Profits drop, debt rises, for oil majors
Quarterly earnings fell sharply, following the sharp deterioration in the global economy. Weak earnings for oil majors are expected for the rest of the year.
Oil majors have reported a steep drop in quarterly profits, weighed down by the trade war, weakening demand, and rising costs.
The first quarter was the worst three-month period for some of the largest integrated oil companies in years, and the outlook going forward is negative.
Chevron’s earnings dropped to $3.5 billion in the first quarter, down a third from the same period in 2024. ExxonMobil’s earnings also fell, although the company beat expectations.
BP’s profits fell in half, collapsing to just $1.38 billion. BP cut its planned spending for 2025 by $500 million, and the company said it may cut even deeper, by as much as $2.5 billion, if market conditions deteriorate further. BP also reduced its stock buybacks.
The oil giant’s CFO told the FT that it has cut ties with 3,000 contractors, and would assess an additional 3,400 contractor roles.
Chevron said it would dial back the pace of share buybacks in the second quarter, repurchasing $2.75 billion in stock, which is nearly a third less than the first quarter.
But ExxonMobil, TotalEnergies, and Shell maintained their pace of stock repurchasing.
Net debt for the five main western oil majors — Shell, BP, ExxonMobil, Chevron, and TotalEnergies — increased to $153 billion in the first quarter of 2025, up from $129 billion in the fourth quarter of last year.
The sharp drop in oil prices so far in 2025 explains much of the trouble. Prices are down around $20 per barrel from where they were at the start of the year. Demand forecasts have also been slashed. If the trade war drags on, further downward revisions are likely.
That spells trouble for the oil majors. A Reuters analysis finds that the companies need oil prices to average roughly $80 per barrel for them to cover capex, pay dividends, and continue to buy back their shares without taking on more debt.
Executives put on a brave face despite the headwinds. “We’re just working through our plan and we don’t really change anything,” Shell CFO Sinead Gorman said on a press call. “But I do understand for other companies that can be more difficult when they haven’t positioned quite as well.”
“We’ve navigated cycles before, and we’ll do it again,” Eimear Bonner, Chevron’s CFO, told the Wall Street Journal.