5 Top-Notch Energy Names at Earnings Time
We've moved well into earnings season, the ritual during which public companies tell us about their quarterly results, which the investment community immediately labels a "beat" or a "miss," depending on the expectations propounded earlier by the Wall Street types who keep tabs on the companies and their peers.
I've long been of the opinion that dispensing results four times yearly is about twice as often as is appropriate, resulting as it does in corporate powers-that-be managing for the quarter, rather than for the longer-term best interests of their companies. Further, the analysts, upon whose forecasts the quality of a company's results are judged, are often insufficiently informed to justify the importance accorded their estimates.
Nevertheless, given my feelings about the importance of the energy sector in today's world, I suggest that we take a quick look at a few of the more attractive oil- and gas-related companies that are poised to provide quarterly information to investors.
First the biggest
Let's begin with Schlumberger (NYS: SLB) , which is set to report on Friday. Beginning with the biggest member of the oil-field services group has nothing to do with the order in which the companies will report. Rather, I continue to maintain that, given its size, the quality of its management, and -- most important -- its relationships with oil and gas operators of all types and in virtually all producing arenas, the company is the key member of the sector.
In addition, each quarter the company describes both its own activities and accomplishments during the period, while providing a solid macro look at the areas of geographic and operating strength and weakness prevailing in the industry. As such, attention to the company's output provides energy investors with a valuable big-picture update.
Expectations are that all of the four biggest services companies will check in with higher year-over-year earnings. In Schlumberger's case, that likely means growth approaching 30% to about $1.09 per share. The big enchilada of services is also expected to maintain a forward dividend yield of approximately $1.50.
And here, representing Big Oil...
Among the members of Big Oil, Chevron (NYS: CVX) is forecast to register earnings growth of about 20% to near $2.94 a share, a figure that probably would have been higher but for the effects of major maintenance activity at its Richmond, California, refinery. At the same time, the company's forward dividend yield is expected to remain at a robust 3.10% in the coming year.
Chevron also benefits from its varied operating locations, as well as from those places where it isn't. For instance, the company is one of the major producers in the U.S. Gulf of Mexico, the onshore Gulf area, the Rocky Mountains, and Alaska. In Australia, it's a leader in the development of massive LNG projects in the offshore northwest part of the country. In Canada, it's active in the Athabasca Oil Sands Expansion Project and off the Maritime Provinces to the east.
Chevron is the only large integrated company with upstream operations in Saudi Arabia, and it joins a host of other companies in such active locations as South America and Africa. In addition, it just might benefit from not being a part of the consortia in Iraq or in currently unstable Russia.
Solidly positioned EOG
Not long ago, I extolled to Fools the virtues of EOG Resources (NYS: EOG) , in large part for its operations in three of our country's liquids-bearing unconventional plays: the Bakken reservoir of the Williston Basin, the Niobrara portion of the Denver-Julesburg Basin, and the Eagle Ford of South Texas. Beyond that, the company is active in the North Texas Barnett Shale, the Haynesville Shale in East Texas and Louisiana, and the Permian Basin of Southwest Texas. Beyond its U.S. operations, EOG can be found in Trinidad and Tobago, the United Kingdom, and China.
While EOG won't report until Feb. 13, its earnings are expected to expand by well over 100% to $0.84 per share. Its forward dividend yield is 0.60%.
A popularity contest winner
Among the oil-field services companies that are not included among the four major companies, it's difficult to find a more popular name than National Oilwell Varco (NYS: NOV) . The company, which will tell us about its quarter on Feb. 2, manufactures a host of components and equipment, primarily for the drilling portion of oil and gas exploration and production. The company is expected to have generated about a 23% increase in earnings to near $1.30, while its forward yield will likely remain at about 0.70%.
All it's cracked up to be
Next week, Houston-based CARBO Ceramics (NYS: CRR) , another of my favorite energy companies, will disclose its quarterly results. As you likely know, the company manufactures "proppants," which are used in the fast-growing world of hydraulic fracturing (fracking). These particles of various sizes are made from high-strength ceramics and are used to hold open cracks that are created in the (primarily shale) rocks. Once the cracks have been created by the fracking process and are maintained by the proppants, the oil and gas that have been trapped for eons are able to escape into the waiting clutches of the operating companies.
CARBO Ceramics is expected to have nearly doubled its year-over-year earnings to $1.68 per share in the fourth quarter of 2011. Furthermore, its forward yield is likely to remain at approximately 0.80%.
There are numerous other quality energy companies queued up to report results for the fourth quarter of 2011. Those above are among my favorites; however, if you're looking for more ideas, The Motley Fool has created a special oil report titled "3 Stocks for $100 Oil," which you can download today, absolutely free. In this report, Fool analysts cover three outstanding oil companies. To get instant access to the names of the three oil stocks, click here -- it's free.
At the time this article was published The Motley Fool owns shares of National Oilwell Varco.Motley Fool newsletter serviceshave recommended buying shares of National Oilwell Varco, Schlumberger, and Chevron. Try any of our Foolish newsletter servicesfree for 30 days.We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Fool contributorDavid Lee Smithdoesn't own shares in any of the companies named in this article. The Motley Fool has adisclosure policy.
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