Several energy companies are expected to post record earnings in 2022. Exxon Mobil alone is on track to make about $60 billion. But 2023 is a different story. While the setup is still very strong for most oil-and-gas companies, many are expected to see their earnings per share fall from 2022 levels.
Oil prices have fallen well below last year’s highs, and natural gas has slipped too. Producers of oil and gas are also expecting higher costs this year, with oil services companies raising their rates.
Of the 24 energy companies in the S&P 1500 with market caps above $10 billion, only 10 are set to grow earnings this year above 2022 numbers. Of those, the five in the table below stand out for particularly strong growth.
Just a handful of energy stocks are expected to post higher earnings in 2023 than in 2022.
|Company / Ticker||Recent Price||Market Value (bil)||2023E EPS||2023E EPS Growth|
|Baker Hughes / BKR||$30.59||$31||$1.64||82%|
|EQ / EQT||35.24||12||6.22||80|
|Targa Resources / TRGP||75.60||17||5.74||53|
|Halliburton / HAL||40.57||37||2.95||40|
|Schlumberger / SLB||55.86||81||3.03||39|
The big oil services names—including Baker Hughes (ticker: BKR), Schlumberger (SLB), and Halliburton (HAL)—have slimmed down in the past few years, reducing their own costs and head counts. In some cases, like Schlumberger, they have also reduced the areas where they operate. With oil drilling now back on the upswing in the U.S. and elsewhere, their services are in higher demand, and they are charging more for them. Baker Hughes announced on Monday that it had booked $8 billion in new orders in the fourth quarter alone. “This reacceleration after a few quarters of cooler bookings brightens the outlook as we look ahead to 2023 according to our experts,” wrote Peter McNally, analyst at Third Bridge.
EQT (EQT) is a natural gas company based in Pittsburgh that has been a beneficiary of the increase in liquefied natural gas shipments from the U.S. to Europe. The company’s hedging strategy should result in its free cash flow rising 90% in 2023, as long as natural-gas prices hold up, the company said in its last quarter. A recent gas-price slump, however, has slowed the stock’s momentum.
Targa Resources (TRGP) owns pipelines and other infrastructure used to transport natural gas around the Gulf Coast region, and will similarly benefit from increasing shipments of natural gas. Tudor Pickering Holt analyst Colton Bean wrote this month that he considers Targa “a top infrastructure holding on earnings growth and free cash flow potential.”
Write to Avi Salzman at firstname.lastname@example.org