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.
How ExxonMobil Plans to Sustain Cash Flows Amid Softer Crude Prices
Read MoreHide Full Article
Key Takeaways
XOM boosts output from Guyana and Permian assets to sustain earnings amid softer crude prices.
Low breakeven costs at these advantaged assets help XOM maintain stable performance and cash flows.
XOM targets 1.7M Boe capacity in Guyana by 2030 and expands Permian acreage to enhance returns.
Exxon Mobil Corporation (XOM - Free Report) , a U.S.-based integrated energy company, earns a significant part of its revenues from its upstream business. The company’s involvement in the upstream segment makes it vulnerable to volatility in oil and gas prices. However, ExxonMobil’s high-return assets in the Permian Basin and Guyana are expected to support its earnings even during low commodity prices, due to their low cost of production.
The company is ramping up production from its most advantaged assets in Guyana and the Permian Basin, helping sustain earnings growth despite softer crude realizations. These advantaged assets have low breakeven costs, allowing XOM to maintain stable performance and generate positive cash flows even when oil prices are low.
In its most recent earnings call, XOM mentioned that it has reached production levels of 700,000 barrels per day in Guyana in the third quarter. The company has sanctioned its seventh development in Guyana, named Hammerhead, which is expected to start production in 2029. By 2030, XOM intends to reach a production capacity of 1.7 million Boe from the eight offshore developments in the Stabroek block. Furthermore, in the Permian Basin, the company has acquired 80,000 net high-quality acres from Sinochem Petroleum. This transaction expands its presence in the basin, allowing full control over new drilling locations where it can implement its technology to generate better returns.
ExxonMobil’s upstream business is poised to generate sustainable cash flows and deliver long-term shareholder value, owing to its focus on production growth from its advantaged assets and structural cost reduction.
The Core of COP and EOG's Competitive Edge
ConocoPhillips (COP - Free Report) and EOG Resources, Inc. (EOG - Free Report) are two global energy firms that can thrive even during challenging commodity price environments.
ConocoPhillips’ portfolio includes assets in the prolific shale basins of the United States, the oil sands in Canada and conventional assets in Asia, Europe and the Middle East, which support low-cost production. Notably, in the U.S. Lower 48, COP has an advantaged inventory position that can support operations at a breakeven cost as low as $40 per barrel WTI. Even if crude oil prices decline significantly, ConocoPhillips will be able to maintain its financial performance and generate positive cash flows.
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. EOG boasts a high-return, low-decline asset base and stands out among the low-cost producers in the United States. The company’s focus on maintaining a resilient balance sheet and lowering production costs should enable it to weather oil price volatility.
XOM’s Price Performance, Valuation & Estimates
Shares of ExxonMobil have risen 12.9% over the past six months compared with the 13.3% increase 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 7.46X. This is above the broader industry average of 4.78X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for XOM’s 2025 earnings has been revised upward over the past seven days.
Image: Bigstock
How ExxonMobil Plans to Sustain Cash Flows Amid Softer Crude Prices
Key Takeaways
Exxon Mobil Corporation (XOM - Free Report) , a U.S.-based integrated energy company, earns a significant part of its revenues from its upstream business. The company’s involvement in the upstream segment makes it vulnerable to volatility in oil and gas prices. However, ExxonMobil’s high-return assets in the Permian Basin and Guyana are expected to support its earnings even during low commodity prices, due to their low cost of production.
The company is ramping up production from its most advantaged assets in Guyana and the Permian Basin, helping sustain earnings growth despite softer crude realizations. These advantaged assets have low breakeven costs, allowing XOM to maintain stable performance and generate positive cash flows even when oil prices are low.
In its most recent earnings call, XOM mentioned that it has reached production levels of 700,000 barrels per day in Guyana in the third quarter. The company has sanctioned its seventh development in Guyana, named Hammerhead, which is expected to start production in 2029. By 2030, XOM intends to reach a production capacity of 1.7 million Boe from the eight offshore developments in the Stabroek block. Furthermore, in the Permian Basin, the company has acquired 80,000 net high-quality acres from Sinochem Petroleum. This transaction expands its presence in the basin, allowing full control over new drilling locations where it can implement its technology to generate better returns.
ExxonMobil’s upstream business is poised to generate sustainable cash flows and deliver long-term shareholder value, owing to its focus on production growth from its advantaged assets and structural cost reduction.
The Core of COP and EOG's Competitive Edge
ConocoPhillips (COP - Free Report) and EOG Resources, Inc. (EOG - Free Report) are two global energy firms that can thrive even during challenging commodity price environments.
ConocoPhillips’ portfolio includes assets in the prolific shale basins of the United States, the oil sands in Canada and conventional assets in Asia, Europe and the Middle East, which support low-cost production. Notably, in the U.S. Lower 48, COP has an advantaged inventory position that can support operations at a breakeven cost as low as $40 per barrel WTI. Even if crude oil prices decline significantly, ConocoPhillips will be able to maintain its financial performance and generate positive cash flows.
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. EOG boasts a high-return, low-decline asset base and stands out among the low-cost producers in the United States. The company’s focus on maintaining a resilient balance sheet and lowering production costs should enable it to weather oil price volatility.
XOM’s Price Performance, Valuation & Estimates
Shares of ExxonMobil have risen 12.9% over the past six months compared with the 13.3% increase 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 7.46X. This is above the broader industry average of 4.78X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for XOM’s 2025 earnings has been revised upward over the past seven days.
Image Source: Zacks Investment Research
XOM, COP 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.