An oil pump jack operates at the Inglewood Oil Field in Culver City, California, U.S., on Sunday, July 11, 2021.
Kyle Grillot | Bloomberg | Getty Images
LONDON — Oil and gas majors are likely to report bumper second-quarter earnings in the coming days, energy analysts have told CNBC, following a brutal 12 months by virtually every measure.
The expected upswing would build on a surprisingly strong showing in the first quarter and lend further support to the oil and gas industry’s efforts to pay down debt and reward investors.
“Europe’s integrated oil sector already enjoyed surprisingly strong earnings in 1Q, but 2Q is set to show further improvement as commodity prices took another step up,” analysts at Morgan Stanley said in a research note.
International benchmark Brent crude futures rose to an average of $69 a barrel in the second quarter, the Wall Street bank said, up from an average of $61 in the first three months of the year. The oil contract was last seen trading at around $73.57.
Oil companies that ignore climate in their earnings calls will be seen as laggards. Long-term investors will conclude they are financially risky.
Kathy Hipple
Finance professor at Bard College
Analysts at Morgan Stanley noted that energy major share prices continue to be anchored by their dividend distributions. Notwithstanding substantial increases to free cash flow forecasts, the bank said Big Oil dividend expectations remain “rather static.”
“The energy transition confronts investors with much uncertainty, and the sector’s capital allocation track record has been mixed at best over the last decade. Hence, investors are only valuing the cash flow paid to them, with little credit given for cash flow retained within companies,” they said.
“As the dividend outlook has not improved much, and dividend yields in aggregate are already low by historical standards, share prices have trailed the earnings outlook considerably.”
In Europe, Royal Dutch Shell and TotalEnergies will report second-quarter earnings on July 29, with BP scheduled to follow on Aug. 3. Stateside, ExxonMobil and Chevron are expected to publish their latest figures on July 30, while ConocoPhillips will report second-quarter earnings on Aug. 3.
Fuel prices on a sign at a BP gas station in Louisville, Kentucky, on Friday, Jan. 29, 2021.
Luke Sharrett | Bloomberg | Getty Images
Rene Santos, manager for North America supply at S&P Global Platts Analytics, told CNBC via email that he expects second-quarter earnings from U.S.-based energy companies to be “significantly higher” when compared to the same period in 2020.
This is “mainly due to much higher oil prices,” he added. “In addition, the majors, large and mid-cap companies have kept capital discipline and have continued to focus on paying down debt and increasing free cash flow instead of increasing activity [drilling and completion] despite higher oil prices.”
Santos said S&P Global Platts Analytics also foresee an increase in the reporting of ESG activity, noting that it “looks like pressure from environmental groups and fear of more regulations from the current administration is persuading many companies to do more to decrease emissions.”
Growing climate risk
The oil and gas industry was sent into a tailspin last year as the coronavirus pandemic coincided with a historic fuel demand shock, plunging commodity prices, unprecedented write-downs and tens of thousands of job cuts. The torrent of bad news prompted the head of the International Energy Agency to suggest it may come to represent the worst year in the history of oil markets.
Oil prices have since rebounded to multi-year highs and all three of the world’s main forecasting agencies — OPEC, the IEA and the U.S. Energy Information Administration — now expect a demand-led recovery to pick up speed in the second half of 2021.
Clark Williams-Derry, energy finance analyst at IEEFA, a non-profit organization, said he expects oil and gas companies to try to claim a clean bill of health after a bumper second quarter. “That’s the mantra that we will hear,” he told CNBC via telephone.
However, while energy majors will likely have had the opportunity to pay down some debt after generating a significant chunk of cash from their operations, Williams-Derry said that this hides the fact that these companies have not invested much in future production.
Members of the environmental group MilieuDefensie celebrate the verdict of the Dutch environmental organisation’s case against Royal Dutch Shell Plc, outside the Palace of Justice courthouse in The Hague, Netherlands, on Wednesday, May 26, 2021. Shell was ordered by a Dutch court to slash its emissions harder and faster than planned, dealing a blow to the oil giant that could have far reaching consequences for the rest of the global fossil fuel industry.
Peter Boer | Bloomberg | Getty Images
“What I think the market is starting to signal is that it kind of likes when the oil companies shrink and aren’t going all out into new production but they are using the cash that their operations are generating to pay down debt and reward investors.”
Longer term, Williams-Derry warned there’s a “tremendous degree” of investor skepticism about the business models of oil and gas firms, citing the deepening climate crisis and the urgent need to pivot away from fossil fuels.
“We saw earlier in the year signs of a sea change in investor thinking about, frankly, the legal status of some of the supermajors,” he said, referring to a series of landmark courtroom and boardroom defeats for the likes of Royal Dutch Shell, ExxonMobil and Chevron.
“So, even if you are riding high for a quarter or two when prices are high, the reality is still that stock prices are way below the market as a whole and there’s just not the investor enthusiasm for the old business model that I think these companies probably expected to see,” he said.
Energy transition
Kathy Hipple, finance professor at Bard College in New York, told CNBC via email that she believes two key themes are likely to emerge this earnings season: Addressing investor concerns around climate risk and the outlining of new business models to survive a pivot toward renewables.
“Investors are future-oriented and will look past a short-term pop in earnings compared to last year’s dismal second-quarter results,” Hipple said. “They want to see concrete business strategies that acknowledge the energy transition that is gathering speed.”
“Oil companies that ignore climate in their earnings calls will be seen as laggards. Long-term investors will conclude they are financially risky,” Hipple said.
America’s heartland is full of rural communities that are miles away from its major cities, both geographically and culturally – but that doesn’t mean these more sparsely populated regions can’t reap the benefits of electrification. In fact, EVs offer rural drivers even more benefits than they do to city-dwellers!
“An electric lifestyle would be a boon to our rural heartland,” wrote the Union of Concerned Scientists’ Maria Cecilia Pinto de Moura. “Rural communities across the country have their own distinguishing characteristics, but certain shared characteristics such as driving distances, the type of vehicles driven, and socio-economics are factors which contribute to this larger potential to benefit from vehicle electrification.”
Pinto de Moura went on to outline five ways rural and country drivers could benefit from going electric – but that was in 2021, and a whole lot has changed in the nearly five years since.
As such, I thought it was high time we revisit some of the reasons EVs could be a great fit for rural lifestyles, see if we could uncover any new ones, and outline the reasons we think rural drivers should rush to embrace electric vehicles in the coming calendar year.
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1. More miles means more savings
David Blenkle’s 252,000 mile Mustang Mach-E; via Ford.
When you hear that line about, “the average American drives 30 to 40 miles a day,” remember that in towns like Wellington, Ohio, or Colfax, Washington, 30 miles is a grocery run. Each way. So when people trot out that old line about range anxiety, what rural drivers actually hear isn’t reassurance. It’s dismissal — a suggestion that they drive too far for an EV to work, when nothing could be further from the truth.
A recent study by Rural Climate Partnership found that rural drivers spend an average of 44% more on fuel than city dwellers, and that the top 3.6% of rural drivers — the “supermilers” who rack up the most miles — could save over $4,000 each year by switching to electric fuel.
2. Electric trucks have arrived
Sierra AT4 EV towing a boat; via GM.
Country guys and gals love their pickups, and arguably the single biggest difference between the EV markets of 2021 and 2025 is the proliferation of electric trucks and SUVs ready to help haul, chore, camp, and tow.
Why not save your expensive horses from breathing in gas and diesel exhaust. Haul ’em with your quiet new EV, instead!
Unlike many apartment-dwelling urban drivers, most rural owners can charge right at home. More than 80% of rural households have a driveway or garage that are ideal for overnight Level 2 charging, and many already have a 240V outlet, keeping setup costs (if there even are any) to a minimum.
Plug in before bed, wake up to a full battery every morning, and do it for pennies on the dollar, especially with off-peak rates.
4. Lifesaving battery power
F-150 Lightning plugged in; via Ford.
If disaster strikes and you lose power, many electric trucks have the ability to power your home and appliances with the energy stored in their massive batteries – either from the truck itself, or through a V2X home battery system. If you live in an area prone to extreme weather events, the ability to keep medication refrigerated can be a literal life-saver!
As such, getting behind the wheel of an ultra-powerful, ultra smooth-running electric pickup truck from your favorite brand is easier than ever.
6. Energy independence and American jobs
GM Defense electric military vehicle; via GM.
At the risk of sounding like a paranoid red hat, rural Americans are proud Americans – just like rural Canadians are proud Canadians. Unfortunately, every gallon of gas burned in their pickups and SUVs came from oil drilled, refined, and traded on global markets — and that means supporting the oil business and economies of nations whose values don’t always align with, or maybe are even outright hostile to theirs.
Switching to an EV can help more of that money right here at home, especially as more and better battery recycling efforts come online and newer battery and anode/cathode chemistries are developed, reducing dependence on rare Earth metals, cobalt, and even lithium.
There are obviously more reasons to go electric than these, from lower cost of ownership to saving the planet to absolutely killer burnouts that would make the one-tire-fire era IROC Camaros hang their 305s in shame – but I think those kind of fade into the background as being appealing to all, instead of being especially appealing to rural drivers.
That said, it’s been a long time since I was back in Ohio, so maybe I’ve forgotten what it’s like. You guys are smart, head on down to the comments and let me know what I missed!
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Honda’s electric SUV is on a roll. The Prologue was the third best-selling EV in the US in August, trailing only the Tesla Model Y and Model 3. Even with the federal EV tax credit now expired, Honda is still offering nearly $17,000 off the Prologue.
Honda Prologue registrations surge with huge incentives
As the $7,500 credit expired at the end of September, automakers rolled out steep discounts, many topping five figures with combined incentives.
The Honda Prologue has been one of the most discounted EVs over the past year or so. Last month, buyers could score up to over $20,000 in combined savings, including a $7,500 credit, $9,500 in financing bonuses, trade-in offers, and 0% interest for six years.
According to the latest registration data from S&P Global Mobility (via Automotive News), the incentives helped propel the Honda Prologue to become the third most popular EV in August.
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A total of 138,457 EVs were registered in the US in August, up 24% from a year ago. Honda Prologue registrations surged 81% to 9,005 vehicles, the data showed.
2025 Honda Prologue Elite (Source: Honda)
Honda’s electric SUV had more registrations than the Chevy Equinox EV in August, and it’s based on the same GM Ultium platform. However, the Equinox is still outselling the Prologue through September.
Since some automakers don’t report monthly or US sales numbers, the S&P Global Mobility data offers a snapshot of sales performance.
2025 Prologue Elite (Source: Honda)
The Prologue was yet again one of the most discounted models, with incentives of $12,704 in August, according to Motor Intelligence. Last August, Prologue incentives were just $5,813. Honda’s gas-powered CR-V had just $2,016 in incentives in August.
The interior of the 2025 Honda Prologue Elite (Source: Honda)
Although the $7,500 credit expired on September 30, Honda is still offering generous incentives for Prologue buyers and lessees.
The 2025 Honda Prologue is available with up to $16,550 in lease cash in most states. The offer includes $5,000 in lease bonus cash, $8,250 in Honda lease cash, and a $3,3300 loyalty or conquest bonus. Honda is offering the deal until November 11. Or, you can opt for 0% APR financing for up to 60 months.
2025 Honda Prologue trim
Starting Price*
EPA Range (miles)
EX (FWD)
$47,400
308
EX (AWD)
$50,400
294
Touring (FWD)
$51.700
308
Touring (AWD)
$54,700
294
Elite (AWD)
$57,900
283
2025 Honda Prologue prices and range by trim (*Does not include $1,450 D&H fee)
Although the Acura ZDX will not return for a 2026 model year, Honda is planning to launch the 2026 Prologue. We have yet to learn prices, but we could see it priced slightly lower due to the loss of the $7,500 EV credit.
Hyundai announced earlier this month it’s reducing 2026 IONIQ 5 prices by up to nearly $10,000 on some trims. The 2026 Hyundai IONIQ 5 now starts at under $35,000. Hyundai is offering leases as low as $289 per month right now. Will Honda match it?
Kia has a new idea. So you don’t miss the smell of gasoline too much when you trade in for its new EV, Kia is giving away free gas-scented air fresheners.
Kia offers gas-scented car fresheners for EV4 buyers
It’s time to trade that new car scented tree dangling from your rearview mirror for a jerry can that smells like… gasoline?
Astara Auto Finland, which imports Kia’s vehicles into Finland, is giving away free gasoline-scented car fresheners for those buying the new EV4.
Although it may seem like Kia’s poking fun at the gas guzzlers, it’s actually partly designed to ease your transition to an EV.
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“Giving up the combustion engine can feel like a huge step, just like giving up anything else that is familiar. We wanted to add a touch of nostalgic fun to the transition with a gas-scented car freshener,” Klaus Pohjala, commercial director at Astara Auto Finland, said.
The scent was created by Finland’s sole perfumier, Max Perttula, who has developed fragrances for other premium brands.
Kia starts EV4 hatchback production in Europe, its first EV built in Europe (Source: Kia UK)
According to Pertulla, he mostly used scents found in men’s fragrances, but added a bit of Jasmine to top things off. “It may sound wild that it’s jasmine of all things that contains compounds with a fragrance that creates associations with gasoline,” Pertulla said, but it works.
The fragrance came to life after metalizing and sanding it with amber compounds, birch tar, and galbanum, he explained.
The Kia EV4 hatchback at IAA Mobility 2025 in Munich (Source: Kia)
Of course, it’s a bit of a “cheeky campaign,” Pertulla said, but Kia aims to add a little fun for new EV drivers. The latest campaign comes after Kia’s importer ran a controversial front-page ad last year mocking traditional luxury automakers, claiming EVs have leveled the playing field.
The EV4 is rolling out in Europe, in both hatchback and sedan variants. Early next year, Kia will launch the sedan version in the US.
Do you miss the smell of gas? After driving an EV for years, I still think that it’s one of the best parts of owning one. Drop us a comment below and let us know what you think.
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