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What’s Next for Big Oil After an Uninspiring Earnings Season?

oil and gas

Last week, I wrote that while Q1 profits were expected to be down this year and energy stock prices were higher, that didn’t mean that energy wasn’t a place to be for long-term investors. Well, the big oil companies have now reported, so does that still apply?

The results have been mixed in terms of how the companies performed versus expectations. On Friday, April 26th, for example, Chevron (CVX) and TotalEnergies (TTE) reported beats of analysts’ estimates for earnings per share (EPS), while Exxon Mobil (XOM) and Phillips 66 (PSX) missed expectations for the same metric. Then, on Thursday morning, the last of the big boys to report, Shell (SHEL), recorded a beat. None of the beats or misses were by much, so it is fair to say that oil company earnings in Q1 have been a bit uninspiring, but there have been some underlying themes.

First, while performance against expectations was mixed, profits on an outright basis showed big drops from the same quarter a year ago. Exxon’s bottom line was down 28% and Total’s 22%, with Chevron doing slightly better but still posting earnings that were 16% below Q1 last year. Crude is higher than it was a year ago and spent most of the first quarter climbing from just above $70 at the start of the year to close out the quarter at around $83, so clearly the drop in earnings is not down to the price of oil.

Rather, it is about the fall in natural gas prices. Gas around the world has been depressed by big surplus stocks…

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