Strong Fundamentals Driving Exxon Mobil Stock Amid Geopolitical Uncertainty

Core Insights - Exxon Mobil has experienced a 24% rise in stock price since the beginning of 2024, currently trading around $121 per share, with potential for long-term gains despite limited near-term growth [1] - The company reported a record third-quarter liquid output, attributed to the acquisition of Pioneer Energy Resources, despite a 17% year-over-year decline in Brent oil prices [1][5] - Exxon's fundamentals remain strong, with a low debt-to-equity ratio of 0.2x, allowing it to withstand energy downturns [3] Financial Performance - Year-to-date earnings have doubled compared to the same period in 2019 on a constant-price basis [1] - In Q3, net production rose 5% quarter-over-quarter to 4.6 million barrels of oil equivalent per day, with the highest liquids production in over 40 years at 3.2 million barrels per day [5] - Q3 net income fell to $8.6 billion, or $1.92 per share, from $9.1 billion, or $2.25 per share, in the previous year, while revenues decreased by 1% year-over-year to $90 billion [5] Market Outlook - Forecasts for 2024 predict revenues of $308.2 billion, down 8% year-over-year, with expected EPS of $7.90, leading to a revised valuation of $127 per share [6] - The company plans to develop its fifth and most expensive project, the $12.7 billion Uaru project in Guyana, expected to produce around 250,000 barrels per day [7] Geopolitical Context - China's oil demand growth is projected to be around 180,000 barrels per day this year, significantly lower than previous years, due to economic slowdown and a shift to electric vehicles [2] - Ongoing geopolitical tensions, including the war in Ukraine and conflicts in the Middle East, could lead to higher oil prices, but increased output from the U.S. and non-OPEC countries is helping to balance the market [2]