2Q26 Earnings Preview for European Major Oil & Gas Companies: Near-Term Support from Trading and Refining, Early Signs of a Longer-Term Capex Inflection

Overview

This report is Goldman Sachs' preview of 2Q26 results and the 2026/27 outlook for major European oil and gas companies. Against the backdrop of progress in U.S.-Iran negotiations, normalization of Persian Gulf exports, and a pullback in oil and gas forward curves, the report lowers its Brent and TTF price assumptions; at the same time, it notes that trading, refining, and parts of the gas business in 2Q26 are still supported by high volatility, spreads, and refining margins. The core view is that short-term earnings are not being revised up across the board; instead, 2026/27 EPS is below consensus due to lower commodity price assumptions, but Top Projects and capex data are beginning to show early signs of a structural reinvestment cycle.

Core views

First, Goldman Sachs raises its 2Q26 EPS estimates by an average of about 3.4%, but cuts its 2026/27 EPS estimates by an average of about 6.2%/3.2%, putting them about 7%/2% below LSEG consensus, respectively; the exceptions are Repsol, Shell, and Galp, whose 2026E and 2027E earnings remain broadly in line with or above consensus. Second, 2Q26 trading and refining activity is benefiting meaningfully, with Gas & Power and Downstream showing QoQ upside signals of about $1.1bn and $5.1bn, respectively. Third, at the project level, Galp leads in growth over the three years to 2027, Repsol leads in liquids production and OCF growth over the five years to 2030, and TotalEnergies offers more de-risked, diversified growth. Fourth, shareholder returns are unlikely to be raised materially further in the near term, and capital allocation may gradually shift from the 2022-style high-dividend/buyback model toward reinvestment.

Analysis framework

The report evaluates differences in earnings, cash flow, growth, and capital allocation for EU Big Oils in 2Q26 and over the medium term by combining top-down commodity price assumptions, comparisons against LSEG and Visible Alpha consensus, company segment-level commodity barometers, the Top Projects database, capex consensus revisions, management call language, and shareholder return and leverage metrics.

Methodology notes

• Earnings forecastingGS vs LSEG EPS consensus comparison

  Compare Goldman Sachs' 2026/27 EPS forecasts with LSEG median consensus

  Used to assess where earnings expectations stand relative to market consensus; the report shows Goldman Sachs' 2026/27 EPS for EU Big Oils is on average 7%/2% below consensus.

• Commodity price sensitivityCommodity Barometer

  Estimate company segment EBIT signals based on macro variables such as crude oil, natural gas, spreads, crack spreads, FX, and volatility

  Using 10-year averages as a baseline, this model measures the positive or negative impact on segment earnings in E&P, Gas & Power, and Downstream when current-quarter commodity prices deviate from the mean.

• Project growth assessmentTop Projects Database

  Measure the quality of company growth based on net entitlement production, OCF, and capex contribution from core oil and gas projects

  The report uses this database to screen production and cash flow growth over the next 3 years, 5 years, and longer horizons, highlighting the differentiation of Galp, Repsol, TotalEnergies, and Shell.

• Capex cycleVisible Alpha Capex Consensus Revision

  Track changes in 2027 capex consensus for 42 listed oil and gas companies

  The report uses 2027 capex consensus relative to 2025 levels and revisions since February 27 as early evidence of an inflection point in the oil and gas capex cycle.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Repsol

  key beneficiary

  Strengths

  Leads in five-year net entitlement production and OCF growth, with high exposure to refining and jet fuel, and is the most likely to raise shareholder distributions within its current payout framework.

  Weaknesses

  Some sensitivities are influenced by multiple factors including refining, commodity prices, and project execution, so standalone oil-price sensitivity has limited explanatory power.

  Comparison

  Relative to EU Big Oils peers, Repsol stands out more in Top Projects cash flow increment and liquids growth through 2030.

  Risks

  A decline in oil prices, contracting refining margins, project delays, or execution risks in regions such as Venezuela could weaken the upside.

• Galp

  growth-leading name

  Strengths

  Leads in three-year production growth through 2027 driven by Bacalhau, while Venus and Mopane could significantly extend growth through 2033; its resource-life advantage is prominent.

  Weaknesses

  Long-term growth depends on large projects progressing on schedule and on FID advancement.

  Comparison

  Relative to European major oil and gas companies, Galp ranks near the top in screens for production growth and resource life.

  Risks

  Development timing in Namibia projects, capex commitments, oil prices, and project execution risk.

• TotalEnergies

  de-risked growth name

  Strengths

  Growth sources are more diversified, with Uganda Tilenga/Kingfisher, GranMorgu Suriname, LNG projects, and potential Venus/Mopane FIDs providing substantial visibility.

  Weaknesses

  A diversified project portfolio may reduce upside elasticity to any single oil-weighted driver.

  Comparison

  Compared with the more concentrated oil-weighted growth of Repsol and Galp, TotalEnergies offers more diversified and de-risked production growth.

  Risks

  Execution of large projects, changes in LNG supply and demand, profit exposure related to the Strait of Hormuz, and commodity price volatility.

• Shell

  cash flow growth and capital allocation focus name

  Strengths

  Projects such as GoM and Brazil offshore oil, LNG Canada, Montney, and NFE/NFS LNG support cash flow growth in 2025-27; lower quarterly buybacks may also create room for reinvestment.

  Weaknesses

  Near-term room to raise shareholder returns is limited, and a shift in capital allocation requires further confirmation.

  Comparison

  The report views Shell, together with Repsol, as relatively attractive in terms of cash flow growth and a relatively stable capex mix.

  Risks

  LNG prices, refining and trading volatility, project start-up timing, and buyback policy adjustment risk.

• BP

  macro upside-risk name

  Strengths

  The report believes BP could be a major beneficiary in a higher commodity price environment in 2026/27, with net debt/capital employed expected to fall from 35.4% in 2025 to 14% by 2027E.

  Weaknesses

  Three-year growth is relatively moderate, and longer-term upside depends on FIDs for projects such as Bumerangue, Bay du Nord, Namibia PEL 85, Tiber, and Kaskida.

  Comparison

  Relative to peers, BP offers more pronounced short-term balance-sheet repair leverage, but project growth visibility is more long-dated.

  Risks

  Oil price downside, delayed project FIDs, deepwater and U.S. shale execution risk, and changes in capital return policy.

• Equinor

  natural gas and capex revision-related name

  Strengths

  Has high exposure to European natural gas prices; 2027 capex guidance was raised by about $1bn to about $12bn, driving consensus revisions.

  Weaknesses

  Decline at Johan Sverdrup partly offsets production, and visibility on new projects narrows after 2028.

  Comparison

  Relative to refining-heavy Repsol, Equinor is more aligned with the European natural gas and upstream reinvestment theme.

  Risks

  Normalization of natural gas prices, decline in mature assets in Norway and Angola, and FID uncertainty for projects such as Bay du Nord and Wisting.

Key data

• 2026/27 Brent assumptions$80.2/$75.0/bblPreviously $86.8/$77.9/bbl; after the revision, they are closer to the forward curve.
• 2026/27 TTF assumptions$14.2/$11.5-11.6/mcfPreviously $18.0/$15.7/mcf, reflecting normalization of the natural gas forward curve.
• Goldman Sachs vs LSEG 2026/27 EPS consensus-7%/-2%After lowering commodity price assumptions, 2026/27 earnings forecasts are on average below consensus.
• 2Q26 EPS estimate revision+3.4% averageNear-term trading, refining, and volatility support 2Q26 earnings.
• EU Big Oils EBIT barometer changeabout +$15.8bn, +37% QoQE&P about +$9.6bn, Gas & Power about +$1.1bn, Downstream about +$5.1bn.
• Repsol five-year net entitlement production increase+27% to 2030Driven by projects such as Pikka, Venezuela, Leon-Castille, and Raia.
• Galp three-year net entitlement production increase+17% to 2027Mainly driven by Bacalhau start-up, with higher growth extending to 2033 after Venus and Mopane come online.
• Repsol Top Projects OCF increase+24% to 2030The report believes Repsol leads in five-year cash flow increment.
• 2027 oil & gas capex consensus revision+4.5% since February 27, 2026Covers 42 listed oil and gas companies, with stronger revisions mainly from U.S. E&P and some international E&P.
• Change in EU Big Oils 2027 capex consensus over the past two months+1.1%Following announcements related to Shell and Equinor, capex upgrades among European major oil and gas companies are beginning to emerge.
• EU Big Oils 2026/27 shareholder cash return yieldabout 8.8%/8.9%Including about 5.3%/5.6% dividend yield and about 3.5%/3.3% buyback yield.

Impact & implications

For investors, the implication of the report is not a simple bullish view on the entire European oil and gas sector, but rather to screen for companies with project growth, cash flow elasticity, and valuation upside risk in a combined environment of softer commodity prices, near-term earnings supported by trading and refining, and a potentially reversing long-term capex cycle. Repsol and Galp are more geared to oil-weighted growth and resource-life advantages, TotalEnergies to de-risked diversified growth, Shell to cash flow growth and capital allocation rebalancing potential, and BP may benefit from balance sheet improvement in a higher commodity price scenario.

Risks

• Further declines in Brent and TTF prices, leading to another downgrade in 2026/27 EPS and cash flow.
• After Middle East tensions ease, the volatility, time spreads, and refining margins that benefited 2Q26 may prove unsustainable.
• Delays in start-up, FID, or ramp-up of Top Projects could weaken the medium-term growth case for Repsol, Galp, TotalEnergies, Shell, and BP.
• A wave of new LNG supply coming online in 2028-30 could depress gas prices and affect FIDs for some LNG projects.
• If higher capex translates into lower free cash flow, it could pressure shareholder returns and valuations.
• If management continues to prioritize dividends and buybacks over reinvestment, the capex inflection point may be delayed.
• Geopolitics, Strait of Hormuz transportation risk, and project risks in regions such as Venezuela and Namibia could alter earnings and project expectations.

What to watch

• Whether profits in trading, refining, and the Gas & Power segment in 2Q26 deliver the upside indicated by the commodity barometer.
• Whether Repsol raises shareholder returns within its existing 30%-40% CFO distribution framework.
• Galp's Bacalhau ramp-up, development progress at Venus and Mopane, and the capex burden-sharing structure after TotalEnergies' participation.
• Whether Shell's buyback pace, ARC trading-related impacts, and reinvestment inclination strengthen.
• Whether Visible Alpha consensus continues to be revised up after Equinor's 2027 capex increase.
• Whether the 2027 capex consensus in EU Big Oils broadens from the early +1.1% trend of the past two months into a wider revision.
• Whether Brent, TTF, JKM, crack spreads, time spreads, and oil and gas volatility remain elevated in 3Q26.
• Whether wording related to exploration, seismic, discovery, and new acreage in earnings call Q&A continues to approach 2014 levels.