With oil prices having been in the tank, the investment community has been more focused on oil stocks. On Friday we will get to see how the two biggest oil giants in America are living with the $80 per barrel price of oil. Chevron Corp. (NYSE: CVX) and Exxon Mobil Corp. (NYSE: XOM) are both set to report third-quarter earnings Friday morning. Together, these two companies have more than $600 billion in market cap — and that is with both stocks being down 10% on average from their highs of the last year.

Chevron

Thomson Reuters has consensus estimates for Chevron of $2.56 in earnings per share (EPS) and $52.97 billion in revenue. In the third quarter of the previous year, this oil and gas giant posted EPS of $2.57 and $58.50 billion in revenue.

Chevron was rated number 12 on our list of the world’s top 20 most profitable companies. The company earned more than $21 billion last year. Most of its profits came from its upstream business, which handles the exploration and extraction of oil and natural gas. However, Chevron was even more profitable in the past. Both net income and return on equity have dropped in the past two years, largely because the company is sensitive to oil prices changes. Including affiliates, the company produced 1.7 million barrels of oil and 5.1 billion cubic feet of natural gas per day last year. However, the significant decline in oil prices this year may pose a challenge to the company’s profitability.

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The company announced earlier in October that its wholly owned subsidiary, Chevron Canada, has sold a 30% stake in the company’s 330,000 net acres of the Duvernay shale play in Western Alberta to a subsidiary of Kuwait Foreign Exploration Company for $1.5 billion. Chevron Canada retains ownership of the other 70% and continues as the operator of the field. According to Canada’s Energy Resources Conservation Board, the Duvernay shale play holds an estimated 443 trillion cubic feet of gas, 11.3 billion barrels of natural gas liquids and 61.7 billion barrels of oil.

Jefferies reiterated a Buy rating for Chevron, but moved its price target down to $138 from $140, on October 21. J.P. Morgan initiated coverage for Chevron with a Neutral rating and a $133 price target on September 23.

Chevron broke under its 50-day moving average at the end of July and tested it a month later — only to fall after a failed test. The stock broke down under the more significant 200-day moving average at the end of September, and it has not come very close to retesting the 50-day and 200-day moving averages since. Currently, the 50-day average is $120.57 and the 200-day average is $120.75.

Shares of Chevron were trading down less than 1% at $116.26 after the first two hours of trading Thursday. The stock has a consensus analyst price target of $132.84 and a 52-week trading range of $106.65 to $135.10. The company has a market cap of $220 billion.

Exxon Mobil

For Exxon Mobil, the consensus estimates are $1.73 EPS and $105.51 billion in revenue. That would be down from the third quarter from the previous year, when it had EPS of $1.79 on revenue of $112.37.

Exxon was rated number 5 on our list of the world’s top 20 most profitable companies. It is the second largest company in the United States by income from continuing operations, trailing only Apple. It is also one of the largest companies in the world by market capitalization. The company’s upstream segment, which explores for and produces oil, accounted for the bulk of its earnings last year. Exxon Mobil derived nearly $26 billion in income from its production activities last year, of which just under half came from equity affiliates — investments with revenue and costs that are not directly included in the income statement. In addition to its highly profitable upstream segment, Exxon Mobil notes that it is “the world’s largest refiner and marketer of petroleum products,” and that “our chemical company ranks among the world’s largest.” While low oil prices may hurt the company’s upstream segment, they could also potentially improve margins in its refining business.

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How much does natural gas matter to Exxon in this report? The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 87 billion cubic feet for the week ending October 24, compared with an expected increase of between 83 billion and 87 billion cubic feet anticipated by analysts. The five-year average injection for the week is 59 billion cubic feet. Stockpiles are about 7.8% below their levels of a year ago and about 8.2% below the five-year average. The U.S. natural gas injection season ends this week, and the EIA earlier this month lowered its end-of-October total inventory estimate from 3.55 trillion cubic feet to 3.53 trillion cubic feet. The actual total may exceed both of those estimates. Last year’s injection season ended with 3.8 trillion cubic feet in inventory.

On October 21, Jefferies reiterated a Hold rating for Exxon and lowered its price target to $93 from $96. J.P. Morgan initiated coverage of Exxon with a Neutral rating and a price target of $104 on September 23.

Exxon fell under its 50-day moving average at the end of July, and since then the average has acted as resistance. Approaching earnings, shares were testing the 50-day moving average at its reading of $95.39. Exxon broke under its 200-day moving average back in September, and that has acted as resistance since and looks to be an overhang now with that average up at $97.17.

Shares of Exxon were trading down less than 1% at $93.69 after the first two hours of trading. The consensus analyst price target is $100.85, and the 52-week trading range of $86.91 to $104.76. The market cap is near $399 billion.

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