Shell and ConocoPhillips reported strong earnings beats early Thursday morning. SHEL stock and Conoco shares rallied Thursday, as U.S. crude oil prices hit their highest levels since 2014.
Shell reported earnings per share of $1.66, on a 94% revenue gain, to $85.3 billion. FactSet analysts had projected EPS soaring to $1.33 per share, up from 10 cents per share in the year-ago quarter. Revenue was expected to rise 52% to $66.9 billion.
The company announced an $8.5 billion share buyback initiative, and said it would raise its quarterly dividend to 25 cents in the first quarter. The 4% hike will be the fourth dividend increase since Shell pared back its dividend in early 2020. Shell stock rose 1.2% to 53.91 on the stock market today, still in range above a 50.85 buy point in a 12-week cup base.
ConocoPhillips earnings swung to $2.27 per share, vs. expectations for $2.19 per share and up from a loss of 19 cents per share in the year-ago quarter. Revenue more than doubled, to $13.36 billion, but came in shy of views for $13.45 billion.
COP stock climbed 1.45% to 90.87.
OPEC Holds Production Target Steady
Ministers and allies of the Organization of Petroleum Exporting Countries quickly wrapped their monthly meeting Wednesday, holding targeted production increases steady. OPEC+, which includes the cartel's 15 member countries and nonmembers including Russia, Kazakhstan and Mexico, voted to maintain the output strategy agreed to in August. That quota called for a monthly increase amounting to an extra 400,000 barrels of oil produced each day. The group has kept that target unchanged, despite demand fluctuations tied to the unsteady impact of the coronavirus pandemic.
U.S. West Texas Intermediate crude nudged higher on Wednesday, then jumped above $90 a barrel on Thursday.
Demand increases amid loosening Covid-19 restrictions have shifted the market's concerns to the supply side. OPEC+ had implemented a massive 9.7 million barrel per day cut in its oil production targets in April 2020, after pandemic-strangled oil prices dived below zero.
The U.S. and others have recently pushed for a more rapid unwinding of those cuts, as oil prices leap to the highest levels since January 2014. However, member countries have struggled to meet even the current target, raising output by only 250,000 barrels per day in December, according to the International Energy Agency.
Oil Prices: 'A Monumentally Bullish Shift'
Blame for the OPEC+ shortfall, as it met only 63% of the group's stated target, fell largely on Nigeria and Angola. But capacity questions also arose about Saudia Arabia, Russia and Kuwait. The result has been a coalescing outlook for continued upward pressure on oil prices.
"In a monumentally bullish shift, market focus has rapidly moved from prior concerns over OPEC+ compliance and strategic cohesion, to capacity constraints and the group's ability to meet 2022 demand growth," wrote Paul Sheldon, chief geopolitical advisor at S&P Global Platts, in a note.
That and other factors have driven U.S. oil prices up almost 17% since the start of the year, and almost 53% higher over the past 12 months. In addition, average U.S. gasoline prices have climbed 3% in the past month. They are 40% above year-ago levels.
Other Oil Earnings: Marathon, Suncor, Magellan, MPLX
Several energy-related stocks were in motion along with oil prices after oil companies reported quarterly results Wednesday.
Marathon Petroleum reported fourth-quarter results that beat analyst expectations and increased its share buyback program by $5 billion. MPC fell nearly 2% Thursday after jumping 6.05% on Wednesday.
MPLX and Magellan Midstream Partners edged higher Thursday after both lost fractions on Wednesday.
Follow Gillian Rich on Twitter for energy news and more.
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