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  • Roger S. Conrad

Expect Q3 Results to Confirm Sector Values

By Roger S. Conrad on Oct. 17, 2019

Earnings season in the energy sector is about to get under way. And wherever companies reside on the value chain, we expect to hear a lot about investment discipline.

Halliburton Co (NYSE: HAL) will be one of the first to release numbers and update guidance on October 21. But management of the energy services giant has already signaled there will likely be a more cautious tenor to its comments, after announcing the layoff of 650 workers across the Rockies region this week.

A little belt-tightening is never a bad thing. That’s especially true in the current long-term environment, where global supply and demand dynamics favor oil and gas prices staying in the neighborhood of where they are now for quite a while.

But we do think the energy bears have it wrong in one very critical respect: Mainly, slogging through a bear market of five years plus, the survivors are actually pretty well adjusted to what we’ve called a “lower for longer” price environment. That’s even true of US shale companies, which are now the target of heavy bearish bets.

There are a number of what we’d call “zombie” companies still going through the motions. That includes almost all members of our enlarged Endangered Dividends List, as well as the sells in our coverage universes. And a handful of companies appear headed for a date with bankruptcy court in the next 12 months.

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