It's always strange when the market reacts with shock and awe to an event or trend that most would have thought to be completely predictable.

Take, for instance, Chevron's (NYSE:CVX) pre-release of its fourth-quarter results late last week. Believe it or not, the company expects that, when all is said and done, its earnings will slide for the quarter, both year over year and versus the prior quarter's estimate-beating results. Chevron's news emerged just as the world's two biggest oilfield service companies were announcing employee cutbacks.

The key, of course, is the continuing drop in oil prices that everybody knows about, or should. So why the surprise?

Specifically because the company's crude price realizations in the U.S. fell by more than half during October and November to $61.70 a barrel, from $112.22 in the previous quarter. Global prices reached their all-time high above $145 in the third quarter, compared to a close at just $40.83 on Friday. At the same time, natural gas prices dropped by 42% from the third quarter to the first two months of the fourth quarter. Downstream, the company's refinery margins also declined.

Schlumberger (NYSE:SLB), the oilfield services majordomo, said it would lay off about 1,000 workers in the U.S., along with an unspecified number in other areas of the world. Its second-in-command, Halliburton (NYSE:HAL), also will be cutting back, although further details about where and how many workers will go still aren't available.

And Chevron isn't alone. Take a look at the year-on-year EPS changes expected for a mixture of Big Oil companies, independent producers, and oilfield service types:

Company

Q4 2007
EPS

Estimated Q4
2008 EPS

Expected Change

Apache (NYSE:APA)

$2.92

$1.52

(48%)

Chevron

$2.25

$1.79

(20%)

ConocoPhillips (NYSE:COP)

$2.48

$1.56

(37%)

Devon (NYSE:DVN)

$1.93

$1.28

(34%)

Halliburton

$0.71

$0.75

6%

Schlumberger

$1.11

$1.09

(2%)

ExxonMobil (NYSE:XOM)

$2.13

$1.59

(25%)

Source: Yahoo! Finance.

At this point, expected energy earnings don't make for a pretty picture. Indeed, the service companies are expected to perform the most solidly, with Halliburton likely to check in with an improved quarter, and Schlumberger predicted to be nearly unchanged from a year ago.

At the same time, with crude prices continuing to slide, the next quarter's earnings dip should be more severe than the fourth quarter of 2008. Nevertheless, as most Fools with a taste for energy know, my strong belief is that the steady six-month energy price declines and resulting development project cancellations will almost certainly lead to sharper oil and gas price hikes once our economy finds its sea legs.

For now, however, I continue to believe that long-term holdings of ExxonMobil are the best way to assuage your energy investing thirst. It's the largest of the public companies, and its solid balance sheet will provide management with ample flexibility amid the current hiatus.

In the world of Motley Fool CAPS, ExxonMobil is a four-star player. Why not add your opinion to the mix?

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Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned. He does, however, welcome your questions or comments. The Fool has a disclosure policy.