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We are yet to get first-quarter 2025 results from the energy companies, with the oil-energy sector’s earnings season to start this week. In the meantime, Exxon Mobil Corporation XOM has already offered an early glimpse of how the quarter might have shaped up. As oil and natural gas prices were buoyant in the March quarter, we expect BP plc BP and SLB SLB to beat on first-quarter earnings.
Favorable Q1 Oil & Gas Prices
Per the data from the U.S. Energy Information Administration (“EIA”), the average Cushing, OK WTI spot prices for January, February, and March of this year were $75.74, $71.53 and $68.24 per barrel, respectively. Thus, the overall pricing environment was favorable in the first quarter of 2025, as the breakeven costs of the exploration and production companies in the shale plays are significantly lower.
However, although crude prices were advantageous in the March quarter of this year, the overall prices of the commodity were a bit higher at $74.15, $77.25 and $81.28 per barrel in January, February and March of 2024, respectively. Hence, the oil-energy sector is likely to have generated lower total earnings in the first quarter of 2025 as compared to the prior-year quarter.
Our data suggests that in the March quarter of 2025, the sector will probably generate total earnings of $27.5 billion, lower than $30.5 billion in the first quarter of 2024.
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Notably, the pricing scenario for natural gas was not only healthier but also favorable in the first quarter of 2025.
Upstream Firms Appear Well-Poised Ahead of Q1 Earnings
Since the prices of both crude oil and natural gas were favorable for exploration and production activities, upstream energy players will likely report handsome first-quarter results. Oilfield service players will also likely remain in the sweet spot since they help upstream firms set up oil and gas wells effectively.
XOM, one of the largest integrated energy players, recently reported in an SEC filing that it expects its upstream earnings for the March quarter to increase sequentially by as much as $800 million. The company attributed advantageous oil and gas prices for the improvement. Moreover, ExxonMobil expects its Energy Products business unit to witness a sequential improvement of $300-$700 million owing to the changes in industry margins.
Here’s How to Pick the Right Stocks
With the existence of a number of players in the sector, finding the right energy stocks that have the potential to beat on earnings can be daunting. Our proprietary methodology, however, makes it fairly simple.