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Cobalt International Energy’s 2Q17 Earnings: Worse Than Expected

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Adjusted net income for 2Q17

Cobalt International Energy (CIE) announced its 2Q17 earnings on August 8, 2017, before the market opened. According to the company’s earnings press release, it had a worse-than-expected loss of ~$71.0 million. Wall Street analysts were expecting a loss of ~$21.0 million. On a year-over-year basis, CIE’s losses increased more than 26.0%. In 2Q16, it reported a lower loss of $56.0 million. Even on a sequential basis and excluding any one-time items, CIE’s losses increased ~3.0%. In 1Q17, it reported a loss of ~$69.0 million.

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Reported net income for 2Q17

Cobalt International Energy’s 2Q17 adjusted net income excludes the one-time benefits and charges totaling -$115.0 million. The majority of that is related to the non-cash loss on embedded derivatives related to debt. Including these one-time items, CIE’s reported net income on a GAAP (generally accepted accounting principles) basis was lower at -$186.0 million, or -$6.28 per share, compared to -$206.0 million, or -$7.52 per share, in 2Q16.

How CIE’s quarterly net income is trending in 2017

In 1Q17, CIE reported a worse-than-expected loss of $69.0 million. Wall Street analysts were expecting a profit of $66.0 million. On a year-over-year basis, CIE’s losses increased ~130.0% in 1Q17 when compared with a net income of -$30.0 million in 1Q16. However, excluding any one-time items and on a sequential basis, CIE’s 1Q17 loss is lower by ~38.0% from a loss of ~$112.0 million in 4Q16.

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CIE’s peers

CIE’s peers ConocoPhillips (COP) and Southwestern Energy (SWN) reported adjusted net incomes of ~$178.0 million and ~$40.0 million, respectively, in 2Q17. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) generally invests at least 80.0% of its total assets in oil and gas exploration companies.

In this series

We’ve looked at Cobalt International Energy’s 2Q17 net income. In the rest of this series, we’ll look at the company’s revenues, production, cash flows, and Wall Street analysts’ ratings.

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