Will Murphy Oil (MUR) Disappoint on Earnings? - Analyst Blog

Integrated oil and gas company Murphy Oil Corporation MUR is set to report first-quarter 2014 results on Apr 30, 2014. The company posted a negative earnings surprise of 40.18% in the preceding quarter. Murphy Oil currently has a Zacks Rank #3 (Hold). Let's see how things are shaping up prior to this announcement.

Factors to Consider This Quarter

The first quarter was volatile for the oil and natural gas industry as the energy companies continued to face challenges from unstable commodity prices and increasing utilization of renewable energy for power generation.

For first-quarter 2014, total worldwide production is expected to be impacted primarily due to planned downtime at the Kikeh Floating Production Storage and Offloading (FPSO) vessel in Murphy Oil's Siakap North/Petai project offshore Malaysia. This will negatively impact the company's performance.

However, Murphy Oil's systematic investment in exploration and production ventures and addition of reserves backed by strong financial position are expected to act as catalysts for its future growth.

Earnings Whispers

Accordingly, our proven model does not conclusively show that Murphy Oil is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here.

Negative Zacks ESP:  The Most Accurate estimate stands at 91 cents while the Zacks Consensus Estimate is pegged higher at 96 cents per share, resulting in a -5.21% ESP.

Zacks Rank #3 (Hold): The combination of a Zacks Rank #3 and a negative ESP makes an earnings surprise prediction difficult. Meanwhile, we caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement.

Other Stocks to Consider

Here are some companies in the oil and gas sector having the right combination of elements to post an earnings beat this quarter.

Abraxas Petroleum Corp. AXAS has an earnings ESP of +20.00% and carries a Zacks Rank #2 (Buy).

Hess Corp. HES has an earnings ESP of +1.98% and carries a Zacks Rank #3 (Hold).

Exxon Mobil Corp. XOM has an earnings ESP of +1.60% and carries a Zacks Rank #3 (Hold).