Energy Sector Faces 26% Earnings Drop as Q2 Earnings Season Begins

The energy sector is expected to report a 26% earnings drop in Q2 due to lower oil and gas prices. FactSet has lowered EPS estimates for oil and gas companies by 18.8% to $22.7 billion. The sector is expected to report the largest revenue decline amongst the 11 US market sectors. Big Oil companies such as Chevron Corp., Exxon Mobil, ConocoPhillips, Hess Corporation, Valero Energy, and Occidental Petroleum have all seen significant decreases in expected earnings.

The energy sector is bracing for a substantial earnings decline in the second quarter (Q2) of 2025, with FactSet projecting an aggregate earnings drop of 26%. This significant reduction is primarily attributed to lower oil and gas prices, which have had a profound impact on the sector's profitability. FactSet has revised earnings per share (EPS) estimates for oil and gas companies down by 18.8%, from $27.9 billion to $22.7 billion [4].

The energy sector is expected to report the largest revenue decline among the 11 U.S. market sectors, with a projected decline of 12.7%. This revenue decrease is primarily driven by lower oil and gas prices, which have negatively impacted the sector's overall revenue. Four out of five sub-industries within the energy sector are expected to report earnings declines, with Integrated Oil & Gas (-34%), Oil & Gas Refining & Marketing (-31%), Oil & Gas Exploration & Production (-20%), and Oil & Gas Equipment & Services (-18%) leading the way [4].

Major oil companies such as Chevron Corp., Exxon Mobil, ConocoPhillips, Hess Corporation, Valero Energy, and Occidental Petroleum have all seen significant decreases in their expected earnings. Exxon Mobil, for instance, is expected to report a $1.56 per share in earnings, down from the previous estimate of $1.66, largely due to the impact of lower oil and gas prices [1]. Similarly, ConocoPhillips is expected to report a 27.3% year-over-year decline in earnings, with the Zacks Consensus Estimate for its earnings pegged at $1.44 per share [2].

Analysts have also noted the impact of lower oil and gas prices on other companies in the sector. EOG Resources, Inc. is expected to report a 33% year-over-year decline in earnings, with the Zacks Consensus Estimate for its earnings pegged at $2.13 per share [2]. The broader energy sector is expected to report an earnings decline of -25.6%, much worse than the -8.4% consensus by analysts on March 31 [4].

Despite the challenging earnings outlook, some analysts remain optimistic about the sector's long-term prospects. TD Cowen analyst John Blackledge, for example, has raised his price target for Meta Platforms (META) stock to $800, citing improving outlooks from the easing of tariffs as part of his rationale [3]. However, the energy sector's earnings decline in Q2 is expected to be significant, and investors should be prepared for potential volatility in the sector's stock prices.

References:
[1] https://finance.yahoo.com/news/exxon-apos-results-show-impact-185818997.html
[2] https://www.tradingview.com/news/zacks:699ad842c094b:0-softer-oil-gas-prices-in-q2-will-xom-s-bottom-line-be-affected/
[3] https://www.investors.com/news/technology/meta-stock-price-target-hike-q2-results-2025-facebook-ai/?mod=newsviewer_click&refcode=aflMarketWatch&src=A00619
[4] https://oilprice.com/Energy/Energy-General/Energy-Sector-Faces-26-Earnings-Drop-as-Q2-Season-Begins.html