What to expect as Big Oil reports second-quarter earnings

Published

4 years ago

July 26, 2021

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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.

“Big Oil” companies, referring to the world’s largest oil and gas majors, still face significant challenges and uncertainties, however.

These include the remarkable success of shareholder activism in recent months, a “tremendous degree” of ongoing investor skepticism and intensifying pressure to massively reduce fossil fuel use in order to meet the demands of the climate emergency.

“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.”

She argued it was important to note that these earnings will be announced “against a backdrop of climate disasters around the globe,” from extreme heat in the Pacific Northwest to flooding in Europe and China.

“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.

Environment

First Solar opens a Louisiana factory that’s 11 Superdomes big

Published

13 hours ago

November 21, 2025

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First Solar opens a Louisiana factory that’s 11 Superdomes big

First Solar Louisiana — Photo: First Solar

First Solar just cut the ribbon on a huge new factory in Iberia Parish, Louisiana, and it dwarfs the New Orleans Superdome. The company’s $1.1 billion, fully vertically integrated facility spans 2.4 million square feet, or about 11 times the size of the stadium’s main arena.

The factory began production quietly in July, a few months ahead of schedule, and employs more than 700 people. First Solar expects that number to hit 826 by the end of the year. Once it’s fully online, the site will add 3.5 GW of annual manufacturing capacity. That brings the company’s total US footprint to 14 GW in 2026 and 17.7 GW in 2027, when its newly announced South Carolina plant is anticipated to come online.

The Louisiana plant produces First Solar’s Series 7 modules using US-made materials — glass from Illinois and Ohio, and steel from Mississippi, which is fabricated into backrails in Louisiana.

The new factory leans heavily on AI, from computer vision that spots defects on the line to deep learning tools that help technicians make real‑time adjustments.

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Louisiana Governor Jeff Landry says the investment is already a win for the region, bringing in “hundreds of good-paying jobs and new opportunities for Louisiana workers and businesses.” A new economic impact analysis from the University of Louisiana at Lafayette projects that the factory will boost Iberia Parish’s GDP by 4.4% in its first full year at capacity. The average manufacturing compensation package comes in at around $90,000, more than triple the parish’s per capita income.

First Solar CEO Mark Widmar framed the new facility as a major step for US clean energy manufacturing: “By competitively producing energy technology in America with American materials, while creating American jobs, we’re demonstrating that US reindustrialization isn’t just a thesis, it’s an operating reality.”

This site joins what’s already the largest solar manufacturing and R&D footprint in the Western Hemisphere: three factories in Ohio, one in Alabama, and R&D centers in Ohio and California. Just last week, First Solar announced a new production line in Gaffney, South Carolina, to onshore more Series 6 module work. By the end of 2026, the company expects to directly employ more than 5,500 people across the US.

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Environment

Chevy previews a sporty new EV, but will it actually come to life?

Published

13 hours ago

November 21, 2025

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Chevy previews a sporty new EV, but will it actually come to life?

No, it’s not the new Bolt. GM’s design team previewed a new high-riding “sporty Chevrolet EV” that should be brought to life.

Is Chevy launching a new sporty EV?

This is the all-electric vehicle Chevy should sell in the US. General Motors’ design team released a series of sketches previewing a sporty new Chevy EV.

Although it kinda looks like the new 2027 Chevy Bolt EV as a higher-sitting compact crossover SUV, the design offers a fresh take on what it should have looked like.

The new Bolt is essentially a modernized version of the outgoing EUV model with a similar compact crossover silhouette. Nissan adopted a similar style with the new 2026 LEAF as buyers continue shifting from smaller sedans and hatchbacks to crossovers and SUVs.

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Will we see the sporty Chevy EV in real life? It’s not likely. For one, the “exploration sketch” is by GM China Advanced designer Charles Huang.

GM Design posted the sketches on its global social media page, but the caption read “Sporty Chevrolet EV for the China Market.”

It’s too bad. The Bolt could use a sporty sibling like an SS variant. Chevy introduced the Blazer EV SS (check out our review) for the 2026 model year, its fastest “SS” model yet. Packing up to 615 horsepower and 650 lb-ft of torque, the Chevy Blazer SS can race from 0 to 60 mph in 3.4 seconds when using Wide Open Watts (WOW) mode.

Will the Bolt be next? I wouldn’t get my hopes up. And if GM does bring the sporty Chevy EV to life, it will likely only be sold in China. Like all the fun cars these days.

The 2027 Chevy Bolt EV RS (Source: Chevrolet)

What do you think of the design? Would you buy one of these in the US? Let us know your thoughts in the comments.

While deliveries of the 2027 Bolt are set to begin in early 2026, Chevy is offering some sweet deals on its current EV lineup, including up to $4,000 off in Customer Cash and 0% APR financing for 60 months.

Ready to test drive one? You can use our links below to find Chevy Equinox, Blazer, and Silverado EVs at a dealership near you.

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Environment

Podcast: Electricity is the base currency, Tesla Robotaxi crashes, new Porsche Cayenne EV, and more

Published

14 hours ago

November 21, 2025

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Podcast: Electricity is the base currency, Tesla Robotaxi crashes, new Porsche Cayenne EV, and more

In the Electrek Podcast, we discuss the most popular news in the world of sustainable transport and energy. In this week’s episode, we discuss electricity becoming the base currency, Tesla Robotaxi crashes, the new Porsche Cayenne EV, and more.

The show is live every Friday at 4 p.m. ET on Electrek’s YouTube channel.

As a reminder, we’ll have an accompanying post, like this one, on the site with an embedded link to the live stream. Head to the YouTube channel to get your questions and comments in.

After the show ends at around 5 p.m. ET, the video will be archived on YouTube and the audio on all your favorite podcast apps:

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Here’s the live stream for today’s episode starting at 4:00 p.m. ET (or the video after 5 p.m. ET:

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