As expected, it was a rough couple of weeks as the oil majors ramped up the spin machine to explain (or gloss over) what happened during the first quarter of the year. Let's be honest here - we all knew it was going to be bad. Oil prices averaged $98.43 per barrel in the U.S. during the first quarter of 2008 and only $43.31 for the first quarter of 2009. When the price the market is willing to pay for your product is cut in half, all a company can do is hang on and do what it can to lessen the impact of the fall.

Some did okay, others got burned, but no one is unscathed.

The above is just an indicative sampling of the oil and gas companies that have reported first-quarter earnings in the past two weeks, sorted from "OH MY GOD" to "well that wasn't great, but we're OK."

Across the board, companies' first-quarter results were down compared with first quarter 2008. Way down. No big surprise there. What is interesting is to see what the market thought the company was going to report, versus what it actually did. After all, we as investors have been conditioned to love upside earnings surprises.

Let's take a look at two companies - one that beat the whisper numbers (ConocoPhillips), and one that missed (Chevron Corp).

ConocoPhillips

ConocoPhillips gets the prize for largest drop from first quarter 2008 to first quarter 2009 - net income was down 80%. To put it into dollars and cents, ConocoPhillips had a net income of $4.14 billion at the end of Q1 08 - this year, that number dropped to $840 million, shedding the equivalent of Iceland, in GDP terms. But even so, once the one-time items and inventory changes were excluded, the company beat earnings estimates by 24%, ending up with 52 cents a share versus the 42 cents per share analysts had been expecting (and versus the $2.62 they reported last year). So yes, it was bad - but not as bad as everyone was expecting.

How did this happen? One reason was that COP pumped out more oil than was expected - approximately 28,000 bpd more than expected, to be exact. A small, but nice, boost to the revenue stream.

But cost cuts were necessary ($35 a barrel in February anyone?), and one place ConocoPhillips cut from was its capital spending. Capital spending is scheduled to drop 37% from last year's levels, to $12.5 billion (including obvious cuts in expensive per-barrel projects, like heavy oil extraction). Those massive cuts are still under way, and frankly, it looks like they're just turning off funds as fast as they can to whatever wheel squeaks. They also laid off 1,300 employees.

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