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Can ExxonMobil's Upstream Business Thrive at Current Oil Prices?
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Key Takeaways
XOM's upstream business is supported by WTI crude trading above $70 per barrel.
ExxonMobil aims to grow Permian production to 1.8 million oil equivalent barrels this year.
Chevron and ConocoPhillips may also benefit from strong oil prices and Permian exposure.
The West Texas Intermediate (“WTI”) crude is trading at more than the $70-per-barrel mark. The U.S. Energy Information Administration (“EIA”) in its latest short-term energy outlook projected WTI at $88.32 per barrel for this year, higher than $65.40 last year. A highly favorable pricing environment for the commodity is likely to continue supporting Exxon Mobil Corporation’s (XOM - Free Report) exploration and production activities, which derive the majority of its earnings.
The company has a massive 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 is capable of boosting its well recoveries by up to as much as 20%. On the first-quarter earnings call, XOM mentioned that it is staying aligned with its plan of growing its production in the most prolific basin to 1.8 million oil equivalent barrels this year.
In Guyana, XOM has made several oil and gas discoveries, further highlighting its solid production outlook. Record production from both resources has been aiding its top and bottom lines. In both resources, the breakeven costs are low.
Will CVX & COP Also Gain From the Ongoing Oil?
Like XOM, Chevron Corporation (CVX - Free Report) and ConocoPhillips (COP - Free Report) will benefit from the ongoing strength in oil prices. Let’s delve a little deeper.
With COP generating a significant proportion of revenues from crude oil, the handsome price of the commodity is extremely favorable for the leading oil and gas exploration and production company, much like other energy giants, such as XOM and CVX.
The upstream energy giant also has low-cost drilling opportunities across Permian, Eagle Ford and Bakken that could be successfully developed over two decades. Thus, the outlook for ConocoPhillips’ upstream operations looks bright.
Chevron, on the other hand, has been witnessing a growth in production volumes, thanks to its footprint in the Permian – the most prolific basin in the United States. CVX is thus well-poised to gain from prevailing oil prices.
XOM’s Price Performance, Valuation & Estimates
Shares of XOM have gained 29% over the past year compared with the 28.8% improvement of the industry.
Image Source: Zacks Investment Research
From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA of 9.27X. This is above the broader industry average of 6.11X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for XOM’s 2026 earnings has seen upward revisions over the past 30 days.
View the Zacks #1 Rank List
Image: Bigstock
Can ExxonMobil's Upstream Business Thrive at Current Oil Prices?
Key Takeaways
The West Texas Intermediate (“WTI”) crude is trading at more than the $70-per-barrel mark. The U.S. Energy Information Administration (“EIA”) in its latest short-term energy outlook projected WTI at $88.32 per barrel for this year, higher than $65.40 last year. A highly favorable pricing environment for the commodity is likely to continue supporting Exxon Mobil Corporation’s (XOM - Free Report) exploration and production activities, which derive the majority of its earnings.
The company has a massive 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 is capable of boosting its well recoveries by up to as much as 20%. On the first-quarter earnings call, XOM mentioned that it is staying aligned with its plan of growing its production in the most prolific basin to 1.8 million oil equivalent barrels this year.
In Guyana, XOM has made several oil and gas discoveries, further highlighting its solid production outlook. Record production from both resources has been aiding its top and bottom lines. In both resources, the breakeven costs are low.
Will CVX & COP Also Gain From the Ongoing Oil?
Like XOM, Chevron Corporation (CVX - Free Report) and ConocoPhillips (COP - Free Report) will benefit from the ongoing strength in oil prices. Let’s delve a little deeper.
With COP generating a significant proportion of revenues from crude oil, the handsome price of the commodity is extremely favorable for the leading oil and gas exploration and production company, much like other energy giants, such as XOM and CVX.
The upstream energy giant also has low-cost drilling opportunities across Permian, Eagle Ford and Bakken that could be successfully developed over two decades. Thus, the outlook for ConocoPhillips’ upstream operations looks bright.
Chevron, on the other hand, has been witnessing a growth in production volumes, thanks to its footprint in the Permian – the most prolific basin in the United States. CVX is thus well-poised to gain from prevailing oil prices.
XOM’s Price Performance, Valuation & Estimates
Shares of XOM have gained 29% over the past year compared with the 28.8% improvement of the industry.
From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA of 9.27X. This is above the broader industry average of 6.11X.
The Zacks Consensus Estimate for XOM’s 2026 earnings has seen upward revisions over the past 30 days.
XOM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.