The Oil Search Ltd (ASX: OSH) share price will be on watch when the company releases its half-year results tomorrow.
Let's take a look to see how the Oil Search shares performed the last time it reported during February.
What did Oil Search report for FY20?
Oil Search delivered its FY20 full-year result in late February, revealing disappointing numbers across key metrics.
Here's a summary of the financial details that Oil Search posted for its last earnings season.
- Total revenue of US$1,074.2 million, down 32% on the prior year (FY19 US$1,584.8 million)
- Earnings before interest, tax, depreciation and amortisation and exploration (EBITDAX) of US$721.1 million, down 37% on the prior year (FY19 US$1,145.9 million)
- Full year net loss after tax of US$320.7 million, down 203% on the prior year (FY19 net profit after tax US$312.4 million)
- Unfranked final dividend declared of US5 cents per share, down 89% on the prior year (FY19 US4.5 cents per share)
Following the release, Oil Search shares levelled between the $4.20 mark and $4.50 in the aftermath of its FY20 results. The weak result was in line with what investors were expecting Oil Search to report, hence the subtle movement.
However, the company's shares picked up in early March as OPEC (Organisation of the Petroleum Exporting Countries) held a meeting to discuss cutting oil production levels.
What should investors look out for this earnings season?
Goldman Sachs expects Oil Search to report a bumper first-half, with its analysts forecasting the following:
- H1 FY21 revenue of US$673 million, up 7.5% on the prior corresponding period (H1 FY20 US$626 million)
- EBITDAX of US$448 million, down 1% on the prior corresponding period (H1 FY20 US$453 million)
- Net profit after tax of US$107 million, up 348% on the prior corresponding period (H1 FY20 net loss of US$266 million)
- Interim dividend of US1.8 cents per share, up 100% on the prior corresponding period (H1 FY20 nil dividend declared).
The broker noted that Oil Search has retained production and capital expenditure guidance for 2021 so far. However, other operating costs such as royalties, levies, and fuel costs are predicted to weigh down future profits.
Key downside risks include new project and expansion delays, production, LNG and oil prices, drilling results, or instability in PNG.
Nonetheless, Goldman Sachs slapped a "buy" rating on the company's shares with a 12-month price target of $5.15. Based on Friday's closing Oil Search share price of $3.69, this implies an upside of almost 40%.
Oil Search share price snapshot
Over the last 12 months, Oil Search shares have gained 20%, but are flat year to date. The company's share price is in the middle of its 52-week range of $2.50 and $4.62.
Oil Search commands a market capitalisation of roughly $7.6 billion, with approximately 2 billion shares on issue.
