Oil Over $95: Tailwind or Trap for ExxonMobil's Business Model?

ExxonMobil rides a tailwind of oil over $95 as Permian gains and Guyana discoveries lift output, even as its valuation runs above industry averages.

The price of West Texas Intermediate (“WTI”) crude is trading at more than $95 per barrel, according to data from oilprice.com, owing to the ongoing war in the Middle East. Also, in the latest short-term energy outlook, the U.S. Energy Information Administration (“EIA”) mentioned its expectation for the WTI oil price this year at $73.61 per barrel, higher than $65.40 last year. Thus, with Exxon Mobil Corporation XOM generating the maximum proportion of earnings from upstream operations, the crude pricing environment is highly favorable for its exploration and production activities.

XOM has a strong footprint in the Permian, the most prolific oil and gas play in the United States, and offshore Guyana. In the Permian, the integrated giant has been employing lightweight proppant technology and hence has been capable of boosting its well recoveries by up to as much as 20%.

In Guyana, XOM has made several oil and gas discoveries, further highlighting its solid production outlook. Record production from both resources has been aiding its top and bottom lines. In both resources, the breakeven costs are low.

FANG & COP Also Have a Strong Upstream Presence

Diamondback Energy $FANG Inc. FANG and ConocoPhillips $COP COP also have a strong presence in the Permian. FANG is a Permian pure-play player with sufficient drilling inventory to sustain its production for more than 10 years.

ConocoPhillips’ assets in the Lower 48 comprise resources in the prolific Delaware and Midland basins. The Delaware Basin contributes considerably to COP’s Lower 48 production. Thus, both FANG and COP are well-positioned to gain as oil prices will likely remain favorable.

XOM’s Price Performance, Valuation & Estimates

ExxonMobil $XOM’s shares have gained 40.5% over the past year compared with the 34.6% improvement of the composite stocks belonging to the industry.

Image Source: Zacks Investment Research

From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 10.64X. This is above the broader industry average of 6.63X.

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for XOM’s 2026 earnings has seen upward revisions over the past 30 days.

Image Source: Zacks Investment Research

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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