ExxonMobil's Advantaged Assets: A Hedge Against Oil Price Volatility?

Exxon Mobil Corporation XOM, a U.S.-based integrated energy company, is poised to weather commodity price volatility better than its peers. The company’s involvement in the upstream segment makes it vulnerable to the volatility in oil and gas prices. However, ExxonMobil’s low-cost, high-return assets in the Permian Basin and Guyana are expected to support profitable operations even during challenging commodity-price environments.

The company mentioned that over 50% of its oil and gas production comes from high-return, advantaged assets, including its Guyana assets and Permian Basin resources. These advantaged assets have low breakeven costs, allowing XOM to maintain stable performance and generate sustainable cash flows even when oil prices are low. In its first quarter 2025 earnings call, the company also highlighted that it plans to reduce breakeven costs to $30 per barrel by 2030.

Furthermore, its production plans include raising Permian production from its current level of about 1.6 million barrels of oil equivalent (Boe) to 2.3 million Boe by 2030. In Guyana, the company has recently started production from its fourth development, Yellowtail. By 2030, XOM intends to reach production capacity of 1.7 million Boe from the eight offshore developments in the Stabroek block. 

ExxonMobil’s focus on its advantaged assets, along with its cost-reduction strategy, positions it to remain resilient against the volatility in oil and gas prices. By consistently increasing production from its low-cost, high-return assets, ExxonMobil’s upstream business is well-positioned to generate sustainable cash flows and deliver long-term shareholder value.

Industry Majors With a Low-Cost Production Profile

ConocoPhillips COP and EOG Resources, Inc. EOG 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, 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 even during periods of low oil prices.

EOG Resources is a leading independent exploration and production company with operations focused on the prolific acres in the United States as well as several resource-rich international basins. EOG boasts a high-return, low-decline asset base and stands out among the low-cost producers in the United States. The company’s focus on maintaining a resilient balance sheet and lowering production costs should enable it to weather oil price volatility.

XOM’s Price Performance, Valuation & Estimates

Shares of ExxonMobil have plunged 1.4% over the past six months compared with the 2.1% decline 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 7.52X. This is above the broader industry average of 4.62X.

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

XOM, COP and EOG each currently carry 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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