Up & Down the Oil & Energy Patch (CVX, DUK, PTEN, PXD, MUR)

Chevron Corporation (NYSE:CVX) reported earnings of $5.17 billion and $2.48 EPS for the first quarter of 2008.  First Call had estimates at $2.41 EPS. This compared with $4.72 billion and $2.18 EPS for the same period a year ago. Revenues jumped to $65.95 billion, up about 38% from $48.23 billion. Analysts were looking for revenues of $75.64 billion and $2.41 EPS. Refining earnings dropped from $1.62 billion to $252 million, due to higher crude oil costs and lower refining margins. It’s a repeat of the same story from all the integrated oil companies. CVX stock is up almost 1% at $95.80 in pre-open trading.

Duke Energy (NYSE: DUK) may be more of an electricity play, but when you look at its break-down you will understand why it’s included in energy stocks this morning.  It is trading up over 3% after earnings of $465 million or $0.35 EPS, compared to $0.30 EPS a year ago and compared to First Call estimates of $0.31. Revenues grew 9% to $3.337 billion, and First Call had estimates at $3.25 billion. 

Even though Duke’s numbers beat the estimates, it took an accounting change to make it happen. Duke changed the way it accounts for the impact of mark-to-market hedges in its Commercial Power segment. Beginning in the 2008 first quarter, the company will exclude its commodity hedging from earnings. Adjusted earnings, compared with the first quarter of 2007, is exactly $0.05/share. So, EPS is flat compared with last year, and 70% of the earnings boost is attributable to this exclusion. The company reiterated its guidance for $1.27 EPS in 2008.

Elsewhere, analysts have made a few calls regarding the oil and energy stocks this morning with calls in Patterson-UTI (NASDAQ: PTEN), Pioneer Natural Resources Company (NYSE: PXD), and Murphy Oil (NYSE: MUR):

• Patterson-UTI (NASDAQ: PTEN) was raised by Credit Suisse, although the prior "Underperform" rating was raised only to a Neutral.
• Pioneer Natural Resources Company (NYSE: PXD), in the exploration and production of oil and gas, was also raised to a Buy from a Hold rating over at Deutsche Bank.
• Murphy Oil (NYSE: MUR) was downgraded this morning over at Bernstein’s research department.  Its prior "Outperform" rating was given a new "Market Perform" rating.

Paul Ausick
May 2, 2008