2Q26 Earnings preview: first pass MtM on normalized oil. Safe to go back in the water? For some!

Research evidence excerpt

2Q26 Earnings preview: first pass MtM on normalized oil. Safe to go back in the water? For some!

Global Majors

Oil & Gas Exploration & Production

Refiners

2Q26 Earnings preview: first pass MtM on normalized oil. July 6, 2026

Safe to go back in the water? For some!

The Wolfe Byte

The correction in the broader energy sector is a reminder that a commodity view is still a necessary starting point

for the energy sector. We see the bulk of the oil price correction likely done, providing selective opportunities for

investors looking to re-engage.

Safe to go back in the water? for some, risk / reward has improved: The correction in the broader energy sector is a

reminder that a commodity view is still a necessary starting point. Spot oil prices have round-tripped by $75/bbl, leaving

2Q26 as the windfall we were concerned it would ultimately become. With the quarter over, sector management’s will

host preview calls over the next two weeks. With this note we rebase the starting point, and mark forward earnings

to the current strip with our l/term $70/bbl Brent assumption unchanged, from 2028. DCF-based price targets adjust

slightly lower across the board as the windfall from our last MtM is taken out; but this is no more than has already been

reflected in the real time correction in the XLE.

The good news is the bulk of the oil price correction is likely done. The bad news is the risk of over supply has moved

front & center as the critical debate for the post-war outlook. Still we see downside risk mitigated by the scale of the

absolute decline in oil prices that has already taken place. In our view, any further weakness portends a return to the

contango market in place at the start of the year versus longer dated prices we still see rangebound as it has been since