Texas based petroleum and natural gas exploration and production company Marathon Oil Corporation, known as “Marathon Oil” (MRO), and Occidental Petroleum (OXY) will both publish their fourth quarter earnings on Monday 22 Feb after the close of the US financial markets. The reports will cover the fourth quarter and full-year 2020 earnings.
According to Zacks Investment Research, for Marathon Oil, based on 11 analysts’ forecasts, the consensus EPS forecast for the quarter is $-0.2. The reported EPS for the same quarter last year was $0.07. For Occidental Petroleum Corporation, according to Zacks Investment Research, based on 9 analysts’ forecasts, the consensus EPS forecast for the quarter is $-0.53. The reported EPS for the same quarter last year was $-0.3.
To be clear on what could be expected, take a look at the below figure from Finviz and compare the performance of the different sectors in the past 3 months.
When it comes to energy companies, for investors, it is not just about current earnings reports, especially when it is Oil-related fossil fuels, and given the new administration in Washington determined to move forward with their green agenda. In the short and middle term, oil companies are still the kings of the energy market; however, investors will still be checking on them and their outlook for new activities.
The key elements of the Earning Reports
The energy sector is one of the largest sectors producing traditionally very high yields, which covers multiple times more than distributable cash flow. The reason that this sector can afford it is the huge cash flow and the credit that they have among large investors. It can be a lucrative business, but as with any business can never guarantee a return.
Some other points that need to be taken into account include the companies’ debit and plan for debt paydown, what kind of cost-cutting they have done and their future plans. The cash liquidity conditions and success level of attracting new investors are also other key numbers we have to check at the same time as their current projects, which play a huge role in their income. Equally important is their Outlook for next quarter and 2021.
Technical Overview:
For MRO, the latest correction happened from the key level of 61.8% of its Fibonacci levels. In comparison, the OXY shares price has not been able to break above 50% of its Fibonacci from the free fall high of February 2020. however, both are trading above their key supports, which is $7.30 for MRO and $23.60 for OXY.
OXY at its current level has recovered the 2020 gap, and trading above this level could send it towards R1 at $28.80 (50% of its Fibo), while any breach lower than $23.60 would not be perceived as a good signal for investors. For MRO, technical signals provide a more positive outlook, while the EMA crossing strategy in the hourly, Daily, and Weekly charts also supports an uptrend. Above this level, $9.70 and $11.80 could take advantage of the uptrend, while negative reports will bring $7.30 into the spotlight.
Ahura Chalki
Foreign Market Analyst
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