LIVE MARKETS-US energy majors could outperform their European peers - RBC

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US ENERGY MAJORS COULD OUTPERFORM THEIR EUROPEAN PEERS - RBC

Global integrated oil and gas companies are at a pivotal moment, with geopolitics and energy security overtaking decarbonisation as the dominant investment themes, according to analysts at RBC Capital Markets.

"We expect the 'transition narrative' to take a back seat, with more emphasis on portfolio longevity and resource access," they said.

Against this backdrop, RBC argues that U.S. energy majors could outperform their European peers in 2026, highlighting five structural advantages for companies such as Exxon XOM.N and Chevron CVX.N.

A central theme is exposure to gas markets. RBC said European majors are far more geared to international gas prices and LNG margins, which it sees moving into structural decline as a wave of new LNG supply pushes prices toward more normalised levels.

RBC also expects trading profits - a major earnings tailwind for Shell SHEL.L and BP BP.L since 2022 - to fade as commodity volatility falls and competition from commodity houses intensifies. With trading earnings forecast to fall sharply from recent peaks, RBC sees free cash flow headwinds that are largely specific to European names.

Balance sheets further differentiate the group. RBC estimates U.S. majors have materially lower fully‑loaded gearing, allowing for more resilient shareholder distributions in a weaker price environment. While buyback cuts are expected across the sector, RBC views Exxon as the most defensively positioned.

Geopolitics adds another layer. RBC argues that a more aggressive U.S. foreign‑policy stance could open doors to resource access that European companies are unlikely to match, even if the financial impact is hard to quantify.

(Joel Jose)

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