Energy companies begin reporting their second-quarter earnings this week, with the worst of the oil bust seemingly behind them.
As the Houston Chronicle reports, the questions for analysts and investors are when the industry’s recovery will get underway and how fast it will proceed.
For now, the energy sector may be stuck in a holding pattern of low oil prices and unstable market conditions, making it too unstable for companies to invest in equipment, operations and renewed hiring, says Bill Herbert, a senior energy analyst at Piper Jaffray & Co., an investment research firm.
“It’s going to be pretty placid, and a lot of the industry is going to be treading water,” Herbert says of the months ahead.
The world’s two largest oil field services companies, Schlumberger and Halliburton, which together slashed at least 70,000 jobs since the bust began in late 2014, report earnings this week, while the biggest oil producers, including ExxonMobil and Chevron, report next week.
So what may investors and analysts find in those reports?
“Two words: more losses.” That’s the assessment of Brian Youngberg, an energy analyst at Edward Jones.
But Youngberg expects second quarter losses to narrow from the first three months of the year. Halliburton, for example, will bleed more red ink but won’t approach the $2.4 billion net loss from the first quarter, according to Bloomberg forecasts.
The number of rigs drilling for oil and gas in the U.S. plummeted by 26% in the first three months of the year and then by another 25% in the second quarter, but that downward trajectory ceased in June.
The Houston Chronicle has the full story.
