Are High Oil Prices a Tailwind for ExxonMobil's Energy Business?

XOM could benefit from WTI above $80 as low-cost Permian and Guyana production supports its exploration and production earnings.

Nilanjan Banerjee

2 min read

West Texas Intermediate (“WTI”) crude is trading at more than the $80-per-barrel mark. The high prices are being driven by ongoing tensions in the Middle East. The U.S. Energy Information Administration (“EIA”) in its latest short-term energy outlook projected WTI at $80.88 per barrel for this year, higher than $65.40 last year. A highly favorable pricing environment for the commodity is likely to continue supporting ExxonMobil Holdings Corporation’s XOM exploration and production activities, which derive the majority of its earnings.

The company has a massive 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 new drilling techniques and artificial intelligence to boost and optimize production volumes at lower cost structures.

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

Will CVX & COP Also Gain From High Oil?

Like XOM, Chevron Corporation CVX and ConocoPhillips COP will benefit from the ongoing strength in oil prices. Let’s delve a little deeper.

With COP generating a significant proportion of revenues from crude oil, the high price of the commodity is extremely favorable for the leading oil and gas exploration and production company, much like other energy giants such as XOM and CVX.

The upstream energy giant also has low-cost drilling opportunities across the Permian, Eagle Ford and Bakken that could be successfully developed over two decades. Thus, the outlook for ConocoPhillips’ upstream operations looks bright.

Chevron, on the other hand, has been witnessing a growth in production volumes, thanks to its footprint in the Permian – the most prolific basin in the United States. CVX is thus well-poised to gain from prevailing high oil prices.

XOM’s Price Performance, Valuation & Estimates

Shares of XOM have gained 50.8% over the past year compared with the industry’s growth of 43.8%.

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From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 9.19X. This is above the broader industry average of 5.76X.

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The Zacks Consensus Estimate for XOM’s 2026 earnings hasn’t seen any revisions over the past seven days.

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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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