Earnings season for the energy sector begins this week, with three major oil services companies reporting financial results for the third quarter of 2012. The results and management commentary from these operators will give investors an updated view on the North American drilling cycle, and activity in the international space.

Discount Brokers Comparison: Your one-stop shop for finding the perfect broker for your investments.

Earnings Season Kick Off
(NYSE:HAL) will hold its conference call at 9:00 a.m. ET on October 17, while Schlumberger (NYSE:SLB) and Baker Hughes (NYSE:BHI) have scheduled calls for the morning of October 19 at 9:00 a.m. ET and 8:00 a.m. ET, respectively. Analysts are looking for quarterly earnings per share of 68 cents, $1.06 and 84 cents, respectively, for the quarter ending Sept. 30, 2012, according to Yahoo! Finance.

Exploration Potential
Noble Energy
(NYSE:NBL) held a conference call last week and highlighted the company's extensive global exploration portfolio. The company's most promising prospects are in the Levant Basin in the Eastern Mediterranean where Noble Energy is evaluating a Mesozoic era oil formation. Noble Energy also has exploration acreage in the Falkland Islands and is participating in the Scotia Oil Prospect on one of the offshore blocks here. The company's other prospects are in Nevada, West Africa, Nicaragua and the Gulf of Mexico.

SEE: 5 Biggest Risks Faced By Oil And Gas Companies

Development Potential
Noble Energy was not the only exploration and production company to tout the potential of its oil and gas properties. Continental Resources (NYSE:CLR) is enamored with the oil and liquids potential of the Bakken and Woodford Shale plays, and plans to use these areas to triple production and reserves by 2017. Infrastructure can barely keep up with the rapid development of onshore shale plays in the United States and one solution is trucking the crude oil to terminals so it can be shipped by barge. Marathon Petroleum (NYSE:MPC) is building a truck-to-barge terminal on the Ohio River to handle production from the Utica Shale. The terminal will have barge loading capacity of 50,000 barrels of oil per day and be operational by the end of 2013.

Marathon Petroleum Corporation has made similar investments before, and recently added 12,000 barrels per day of truck-unloading capacity at the company's refinery in Canton, Ohio. Marathon Petroleum Corporation is also increasing the company's exposure in the downstream area and signed a deal to purchase a refinery owned by BP (NYSE:BP). The company will acquire the 451,000 barrel-per-calendar-day Texas City refinery for a base price of $598 million. The deal also includes the purchase of logistics and marketing assets and crude oil inventories with an estimated value of $1.2 billion.

Total (NYSE:TOT) is bullish on exploration prospects in Indonesia and signed production sharing contracts with the government on two offshore blocks. The contracts give Total a 100% participating interest in the Telen and the Bengkulu I - Mentawai blocks. The company plans to conduct a 3D seismic survey on the Bengkulu-I, and to drill one exploration well on the Telen over the next three years.

The Bottom Line
The energy sector may experience even more price volatility than usual this week as the big three oil service operators launch third quarter of 2012 earnings season. Investors should pick through these financial reports for information on current and expected business trends in the sector.

At the time of writing, Eric Fox did not own any shares in any company mentioned in this article.

Related Articles
  1. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  2. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  3. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  4. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  5. Stock Analysis

    When Will Dick's Sporting Goods Bounce Back? (DKS)

    Is DKS a bargain here?
  6. Investing News

    How AT&T Evolved into a Mobile Phone Giant

    A third of Americans use an AT&T mobile phone. How did it evolve from a state-sponsored monopoly, though antitrust and a technological revolution?
  7. Stock Analysis

    Home Depot: Can its Shares Continue Climbing?

    Home Depot has outperformed the market by a wide margin in the last 12 months. Is this sustainable?
  8. Stock Analysis

    Yelp: Can it Regain its Losses in 2016? (YELP)

    Yelp investors have had reason to be happy recently. Will the good spirits last?
  9. Stock Analysis

    Is Walmart's Rally Sustainable? (WMT)

    Walmart is enjoying a short-term rally. Is it sustainable? Is Amazon still a better bet?
  10. Stock Analysis

    GoPro's Stock: Can it Fall Much Further? (GPRO)

    As a company that primarily sells discretionary products, GoPro and its potential falls right in line with consumer trends. Is that good or bad?
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center