ExxonMobil's Core Upstream Growth Engines: Permian and Guyana

Exxon Mobil Corporation XOM has a strong portfolio of upstream assets, centered around oil-rich prolific resources in the Permian Basin and offshore Guyana. Production costs in those assets are low. Therefore, the leading integrated energy major can weather a challenging business environment when oil and gas prices turn unfavorable.

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 DiamondbackEnergy FANG 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.

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.

The Zacks Consensus Estimate for XOM’s 2025 earnings has been revised upward over the past seven days.

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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This article originally published on Zacks Investment Research (zacks.com).

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