BP and Shell face a grilling from the City, after enduring a year to forget, when they make their annual strategy presentations in the next 10 days.
The companies could also be forced to lower their profit forecasts for 2007 because of the slump in oil prices - to $55 a barrel for Brent crude - and rising costs.
Analysts at stockbrokers Investec warned BP last week that a "'business-as-usual approach' will not be acceptable to a sceptical market" when the company reports its annual results on 6 February.
They are calling on BP to raise $3.7bn (£1.9bn) by selling mature oil fields in the UK or continental Europe, using the proceeds to boost the dividend and help restore battered confidence in the company.
Stockbrokers at Charles Stanley, meanwhile, are forecasting that when Shell reports full-year results on Thursday, income for the fourth quarter to December last year will be $5.3bn - 2 per cent down on the same period a year earlier.
Analysts will also quiz Shell about the precise terms of the controversial sale of half its stake in the $20bn Sakhalin 2 project in Russia to state-owned gas giant Gazprom.
After months of pressure from Kremlin-backed environ- mental regulators, Shell agreed to sell half its 55 per cent stake for $7.45bn last month.
Shell had banked on the project, the largest-ever foreign direct investment in Russia , to help replenish its depleting reserves. UBS analysts estimate that after diluting its Sakhalin 2 holding, Shell will now have to trim up to 200,000 barrels of oil and gas equivalent from its total estimated production for 2009 of 3.8 million per day.
Shell has yet to complete the sale of its stake to Gazprom, but analysts will press for more details on how much of the project's reserves it has booked and how much will need to be written off.
There is also concern over whether the Anglo-Dutch company will be able to reclaim all its costs from the project. There is speculation that under the agreement with the Russian government, Shell may have to pay between $3bn and $4bn out of its own pocket.
The debacle over Sakhalin 2 capped a bad 2006 for Shell, which underperformed the FTSE 100 by 13 per cent, its worst showing since 1998.
But BP fared even worse, underperforming the blue-chip index by 17 per cent. The company, where chief executive Lord Browne has brought forward his retirement to this summer, has been heavily criticised for its safety and environmental performance. Its Prudhoe Bay field in Alaska was shut for weeks last year after an oil spill, and it is still suffering the fallout from an explosion at its Texas refinery in 2005, which killed 15 workers.
But Shell and BP are also affected by sector-wide problems: rampant costs and falling prices. The International Energy Agency says capital spending by the industry almost doubled from $200bn in 2000 to $390bn last year, with companies having to look for oil in more remote and inaccessible areas. The cost of services, such as hiring rigs, has also soared, while oil prices have fallen from record highs and now stand at $55 for Brent against an average of $66 last year.Reuse content