Energy Sector Faces 26% Earnings Drop as Q2 Season Begins
Earnings season is here again, with second-quarter earnings season set to begin in earnest during the second full week of July. According to FacetSet Earnings Insight, companies in the S&P 500 are expected to report aggregate earnings growth of 5.0%, marking the lowest growth by the market in seven quarters. FactSet has reported that Wall Street is most bearish about the energy sector, and has lowered EPS estimates for oil and gas companies by the largest percentage amongst all 11 market sectors at -18.8% to $22.7 billion from $27.9 billion predicted at the beginning of the quarter. The energy sector is now expected to report an earnings decline to the tune of -25.6%, much worse than the -8.4% consensus by analysts on March 31.
At the sub-industry level, 4 of the 5 sub-industries in the energy sector are expected to report a decline in earnings, led by Integrated Oil & Gas (-34%), Oil & Gas Refining & Marketing (-31%), Oil & Gas Exploration & Production (-20%), and Oil & Gas Equipment & Services (-18%). Only the Oil & Gas Storage & Transportation sub-industry is expected to report positive earnings growth at 13%. Similarly, the energy sector is expected to report the largest revenue decline amongst the 11 U.S. market sectors, thanks to lower oil and gas prices. 3 of the 5 sub-industries in the sector are predicted to report revenue declines, led by Oil & Gas Refining & Marketing (-15%), Integrated Oil & Gas (-14%), and Oil & Gas Equipment & Services (-7%). On the other hand, Oil & Gas Storage & Transportation( and Oil & Gas Exploration & Production are expected to report year-over-year increases in revenue by 24% and 10%, respectively.
Big Oil companies have been the largest contributors to the decrease in expected earnings, led by Chevron Corp. (from $2.53 to $1.76), Exxon Mobil ( from $1.78 to $1.53), ConocoPhillips (from $1.84 to $1.38), Hess Corporation (from $1.71 to $1.20), Valero Energy (from $2.66 to $1.87) and Occidental Petroleum (from $0.77 to $0.37).
Earlier this week, Exxon Mobil (NYSE:XOM) and Shell Plc (NYSE:SHEL) warned of lackluster second-quarter scorecards due to lower oil and gas prices. According to Exxon, declining liquids prices, including crude oil and condensate oil, could lower its second quarter upstream earnings by $800M-$1.2B compared with the first quarter, while lower natural gas prices could cut earnings by $300M-$700M, bringing the combined cut to $1.5B. Exxon said in an SEC filing that it will release Q2 2025 results on 08/01/2025.
Shell announced on Monday that it expects its overall corporate adjusted earnings to remain negative, with a projected loss of $400 million to $600 million vs. $500 million loss posted in the first quarter. The company’s Chemicals & Products segment to negatively impact earnings despite improved margins. The company’s Integrated Gas production is expected to clock in between 900,000 and 940,000 kboe/d, down from 927,000 kboe/d last quarter, with weaker trading performance. Upstream production is expected to decline to 1.66M–1.76M kboe/d compared with 1.85M kboe/d in the previous quarter, mainly due to scheduled maintenance coupled with sale of SPDC in Nigeria. Shell will publish its final Q2 results on July 31, 2025.
Energy Transfer LP (NYSE: ET) announced on Monday that it will release earnings for Q2 2025 on August 6, 2025, after the market closes. The company has a consensus EPS forecast of $0.32 for the quarter, lower than $0.35 reported in Q2 2024. Last month, Energy Transfer announced that it will supply Chevron with an additional 1M metric tons/year of LNG from its Lake Charles LNG export facility. The company owns and operates one of the largest energy portfolios of oil and gas assets in the United States.
Crescent Energy Company (NYSE:CRGY) is estimated to report earnings on 08/04/2025. The consensus EPS forecast for Q2 2025 $0.17, a nearly 50% decline compared to last year’s comparable quarter. However, the company has a history of beating Wall Street estimates, having exceeded consensus estimates by nearly 70% over the past two quarters.
However, it’s not going to be all doom and gloom, with some energy companies expected to post some earnings growth. To wit, electric and gas utility giant, Duke Energy Corp. (NYSE:DUK), has a consensus EPS forecast of $1.29 for the second quarter, good for 9.3% Y/Y growth. The company is expected to report earnings on 08/05/2025.
By Alex Kimani for Oilprice.com
