This column was originally published on RealMoney on July 19 at 2:37 p.m. EDT. It's being republished as a bonus for TheStreet.com readers.While energy stocks have fizzled lately, the beginning of earnings season should reheat the sector to a summer sizzle. Three big companies report this week, and all could deliver news that could boost their shares, at least in the short-term.
Top of the OrderIn a rare (some would say bold) move, Weatherford International ( WFT) claimed the leadoff spot among the oil field companies reporting for the second quarter. It will deliver results Thursday. While earnings schedules aren't set in stone, traditionally the largest oil field service companies -- Halliburton ( HAL) and Schlumberger ( SLB) -- take the leadoff and No. 2 slots. That Weatherford CEO Bernard Duroc-Danner decided he'd be the first on stage this quarter could be a tell on the strength of its numbers. Duroc-Danner, a gentleman and a scholar (he holds a doctorate in economics), also has the typical oil field CEO's drive to protect his ego. It's unlikely that he would put himself in the spotlight if he had less-than-stellar news to deliver. There is more than ego that drives my analysis. Weatherford has spent the last several years building scale in the Eastern Hemisphere, focusing on oil services and diversifying away from the North American natural gas market. One need only look at the recent divergence in crude and natural gas prices to understand that there is strength in oil and weakness in gas. I believe Duroc-Danner is likely to deliver bullish talk on the remaining significant growth opportunities in the Eastern Hemisphere, from new technologies in oil and gas exploration in Africa and the Middle East to the significant potential in Russia. Again, the more oil and international exuberance expressed by Weatherford, the better for energy investors. That said, I would wager that Duroc-Danner is also sanguine on the North American natural gas market. My sources tell me activity is still good in key Weatherford strongholds like the Gulf of Mexico. While most investors hate natural gas, upbeat comments from energy services CEOs may give even gassy stocks a short-term boost.
The Seismic ShuffleOn Friday, Schlumberger and Halliburton are likely to report strong numbers, and I think Schlumberger's call could hold a surprise or two, including bullish news for the seismic-survey industry. Seismic surveying involves recording the echo from sound waves sent into the ground to find likely locations for oil and gas reserves. Through its WesternGeco subsidiary, Schlumberger is a leader in seismic mapping. The company claims that its Q-system creates better pictures with less noise, allowing exploration companies clearer views of potential new oil and natural gas reservoirs. As a leader in the field, anything positive Schlumberger has to say about it should benefit other players in the industry. Data suggests WesternGeco's second quarter was stronger than normal (it's typically weak due to a slowdown in activity necessitated by the spring thaw). The number of teams it had working on seismic projects actually increased during the quarter. In addition, the company recently announced a major seismic project in the Gulf of Mexico for Royal Dutch Shell ( RDS-A). Those are positive data points that will likely be reflected in the conference call. CEO self-esteem is likely to play a role here as well. Schlumberger announced earlier this year that it had consolidated control of WesternGeco by buying Baker Hughes' ( BHI) stake in the company. Andrew Gould, Schlumberger's able CEO, will want to make sure he expresses great pride in what an opportunistic purchase he made and how seismic is the wave of the future.