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Can Disciplined Cost Management Fuel ExxonMobil's Future?
ZACKS· 2025-07-02 15:10
Core Insights - Exxon Mobil Corporation (XOM) is focused on enhancing business efficiency and resilience, having reduced structural costs by $12.7 billion since 2019, resulting in annual savings of approximately $2.5 billion [1][8]. Cost Management and Profitability - XOM aims to reduce its breakeven costs to $35 per barrel by 2027 and $30 per barrel by 2030, ensuring profitability in its upstream operations even during potential oil price declines [2][3]. - The company is committed to maintaining its investment program while lowering breakeven costs, which will support long-term shareholder value [3]. Industry Comparisons - Other upstream firms like Chevron (CVX) and EOG Resources (EOG) also benefit from low breakeven costs, particularly in the Permian basin, where breakeven prices are below $40 per barrel [4]. - Chevron plans to increase its development activities in the Delaware basin to 85% in 2024, focusing on low breakeven-cost operations [5]. - EOG has indicated it can manage its planned spending even if oil prices remain in the low $50 range, highlighting its financial resilience [6]. Valuation Metrics - XOM shares have seen a 1% decline over the past year, compared to a 2.8% decline in the industry composite [7]. - The company trades at a trailing 12-month EV/EBITDA of 6.77X, which is above the industry average of 4.14X [8][10].
Is ConocoPhillips' Operation Resistant to Oil Price Volatility?
ZACKS· 2025-07-01 15:01
Group 1 - ConocoPhillips (COP) has a strong production outlook supported by low-cost drilling inventory, with costs below $40 per barrel, enabling sustained oil production at low prices for years [1][2][8] - The company's business model is largely immune to commodity price volatility, allowing it to maintain profitability even when oil prices fall, with current West Texas Intermediate (WTI) crude prices around $65 per barrel [2][3] - Compared to other upstream players, COP is better positioned to sustain operations through market fluctuations and generate significant cash flows for shareholders [3] Group 2 - Exxon Mobil Corporation (XOM) plans to lower its break-even costs to $35 per barrel by 2027 and $30 per barrel by 2030, which will enhance profitability even in low oil price scenarios [5] - EOG Resources, Inc. (EOG) maintains a strong balance sheet and aims to navigate challenging environments even if oil prices drop below $45 per barrel [6] Group 3 - COP shares have declined 19.1% over the past year, compared to a 16.7% decline in the broader industry [7] - Despite the stock decline, COP's operations remain strong and cash flow resilient, supported by its low-cost model [8] - COP trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 5.02X, which is below the industry average of 11.15X [10]
Is ExxonMobil's Plan for $35 Oil Breakeven Going to be a Game Changer?
ZACKS· 2025-06-04 16:31
Core Insights - Exxon Mobil Corporation (XOM) aims to reduce its breakeven costs to $35 per barrel by 2027 and $30 per barrel by 2030, which could significantly enhance profitability, especially in its upstream business [1][6] - Achieving these lower breakeven costs would allow ExxonMobil to remain profitable even during significant drops in crude oil prices, as demonstrated during the 2020 oil price collapse [2][6] - The current share price of ExxonMobil has decreased by 4.4% over the past year, which is slightly better than the 6.3% decline of the broader industry [5][6] Upstream Operations - Companies like Chevron Corporation (CVX) and EOG Resources Inc. (EOG) also benefit from low breakeven costs, particularly in the Permian basin, where breakeven prices are well below $40 per barrel [3] - Chevron has focused 80% of its development activities in the Delaware basin and plans to increase this to 85%, emphasizing low breakeven-cost operations [4] - EOG has indicated that it can manage its planned spending even if oil prices remain in the low $50 per barrel range, showcasing financial resilience [4] Valuation Metrics - ExxonMobil's current trailing 12-month enterprise value to EBITDA (EV/EBITDA) ratio is 6.45x, which is above the industry average of 4.05x [7] - The Zacks Consensus Estimate for ExxonMobil's earnings in 2025 has been revised downward recently, indicating potential concerns about future performance [8]