Why Oil Stocks Like Chevron, Exxon, and Schlumberger Are Set to Outperform in 2025–2026

The global energy sector is navigating a complex landscape in 2025–2026, marked by bearish oil prices, geopolitical uncertainties, and the lingering shadow of the energy transition. Yet, within this volatility, oil stocks like Chevron (CVX), ExxonMobil (XOM), and Schlumberger (SLB) are positioned to outperform. Their resilience stems from structural demand trends, strategic production visibility, and robust balance sheets that insulate them from market headwinds. For investors seeking stability and long-term growth, these companies offer a compelling case.

Structural Demand Resilience: The Permian Basin and Beyond

The Permian Basin remains the cornerstone of U.S. oil production, accounting for 46% of crude output and 20% of natural gas production. Despite challenges like constrained takeaway capacity and oversupply, new infrastructure projects—such as the 2.5 Bcf/d Matterhorn Express Pipeline—are set to alleviate bottlenecks by 2026. This will stabilize prices and unlock growth for operators like Chevron and Exxon, which have deep exposure to the basin.

Chevron's recent $53 billion acquisition of Hess Corp. has expanded its Permian footprint, enabling it to maintain a production plateau of 1 million barrels per day through 2040. Exxon, meanwhile, is doubling its Permian output to 2.3 million bpd by 2030, supported by $27–$29 billion in annual capital expenditures. Both companies are leveraging digital technologies to optimize well productivity, reducing breakeven costs to $30–$50 per barrel.

Strategic Production Visibility: High-Return Assets and Energy Transition

Chevron and Exxon are not only focused on traditional hydrocarbons but are also investing in long-cycle projects that align with the energy transition. Exxon's $60 billion acquisition of Pioneer Natural Resources and its $140 billion 2030 corporate plan emphasize low-cost-of-supply assets in the Permian and Guyana. In Guyana, Exxon's Stabroek Block is projected to produce 1.7 million bpd by 2030, generating stable cash flows.

Chevron's 30% stake in the Stabroek Block complements its Gulf of Mexico operations, where it plans to maintain a 1 million bpd plateau through 2040. The company is also allocating 10% of its $15 billion annual capital budget to lower-carbon initiatives, including lithium extraction via direct lithium extraction (DLE) technology in the Smackover Formation.

Schlumberger, as a key oilfield services provider, is capitalizing on the sector's shift toward efficiency and sustainability. Its international backlog and long-cycle projects position it as a high-beta play if oil demand rebounds. Schlumberger's collaboration with Genvia and Air Products on clean hydrogen technologies further diversifies its revenue streams, aligning with Chevron and Exxon's decarbonization goals.

Balance Sheet Strength: A Shield in a Bear Market

ExxonMobil's financial discipline is a standout factor. With a net-debt-to-capital ratio of 8%, $15.7 billion in cash reserves, and a 30.3% dividend payout ratio, Exxon is well-positioned to weather prolonged low-price environments. Its $20 billion annual buyback target and $13.5 billion in cost reductions since 2019 underscore its commitment to shareholder returns.

Chevron, while more leveraged (14.8% net-debt-to-capital ratio), has reduced 2025 capital spending by $2 billion to preserve liquidity. Its $4.9 billion in free cash flow and $29.47 billion in total debt are manageable, especially with the integration of Hess Corp. expected to boost production and cash flow by 2026.

Schlumberger's stock has declined 12.8% year-to-date in 2025, but its $49.28 analyst price target (a 47% upside) reflects optimism about a recovery in oil prices and long-cycle demand.

Geopolitical and Macroeconomic Catalysts

The energy sector's fortunes are intertwined with global macroeconomic trends. The Federal Reserve's projected 150 basis points in rate cuts by 2026 could stimulate industrial activity and travel, boosting oil demand. Meanwhile, OPEC+'s planned 2.2 MMbbl/d output restoration in 2025 may create supply-demand imbalances, pushing prices higher.

Geopolitical risks, such as a potential Russia-Ukraine peace deal or Middle East tensions, could further disrupt markets. However, the underappreciated demand from emerging economies—particularly in residential and industrial sectors—provides a floor for prices.

Investment Thesis: Positioning for a Rebound

Chevron and Exxon's strong balance sheets, high-return assets, and disciplined capital allocation make them ideal for risk-averse investors. Schlumberger, though more volatile, offers asymmetric upside if oil prices rebound.

For Chevron, the integration of Hess Corp. and Permian production growth justify a 12–15% earnings multiple. Exxon's $30-per-barrel breakeven and $20 billion buyback target support a 14–17% multiple. Schlumberger's 47% upside potential, driven by long-cycle projects and energy transition partnerships, makes it a speculative but high-reward play.

Conclusion: A Sector Poised for Resilience

In a bearish market environment, Chevron, Exxon, and Schlumberger stand out due to their structural demand visibility, strategic production initiatives, and financial resilience. While oil prices may remain volatile, these companies are positioned to outperform through disciplined execution, technological innovation, and alignment with the energy transition. For investors seeking a mix of stability and growth, these stocks represent a compelling opportunity in 2025–2026.