Noah Allen
Mixed and offshore upstream exploration and production stocks posted a broadly disappointing first quarter of 2025, with revenues across 21 tracked companies coming in about 0.8% below analyst consensus. Share prices felt the pain too, falling an average of 13.6% after results landed.
At a Glance
- 21 mixed and offshore upstream E&P companies reported Q1 2025 results
- Group revenues missed consensus by 0.8% on average
- Average share price decline of 13.6% following earnings
- Seadrill was the standout performer, beating revenue estimates by 7.2%
- Kosmos Energy suffered the steepest stock drop, down 29.2% post results
Why This Sector Is Under Pressure
Companies in this corner of the energy market tend to operate in specialized basins, frontier regions, or unconventional resource plays that sit outside the major classifications. The upside case is real: successful exploration can deliver outsized returns, and niche expertise sometimes commands premium valuations. But so do the risks. Smaller scale limits negotiating power, access to capital tightens whenever commodity prices soften, and regulatory burdens can fall disproportionately on operators with lean compliance budgets.
Those structural headwinds were visible in Q1 results across the board.
Company by Company: Who Beat, Who Missed
Vitesse Energy (NYSE: VTS)
Vitesse holds non-operated stakes in oil and natural gas wells concentrated in the Williston Basin across North Dakota and Montana. Because it does not operate the wells directly, it takes a passive approach to production. Q1 revenue came in at $67.41 million, up 1.9% year over year but 6.8% short of what analysts expected. EBITDA and earnings per share both missed estimates by a significant margin. The stock has dropped 16.4% since the report and recently traded at $15.96.
Seadrill (NYSE: SDRL)
Seadrill operates drillships and semi-submersible rigs in deepwater locations reaching 12,000 feet below the surface. Its Q1 revenue of $358 million grew 6.9% year over year and cleared analyst forecasts by 7.2%, with both EPS and EBITDA coming in ahead of expectations. Despite the strong print, the stock is down 17.7% since reporting and last traded at $39.76, suggesting investors are pricing in concerns beyond a single quarter.
Kosmos Energy (NYSE: KOS)
Kosmos explores and produces from deepwater offshore fields, with some projects located up to 120 kilometers from shore. Revenue of $370.9 million represented a 27.7% jump year over year, yet still came in 8.9% below analyst targets. EBITDA and EPS both missed by a notable margin. The stock has declined 29.2% since the release and traded recently at $2.32.
Murphy Oil (NYSE: MUR)
Murphy Oil operates across two very different environments: deepwater Gulf of Mexico and tight shale formations in Texas, with additional exposure in Asia. Q1 revenue of $733.6 million grew 10.2% year over year and topped estimates by 3.7%. That revenue beat was the bright spot; EBITDA missed by a significant amount. The stock is down 7.3% since reporting and trades near $36.08.
California Resources (NYSE: CRC)
California Resources runs some of the state's most productive fields, including Elk Hills and Belridge. Q1 revenue reached $967 million, up 6.7% year over year and slightly above the consensus estimate by 0.7%. Even so, both EBITDA and EPS fell short of forecasts. Shares have dropped 24.5% since the report and recently traded at $52.92.
Q1 Results Compared
| Company | Q1 Revenue | Year over Year Growth | vs. Estimates | Stock Move |
|---|---|---|---|---|
| Vitesse Energy | $67.41M | +1.9% | Missed by 6.8% | Down 16.4% |
| Seadrill | $358M | +6.9% | Beat by 7.2% | Down 17.7% |
| Kosmos Energy | $370.9M | +27.7% | Missed by 8.9% | Down 29.2% |
| Murphy Oil | $733.6M | +10.2% | Beat by 3.7% | Down 7.3% |
| California Resources | $967M | +6.7% | Beat by 0.7% | Down 24.5% |
The Macro Backdrop Complicating the Picture
Earnings do not exist in a vacuum. Late 2025 and into early 2026, markets were consumed by fears that artificial intelligence would erode pricing power for software companies and destabilize crypto infrastructure. That anxiety prompted a rotation out of growth-oriented and speculative sectors and into perceived safe havens.
By spring 2026, the narrative had shifted again. Escalating tensions between the US and Iran moved geopolitical risk to the front of investors' minds, redirecting attention toward oil supply security, inflation, and global stability. Energy stocks can benefit from that kind of focus, but the volatility it brings tends to punish the smaller, higher-risk operators in this segment first.
Frequently Asked Questions
Why did Seadrill's stock fall even though it beat estimates?
Beating quarterly estimates does not guarantee a positive stock reaction. Investors may be pricing in weaker future guidance, deteriorating dayrates, or broader sector sentiment that outweighs a single strong report.
What is a non-operated stake, and how does Vitesse Energy use one?
A non-operated stake means a company owns a share of a well's production economics without controlling drilling or operational decisions. Vitesse holds these interests primarily in Williston Basin wells, collecting revenue tied to production without bearing direct operating responsibility.
How does deepwater drilling differ from shale production?
Deepwater drilling targets reservoirs beneath thousands of feet of water, requiring specialized rigs and significantly higher upfront capital. Shale production uses horizontal drilling and hydraulic fracturing in tight rock formations on land, with lower per-well costs but different production decline curves.
Why do smaller E&P companies face tighter capital market access?
Lenders and equity investors typically require higher risk premiums from smaller operators because they have fewer assets to pledge as collateral, less diversified production, and limited ability to absorb prolonged commodity price downturns compared to larger integrated energy companies.
What to Watch Going Forward
The combination of geopolitical tension, AI-driven disruption narratives, and broadly weak Q1 earnings creates a difficult near-term environment for this group. Kosmos Energy and California Resources, with declines of roughly 29% and 25% respectively since reporting, face the steepest path to recovery. Murphy Oil, down just over 7%, held up relatively well despite its EBITDA miss. How commodity prices respond to ongoing US-Iran tensions will likely matter more for this sector in the coming months than any single earnings revision.
