Record June-quarter profit came from $114 Brent and scarce refining capacity, while 10% of production was offline. We expect oil and refining margins to ease toward $85 Brent, leaving $145 a share, about 12% below today.
Key points
- $3.48 June-quarter EPS, double last year's $1.64, driven by price, not volume.
- $145 twelve-month target, 12% below the $164.05 price.
- $10.36 my EPS estimate at $85 Brent, versus $10.94 the price needs at 15 times.
The call
The price assumes today's windfall lasts. At $164.05 and 15 times earnings, the stock needs about $10.90 a share of yearly profit. That is roughly three times the $3.48 June quarter, annualized, only if Brent stays near $114.
GAAP diluted EPS by quarter ($ per share)Source: company releases, desk briefing Oct 8, 2026. Reference is my EPS estimate for the next 12 months.
I expect the windfall to fade. Management itself said refining margins sit above the 2010 to 2019 range because Middle East supply is disrupted. As that capacity returns and Guyana's cost recovery trims barrels, earnings settle lower. Chemicals remain weak.
Valuation
| Item | Figure |
|---|
| Brent assumed, next 12 months | $85 a barrel |
| Net income, base case | $42 billion |
| Shares outstanding | 4.06 billion |
| Earnings per share | $10.36 |
| Multiple | 14 times |
| Target | $145 a share |
A 14 times multiple is fair for a large integrated oil company with steady buybacks ($20 billion a year planned) and a 2.5% dividend yield. If Brent holds above $100, earnings near $12 would justify about $168. If it falls to $70, the stock is near $115. The downside is larger than the upside, so the rating is sell.
Risks
- Oil stays high because Middle East supply stays broken: watch Brent above $100 and refining margins through the next earnings report.
- Buybacks and Guyana growth lift earnings more than I model: watch fifth vessel start-up in the fourth quarter.
- Possible LNG or Venezuela deals add value: watch investment decisions in Mozambique and Papua New Guinea.
What would change my mind
Brent holding above $100 into spring while lost production returns, which would show durable earnings near $12 a share.