2015 Energy Earnings Were Historically Bad, But 2016 Could Be Even Worse

Oppenheimer issued an industry update on the oil and gas industry saying the firm expects 4Q15 results to reflect the low prices for commodities seen in 2015. Oppenheimer highlighted major players, including Chevron Corporation CVX, Anadarko Petroleum Corporation APC and Apache Corporation APA, all of which are expected to report steep earning declines.

Fadel Gheit and Luis Amadeo, analysts at Oppenheimer, wrote, "We expect 4Q15 earnings to be sharply lower for all oil and gas producers, including integrated companies, with deeper losses and wider cash flow deficits, compared with the prior periods, as realized prices fell below break-even levels. The industry's financial condition continues to deteriorate, despite asset sales and secondary offerings, which are a temporary solution to a longer term problem of low prices for a longer period."

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The E&P Effect On Earnings

Oppenheimer noted that amid the weakness in exploration and producing firms, independent refiners are expected to release mixed earnings based on improving operational efficiency for some companies opposed by seasonal factors reducing the demand for gasoline.

Further, low utilization for the refiners can be seen as a weakness as well that can carry forward into the New Year. In 2016, Oppenheimer analysts believe energy earnings could be worse than 2015, as uncertainty in the prices of oil and the oversupply of the commodity globally may weigh on corporate profits.

Seen At The Time Of Publication...

Chevron was recently seen trading at $82.21, down 3.81 percent.

Anadarko Petroleum was recently seen trading at $32.40, down 7.43 percent.

Apache Corporation was recently seen trading at $33.82, down 8.67 percent.