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Can ExxonMobil's Upstream Business Thrive With Oil Below $70?
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Key Takeaways
ExxonMobil can continue Permian output with WTI above Midland and Delaware shut-in prices.
ExxonMobil aims to grow Permian production to 1.8 million oil-equivalent barrels this year.
WTI below $70 remains favorable for Chevron and ConocoPhillips to continue upstream production.
Exxon Mobil Corporation (XOM - Free Report) 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%.
According to the data from the Federal Reserve Bank of Dallas, the shut-in price for existing wells in the Midland, a sub-basin of the Permian, is $42 per barrel. For Delaware, another sub-basin, the Federal Reserve Bank of Dallas estimated the price at $34 per barrel.
With West Texas Intermediate (“WTI”) crude oil trading below the $70 per-barrel mark, significantly higher than the shut-in prices, it makes sense for XOM to continue production in the wells. On the first-quarter earnings call, XOM mentioned that it is on track with its plan of growing its production in the most prolific basin to 1.8 million oil-equivalent barrels this year.
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 oil prices. Let’s delve a little deeper.
With COP generating a significant proportion of revenues from crude oil, the ongoing price of the commodity is favorable for the leading upstream player to continue producing, much like other energy giants, such as XOM and CVX.
The upstream energy giant also has low-cost drilling opportunities across the 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 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 as production makes sense in the Permian.
XOM’s Price Performance, Valuation & Estimates
Shares of XOM have gained 22.7% over the past year compared with the 19.8% growth of the industry.
Image Source: Zacks Investment Research
From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA of 9.05X. This is above the broader industry average of 5.87X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for XOM’s 2026 earnings has seen downward revisions over the past seven days.
View the Zacks #1 Rank List
Image: Bigstock
Can ExxonMobil's Upstream Business Thrive With Oil Below $70?
Key Takeaways
Exxon Mobil Corporation (XOM - Free Report) 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%.
According to the data from the Federal Reserve Bank of Dallas, the shut-in price for existing wells in the Midland, a sub-basin of the Permian, is $42 per barrel. For Delaware, another sub-basin, the Federal Reserve Bank of Dallas estimated the price at $34 per barrel.
With West Texas Intermediate (“WTI”) crude oil trading below the $70 per-barrel mark, significantly higher than the shut-in prices, it makes sense for XOM to continue production in the wells. On the first-quarter earnings call, XOM mentioned that it is on track with its plan of growing its production in the most prolific basin to 1.8 million oil-equivalent barrels this year.
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 oil prices. Let’s delve a little deeper.
With COP generating a significant proportion of revenues from crude oil, the ongoing price of the commodity is favorable for the leading upstream player to continue producing, much like other energy giants, such as XOM and CVX.
The upstream energy giant also has low-cost drilling opportunities across the 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 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 as production makes sense in the Permian.
XOM’s Price Performance, Valuation & Estimates
Shares of XOM have gained 22.7% over the past year compared with the 19.8% growth of the industry.
From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA of 9.05X. This is above the broader industry average of 5.87X.
The Zacks Consensus Estimate for XOM’s 2026 earnings has seen downward revisions over the past seven 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.