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Q4 Energy Numbers: Facing Down Low Expectations

By  Elliott H. Gue
Issue No.163 . Jan. 20, 2020

A year ago, benchmark oil prices plunged from a high of $75 a barrel in early October to a late December low point of $42 and change. By contrast, Q4 2019 was relatively calm. The North American benchmark hugged the mid-50s before closing out the year in the low 60s.

Despite that relative steadiness, few Wall Street analysts expect favorable earnings comparisons for energy companies with year ago results. One reason is a flood of new associated natural gas supplies hitting the market in 2019, which resulted in Q4 benchmark prices falling to less than half where they traded in the year ago quarter.

But the larger worry weighing on the sector is the pronounced reduction in the national rig count that started in the second half of the year. We’ve commented early and often about North American shale producers’ ongoing conversion to the gospel of generating free cash flow, reversing their long-time practice of maximizing output at any cost.

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  • The State of LNG

    By Elliott H. Gue on Jan. 20, 2020

    At a time when the US shale oil and gas industry is getting used to living on less, one corner of the energy sector is still red hot: Liquefied natural gas exports. We continue to be unenthusiastic about this group. Here’s our take on the state of LNG.

  • Endangered Dividends List

    By Roger S. Conrad on Jan. 20, 2020

    EnLink Midstream is cutting its quarterly dividend to 18.75 cents per share starting with the February 13 payment, a roughly 34 percent reduction from the previous 28.3 cents. The company is holding in more cash in response to weaker drilling activity in Oklahoma.

  • Energy Sector Roundup - Key lessons from 2019 and what lies ahead for 2020.

    By Elliott H. Gue on Dec. 28, 2019

    We present our sector-by-sector outlook for energy in 2020 and beyond. We should expect global oil prices to generally hold the same trading range of the past few years and this would actually be a positive upside catalyst for energy stocks going forward.

  • Endangered Dividends List

    By Roger S. Conrad on Dec. 28, 2019

    The current EDL features 20 different companies. Four of them are natural resource producers, three Canadian oil and gas and one of them a coal miner. Their primary risk is simply realized selling prices for their products, and their ability to offset pressures with hedging and cost reduction.

  • Oil: Our 2020 Outlook

    By Elliott H. Gue on Dec. 12, 2019

    One of the best things about commodity markets – and any sort of “real” asset – is that ultimately prices are based on supply and demand.

    If the price of oil is “too high,” there’s a market response – rising production and falling demand – that pushes prices back into line over time.

    Of course, oil prices can rise or fall in the short-run due to speculative flows in futures markets; in fact, that’s something we watch closely in Energy & Income Advisor over time.
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    Elliott and Roger on Jan. 30, 2020

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      Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.

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      Our assessment of every energy-related master limited partnership.

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      Roger Conrad’s coverage of more than 70 dividend-paying energy names.

    Experts

    • Elliott H. Gue

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor

    • Roger S. Conrad

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor