Since several countries re-introduced travel restrictions due to a spike in COVID-19 cases, investors have been worried about the global demand for oil energy. However, the major oil-producing countries are curbing their supply cuts. But with gasoline prices surging last week, the Biden administration believes a recent OPEC+ agreement to increase output by 400,000 barrels per day was “simply not enough” and is in additional negotiations with the cartel and other oil-producing countries to increase production to curb rising prices.
According to a U.S. offshore regulator, discussions are underway to overturn the federal oil and gas leasing moratorium imposed earlier this year. Furthermore, impressive second-quarter earnings reported by the energy sector and increasing dividend distributions to the shareholders have fostered a positive outlook for the industry.
TotalEnergies SE (TTE)
TTE in France is a globally integrated oil and gas corporation. Exploration & Production; Integrated Gas, Renewables & Power; Refining & Chemicals; and Marketing & Services are the company’s four operational segments. In addition , it has a strategic collaboration with PureCycle Technologies and GHGSat Inc. to develop satellite imaging technology to detect possible methane leaks at offshore sites.
This month, TTE and its partners agreed to invest in the fourth phase of the Mero project, located deep offshore, 180 kilometers off the coast of Rio de Janeiro. The Mero 4 Floating Production, Storage, and Offloading facility will have a liquid treatment capacity of 180,000 barrels per day and is scheduled to begin operations in 2025. This massive project is in accordance with TTE’s expansion strategy in Brazil, which produces oil at a competitive cost from world-class sources, while strictly minimizing CO2 emissions.
Last month, TTE announced a strategic partnership with Amazon.com, Inc. (AMZN), through which TTE will contribute to AMZN’s commitment to power its operations with 100% renewable energy, and AMZN will assist TTE in accelerating its digital transformation.
During the second quarter, ended June 30, 2021, TTE’s sales increased 82.9% year-over-year to $47.05 billion. Its cash flow from operating activities increased 117.1% year-over-year to $7.55 billion. The company reported $2.30 billion in net income, compared to a $8.42 billion net loss in the prior-year quarter. Its EPS came in at $0.80, compared to a $3.27 loss per share in the second quarter of 2020.
A $5.06 consensus EPS estimate for the current year represents a 253.8% improvement year-over-year. Furthermore, TTE has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. TTE’s revenue is expected to increase 26.4% from the same period last year to $177.76 billion. The stock has gained 8.8% over the past year.
TTE’s POWR Ratings reflect this promising outlook. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting. TTE is also rated an A grade for Growth, and a B for Stability.
COP discovers, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG), and natural gas liquids. The Houston, Tex., company is primarily involved in conventional and tight oil reservoirs, shale gas, heavy oil, LNG, oil sands, and other production operations.
COP’s total revenue and other income increased 154.3% year-over-year to $10.21 billion in the second quarter, ended June 30, 2021. Its cash and cash equivalents surged 127.3% year-over-year to $6.61 billion. The company’s net income increased 704.2% from its year-ago value to $2.09 billion over this period, while its EPS increased 545.8% year-over-year to $1.55.
The company’s EPS is expected to grow 584.5% year-over-year to $4.7 in its fiscal year 2021. Analysts expect COP’s revenue to increase 110.4% year-over-year to $40.52 billion in the current year. The stock has gained 32.3% over the past year and 31.1% year-to-date.
COP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. COP also has an A grade for Momentum, and a B for Growth and Sentiment. The stock is ranked #17 of 92 stocks in the Energy – Oil & Gas industry.
Beyond the POWR Ratings grades I have just highlighted, you can see the COP ratings for Stability, Value, and Quality.
National Fuel Gas Company (NFG)
NFS operates as a diversified energy company. Based in Williamsville, N.Y., Exploration and Production; Pipeline and Storage; Gathering; and Utility are NFS’ four business segments. It serves primarily industrial, wholesale, commercial, public authority, and residential consumers in Western and Central New York, and Northwestern Pennsylvania.
Last month, NFG’s Exploration and Production segment’s Seneca Resources Company and U.S. Well Services (USWS) announced a partnership on a forthcoming field experiment that employs USWS’ Clean Fleet technology to complete a six-well pad in Lycoming County, Pa., inside Seneca’s Eastern Development Area.
Also, last month, NFG and NexTier Oilfield Solutions Inc. announced their intention to lead unique research assessing the carbon emissions produced by several types of hydraulic fracturing equipment widely used in oil and natural gas wells. The findings from the study are expected to provide the industry with a comparative look at the emissions profiles of these technologies, which include those that use Tier 2 diesel and dynamic gas blending (DGB) engines, Tier 4 diesel and DGB engines, natural gas-powered turbine engines, and electric frac equipment powered by natural gas-fueled reciprocating engines.
For its third fiscal quarter, ended June 30, 2021, NFG’s operating revenue increased 22.1% year-over-year to $394.40 million. Its operating income grew 86.7% from its year-ago value to $150.07 million. The company’s net income increased 109.6% year-over-year to $86.48 million. In addition, its EPS increased 100% year-over-year to $0.94 over this period.
A $4.00 consensus EPS estimate for the current year represents a 37% increase year-over-year. The $1.86 billion consensus revenue estimate for 2021 represents a 20.3% increase from the same period last year. NFG’s stock has gained 10.3% over the past year and 22.5% year-to-date.
NFG’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. NFG is also rated a B grade for Growth and Quality. Within the Energy – Oil & Gas industry, it is ranked #16 of 92 stocks.
Click here to see additional POWR Ratings for Sentiment, Value, Stability, and Momentum for NFG.
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TTE shares were trading at $42.56 per share on Friday morning, up $0.05 (+0.12%). Year-to-date, TTE has gained 3.98%, versus a 19.19% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...
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