Oil and Gas Industry Faces Contrasting Expectations in 2025
As the oil and gas industry prepares to release its fourth-quarter results, a disconnect is emerging between President Donald Trump’s “drill, baby, drill” agenda and investor expectations. Despite the president’s push for increased drilling, Wall Street analysts anticipate that U.S. oil and gas companies will maintain a cautious approach to spending in 2025, prioritizing shareholder returns over aggressive expansion.
Efficiency Over Expansion
In recent years, the industry has focused on driving down costs and increasing production through the adoption of more efficient technology, rather than drilling new wells. This approach has allowed companies to maintain profitability despite lower global oil prices. According to the U.S. Energy Information Administration, benchmark Brent crude oil prices are projected to average $74 per barrel in 2025, down from $81 in 2024.
Production Growth and Capital Expenditures
Analysts at Scotiabank expect the U.S. exploration and production sector to target up to 5% production growth in 2025, with flat to slightly lower year-over-year capital expenditures. Exxon Mobil is an exception, planning a significant increase in production, including a more than tripled output in the Permian Basin and 1.3 million barrels per day from its Guyana operations by 2030.
Disciplined Spending Expected
“We expect most oil and gas producers to remain disciplined with capital expenditures,” said Rob Thummel, senior portfolio manager at Tortoise Capital. However, he noted that less regulation could lead to increased drilling activity if commodity prices rise.
Company Outlooks
Chevron, which reports results on Friday, is expected to grow production by about 3% this year and in the mid-single digit percentage in 2026. The company has adopted a conservative strategy, moving away from heavy investment in new projects and generating cash. Chevron may also announce a dividend increase of at least 5%.
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.
Other companies, such as ConocoPhillips and Occidental, are also expected to focus on returning cash to shareholders, with production growth in the low single-digit percentage this year. Diamondback Energy, meanwhile, is expected to prioritize free cash flow over growth after its acquisition of Endeavor.
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