This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

For Big Oil, $100 Oil Is Window Dressing

NEW YORK ( TheStreet) -- Big profits won't be enough for Big Oil.

Even if high oil prices will make for some easy year-over-year comparisons for integrated oil majors, it's already reflected in stock prices. Add to this macroeconomic headwinds, and investors haven't shown a willingness to buy on earnings beats this quarter.

Fadel Gheit, analyst at Oppenheimer & Co., says the integrated oil majors need to at least meet or beat expectations just to keep their heads above water.

The standard bearer of Big Oil, Exxon Mobil (XOM - Get Report), reported disaapointing results on Thursday morning, with its second quarter earnings coming below even the lowest Wall Street estimate, and its shares fell by 2%. Exxon Mobil production lagged Wall Street models and its costs went up while margins took a dip, the epitome of a less than perfect earnings report, if not a major needle mover for shares. The headline from Exxon Mobil of a 41% rise in profits meant little compared to the negatives in the report.

Analysts don't have great expectations that earnings will send integrated oil shares higher from here. In fact, merely turning in a ho-hum profitable quarter has been met with a yawn from investors.

"I don't see much difference between the oil majors and the independent exploration and production companies. They are all trading together now and it's not an opportune entry point," said Alex Morris, analyst at Raymond James.

ConocoPhillips (COP - Get Report) had one of the best stories headed into earnings season with plans to spin off its refining business, a means to unlock value in its shares, as well as its continuing asset divestiture plan.

Oppenheimer's Gheit says the beat that ConocoPhillips posted on Wednesday didn't change the fact that it's more of a 2012 as opposed to 2011 story.

"The spinoff will create value and exceed people's expectations, but right now, the improvement in earnings has nothing to do with oil companies working harder and the market won't provide oil companies with any slack," Gheit said.

ConocoPhillips has, though, turned in the best earnings report of the Big Oil sector, and the only clean report set against the results from BP, Exxon Mobil, and Royal Dutch Shell.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
BP $36.97 0.00%
COP $50.34 0.00%
CVX $88.48 0.00%
RDS.A $57.48 0.00%
XOM $79.21 0.00%

Markets

Chart of I:DJI
DOW 17,689.86 -56.12 -0.32%
S&P 500 2,103.84 -4.79 -0.23%
NASDAQ 5,128.2810 -0.5040 -0.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs