Big Oil is not rushing to "drill, baby drill" this year despite Trump's agenda

Oil companies prioritize drilling returns over growth

The overall oil and gas production is expected to increase by 5% in this year

Chevron and Exxon are expected to report a decline in fourth-quarter profits

Sheila Dang & Seher Dareen

HOUSTON, January 27 -

Wall Street believes that U.S. energy companies will keep spending under control in 2025, and focus on shareholder returns despite President Donald Trump's calls to "drill baby, drill".

This week, Big Oil will report its fourth-quarter results. The outlook for the next year should reflect Trump's agenda to maximize oil and gas production and the expectations of investors. In recent years, the industry has been pushing to reduce costs and increase output by using more efficient technologies rather than drilling new wells.

As the global oil market continues to decline, producers will also have to contend with the lower prices of crude oil as China's economic struggles and the recovery from pandemic-related demand take their course.

According to the U.S. Energy Information Administration, benchmark Brent crude oil is projected to average $74 per barrel by 2025. This compares to $81 per barrel in 2024.

Analysts at Scotiabank predict that companies will aim for a production increase of up to 5% this year and capital expenditures to be flat or slightly lower than last year.

Exxon Mobil is the exception, as it plans to build a large amount of infrastructure.

Increase in production

. The largest U.S. Oil Company intends to do more than

Triple its production in Permian - the largest U.S. Shale field.

By 2030, the company will be able to pump 1.3 millions barrels of oil per day out of its lucrative operations in Guyana.

Rob Thummel is a senior portfolio manager with Tortoise Capital. He said, "We expect the majority of oil and gas producers will remain disciplined in their capital expenditures." "However less regulation will make increasing drilling activity easier if commodity prices are at levels that are too higher."

Barclays analysts said in a research report that Chevron's results will be released on Friday. They expect production to increase by about 3% in this year, and mid-single-digit percentages in 2026.

Analysts from RBC Capital Markets said in a report that the company had followed a conservative approach, moved out of a period of heavy investments in new projects and was now generating cash. Thummel said that Chevron may also announce an increase in dividends of at least 5% compared to the previous year. Dividend increases were between 6% and 8% before.

According to LSEG data, Chevron will report a profit of $3.87 billion, a decrease from the $6.45 billion reported in the previous quarter.

Exxon Mobil is expected to report a profit of $6.85 billion, down from $9.96 in the same quarter in last year.

Last month, the company announced that it would be reducing earnings by approximately $1.75 billion from the third quarter due to lower oil refinery profits and weakness in its other businesses.

Arbitration panels will be appointed.

Decide in May

Exxon has challenged Chevron to buy Hess, a purchase which would give Chevron an interest in Guyana's offshore reserves. Exxon claims a contractual right in order to purchase Hess' stake.

Barclays stated that ConocoPhillips' oil and gas production could grow by a low-single-digit percentage in order to return cash to shareholders.

In December, the company completed its $22.5-billion buyout of Marathon Oil. The smaller competitor had been subject to a Federal Trade Commission investigation. Analysts at Scotiabank believe that this could boost its performance.

Occidental is expected to report a profit of $730.9 millions for the fourth-quarter, up from the $710 million it reported in the same period last year. Barclays reported that the oil producer completed its CrownRock acquisition in August, and its capex for this year will total $7.44 Billion, up from $6.9 Billion last year.

Raymond James expects Diamondback Energy to prioritize free cash flow after the acquisition of Endeavor. Profits are expected to increase from $854 millions in the same quarter of last year to $977 million. They added that they expect the growth of production to remain flat in 2025 with lower spending. Sheila Dang reported from Houston, and Seher Dareen from Bengaluru. David Gregorio edited the report.

(source: Reuters)