Occidental Petroleum (NYSE: OXY) beat Wall Street estimates by a wide margin when it reported first-quarter 2026 earnings. Analysts were expecting earnings of $0.59 per share, but the company reported $1.06 per share. That’s an impressive beat, but management admits that it could have done better. What’s going on with the company and with peers like Chevron (NYSE: CVX) and ExxonMobil (NYSE: XOM)?
The timing wasn’t perfect
One of the first big problems in the quarter for oil companies was the timing of the oil price spike. Most of the advance occurred after the geopolitical conflict in the Middle East began, so the spike that has pushed oil prices up 85% in 2026 as of this writing didn’t really get underway until March. So, energy companies only benefited from higher oil prices for a short period.
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This is why analyst expectations for the second quarter are much higher than expectations for the first quarter. For example, Wall Street is projecting Oxy to earn $1.58 per share in the second quarter. But another issue hampered Oxy’s performance in the first quarter: hedging.
Oil companies routinely hedge their production to protect against price movements in energy markets. In this case, that hedging turned into a headwind.
Hedging was a problem for Exxon and Chevron, too
Oxy, which is much less exposed to the Middle East than Exxon or Chevron, was a relative standout. At the other extreme was Exxon, which has more exposure to the region and saw its production impacted. That said, its $1.16 per share in earnings beat the analyst call of $1.01. But hedging led to a $700 million earnings hit. That should be reversed in the second quarter as shipments hedged are delivered. Still, the short-term impact is worth noting as you examine the business.
Chevron, meanwhile, fell between Exxon and Oxy, with its $1.41 per share earnings beating Wall Street’s $0.97 per share call. But once again, the company’s hedging activity was a headwind, as management took a $2.9 billion charge related to it. Hedging is company-specific, with each company adopting a different approach. And because hedging is a proprietary activity, investors won’t know about the impact, good or bad, until the company releases quarterly results.
Oxy slimmed down at a good time
That said, the refining operations of Exxon and Chevron performed weakly, with timing and hedging both playing a role. Oxy recently sold its downstream business at the start of 2026, so this business wasn’t a meaningful issue for the company in the quarter. Simply put, there are a lot of moving parts to consider when you look at individual energy companies.