It's a busy week on the corporate front, with a number of companies releasing quarterly updates for investors to sink their teeth into. Coming to ‘black gold’, British energy major BP plc (BP Quick QuoteBP - Free Report) kicked off the quarterly results season for the top global integrated oil firms with some bad news – an earnings miss amid sputtering refining margins and barely profitable oil production – for the sector’s already beleaguered investors.

One of the world’s largest investor-controlled oil and gas groups, BP, however reassured investors that it could lower costs further by restricting total organic capital expenditure for 2016 to less than $17 billion. Importantly, the London–based company was relieved to have finally ‘drawn a line’ under the 2010 deepwater Horizon spill in the Gulf of Mexico.

Sector investors have been worried after oil’s horror show threatened the industry’s creditworthiness by hurting cash flows, drying up liquidity and narrowing profit margins. Moreover, weak realizations are restricting the companies' internally generated cash flow amid high capital spending and dividend payments (if any). What’s more, the outlook remains grim too, with fundamentals suggesting that the odds are firmly stacked against a sustained crude rally.

Outlook for ‘Big Oil’ Earnings

Following BP’s grim results, the focus now shifts to the other supermajors.

With oil and natural gas both clawing their way back during the second quarter, prospects certainly look brighter. Nevertheless, the commodities are still significantly below year-ago levels and far below the breakeven price for many energy companies.

As such, another round of spending cuts can’t be ruled out amid the majors’ efforts to step up efficiency and improve cash flows. Importantly, there are signs of weakness in the refining business, suggesting that the units – which had saved them when crude prices plunged – could now be a drag.

Among the integrated stocks slated to report this week, let’s take a sneak peek at two of the biggest domestic energy behemoths to see how things are shaping up for the upcoming quarterly results.

Exxon Mobil Vs. Chevron

Exxon Mobil Corp. (XOM Quick QuoteXOM - Free Report) and Chevron Corp. (CVX Quick QuoteCVX - Free Report) – with their massive market capitalizations of $377 billion and $193 billion, respectively – dominate and define the U.S. energy industry.

Both these companies are engaged in the exploration and production of oil and natural gas, refining and marketing of petroleum products, manufacturing of chemicals, and other energy-related businesses.

With the duo slated to come up with second-quarter numbers on Friday, Jul 29, let’s take a sneak peek to see how things are shaping up for the upcoming quarterly results.

The largest U.S. oil company by market value, Exxon Mobil is expected to report results before the opening bell. In the first quarter of 2016, this Irving, TX-headquartered energy biggie reported better-than-expected numbers as a resilient integrated business model enabled it to beat estimates despite the current environment of relentlessly falling commodity prices. Moreover, the company has a good track of earnings surprises, having beaten estimates in three of the last four quarters.

However, an earnings beat is uncertain for Exxon Mobil this time around. This is because, as per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat earnings. Simultaneously, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

For the quarter to be reported, Exxon Mobil has an Earnings ESP of 0.00%, while it carries a Zacks Rank #2. Though a Zacks Rank #2 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult. (Read more: Exxon Mobil Q2 Earnings: A Surprise in the Cards?)

Headquartered in San Ramon, CA, Chevron is also set to report second-quarter 2016 results before the opening bell. Coming to earnings surprise history, Chevron has a poor track of having missed estimates in three of the last four quarters, resulting in an average negative surprise of 82.37%. The previous quarter saw another dismal performance from America’s No. 2 oil company as the oil market slump deepened and refining margins weakened.

Our proven model shows that Chevron is unlikely to beat earnings in the to-be-reported quarter as well, given the combination of a Zacks Rank #2 and Earnings ESP of -3.23%.  (Read more: Chevron: Is a Surprise in Store this Earnings Season?)

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