Analysts are looking at 2026 as a timeframe for a rise in Big Oil earnings
Big Oil's third-quarter results may be boosted by marginally higher oil and refining prices, as well as stronger results in the refinery sector. However, some analysts are more concerned with how the global oil majors will set the stage for the year 2026 when they report their results next week.
According to LSEG's analyst estimates, Shell, the British oil giant, and TotalEnergies, the French major, will begin earnings season on a Thursday. Both companies are expected to announce 18% and 11 % increases in their adjusted net income compared to last quarter, though they are both down from a full year ago. Oil producers had a turbulent year, marked by unpredictability in trade tariffs, and increased oil production from OPEC+ nations, which pushed down prices, resulting in some of the lowest earnings recorded since the pandemic. International Energy Agency predicts that the supply woes will continue in 2019, as the demand is sluggish and there's an excess of 4 million barrels daily. Brent crude average prices declined by 13% in the third quarter compared to the same period of last year, but were up by 2% compared to the second quarter. The average U.S. Natural Gas prices fell 12% in the third quarter compared to last year.
In a research note from Barclays, Betty Jiang stated that "greater emphasis will be placed on the early 2026 outlook". She also noted that she was watching for comments on tariff cost impacts and gas outlooks for next year due to the continued increase in power demand for AI data centers.
TotalEnergies stated in its trading update for this month that higher production and rising refining margins would help boost the third quarter earnings. Analysts are interested in how TotalEnergies will deal with its debt, which has risen 89% since the first half 2025. TotalEnergies announced last month that it would reduce buybacks, cut capital spending, and sell more mature hydrocarbon and power assets. However, the plans did not ease investor concerns due to lower commodity prices anticipated next year.
U.S. MAJORS CENTER ON INTEGRATION AND REFINING MARGINS
Analysts will be watching for any early indications of future operational updates from Exxon Mobil, and Chevron. Both companies report their results on Friday. Chevron is expected to announce $3.4 billion, or $1.71 a share, in adjusted profits, after closing the $55 billion purchase of Hess last July. In a research note, RBC Capital Markets' Biraj Borkhataria stated that the results and call will be used to get answers on important topics as well as gauge how well Hess is being integrated. Chevron announced in September that Hess would contribute between $50 million and $150 million of adjusted earnings, excluding severance costs and other transaction expenses. In a highly anticipated investor day scheduled for November 12, the company will give further guidance. Exxon's refining results may have boosted earnings up to $700m compared to the second quarter.
Analysts at TD Cowen wrote in a report that they expect Exxon will reduce its annual capex expenditures on early-stage opportunities. These are currently $2.5 billion a yearly. However, any update to this could be made during a corporate update scheduled for the month of December. Exxon is open about its pursuit of acquisitions and will probably answer more questions during the conference call. LSEG data predicts that BP will release its third quarter results in November. The net profit should be down around 10% compared to a year earlier, to just under $2 billion. According to estimates from three banks, the higher refining profits in the Customers and Products division should help to offset some of the negative impact. Analysts also want to know the latest on the company's plans to sell the Castrol lubricants division, which is a crucial step in its divestment plan to increase its share price.
(source: Reuters)
