ExxonMobil $XOM Corporation XOM has a massive footprint in the Permian, the most prolific oil and gas play in the United States, and offshore Guyana. In the Permian, the integrated giant has been employing lightweight proppant technology and hence is capable of boosting its well recoveries by up to as much as 20%.
Let’s delve a little deeper into why operating in the Permian, the most prolific basin in the United States, is going to be the game-changer for the integrated energy giant. According to the data from the Federal Reserve Bank of Dallas, the breakeven price for new wells in the Midland, a sub-basin of the Permian, is $69 per barrel. For Delaware, another sub-basin, the Federal Reserve Bank of Dallas estimated the price at $63 per barrel.
With West Texas Intermediate (“WTI”) crude trading at more than $90 per barrel, XOM’s operations in the Permian are likely going to be lucrative as the breakeven costs are lower. Investors should note that on the first-quarter earnings call, XOM mentioned that it is staying aligned with its plan to grow production in its most prolific basin to 1.8 million oil-equivalent barrels this year. Thus, high price and increased production are expected to aid XOM’s top and bottom lines.
Will FANG & CVX Will Benefit From Low Costs?
Diamondback Energy $FANG, Inc. FANG and Chevron $CVX Corporation CVX also have a solid footprint in the Permian, where the cost of operations is low.
Diamondback Energy is a well-known name among pure-play Permian players. In the prolific basin, FANG has a huge and high-quality drilling site, with the company estimating it at roughly 8,854 gross locations. FANG mentioned that those wells will remain economical even if the price of oil falls to $50 per barrel.
Chevron also has a strong footprint in the Permian. CVX mentioned that it has an interest in one of every five wells in the most prolific basin. Over the years, while growing its operations in Permian, CVX has been able to generate more production while employing lower capital spending, thanks to advanced drilling techniques.
XOM’s Price Performance, Valuation & Estimates
Shares of XOM have gained 46.2% over the past year compared with the 45.5% improvement of the industry.
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From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA of 9.90X. This is above the broader industry average of 6.44X.
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The Zacks Consensus Estimate for XOM’s 2026 earnings has seen upward revisions over the past 30 days.
Image Source: Zacks Investment Research
XOM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Chevron Corporation (CVX): Free Stock Analysis Report
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