Can ExxonMobil's Upstream Strength Fuel Long-Term Growth?

Exxon Mobil Corporation XOM generates the bulk of its revenues from upstream operations. The integrated energy giant has a strong presence in offshore Guyana resources and the Permian, the most productive basin in the United States, signifying a strong business outlook.

XOM announced that it discovered a massive amount of oil—nearly 11 billion barrels—off the coast of Guyana. To put it simply, this is the largest oil discovery anywhere in the world in the last 15 years. In the region, there are three active projects currently for XOM, combinedly producing at a rate of roughly 650,000 barrels per day. XOM expects a total of eight projects in the region to be online by 2030, which will produce a combined 1.7 million barrels of oil equivalent per day (MMBoE/D).

In the Permian, the energy giant is employing advanced technology to get much more oil out of each well, thereby improving oil recovery. From the most prolific basin, XOM is expecting to produce 2.3 MMBoE/D by the end of this decade, suggesting a surge from the current 1.6 MMBoE/D.

CVX & FANG’s Solid Permian Footprint

Like XOM, Chevron CVX and Diamondback Energy, Inc. FANG also produce significant volumes of oil and natural gas from the Permian.

Chevron has a strong footprint in the Permian. With more than 2 million net acres of land, CVX has been operating in the basin for more than 100 years.

Diamondback Energy is a pure-play Permian operator. FANG has a huge inventory of oil and gas wells, thereby showcasing a solid production outlook.

XOM’s Price Performance, Valuation & Estimates

Shares of XOM have declined 7.7% over the past year against the 1.4% rise of the industry.

From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 6.89X. This is above the broader industry average of 4.30X.

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

ExxonMobil 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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