Wall Street expects U.S. oil and gas companies to keep a lid on spending in 2025 and keep their focus on generating shareholder returns, despite calls by President Donald Trump to "drill, baby, drill."
Big Oil begins reporting fourth-quarter results this week, and outlooks for the coming year should reflect the dissonance between Trump's oil and gas-maximizing agenda and investor expectations. The industry has pushed in recent years to drive down costs and increase production by using more efficient technology rather than drilling many new wells.
Producers also must contend with lower global oil prices as the post-pandemic demand rebound runs its course and as China's economy struggles.
Benchmark Brent crude oil prices are projected to average $74 per barrel in 2025, down from $81 in 2024, according to the U.S. Energy Information Administration.
Overall, for the U.S. exploration and production sector, analysts at Scotiabank expect companies to target up to 5% production growth this year, and flat to slightly lower year-over-year capital expenditures.
The exception is Exxon Mobil, which plans a large increase in production. The largest U.S. oil company intends to more than triple its production in the Permian, the top U.S. shale field, and pump 1.3 million barrels per day from its lucrative operations in Guyana by 2030.
"We expect most oil and gas producers to remain disciplined with capital expenditures," said Rob Thummel, senior portfolio manager at Tortoise Capital. "However, less regulation will make it easier to increase drilling activity if commodity prices reach levels that are too high."
The company has followed a conservative strategy, moving out of a phase of heavy investment in new projects, and is now generating cash, said analysts from RBC Capital Markets in a note. Chevron could also announce a dividend increase of at least 5% over the previous year, Thummel added, as dividend increases have been between 6% to 8% previously.
Chevron is expected to report $3.87 billion in profit, according to data compiled by LSEG, which would be a decline from $6.45 billion in the year-ago quarter.
Exxon Mobil, meanwhile, is expected to report $6.85 billion in profit, down from $9.96 billion in the same quarter last year.
The company signaled last month that lower oil refining profits and weakness across its business would reduce earnings by about $1.75 billion compared to the third quarter.
An arbitration panel will decide in May on Exxon's challenge to Chevron's acquisition of Hess - a purchase that would give Chevron a rival stake in Guyana's rich offshore reserves. Exxon has claimed a contractual right to buy Hess' stake in the field.
Producer ConocoPhillips (COP.N) could also grow oil and gas production in the low single-digit percentage this year to focus on returning cash to shareholders, Barclays said.
The company in December completed its $22.5 billion buyout of smaller peer Marathon Oil, which had been under a Federal Trade Commission review. This could, according to Scotiabank analysts, swing its performance up.
