Berry Petroleum (NASDAQ: [stock_market_widget type=”inline” template=”generic” color=”default” assets=”BRY” markup=”{symbol} {currency_symbol}{price} ({change_pct})” api=”yf”]) is off to a solid start in 2019, with shares of the upstream oil producer having shot up nearly 45% so far this year thanks to the rally in crude oil prices. But Berry’s momentum will be put to test when the company releases its fiscal fourth-quarter and full-year results on March 6. Let’s see what Wall Street is expecting from Berry.
Big Expectations For Berry Petroleum
Analysts expect Berry to deliver earnings of $0.44 per share on revenue of $153.5 million. Now, Berry closed its initial public offering in July last year, so there’s no prior data with which we can compare its upcoming results. However, there’s a good chance of the exploration and production company moving above its IPO price of $14 per share this year because Wall Street is anticipating strong revenue growth.
For 2019, Berry’s revenue is expected to increase nearly 34% year over year to $620.5 million, while earnings are expected to increase from an estimated $1.53 per share in 2018 to $1.63 per share this year. But investors should note that Berry doesn’t expect its production to increase by much this year.
The company is on track to produce between 27,000 and 30,000 barrels of oil equivalent per day in 2018, around 80% of which will be oil. For 2019, the production is expected to range between 29,000 and 32,000 barrels of oil equivalent per day, a potential increase of 7% over last year. Meanwhile, capital expenses are expected to jump from $150 million last year to $245 million in 2019 at the mid-point of the company’s guidance.
As such, Berry will need a massive improvement in oil prices this year to deliver the revenue growth that analysts are expecting. That is far from guaranteed.
Oil Prices to Decide Berry’s
Berry has enjoyed strong oil pricing momentum so far. The company’s average realized price of oil stood at just above $67 per barrel during the September quarter last year. The realized price closely reflected the West Texas Intermediate (WTI) oil price of $69.50 per barrel.
However, WTI oil prices have tumbled in recent months, with the commodity now trading at just above $57 per barrel, rising from December 2018’s lows of $42 per barrel. As such, the likelihood of Berry missing estimates is strong, and in such a scenario, the company’s recent stock price momentum will definitely take a hit. At the same time, the company’s 2019 outlook could also take a hit because of the weak pricing.
So, Berry Petroleum investors should brace for a potential crash when it releases its earnings early in March.
