Five energy companies we like to track reported second-quarter results this morning. They range in size from supermajor Royal Dutch Shell PLC (NYSE: RDS-A) to refiners Marathon Petroleum Corp. (NYSE: MPC) and Valero Energy Corp. (NYSE: VLO).

Unusually, perhaps, ConocoPhillips (NYSE: COP) and Shell, the former entirely dependent on production and the latter heavily reliant on it, were the best performers based on morning stock prices. With crude oil prices lower than a year ago at the same time, revenues and profits should perhaps have been better either at smaller exploration & production (E&P) companies like EQT Corp. (NYSE: EQT) and refiners like Marathon and Valero.

Shell CEO Ben van Beurden played off the industry truism that crude prices will remain “lower for longer” than anyone expected and declared simply that crude prices would be “lower forever.” That means that E&P companies will be forced to cut costs to come to grips with an abundance of supply and declining demand. Shell doesn’t know when it will happen, van Beurden said, “but that it will happen we are certain.”

Net profit at Shell rose from $239 million a year ago to $1.9 billion, and cash flow from operations jumped to $11.3 billion. Over the past 12 months the company has generated $38 billion in cash, enough to cover dividend payments and reduce debt. The stock was last seen up about 1.2%, at $55.15 in a 52-week range of $46.57 to $56.39, and the consensus 12-month price target is $62.09.

ConocoPhillips posted a net loss of $3.4 billion this morning, more than triple the loss posted in the same quarter last year. The company said it would cut planned capital spending by $200 million to $4.8 billion for 2017. Shares traded up about 1.6% Thursday morning, at $44.40 in a 52-week range of $38.80 to $53.17. The 12-month price target on the shares is $51.89.

E&P company EQT Corp. plans to suspend its test drilling plans in the Utica shale play as it works to complete its $6.7 billion acquisition of Rice Energy. If that deal makes it through regulators and shareholders, EQT will become the largest U.S. producer of natural gas, replacing Exxon Mobil at the top of the rankings. EQT’s stock traded about flat Thursday morning, at $63.98 in a 52-week range of $49.63 to $75.74. Analysts have a consensus price target of $74.97.

Refiner Valero ran at a higher capacity year over year, and profits solidly beat expectations. But costs rose and margins fell in the company’s ethanol business weighed on profits somewhat. Still, shares traded up about 0.5%, at $68.41 in a 52-week range of $50.65 to $71.40. The consensus price target is $72.31.

Marathon Petroleum, another refiner reporting this morning, faced some of the same problems as Valero. Higher crude costs weighed on profits, leading to a decline of about 11% year over year. Even though the company missed the consensus earnings estimate, shares traded up about 0.6% to $56.00, in a 52-week range of $37.02 to $56.64. The 12-month consensus price target is $63.12.

E&P companies and refiners alike are going to be challenged to get costs down in the “lower forever” scenario promulgated by Shell this morning. Now would be a good time to get started.

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