Energy Majors: 1Q26 Wrap: Volatile Near Term; Compelling Medium Term

Research evidence excerpt

Energy Majors: 1Q26 Wrap: Volatile Near Term; Compelling Medium Term

Idea

May 12, 2026 04:01 AM GMT

Morgan Stanley & Co. International plc+MEnergy Majors | Europe Martijn Rats, CFA

Equity Analyst and Commodities Strategist

1Q26 Wrap: Volatile Near Term; Martijn.Rats@morganstanley.comGuilherme Levy +44 20 7425-6618

Equity Analyst

Guilherme.Levy@morganstanley.com +44 20 7425-6616

Compelling Medium Term Alice Bergier Winograd

Alice.Winograd@morganstanley.com +44 20 7425-0174

The earnings season confirmed that the disruption is working

Energy

through the integrated model: downstream and trading drove Europe

beats, while upstream strength should become more visible in Industry View Attractive

2Q. "Wait-and-see" message on distributions, but these too What’s Changed

should grind higher as balance sheets improve. EquinorPrice TargetASA (EQNR.OL) FromNKr 388.00 ToNKr 376.00

Shell PLC (SHEL.N) From To

Key Takeaways Price Target US$95.50 US$93.00

Earnings beat on elevated expectations, driven primarily by downstream margins Shell PLC (SHEL.L) From To

and trading/optimisation gains. Price Target 3,589p 3,495p

1Q upstream pricing remained muted by contractual lags; stronger realised TotalEnergies SE (TTEF.PA) From To

Price Target €88.30 €89.10

pricing should support 2Q earnings materially.

TotalEnergies SE (TTE.N) From To

Distribution frameworks remained conservative: companies preferred balance- Price Target US$102.50 US$103.30

sheet strengthening over accelerating payouts.

We remain constructive on the sector as higher-for-longer commodity pricing

supports FCF and future shareholder returns.

Stick to TotalEnergies (Top Pick) as our preferred quality compounder; BP as the

higher-leverage play on FCF improvement; Repsol on refining strength.