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ExxonMobil's Upstream Focus and Financial Strength Drive Resilience
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Key Takeaways
ExxonMobil's integrated model supports earnings stability during challenging commodity conditions.
Over half of its production comes from high-return assets in Guyana and the Permian Basin.
A low 11.06% debt-to-capitalization ratio enhances ExxonMobil's financial flexibility and resilience.
Exxon Mobil Corporation (XOM - Free Report) , a U.S.-based integrated energy giant,stands out among other industry majors due to its strong upstream presence, fortress-like balance, which enable it to maintain earnings stability through volatile commodity-price environments.
A significant part of XOM’s earnings come from its upstream business segment, which is highly vulnerable to fluctuations in oil and gas prices. However, the company’s upstream business is supported by low-cost, high-return assets, which provide a competitive edge over other players in the industry. In its recent earnings call, the company mentioned that over 50% of its oil and gas production comes from high-return, advantaged assets, including its Guyana assets and Permian Basin resources. These advantaged assets have low breakeven costs, allowing XOM to maintain stable performance and generate sustainable cash flows even when oil prices are low.
Furthermore, the company’s balance sheet strength allows it to sail through challenging business cycles. Its debt-to-capitalization ratio of 11.06% stands significantly lower compared to the industry average of 22.92%. The strong balance sheet enables it to navigate unfavorable business environments by reducing financial stress and improving overall financial resilience.
XOM’s strategic focus on low-cost, high-return assets, along with a fortress-like balance sheet, provides the company with operational flexibility and the ability to consistently return shareholder value across different commodity cycles.
EOG and CVX Boast Superior Balance Sheet Strength
Like XOM, EOG Resources (EOG - Free Report) and Chevron Corporation (CVX - Free Report) also have lower debt exposure.
EOG Resources is a leading independent exploration and production company with operations focused on the prolific acres in the United States as well as several resource-rich international basins. The company has a debt-to-capitalization ratio of 12.66%, which is significantly lower than that of the composite stocks belonging to the industry.
Chevron Corporation is an integrated energy giant with operations ranging from oil production to refining and marketing. The company operates across several countries. CVX’s debt-to-capitalization ratio of 16.67% demonstrates lower dependence on debt capital.
XOM’s Price Performance, Valuation & Estimates
Shares of ExxonMobil have plunged 6.4% over the past year compared with the 2.5% decline 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 7.33X. This is above the broader industry average of 4.51X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for XOM’s 2025 earnings has been revised upward in the past seven days.
Image: Bigstock
ExxonMobil's Upstream Focus and Financial Strength Drive Resilience
Key Takeaways
Exxon Mobil Corporation (XOM - Free Report) , a U.S.-based integrated energy giant,stands out among other industry majors due to its strong upstream presence, fortress-like balance, which enable it to maintain earnings stability through volatile commodity-price environments.
A significant part of XOM’s earnings come from its upstream business segment, which is highly vulnerable to fluctuations in oil and gas prices. However, the company’s upstream business is supported by low-cost, high-return assets, which provide a competitive edge over other players in the industry. In its recent earnings call, the company mentioned that over 50% of its oil and gas production comes from high-return, advantaged assets, including its Guyana assets and Permian Basin resources. These advantaged assets have low breakeven costs, allowing XOM to maintain stable performance and generate sustainable cash flows even when oil prices are low.
Furthermore, the company’s balance sheet strength allows it to sail through challenging business cycles. Its debt-to-capitalization ratio of 11.06% stands significantly lower compared to the industry average of 22.92%. The strong balance sheet enables it to navigate unfavorable business environments by reducing financial stress and improving overall financial resilience.
XOM’s strategic focus on low-cost, high-return assets, along with a fortress-like balance sheet, provides the company with operational flexibility and the ability to consistently return shareholder value across different commodity cycles.
EOG and CVX Boast Superior Balance Sheet Strength
Like XOM, EOG Resources (EOG - Free Report) and Chevron Corporation (CVX - Free Report) also have lower debt exposure.
EOG Resources is a leading independent exploration and production company with operations focused on the prolific acres in the United States as well as several resource-rich international basins. The company has a debt-to-capitalization ratio of 12.66%, which is significantly lower than that of the composite stocks belonging to the industry.
Chevron Corporation is an integrated energy giant with operations ranging from oil production to refining and marketing. The company operates across several countries. CVX’s debt-to-capitalization ratio of 16.67% demonstrates lower dependence on debt capital.
XOM’s Price Performance, Valuation & Estimates
Shares of ExxonMobil have plunged 6.4% over the past year compared with the 2.5% decline 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 7.33X. This is above the broader industry average of 4.51X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for XOM’s 2025 earnings has been revised upward in the past seven days.
Image Source: Zacks Investment Research
XOM, CVX and EOG each currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.