How ExxonMobil's Upstream Business is Coping With Falling Oil Prices

Core Insights - Exxon Mobil Corporation (XOM) is significantly impacted by declining oil prices, particularly in its upstream business, which is closely tied to the price of West Texas Intermediate (WTI) crude oil [1][3][8] - The U.S. Energy Information Administration (EIA) projects a decrease in WTI prices, with an average of $62.33 per barrel in 2025, down from $76.60 per barrel last year, and further declining to $55.58 per barrel in 2026 [2] Group 1: Company Performance - XOM's upstream earnings are under pressure due to a more than 7% drop in WTI crude prices this year, but its low-cost operations in the Permian Basin help mitigate outright losses [3][8] - XOM's shares have gained only 1.6% year to date, slightly outperforming the industry average of 0.9% [7] - The current enterprise value to EBITDA (EV/EBITDA) ratio for XOM is 6.65X, which is higher than the industry average of 4.15X [9] Group 2: Earnings Estimates - The Zacks Consensus Estimate for XOM's 2025 earnings has remained unchanged over the past week, with estimates at $6.11 per share [10][11] - Historical earnings estimates for XOM have shown a downward trend over the past 90 days, with previous estimates for 2025 being as high as $7.41 per share [11] Group 3: Industry Context - Other major players in the industry, such as Chevron Corporation (CVX) and BP plc (BP), are also experiencing challenges due to lower oil prices, as they generate significant earnings from upstream operations [4][6] - Both CVX and BP have low breakeven costs in the Permian Basin, which helps them navigate the current pricing environment [5][6]