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.
ConocoPhillips or ExxonMobil: Which Oil Major Looks Stronger Today?
Read MoreHide Full Article
Key Takeaways
ExxonMobil posts gains over the past year while COP shares decline, prompting a comparison of prospects.
ExxonMobil benefits from low-cost Permian and Guyana output plus support from resilient downstream operations.
ConocoPhillips expands its Lower 48 position after buying Marathon Oil, supported by low breakeven resources.
ExxonMobil Corporation (XOM - Free Report) and ConocoPhillips (COP - Free Report) are major energy giants, both having a strong upstream presence. Over the past year, ExxonMobil has gained 2.2%, outpacing the 15.6% decline of COP.
One-Year Price Chart
Image Source: Zacks Investment Research
Before making investment decisions, let's first analyze the business prospects and fundamentals of both energy giants.
ExxonMobil’s Robust Upstream Presence
XOM has a strong footprint in the Permian, the most prolific oil and gas play in the United States, and offshore Guyana. In the Permian, the integrated giant has been employing lightweight proppant technology and hence has been capable of boosting its well recoveries by up to as much as 20%.
In Guyana, XOM has made several oil and gas discoveries, further highlighting the company’s solid production outlook. Notably, record production from both resources has been aiding its top and bottom lines. Importantly, in both resources, the breakeven costs are low, thereby aiding ExxonMobil in continuing its upstream business even during a low crude pricing environment.
Strong Lower 48 Presence of ConocoPhillips
ConocoPhillips has a strong presence in the Lower 48, which comprises the Permian – the most prolific basin in the United States –, Eagle Ford and Bakken. The company’s acquisition of Marathon Oil late last year has further bolstered its footprint in the prolific Lower 48.
Image Source: ConocoPhillips
The breakeven costs in the resources are low, enabling COP to sail through the business environment when oil prices turn low.
Which is a Better Stock? XOM, COP
Before getting to the investment conclusions, one should know that XOM’s resilient refining operations give support when oil prices turn low, and the upstream business suffers. ExxonMobil highlighted on its third-quarter earnings call that low-value fuel is getting upgraded in its Singapore Resid Upgrade to high-value end products, thereby meeting the growing demand for cleaner fuels.
Thus, it has been a clear fact that XOM has a more stable business since it is an integrated energy giant with both upstream and downstream presence. On the contrary, ConocoPhillips is primarily an upstream energy major and is thus more vulnerable to oil and gas price volatility.
Since XOM is more stable, investors are willing to pay a premium for the stock over COP. This is reflected by the fact that ExxonMobil trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 7.44X, which is above COP’s 4.75X.
Image Source: Zacks Investment Research
To conclude, risk-averse investors can hold ExxonMobil stock, while investors willing to take risks could retain ConocoPhillips stock to benefit from a low breakeven cost.
Image: Bigstock
ConocoPhillips or ExxonMobil: Which Oil Major Looks Stronger Today?
Key Takeaways
ExxonMobil Corporation (XOM - Free Report) and ConocoPhillips (COP - Free Report) are major energy giants, both having a strong upstream presence. Over the past year, ExxonMobil has gained 2.2%, outpacing the 15.6% decline of COP.
One-Year Price Chart
Before making investment decisions, let's first analyze the business prospects and fundamentals of both energy giants.
ExxonMobil’s Robust Upstream Presence
XOM has a strong footprint in the Permian, the most prolific oil and gas play in the United States, and offshore Guyana. In the Permian, the integrated giant has been employing lightweight proppant technology and hence has been capable of boosting its well recoveries by up to as much as 20%.
In Guyana, XOM has made several oil and gas discoveries, further highlighting the company’s solid production outlook. Notably, record production from both resources has been aiding its top and bottom lines. Importantly, in both resources, the breakeven costs are low, thereby aiding ExxonMobil in continuing its upstream business even during a low crude pricing environment.
Strong Lower 48 Presence of ConocoPhillips
ConocoPhillips has a strong presence in the Lower 48, which comprises the Permian – the most prolific basin in the United States –, Eagle Ford and Bakken. The company’s acquisition of Marathon Oil late last year has further bolstered its footprint in the prolific Lower 48.
The breakeven costs in the resources are low, enabling COP to sail through the business environment when oil prices turn low.
Which is a Better Stock? XOM, COP
Before getting to the investment conclusions, one should know that XOM’s resilient refining operations give support when oil prices turn low, and the upstream business suffers. ExxonMobil highlighted on its third-quarter earnings call that low-value fuel is getting upgraded in its Singapore Resid Upgrade to high-value end products, thereby meeting the growing demand for cleaner fuels.
Thus, it has been a clear fact that XOM has a more stable business since it is an integrated energy giant with both upstream and downstream presence. On the contrary, ConocoPhillips is primarily an upstream energy major and is thus more vulnerable to oil and gas price volatility.
Since XOM is more stable, investors are willing to pay a premium for the stock over COP. This is reflected by the fact that ExxonMobil trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 7.44X, which is above COP’s 4.75X.
To conclude, risk-averse investors can hold ExxonMobil stock, while investors willing to take risks could retain ConocoPhillips stock to benefit from a low breakeven cost.
Currently, both XOM and COP carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.