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Crude Oil Price Will Likely Remain Soft: Will ExxonMobil Suffer?
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Key Takeaways
WTI crude hovers near $60, pressuring upstream earnings at ExxonMobil, which relies on upstream profits.
XOM's Permian and Guyana assets have advantages, while a 13.6% debt ratio adds flexibility.
XOM shares rose 21.7% over a year and trade at 8.20X EV/EBITDA, above the industry's 5.22X average.
According to data from OilPrice.com, the price of West Texas Intermediate (WTI) crude is hovering around $60 per barrel, down significantly from the year-ago level. This is hurting the upstream business of integrated energy players like Exxon Mobil Corporation (XOM - Free Report) .
Notably, EIA projects the spot average West Texas Intermediate price for 2026 at $52.21 per barrel, lower than $65.40 for 2025. With XOM generating a king's size of its earnings from upstream operations, can it combat the prevailing softness in oil prices?
The advantageous assets where XOM is operating include the Permian, the most prolific basin in the United States, and offshore Guyana resources. Although the assets have cost advantages, lower oil prices are likely to hurt profits. However, unlike many other companies, ExxonMobil can rely on its strong balance sheet.
XOM’s debt-to-capitalization of 13.6% is significantly lower than 29.2% of the industry’s composite stocks. Thus, the integrated energy giant can lean on its robust financials to navigate the low pricing environment, such as securing debt capital on favorable terms when the business scenario turns unfavorable.
CVX & EOG Can Also Brave Business Uncertainty
Chevron Corporation (CVX - Free Report) and EOG Resources Inc (EOG - Free Report) are two leading energy companies with a strong presence in exploration and production activities. Thus, the softness in crude prices is also hurting the bottom line of both CVX and EOG.
However, like XOM, CVX and EOG also have strong balance sheets. Debt to capitalization of Chevron and EOG are 17.52% and 20.26%, respectively, suggesting a considerably lower exposure to debt capital. Hence, they can brave the uncertainty of the business environment.
XOM’s Price Performance, Valuation & Estimates
Shares of XOM have gained 21.1% over the past year compared with the 16.5% 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 8.42X. This is above the broader industry average of 5.33X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for XOM’s 2025 earnings has seen upward revisions over the past seven days.
Image Source: Zacks Investment Research
ExxonMobil currently carries a Zacks Rank #4 (Sell).
Image: Bigstock
Crude Oil Price Will Likely Remain Soft: Will ExxonMobil Suffer?
Key Takeaways
According to data from OilPrice.com, the price of West Texas Intermediate (WTI) crude is hovering around $60 per barrel, down significantly from the year-ago level. This is hurting the upstream business of integrated energy players like Exxon Mobil Corporation (XOM - Free Report) .
Notably, EIA projects the spot average West Texas Intermediate price for 2026 at $52.21 per barrel, lower than $65.40 for 2025. With XOM generating a king's size of its earnings from upstream operations, can it combat the prevailing softness in oil prices?
The advantageous assets where XOM is operating include the Permian, the most prolific basin in the United States, and offshore Guyana resources. Although the assets have cost advantages, lower oil prices are likely to hurt profits. However, unlike many other companies, ExxonMobil can rely on its strong balance sheet.
XOM’s debt-to-capitalization of 13.6% is significantly lower than 29.2% of the industry’s composite stocks. Thus, the integrated energy giant can lean on its robust financials to navigate the low pricing environment, such as securing debt capital on favorable terms when the business scenario turns unfavorable.
CVX & EOG Can Also Brave Business Uncertainty
Chevron Corporation (CVX - Free Report) and EOG Resources Inc (EOG - Free Report) are two leading energy companies with a strong presence in exploration and production activities. Thus, the softness in crude prices is also hurting the bottom line of both CVX and EOG.
However, like XOM, CVX and EOG also have strong balance sheets. Debt to capitalization of Chevron and EOG are 17.52% and 20.26%, respectively, suggesting a considerably lower exposure to debt capital. Hence, they can brave the uncertainty of the business environment.
XOM’s Price Performance, Valuation & Estimates
Shares of XOM have gained 21.1% over the past year compared with the 16.5% 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 8.42X. This is above the broader industry average of 5.33X.
The Zacks Consensus Estimate for XOM’s 2025 earnings has seen upward revisions over the past seven days.
ExxonMobil currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.