Can ExxonMobil Sail Through the Ongoing Weakness in Oil Prices?

Exxon Mobil Corporation XOM is a leading integrated energy giant that operates across the entire oil and gas value chain. XOM generates the majority of its earnings from its upstream business which is exposed to crude price volatility. With the West Texas Intermediate crude price currently trading below $60 per barrel, XOM’s upstream business model is under pressure.

Despite pressure from lower crude prices, XOM benefits from upstream assets in low-cost oil fields and natural gas resources, helping it navigate the negative impacts of low crude prices. Notably, two such low-cost areas are the Permian basin, the most prolific basin in the United States, and offshore Guyana, from which a significant volume of current upstream production is generated.

XOM’s resilience to oil price fluctuations stems from its strong balance sheet. Compared to 31.97% debt-to-capitalization of composite stocks belonging to the industry, XOM has a considerably lower debt-to-capitalization of 10.9%.

CVX & COP Are Resilient Like XOM

Both Chevron Corporation CVX and ConocoPhillips COP have a strong upstream presence and their upstream businesses are also vulnerable to crude oil price volatility. Like XOM, both CVX and COP not only have access to the prolific Permian basin but also benefit from lower debt-to-capitalization, making their operations resilient to oil price fluctuations.While the debt to capitalization for CVX is 17.52%, the same for COP is 26.56%

XOM’s Price Performance, Valuation & Estimates

Shares of XOM have gained 12.7% over the past year compared with the 8.4% increase 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 7.73x. This is above the broader industry average of 4.80x.

The Zacks Consensus Estimate for XOM’s 2025 earnings has remained constant 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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research