The first half of 2025 was a stark reminder for oil and gas companies of just how quickly market conditions can shift. Geopolitical tensions, evolving tariff policies, swings in global demand, and shifting OPEC+ strategies have all contributed to a landscape that remains as unpredictable as ever. Amid all this, a central question emerges: how resilient are your forecasting and financial planning processes?
In this kind of environment, the conventional approach to budgeting and valuation—anchoring on a single “base case” price deck and layering in limited sensitivities—can leave companies exposed. Market assumptions around commodity prices, capital expenditure, and production profiles can age out in a matter of weeks. The impact exceeds budget accuracy: stale forecasts can affect everything from valuations and impairment testing to capital allocation and investor messaging.
The companies best positioned to navigate the back half of 2025 will be those that have moved to more agile, scenario-driven planning. That means expanding beyond a lone base case into fully developed alternative cases that reflect materially different macroeconomic and geopolitical pathways, ranging from trade disruptions to regional supply outages to demand shocks driven by changes in GDP growth.
Critically, these scenarios must link pricing assumptions directly to operational drivers. For instance, a $60 WTI scenario should automatically adjust projected production volumes, unit operating costs, drilling schedules, EBITDA, and leverage metrics. Without this connection, scenarios remain mere numbers on a page.
Forecast cadence matters as much as structure. Updating models quarterly is no longer adequate, as the forward curve can change significantly within days. Rolling forecasts, updated monthly or even biweekly, help management align internal assumptions with external benchmarks like NYMEX and ICE futures, peer disclosures, and hedge positions. The aim is to narrow the gap between the company’s internal market view and the perceptions used by investors, lenders, and auditors for risk and valuation assessments.
The sector has been here before. In 2020, WTI’s plunge into negative territory during COVID-19 caught many operators flat-footed. In 2014, the rapid collapse below $30 per barrel forced abrupt spending cuts and impairment charges. Companies with flexible, scenario-dependent models could pivot more quickly toward adjusting budgets, rebalancing capital programs, and maintaining credibility with lenders and equity markets. The lesson is that volatility is now a structural element, not just an outlier.
There is also a new variable in play this year: tax policy. The “Big Beautiful Bill” passed earlier this year introduced significant changes to depreciation rules. For capital-intensive operators, particularly in upstream and midstream segments, these changes will alter after-tax project economics and could shift investment priorities. Integrating the new rules into forecasts and valuations is essential, not only for current-year planning but also for multi-year capital strategies and potential M&A assessments.
Energy companies are increasingly adopting agile, data-driven approaches to financial planning by building multi-scenario models, linking assumptions to market realities, and factoring new tax rules into long-term strategies. At WilliamsMarston, we help organizations develop these capabilities, which have become essential as finance teams place greater emphasis on fair value measurements and impairment triggers in a fast-changing environment.
With the second half of 2025 likely to bring continued volatility, the companies that stand out will be those that treat forecasting as a living process rather than a quarterly exercise. The ability to reframe valuations quickly, adjust capital deployment, and deliver a clear, current outlook to stakeholders is no longer just best practice, but a defining competitive advantage.
