We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is the Current Oil Price Favorable for ExxonMobil's Upstream Business?
Read MoreHide Full Article
Key Takeaways
ExxonMobil's upstream unit benefits from WTI crude above $63 and low-cost Permian and Guyana assets.
XOM targets reducing breakeven costs to $30 per barrel by 2030 for greater efficiency and cash flow.
XOM shares gained 3.5% in a year, while its EV/EBITDA valuation stands above the industry average.
Exxon Mobil Corporation (XOM - Free Report) earns most of its income from its upstream business. Since exploration and production activities mainly depend on oil and gas prices, the natural question is whether the crude pricing environment is favorable for XOM.
In the second quarter of 2025 earnings announcement, ExxonMobil already mentioned the Permian, the most prolific basin in the United States, and the Guyana deepwater projects as its core advantageous projects. The cost of operations is low there, as reflected in low breakeven costs. Per Statista, a global platform that provides facts and figures, the breakeven price in the existing wells in the Midland and Delaware sub-basins of the broader Permian is below $40 per barrel. Thus, with the West Texas Intermediate (WTI) crude trading at more than $63 per barrel, the upstream operations of XOM in the prolific basin are highly profitable.
In the first quarter of 2025 earnings call, ExxonMobil revealed its plan to lower its break-even costs to $30 per barrel by the end of this decade. Thus, with the integrated energy giant striving to lower its breakeven costs while making its operations more efficient, the upstream business is likely to continue to generate handsome cash flows for the company.
CVX & FANG Can Also Combat Low Oil
Like XOM,Chevron Corporation (CVX - Free Report) and Diamondback Energy Inc (FANG - Free Report) also have low breakeven costs to survive a period when oil turns low.
In the Permian Basin, Chevron is among the leading exploration and production players and is thus benefiting from low-cost assets. Notably, Permian production drives the upstream business to a great extent.
Diamondback Energy is also a Permian pure play stock, reflecting its low break-even costs. FANG also has a strong balance sheet.
XOM’s Price Performance, Valuation & Estimates
Shares of ExxonMobil have risen 3.5% over the past year compared with the 9.2% improvement of the composite stocks belonging to the industry.
Image Source: Zacks Investment Research
From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 7.11X. This is above the broader industry average of 4.28X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for XOM’s 2025 earnings has not seen any revisions over the past seven days.
Image: Bigstock
Is the Current Oil Price Favorable for ExxonMobil's Upstream Business?
Key Takeaways
Exxon Mobil Corporation (XOM - Free Report) earns most of its income from its upstream business. Since exploration and production activities mainly depend on oil and gas prices, the natural question is whether the crude pricing environment is favorable for XOM.
In the second quarter of 2025 earnings announcement, ExxonMobil already mentioned the Permian, the most prolific basin in the United States, and the Guyana deepwater projects as its core advantageous projects. The cost of operations is low there, as reflected in low breakeven costs. Per Statista, a global platform that provides facts and figures, the breakeven price in the existing wells in the Midland and Delaware sub-basins of the broader Permian is below $40 per barrel. Thus, with the West Texas Intermediate (WTI) crude trading at more than $63 per barrel, the upstream operations of XOM in the prolific basin are highly profitable.
In the first quarter of 2025 earnings call, ExxonMobil revealed its plan to lower its break-even costs to $30 per barrel by the end of this decade. Thus, with the integrated energy giant striving to lower its breakeven costs while making its operations more efficient, the upstream business is likely to continue to generate handsome cash flows for the company.
CVX & FANG Can Also Combat Low Oil
Like XOM,Chevron Corporation (CVX - Free Report) and Diamondback Energy Inc (FANG - Free Report) also have low breakeven costs to survive a period when oil turns low.
In the Permian Basin, Chevron is among the leading exploration and production players and is thus benefiting from low-cost assets. Notably, Permian production drives the upstream business to a great extent.
Diamondback Energy is also a Permian pure play stock, reflecting its low break-even costs. FANG also has a strong balance sheet.
XOM’s Price Performance, Valuation & Estimates
Shares of ExxonMobil have risen 3.5% over the past year compared with the 9.2% improvement of the composite stocks belonging to the industry.
From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 7.11X. This is above the broader industry average of 4.28X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for XOM’s 2025 earnings has not seen any revisions over the past seven days.
ExxonMobil stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.