On Wednesday, oil prices slipped about 4% to hit almost six-month lows. Brent crude futures settled down 3.7% at $96.78 a barrel. The decline was mainly driven by U.S. data showing an unexpected rise in crude and gasoline stockpiles and OPEC+ agreeing to raise its oil output target by 100,000 barrels per day (bpd).
On the other hand, OPEC has provided an optimistic outlook on global oil demand. The cartel expects total world demand in 2023 to average a record high of 103 million bpd, up from the 100.29 million bpd expected for 2022. OPEC sees a fourth-quarter demand as high as 105.4 million bpd.
According to Neal Dingmann, Truist’s managing director of energy research, oil prices could climb over $150 per barrel if the tight supply created by the ban on Russian oil and gas is not mitigated.
Occidental Petroleum Corporation (OXY)
OXY is an oil and gas exploration company primarily operating in the United States, the Middle East, Africa, and Latin America. The company operates through three segments: Oil and Gas; Chemical; and Marketing and Midstream.
On July 27, OXY announced a regular quarterly dividend of $0.13 per share on its common stock, payable to shareholders on October 17. This reflects upon the company’s ability to return back to its shareholders.
On June 27, 1PointFive, a subsidiary of OXY’s Low Carbon Ventures (OLCV) business, and Manulife Investment Management announced that they had entered into a lease agreement for approximately 27,000 acres of timberland in Western Louisiana. This is expected to advance the company’s commercial-scale decarbonization solutions.
For the fiscal second quarter of 2022, OXY’s total revenues and other income increased 78.6% year-over-year to $10.74 billion. Adjusted income attributable to common stockholders and adjusted EPS came in at $3.24 billion and $3.16, up 941.8% and 887.5% from the prior-year quarter.
The consensus revenue estimate for the quarter ending September 2022 of $10.26 billion reflects a 56.6% year-over-year improvement. Additionally, OXY has beaten consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 130.8% over the past year and 110.4% year-to-date to close its last trading session at $60.99.
OXY’s strong fundamentals are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree. The stock has a Momentum grade of A and a Growth and Quality grade of B.
Devon Energy Corporation (DVN)
DVN is an independent energy company that explores, develops, and produces oil, natural gas, and natural gas liquids in the United States. The company operates several gross wells.
On August 1, DVN declared a fixed-plus-variable dividend of $1.55 per share based on its second-quarter financial performance. This marks a 22% increase from the prior quarter and reflects upon the company’s cash generation ability.
On July 21, DVN announced that it had completed its acquisition of the leasehold interest and related assets of RimRock Oil and Gas, LP, in the Williston Basin. This acquisition is expected to boost the company’s production and cash flow.
DVN’s total revenues increased 132.8% year-over-year to $5.63 billion in the fiscal second quarter of 2022. Net earnings rose 642.5% from the prior-year quarter to $1.94 billion. Net earnings per share improved 671.1% from the same period the prior year to $2.93.
Street EPS estimate for the quarter ending September 2022 of $2.45 indicates a 126.9% year-over-year increase. Likewise, Street revenue estimate for the same quarter of $5.03 billion reflects a rise of 45.2% from the prior-year period. Moreover, DVN has an impressive surprise earnings history, as it has topped consensus EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 116.3% to close its last trading session at $56.70. It has gained 28.7% year-to-date.
DVN’s POWR Ratings reflect this promising outlook. The stock has an A grade for Momentum and a B for Quality. It is ranked #44 in the same industry.
In addition to the POWR Rating grades we’ve stated above, one can see DVN ratings for Growth, Value, Stability, and Sentiment here.
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OXY shares were trading at $58.97 per share on Thursday afternoon, down $2.02 (-3.31%). Year-to-date, OXY has gained 104.29%, versus a -12.17% 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. More...
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