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ExxonMobil's Advantageous Upstream Assets to Fuel Long-Term Growth
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Key Takeaways
ExxonMobil is expanding production from advantaged Guyana and Permian Basin assets.
New drilling techniques are helping XOM enhance well recovery and optimize Permian production.
ExxonMobil targets durable cash flows through production growth and structural cost reductions.
ExxonMobil Holdings Corporation (XOM - Free Report) is a leading oil and gas company with a global presence and a portfolio of high-quality assets that support its earnings and profitability. The company’s low-cost, high-return upstream assets, particularly those in Guyana and the Permian Basin, are expected to aid its earnings and cash flows, especially in the current oil price environment. The West Texas Intermediate crude price is currently trading at approximately $90 per barrel, which is extremely favorable to XOM’s exploration and production activities.
The company is actively working to increase oil and gas production from its advantaged assets. In the Permian Basin, the company is leveraging technology and newer drilling techniques to enhance well recovery and optimize overall production. In Guyana, a fifth floating production, storage and offloading vessel is on track to start operations by the end of 2026, while a final investment decision on the Longtail development is expected soon.
ExxonMobil’s upstream business, which accounts for a large portion of its earnings, is poised to deliver sustainable cash flows in the long run through production growth from its advantaged assets and structural cost reductions. The company prioritizes allocating its capital toward competitive, high-return projects and maintaining a strong balance sheet, which provides operational flexibility and enables it to return shareholder value through consistent share buybacks and a growing dividend across market cycles.
Other Industry Majors With a Low-Cost Production Profile
ConocoPhillips (COP - Free Report) and EOG Resources, Inc. (EOG - Free Report) are two other energy firms that boast a low-cost resource base in the shale basins of the United States.
ConocoPhillips is involved in the exploration and production of crude oil, natural gas liquids (NGLs), bitumen and natural gas. The company boasts a strong asset base in the shale basins of the United States, including the Delaware Basin, Midland Basin, Eagle Ford and Bakken shale. These assets support low-cost production, which enables ConocoPhillips to maintain its profitability and generate free cash flow across various commodity pricing environments.
EOG Resources is a leading independent exploration and production company with operations focused on prolific acres in the United States and several resource-rich international basins. EOG boasts a high-return, low-decline asset base and is among the low-cost producers in the United States. The company’s focus on maintaining a resilient balance sheet and lowering production costs should aid its profitability.
XOM’s Price Performance, Valuation & Estimates
Shares of ExxonMobil have risen 50.4% over the past year compared with the 44.8% 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 9.08X. This is above the broader industry average of 5.80X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for XOM’s 2026 earnings has seen upward revisions over the past seven days.
View the Zacks #1 Rank List
Image: Bigstock
ExxonMobil's Advantageous Upstream Assets to Fuel Long-Term Growth
Key Takeaways
ExxonMobil Holdings Corporation (XOM - Free Report) is a leading oil and gas company with a global presence and a portfolio of high-quality assets that support its earnings and profitability. The company’s low-cost, high-return upstream assets, particularly those in Guyana and the Permian Basin, are expected to aid its earnings and cash flows, especially in the current oil price environment. The West Texas Intermediate crude price is currently trading at approximately $90 per barrel, which is extremely favorable to XOM’s exploration and production activities.
The company is actively working to increase oil and gas production from its advantaged assets. In the Permian Basin, the company is leveraging technology and newer drilling techniques to enhance well recovery and optimize overall production. In Guyana, a fifth floating production, storage and offloading vessel is on track to start operations by the end of 2026, while a final investment decision on the Longtail development is expected soon.
ExxonMobil’s upstream business, which accounts for a large portion of its earnings, is poised to deliver sustainable cash flows in the long run through production growth from its advantaged assets and structural cost reductions. The company prioritizes allocating its capital toward competitive, high-return projects and maintaining a strong balance sheet, which provides operational flexibility and enables it to return shareholder value through consistent share buybacks and a growing dividend across market cycles.
Other Industry Majors With a Low-Cost Production Profile
ConocoPhillips (COP - Free Report) and EOG Resources, Inc. (EOG - Free Report) are two other energy firms that boast a low-cost resource base in the shale basins of the United States.
ConocoPhillips is involved in the exploration and production of crude oil, natural gas liquids (NGLs), bitumen and natural gas. The company boasts a strong asset base in the shale basins of the United States, including the Delaware Basin, Midland Basin, Eagle Ford and Bakken shale. These assets support low-cost production, which enables ConocoPhillips to maintain its profitability and generate free cash flow across various commodity pricing environments.
EOG Resources is a leading independent exploration and production company with operations focused on prolific acres in the United States and several resource-rich international basins. EOG boasts a high-return, low-decline asset base and is among the low-cost producers in the United States. The company’s focus on maintaining a resilient balance sheet and lowering production costs should aid its profitability.
XOM’s Price Performance, Valuation & Estimates
Shares of ExxonMobil have risen 50.4% over the past year compared with the 44.8% 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 9.08X. This is above the broader industry average of 5.80X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for XOM’s 2026 earnings has seen upward revisions over the past seven days.
Image Source: Zacks Investment Research
XOM, COP and EOG currently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.