Unlocking Potential: Hess and 4 Other Oil & Gas Companies Poised for Earnings Surge

by | Dec 12, 2023 | Oil Prices, Energy, Production, United States

The current year has posed challenges for oil and gas companies, with most expected to report weaker earnings due to falling commodity prices.

Unlocking Potential: Hess and 4 Other Oil & Gas Companies Poised for Earnings Surge

Introduction

The energy sector has faced a challenging few months with plummeting oil prices, causing energy stocks to underperform in the market. However, a silver lining may be on the horizon as we delve into the earnings potential of certain oil and gas companies. In this blog post, we’ll explore why earnings could be the catalyst for a rebound in the sector and highlight five companies, including Hess, that are on the brink of significant earnings growth.

The Current Energy Landscape

Over the last three months, energy stocks have struggled due to a decline in oil prices. Despite this, the focus on earnings might be the key to reversing this trend. The rebound of energy demand post covid restrictions and increased operational efficiency led to rising oil and gas earnings in 2021 and 2022.

The current year has posed challenges for oil and gas companies, with most expected to report weaker earnings due to falling commodity prices. However, a turnaround is anticipated in 2024, presenting a mixed bag of results. While some companies are expected to see modest increases, a select few are poised for stellar growth, contingent on strong commodity prices.

Companies on the Rise

Barron’s conducted a screening for oil and gas companies with market caps exceeding $5 billion, identifying five names with the highest expected earnings growth between 2023 and 2024. Let’s take a closer look at these promising entities:

1. Antero Resources (AR)

  1. Recent Price: $25.13
  2. Market Value: $7.6 billion
  3. 2023E EPS: $0.77
  4. 2024E EPS: $2.51
  5. Percent Earnings Growth: 228%
  6. 2024 P/E: 9.7

2. Hess (HES)

  1. Recent Price: $145.41
  2. Market Value: $44.7 billion
  3. 2023E EPS: $4.99
  4. 2024E EPS: $9.35
  5. Percent Earnings Growth: 87%
  6. 2024 P/E: 15.4

3. EQT (EQT)

  1. Recent Price: $40.85
  2. Market Value: $16.8 billion
  3. 2023E EPS: $2.27
  4. 2024E EPS: $3.94
  5. Percent Earnings Growth: 74%
  6. 2024 P/E: 10.2

4. Southwestern Energy (SWN)

  1. Recent Price: $6.83
  2. Market Value: $7.5 billion
  3. 2023E EPS: $0.65
  4. 2024E EPS: $1.03
  5. Percent Earnings Growth: 59%
  6. 2024 P/E: 6.5

5. Civitas Resources (CIVI)

  1. Recent Price: $69.03
  2. Market Value: $6.5 billion
  3. 2023E EPS: $10.20
  4. 2024E EPS: $16.09
  5. Percent Earnings Growth: 58%
  6. 2024 P/E: 4.3

Note: E=estimate

Source: FactSet

Natural Gas Producers and the Export Potential

Several of the highlighted companies are natural gas producers, and analysts are optimistic about natural gas prices in 2024. The U.S. is expected to add significant liquefied natural gas (LNG) export capacity, leading to increased export opportunities. With terminals along the Gulf Coast facilitating exports to European and Asian markets, the potential for higher prices becomes apparent.

Why This is Good for Oil and Gas Investors

For oil and gas investors, the prospect of rising earnings for companies like Hess signifies a lucrative opportunity. Hess, in particular, is on the brink of substantial growth, thanks to its involvement in a large offshore drilling program near Guyana. Collaborating with Exxon on this project, Hess is expected to witness accelerated growth, making it an attractive investment. Additionally, the acquisition deal with Chevron further positions Hess as a noteworthy player in the industry.

Conclusion

As we look ahead to 2024, the oil and gas sector may experience a resurgence, driven by anticipated earnings growth. Investors eyeing opportunities in companies like Hess could potentially reap significant rewards as these entities navigate through challenges and capitalize on market dynamics. Stay tuned for updates as we witness the unfolding of these promising developments in the energy landscape.

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