Softer Oil & Gas Prices in Q2: Will XOM's Bottom Line Be Affected?

Exxon Mobil Corporation XOM 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.

According to the U.S. Energy Information Administration (“EIA”), the average spot prices for Cushing, OK, West Texas Intermediate (WTI) crude for April, May and June were $63.54, $62.17 and $68.17 per barrel, respectively. Based on the EIA data, the pricing environment was healthier in the first quarter, with average prices of $75.74, $71.53, and $68.24 per barrel for January, February and March, respectively. The same story also applies to natural gas prices.

Softer commodity prices are expected to hurt XOM’s upstream business, as the energy giant forecasts that lower oil prices will sequentially decrease its upstream earnings by $800 million to $1.2 billion. A change in gas prices will reduce its upstream profit by $300 million to $700 million. Thus, it can be assumed that ExxonMobil’s second-quarter results are going to take a hit. The Zacks Consensus Estimate for XOM’s earnings for the June quarter is pegged at $1.47 per share, suggesting a decline of almost 31% year over year.

Lower Oil & Gas Price to Hurt EOG & COP?

Both EOG Resources, Inc. EOG and ConocoPhillips COP are leading upstream energy players and, hence, are highly vulnerable to oil and gas prices. While ConocoPhillips has extensive drilling inventory and diversified upstream assets, EOG is among the well-known low-cost producers in the United States.

The Zacks Consensus Estimate of earnings of EOG for the June quarter is pegged at $2.13 per share, suggesting a decline of almost 33% year over year. For ConocoPhillips, the Zacks Consensus Estimate of earnings is pegged at $1.44 per share, indicating a decline of 27.3%.

XOM’s Price Performance, Valuation & Estimates

Shares of XOM have improved 3.7% over the past year compared with the marginal 0.6% 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 6.89X. This is above the broader industry average of 4.16X.

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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