPS, both excluding charges and credits, came in at $587 million and $0.41, respectively, up 90% and 86.4% from the prior-year quarter.
The Street’s $1.68 EPS estimate for its fiscal year 2022 reflects a 43.6% year-over-year improvement. And the Street’s $23.67 billion revenue estimate for the same year indicates a 13.4% rise from the prior year. SLB has beaten consensus EPS estimates in three out of the trailing four quarters.
SLB’s shares have gained 46.9% in price over the past year and 35.1% year-to-date to close yesterday’s trading session at $40.46.
SLB has an overall B rating, which translates to Buy in our POWR Rating system. The stock has an A grade for Momentum and a B grade for Growth and Quality. In the 42-stock Energy – Services industry, it is ranked #10.
To see the additional POWR Ratings for Value, Stability, and Sentiment for SLB, click here.
Diamondback Energy, Inc. (FANG)
FANG in Midland, Tex., is an independent oil and gas company that acquires, develops, explores for, and exploits unconventional and onshore oil and gas reserves in the Permian Basin, located in West Texas.
On March 3, FANG announced the pricing of 4.250% senior notes that mature on March 15, 2052. The company intends to use the net proceeds from the offering to redeem all its outstanding 4.750% senior notes due 2025. For its fiscal fourth quarter, ended December 31, FANG’s total revenues increased 162.9% year-over-year to $2.02 billion. Its net income and earnings per common share stood at $1.05 billion and $5.54, respectively, up substantially from their negative year-ago values.
Analysts expect FANG’s EPS to increase 106.1% year-over-year to $4.74 for the quarter ended March 31, 2022. And the Street expects FANG’s revenue to improve 60.2% from the prior-year quarter to $1.90 billion. FANG has topped consensus EPS estimates in each of the trailing four quarters.
FANG’s stock has gained 79.7% in price over the past year and 25.6% year-to-date to close yesterday’s trading session at $135.48.
FANG has an overall B rating, which equates to Buy in our proprietary rating system. FANG has a Momentum grade of A and a Growth, Sentiment, and Quality grade of B. It is ranked #30 in the Energy – Oil & Gas industry.
In addition to the POWR Rating grades we have shown above, one can see FANG ratings for Value and Stability here.
XOM shares were trading at $84.25 per share on Wednesday morning, up $1.52 (+1.84%). Year-to-date, XOM has gained 39.21%, versus a -5.95% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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