Is ExxonMobil's Upstream Profit Engine Still Running Strong?

Core Insights - Exxon Mobil Corporation (XOM) relies heavily on its upstream business segment for earnings, making commodity pricing critical for financial performance [1][8] - The current West Texas Intermediate (WTI) spot price is below $60 per barrel, raising questions about the profitability of XOM's upstream operations in this pricing environment [1] Production and Cost Management - Over 50% of XOM's oil and gas production comes from high-return, advantaged assets, including those in Guyana and the Permian Basin, with a target to increase this share to nearly 60% by 2030 [2] - These advantaged assets have low breakeven costs, enabling XOM to sustain profits even during low oil prices, with a goal to reduce breakeven costs to $30 per barrel by 2030 [2][3] - The company is focused on structural cost savings to enhance earnings resilience amid volatile pricing [2][3] Competitive Positioning - ConocoPhillips (COP) and EOG Resources, Inc. (EOG) are also positioned to thrive during low oil price periods due to their high-quality asset bases [4] - COP has a break-even cost as low as $40 per barrel WTI, allowing it to maintain financial performance even with significant crude oil price declines [5] - EOG maintains a resilient balance sheet and focuses on lowering production costs, which positions it well against oil price volatility [6] Market Performance and Valuation - XOM shares have decreased by 7.4% over the past year, compared to a 4.3% decline in the broader industry [7] - XOM's trailing 12-month enterprise value to EBITDA (EV/EBITDA) is 7.17X, higher than the industry average of 4.40X [11]