ExxonMobil and Chevron are set to report fourth-quarter earnings before the market opens this morning, kicking off Big Oil's earnings season at a challenging moment for the industry. With West Texas Intermediate crude averaging just $58 per barrel in December and critical decisions looming about Venezuelan oil production, today's results carry significance far beyond the quarterly numbers.
Analysts expect Exxon to report earnings per share of $1.70, representing modest 0.6% year-over-year growth despite the difficult commodity price environment. The Zacks Consensus Estimate for revenues stands at $83.2 billion, a 0.3% decline from the year-ago period.
Chevron faces a more challenging comparison, with analysts projecting EPS of $1.43, reflecting a steep 31% year-over-year decline. For the full year, analysts expect Chevron to report adjusted earnings per share of $7.34, down 27% from 2024's $10.05.
The Oil Price Pressure
The fundamental challenge facing both companies is clear in the commodity price data. According to the Energy Information Administration, Cushing, OK WTI spot prices averaged $60.89 per barrel in October, $60.06 in November, and $57.97 in December. These levels represent a significant decline from the third quarter, when prices averaged $65.74.
For context, oil prices fell 9.2% in the fourth quarter of 2025 alone, driven by concerns about oversupply from non-OPEC producers and the potential impact of tariffs on global economic growth and energy demand.
"The oil market is grappling with a perfect storm of bearish factors. Demand concerns, strong U.S. production growth, and the uncertain impact of tariffs on global trade have all weighed on prices."
— Energy sector analyst
Exxon's Defensive Position
ExxonMobil has positioned itself as the more defensive play in the current environment. The company's integrated business model—spanning upstream production, downstream refining, and chemicals—provides some insulation from pure commodity price exposure.
The company flagged last week that its fourth-quarter upstream earnings would face an $800 million to $1.2 billion headwind compared to the third quarter, while lower industry margins could affect the chemicals division by up to $400 million. Despite these challenges, Exxon's consistent ability to beat earnings expectations—it has exceeded analyst estimates in each of the last four quarters with an average surprise of 5.7%—has earned it a reputation for execution.
JPMorgan analyst Arun Jayaram has called Exxon "the most defensive pick" in the energy sector, expecting the company to maintain its status as a "safety trade" in an uncertain 2026 backdrop.
Chevron's Turnaround Challenge
Chevron faces a more difficult path, with its earnings facing greater pressure from the commodity price decline. The company's EPS decline of 31% year-over-year reflects both lower oil prices and ongoing operational challenges.
However, Wall Street remains surprisingly bullish on Chevron's stock. The consensus rating is "Strong Buy" based on 16 buy recommendations and four holds. The average price target of $178.50 implies 7.1% upside from current levels, suggesting analysts believe the current stock price undervalues the company's long-term potential.
The Venezuela Question
Perhaps more important than the quarterly numbers themselves is what both companies say about Venezuela. The country sits on 303 billion barrels of proven oil reserves—the largest in the world—and both Exxon and Chevron have historical operations there that could be reactivated under the right conditions.
The Biden administration's sanctions relief allowed some Venezuelan oil to flow to the U.S., and decisions about whether to expand or restrict this access will have major implications for both companies' production profiles and stock prices.
Analysts have flagged the earnings calls as particularly important for understanding management's thinking on Venezuela. Any hints about increased investment or expanded operations could significantly boost investor sentiment, while indications of continued caution could disappoint those hoping for a near-term production windfall.
Stock Performance and Valuation
Both stocks have recovered strongly from mid-December lows:
- Exxon: Up 14.3% since December 16
- Chevron: Up 11.3% since December 16
- S&P 500 Energy Sector: Up 15.6% over the same period
The recent rally reflects growing optimism about energy sector fundamentals despite near-term commodity price headwinds. Investors appear to be betting that disciplined capital allocation, strong balance sheets, and attractive dividend yields will support the stocks even if oil prices remain range-bound.
Capital Allocation in Focus
Beyond the earnings numbers, investors will scrutinize both companies' capital allocation decisions. In an environment of volatile commodity prices, how much to invest in new production, how much to return to shareholders through dividends and buybacks, and how much to keep on the balance sheet for flexibility are critical strategic questions.
Both companies have committed to maintaining their dividends, which yield approximately 3.5% for Exxon and 4.2% for Chevron at current prices. These payouts provide a floor of support for the stocks and attract income-focused investors who might otherwise avoid the commodity exposure.
What to Watch For
Key items to monitor in this morning's earnings releases and conference calls:
Production Guidance: Both companies' 2026 production targets will signal their confidence in commodity prices and willingness to invest in growth.
Cost Management: With prices under pressure, operating cost discipline becomes increasingly important for maintaining margins.
Venezuela Commentary: Any discussion of Venezuelan operations could move both stocks significantly.
Refining Margins: Downstream businesses have provided an offset to lower crude prices; their outlook matters.
Permian Basin Updates: Both companies have significant operations in this prolific U.S. shale basin; production efficiency matters.
For energy investors, today's earnings represent more than a quarterly check-in. They offer a window into how America's oil majors are navigating a world of volatile prices, geopolitical uncertainty, and the long-term energy transition. The answers will shape investment decisions for quarters to come.
