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 ExxonMobil's Premium Price Justified on Permian & Guyana Presence?
Read MoreHide Full Article
Key Takeaways
ExxonMobil trades at a premium EV/EBITDA versus peers, with investors eyeing its upstream assets.
XOM projects 1.7MM boe/d in Guyana and 2.3MM boe/d in the Permian by decade's end.
The company targets $20B more earnings and $18B cost savings by 2030, plus low debt levels.
Exxon Mobil Corporation (XOM - Free Report) trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 7.36X, which is above the broader industry average of 4.33X. Notably, Chevron Corporation (CVX - Free Report) and BP plc (BP - Free Report) , two other integrated energy players, currently trade at a trailing 12-month EV/EBITDA of 7.16X and 3.26X, respectively.
Image Source: Zacks Investment Research
It seems that investors are willing to pay a premium price for XOM, but is it justified now? Before getting into the investment conclusions, let’s analyze the energy giant’s fundamentals and overall business environment.
ExxonMobil generates the majority of its earnings from upstream operations. In offshore Guyana, XOM has discovered huge oil resources. In the latest earnings call, the integrated major mentioned that it has produced 650,000 barrels per day from the resources, with more projects coming online. XOM expected that by the end of this decade, it would be able to produce daily volumes of a massive 1.7 million oil equivalent barrels.
In the Permian, the most prolific basin in the United States, XOM also has a strong presence. In the basin, ExxonMobil is producing massive volumes of oil, with the company expecting production to surge to 2.3 million oil equivalent barrels per day by the end of this decade.
XOM’s Project Startup & Cost Savings Target
XOM mentioned in the second quarter of 2025 earnings call that from its project start-ups in 2025, it is expecting to generate a profit of $3 billion, with the assumption that prices and margins will be constant. The earnings call also revealed that, overall, from all its operations, the integrated company is expecting to produce an incremental $20 billion in earnings by 2030 compared to 2024.
Although the next projects are adding to expenses, XOM is focusing strongly on reducing costs. The company expects a cost savings of $18 billion by 2030 compared to 2019.
Time to Bet on XOM Stock Now?
ExxonMobil also has lower debt capital exposure and hence can rely on its strong balance sheet when the business environment turns unfavorable. This is reflected in XOM’s debt-to-capitalization of 12.6%, well below the industry’s 22.9% and lower than other integrated players like CVX’s 16.7% and BP’s 43%.
Image Source: Zacks Investment Research
Despite the positive developments, the stock gained only 3.7% in the past year, underperforming the industry’s 8.3% increase. XOM also underperformed Chevron’s 15.8% improvement and BP’s 12.8% jump.
One-Year Price Chart
Image Source: Zacks Investment Research
One of the concerns that could probably hurt the stock price of XOM is its significant dependence on Permian, which has potential decline rates.
Image: Bigstock
Is ExxonMobil's Premium Price Justified on Permian & Guyana Presence?
Key Takeaways
Exxon Mobil Corporation (XOM - Free Report) trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 7.36X, which is above the broader industry average of 4.33X. Notably, Chevron Corporation (CVX - Free Report) and BP plc (BP - Free Report) , two other integrated energy players, currently trade at a trailing 12-month EV/EBITDA of 7.16X and 3.26X, respectively.
It seems that investors are willing to pay a premium price for XOM, but is it justified now? Before getting into the investment conclusions, let’s analyze the energy giant’s fundamentals and overall business environment.
Offshore Guyana & Permian: XOM’s Strong Upstream Presence
ExxonMobil generates the majority of its earnings from upstream operations. In offshore Guyana, XOM has discovered huge oil resources. In the latest earnings call, the integrated major mentioned that it has produced 650,000 barrels per day from the resources, with more projects coming online. XOM expected that by the end of this decade, it would be able to produce daily volumes of a massive 1.7 million oil equivalent barrels.
In the Permian, the most prolific basin in the United States, XOM also has a strong presence. In the basin, ExxonMobil is producing massive volumes of oil, with the company expecting production to surge to 2.3 million oil equivalent barrels per day by the end of this decade.
XOM’s Project Startup & Cost Savings Target
XOM mentioned in the second quarter of 2025 earnings call that from its project start-ups in 2025, it is expecting to generate a profit of $3 billion, with the assumption that prices and margins will be constant. The earnings call also revealed that, overall, from all its operations, the integrated company is expecting to produce an incremental $20 billion in earnings by 2030 compared to 2024.
Although the next projects are adding to expenses, XOM is focusing strongly on reducing costs. The company expects a cost savings of $18 billion by 2030 compared to 2019.
Time to Bet on XOM Stock Now?
ExxonMobil also has lower debt capital exposure and hence can rely on its strong balance sheet when the business environment turns unfavorable. This is reflected in XOM’s debt-to-capitalization of 12.6%, well below the industry’s 22.9% and lower than other integrated players like CVX’s 16.7% and BP’s 43%.
Despite the positive developments, the stock gained only 3.7% in the past year, underperforming the industry’s 8.3% increase. XOM also underperformed Chevron’s 15.8% improvement and BP’s 12.8% jump.
One-Year Price Chart
One of the concerns that could probably hurt the stock price of XOM is its significant dependence on Permian, which has potential decline rates.
Hence, investors shouldn’t bet on the stock right away. However, those who are already invested can stick to their investment in the stock, currently carrying a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.