Oil majors BP and Shell face headwinds as Q2 earnings approach
Shell and BP prepare to report Q2 earnings
As BP and Shell prepare to report their second quarter (Q2) results, both oil giants are grappling with challenges in their refining businesses and shifting market dynamics.
Broader industry challenges
Both companies are dealing with wider pressures in the global refining business. ExxonMobil, for instance, has warned of a $1.1-$1.5 billion negative impact on Q2 profit due to lower refining margins. More broadly, declining demand for fuels is affecting refining operations across the industry.
On a positive note
Despite the challenges, there are some bright spots for these oil majors. Shell has announced plans to develop a new gas field off Trinidad and Tobago. The company is also maintaining its share buyback program, with a new $3.5 billion buyback announced alongside first quarter (Q1) results. Furthermore, Shell’s Q1 adjusted earnings of $7.73 billion beat market expectations, demonstrating some resilience in the face of industry headwinds.
Investor focus
As these oil majors report, investors will be watching for several key indicators. Updates on cost-cutting measures and operational efficiencies will be crucial, as will progress on balancing traditional oil and gas businesses with clean energy investments. Dividend policies and share buyback programs will also be under scrutiny. Finally, investors will be keen to hear the companies’ outlook for oil and gas prices and refining margins in Q2 2024.
Broader industry challenges
Both companies are dealing with wider pressures in the global refining business. ExxonMobil, for instance, has warned of a $1.1-$1.5 billion negative impact on Q2 profit due to lower refining margins. More broadly, declining demand for fuels is affecting refining operations across the industry.
Positive notes
Despite the challenges, there are some bright spots for these oil majors. Shell has announced plans to develop a new gas field off Trinidad and Tobago. The company is also maintaining its share buyback program, with a new $3.5 billion buyback announced alongside first quarter (Q1) results. Furthermore, Shell’s Q1 adjusted earnings of $7.73 billion beat market expectations, demonstrating some resilience in the face of industry headwinds.
Investor focus
As these oil majors report, investors will be watching for several key indicators. Updates on cost-cutting measures and operational efficiencies will be crucial, as will progress on balancing traditional oil and gas businesses with clean energy investments. Dividend policies and share buyback programs will also be under scrutiny. Finally, investors will be keen to hear the companies’ outlook for oil and gas prices and refining margins in Q2 2024.
BP & Shell – what do the brokers say?
BP currently has an ‘outperform’ rating on the SmartScore available on the IG platform. Meanwhile, of 12 brokers covering the stock, nine have ‘buy’ ratings, with two ‘holds’ and one ‘sell’.
