It’s earnings season and the living isn’t exactly easy for energy companies.

Oil producers mostly saw revenues wane in the second quarter of 2012 as crude prices receded in the face of a souring global economy and declining demand before being “rescued” somewhat by geopolitical friction in oil-rich countries like Iran, Syria and Sudan.

Altogether, crude prices declined by 7% in Q2. That scenario was upside down in the second quarter of 2011, when oil prices rose significantly as the Arab Spring uprisings took root, adding some serious cabbage to the bottom lines of major producers.

With Simmons & Co. analyst Bill Herbert saying that big oil producers are staring down “an extremely challenging economy,” Oil and Gas Investor reviewed the landscape for production companies and now takes a pulse of the industry as the second half of 2012 beckons, along with a potential recessionary climate and a big U.S. presidential election on the first Tuesday of November.

Downside for energy firms – Zacks Investment Research is out with its quarterly earnings outlook, and it isn’t a rosy one for oil companies. This from Zacks:

• Of 292 companies covered by Zacks, earnings are up by 5.4% from the second quarter of 2011. Financial companies are the primary drivers of earnings growth.

• Energy companies are a big drag on earnings this quarter, as declining profits at ExxonMobil, Chevron and Conoco demonstrate. Total energy sector earnings are down 16.4% from the same period last year, which compares to 0.6% positive earnings growth in the previous quarter.

• Excluding Energy, total earnings for the S&P 500 companies that have reported would be up 10%, while those same companies had earnings growth of 9.8% in the first quarter.

The majors took a hit in Q2 – The big producers did not fare well in the quarter, but most analysts say Q3 shapes up well for E&P companies, suggesting that any drop-off in share prices cold be temporary, leading to some interesting buying opportunities.

• Exxon saw second-quarter earnings fall by about $9.3 billion ($1.95 per share), from $10.7 billion ($2.18) on a year-to-year basis.

• Chevron saw its earnings decline by about $6.4 billion, or $3.22 per share. That’s down significantly from $7.7 billion, or $3.85 per share, from the same period last year.

• ConocoPhillips should record Q2 profits of $1.65 billion ($1.20 per share), a decline from $3.4 billion ($1.84 per share).

Of the three oil giants, only one seems to be generating much enthusiasm from Wall Street analysts. Deutsche Bank analyst Paul Sankey calls Chevron a “buy,” while assigning “holds” on ExxonMobil and ConocoPhillips.

Wider view shows improvement among E&P providers – Data from the Wall Street analysis firm Enercom shows that the median E&P earnings estimate for the quarter ending June 30, 2012, is $0.19 per share compared with actual earnings per share of $0.14 and $0.07 for Q1 2012 and Q4 2011, respectively.

June was a better month for oil producers – According to Enercom, the energy sector outperformed the overall stock market in June 2012. This suggests that the sector shed the negative news accumulated in April and May, and that June’s rise may trigger further acceleration in July and August as oil and gas prices swing upward.

Oil is doing better than gas, but neither shine – Enercom reports that, on a year-to-date basis, large-cap, mid-cap, small-cap and micro-cap E&P stocks lost 8.5%, 10.6%, 10.5% and 9.5%, respectively. Meanwhile, also on a year-to-date basis, oil companies are off by 9.2% against a decline of 14.7% for natural gas companies.

Offshore, shale taking a breather – Also from Enercom, company financial performance from producers heavily invested in the Bakken and the Gulf of Mexico saw average share prices drop by 15.2%, 0.5% and 7.5% on a year-to-date basis. But firms with a heavy presence in mid-continent drilling sites saw their stocks rise by 1.0%, the analyst firm says.

The outlook for the third quarter seems moderately more bullish for oil producers as high-level analysis from the U.S. Energy Information Administration and OPEC both say that both oil consumption and demand are heading upward in the second half of 2012.

That bodes well for oil companies and the investors who buy shares of their stocks.

“In our view, crude oil prices in 2012 are likely to witness more upside -- rather than downside -- given the considerable supply tightness in the market,” Zacks stated in a recent research report. “While domestic demand is relatively soft and the global economy is still showing signs of weakness, the fact that demand is outpacing supply appears to be evident.

“As long as growth from the developing nations continues and the global output is unable to keep up with that, we are likely to experience a surge in the price of a barrel of oil. With a world population of 7 billion people and all the easy oil being already discovered and expanded, we assume that crude will trade in the $90-$100 per barrel range for the near future.”

That would be welcome news for investors, who didn’t have a great deal to cheer about in Q2 2012.