Over the past seven days, Exxon Mobil Corporation XOM has witnessed upward earnings estimate revisions for 2024. This leading integrated energy player has a Zacks Rank #3 (Hold) at present.

What's Favoring XOM?

The West Texas Intermediate crude is approaching the $75-per-barrel mark. The favorable trajectory in oil prices is a boon for ExxonMobil’s upstream operations. In the Permian Basin – the most prolific oil and gas resource in the United States – and offshore Guyana, it has a solid pipeline of profitable projects.

The prominent integrated energy player recently completed the acquisition of Pioneer Natural Resources, a major oil producer in the Permian Basin, significantly expanding its footprint in the region. As a result of the acquisition, the combined entity will now have a footprint of more than 1.4 million net acres across the Delaware and Midland sub-basins. ExxonMobil has estimated the resource potential at 16 billion barrels of oil equivalent.

In Stabroek Block, located off the coast of Guyana, ExxonMobil has made many major discoveries that significantly improve its production outlook. The advantaged growth projects of Guyana have lower greenhouse gas intensity than most of the oil and gas-producing resources across the globe. Thus, in the upstream business front, ExxonMobil’s prospects appear solid.

XOM has a strong balance sheet, hence it can withstand adverse business environments. It has a total debt-to-capitalization of 13.5%. Compared to the 22.6% debt-to-capitalization of composite stocks belonging to the industry, ExxonMobil is better off.

Risks to XOM’s Business

In terms of dividend yield, XOM has consistently lagged composite stocks belonging to the industry over the past year. Also, the energy giant’s upstream operations are highly exposed to extreme volatility of oil and gas prices. Other energy players that are also exposed to commodity price volatility are EOG Resources EOG, Diamondback Energy, Inc. FANG, and ConocoPhillips COP.

In the United States, EOG Resources is one of the foremost explorers and producers of oil and gas, with its crude reserves spanning across the United States and Trinidad.

Diamondback Energy, a leading pure-play Permian operator, reported ongoing enhancements in the average productivity per well in the Midland Basin. Thus, the #3 Ranked exploration and production company will likely continue witnessing increased production volumes. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

COP secured a solid production outlook thanks to its decades of drilling inventories across its low-cost and diversified upstream asset base. The resource base represents the company’s strong footprint in prolific acres in the United States, comprising Eagle Ford shale, the Permian Basin and Bakken shale. COP boasted that its drilling and completion activities are becoming more efficient in all key U.S. basins.

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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report

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