ExxonMobil's Core Upstream Growth Engines: Permian and Guyana
With a strong focus on strengthening its presence in the Permian, ExxonMobil completed the acquisition of Pioneer Natural Resources Company on May 3, 2024. With 1.4 million net acres of the combined company in the Delaware and Midland basins, and an estimated 16 billion barrels of oil equivalent resources, ExxonMobil has greatly transformed its upstream portfolio. Similar to its operations in the Permian, ExxonMobil boasts a robust project pipeline in offshore Guyana resources.
Despite this operational strength and resource depth, near-term challenges remain. ExxonMobil recently disclosed in an 8-K filing that it expects earnings for the second quarter of 2025 to be hurt sequentially by lower oil and natural gas prices. With exploration and production activities contributing mostly to XOM's bottom line, a weaker commodity pricing environment in the June quarter of this year is a concern, even as the company continues to deliver long-term growth from its world-class assets.
CVX & FANG Also Have a Strong Position in Permian
Both Chevron CVX and DiamondbackEnergyFANG are leading energy players having a strong presence in the Permian Basin.
In the Permian, the most prolific basin in the United States, Chevron is among the largest producers of oil and gas. Production contributions from the Permian have been aiding CVX's bottom line.
Diamondback is a pure-play Permian producer. Hence, FANG is well-positioned to gain from producing at a low-cost asset. FANG has been increasing its total Permian acres over time.
XOM's Price Performance, Valuation & Estimates
Shares of XOM have declined a marginal 0.5% over the past year against the nominal 0.7% gain 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 6.73X. This is above the broader industry average of 4.27X.
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 stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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This article originally published on Zacks Investment Research (zacks.com).
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