Investors.com: Exxon, Halliburton, Shell and more

By Lisa Sanders

Last Updated: 4/22/2004 6:17:00 PM 

DALLAS (CBS.MW) - Some of the biggest companies in the oil and gas industry are set to report earnings next week with names like ExxonMobil, Halliburton and Royal Dutch/Shell headlining the week.

Shell (RD)(SC) is of particular interest because of recent operational chaos at the Anglo-Dutch oil and gas giant. The company has cut proved reserves three times since the beginning of January and endured a management shake-up at the highest levels.

Analysts polled by Thomson First Call expect Shell to earn an average of $1.06 a share vs. $1.13 a year ago. In addition to reclassifying its reserves, Royal Dutch has also seen its production deteriorate - an industry-wide problem. The company reports results Apr. 29.

"We always look at production growth," said Fadel Gheit, an analyst at Oppenheimer & Co., speaking generally. "We always like to see production growth, higher than a year ago by 1 or 2 percent, but the larger companies are showing flattish or slightly declining production, particularly in the U.S. They're not putting as much money into arresting production declines."

Exxon (XOM), the bellwether of the integrated oil group and the largest in the world, reports Apr. 29, and analysts expect average earnings of 74 cents vs. 71 cents a year ago.

"Refining and marketing are definitely key here," Gheit said.

As for ChevronTexaco, the No. 2 U.S.-based oil and gas company, Gheit sees a potential miss or a potential surprise. "It depends on how strong refining and marketing are. They are very exposed to California."

Chevron (CVX) is set to report earnings Apr. 30, and analysts are expecting around $2.01 a share vs. $2.03 a year ago.

ConocoPhillips (COP) will post earnings Wednesday and expectations average $1.98 a share, up from $1.86 a year ago.

"It goes without saying they'll benefit from refining and marketing in the U.S.," Gheit said. "There shouldn't be a significant change in earnings from exploration and production."

BP (BP), the second-largest oil and gas company in the world, is expected to report $1.03, on average, on Tuesday, up from $1 a year ago.

"Oil and gas prices have been extremely strong, way above expectations," Gheit said. "(Refining) margins have been extremely strong, but marketing margins are weak."

Gheit explained that refiners rule when supplies are tight, and marketers are at the mercy of consumer demand.

"There have been a lot of unexpected refinery shutdowns, which have tightened the availability of refined products," he said. "And there's competitive pressure at the pump."

Also scheduled for next week is Murphy Oil (MUR), which Gheit expects to post one of the best performances in the group when it reports Wednesday. That's due to production growth from new projects and a "tremendous turnaround in refining and marketing." Analysts expect Murphy to earn 97 cents vs. 80 cents a year ago.

Amerada Hess (AHC), which reports Apr. 29, is expected to earn $1.67 vs. $2.08 a year ago. The decrease in profit comes from production declines and asset sales.

And Marathon Oil (MRO), on deck Tuesday, is also expected to report lower earnings of 82 cents a share on average vs. 99 cents in the first quarter of 2003. One of Marathon's major refineries was down for annual maintenance in the most recent quarter.

Oil service

Halliburton (HAL) said Monday it expects to take a 14-cent charge to first-quarter earnings. The charge stems from disputed costs over a project in Brazil. See full story. The company reports Wednesday and is expected to post earnings of 30 cents a share, up from 12 cents a year ago, due to strength in its oil-services business.

"The market saw that (the charge) as much more positive than I did," said Jim Wicklund, analyst at Banc of America Securities. "But they're still going to report a quarter with a $97 million pretax charge and they still are not able to report they won't report more charges."

Baker Hughes (BHI) kicks off on Tuesday and is expected to post earnings of 25 cents a share vs. 14 cents a share a year ago.

"I expect them to beat consensus," Wicklund said. "They've benefited from strength in U.S. activity."

Also scheduled for Tuesday are BJ Services (BJS), Transocean (RIG) and Nabors Industries (NBR).

Analysts expect BJ Services to earn 41 cents a share, up from 28 cents a share in the year-earlier period.

"There's no question they are seeing pricing improvement in the U.S. after raising their price book last May by 7 percent and this May by 7 percent," Wicklund said. "You don't put forward a new price book unless the old one is sticking."

Wicklund doesn't expect any surprises from Transocean, which is expected to report 3 cents a share, down from 15 cents a share in the first quarter of 2003.

"The offshore market continues to be weak," Wicklund said.

And Nabors should benefit from strength in U.S. pricing and drilling activity, Wicklund said. That company is expected to post per-share earnings of 47 cents vs. 31 cents a year ago.

Cooper Cameron (CAM), on the schedule Wednesday, is expected to report 25 cents a share vs. 23 cents a share in the first three months of 2003.

"Who knows?" Wicklund said about Cooper. "Last quarter, they were supposed to earn 57 cents, but they reported an operating number of 12 cents due to higher costs from engineering and testing systems delivered in the fourth quarter. I have no clue what will be shipped in the first quarter and whether the margins will be as the fourth quarter was expected or what the fourth quarter realized."

Wicklund expects a solid report from Patterson-UTI Energy (PTEN) on Apr. 29 due to rising day rates, or rates the companies charge the producers for use of equipment per day. Analysts are forecasting earnings of 26 cents vs. 6 cents a year ago.

Oil and gas producers

Unocal (UCL) will report quarterly results on Wednesday, and is expected to earn an average of 81 cents vs. 87 cents in the year-earlier period due to declining production.

Anadarko Petroleum (APC), scheduled for Apr. 30, is expected to report earnings-per-share of $1.40 vs. $1.45 a year ago.

"They've had a big change in management," said Banc of America analyst Robert Morris. See archived story about hiring of Jim Hackett. "He's a good motivator, a good manager, and he'll be more focused on capital returns and may sell some properties down the road. He'll risk less on exploration and production."

Morris doesn't expect too much insight on the future when Anadarko reports its results next week.

"In June, Jim will have been on the job six months, and then he'll roll out his strategy," Morris said.

© 1997-2004 MarketWatch.com, Inc.

http://www.investors.com/breakingnews.asp?journalid=20835072&brk=1