October is here - and so is Q3 reporting season
A slight decline in oil and gas prices in recent months has us following the money trail.
As the Q3 earnings reports begin to roll out, we will be keeping a close eye on cash spending strategies as North American oil and gas companies may be considering their options.
"We're interested in where they are going to be spending their money. We'll be focused on how far producers have been able to maintain current levels of capital spending as well as dividends and buybacks, or if one is starting to make way for the other in the face of falling commodity prices," said Mark Young, Senior Analyst, Evaluate Energy.
Many North American operators are going to see a big hit to their operating and free cash flows thanks to substantially lower natural gas prices and supply curtailments. Darrell Stonehouse, Technical Editor, geoLOGIC systems, said capital spending will likely decline among this group as they delay drilling and competition programs awaiting higher prices.
"It will be interesting to see what happens to prices in the final quarter and in early 2025 if this delayed supply all comes on at once," said Stonehouse. "There is also an inventory of drilled but incomplete wells that needs to be worked through."
?? Our analysts will also be closely monitoring the immediate effects of the major acquisitions that have closed in recent months.
"Usually integrating a new acquisition takes a long time but we've seen quite a few major deals close over the past three to six months that we're still tracking the impact," said Young.
?? U.S. producers: Production boost or stagnation in Q3?
Many producers have retained their 2024 full year production guidance, despite Q2 production being well below equivalent levels needed to meet those targets, according to Evaluate Energy data.??
What does this mean for the rest of the year?
Our data suggests they will increase production in the second half of 2024 to reach full year guidance. Read our full analysis here.
?? First out of the gate in October ??
Whoa! You know it's reporting season when your calendar begins to resemble a battleground. Oil and gas companies will begin reporting as early as next week.
Keep an eye out for these companies who are reporting later this month: Eni, BP, Expand Energy, Cenovus, ConocoPhillips, Repsol, Shell and TotalEnergies.
"Evaluate Energy clients can track developments during the Q3 reporting season using our corporate financial and operating database," said Nikki Zenonos, Director, Evaluate Energy.
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