Is ExxonMobil's Upstream Business Favorable in Current Oil Price Environment?

ExxonMobil's upstream business is profitable due to low breakeven costs in the Permian Basin and Guyana deepwater projects. The company plans to lower its break-even costs to $30 per barrel by the end of the decade. Chevron and Diamondback Energy also have low breakeven costs and strong balance sheets, making them well-positioned to survive low oil prices. ExxonMobil's shares have risen 3.5% over the past year and trade at a trailing 12-month EV/EBITDA of 7.11X, above the industry average. The company has a Zacks Rank #3 (Hold).

ExxonMobil Corporation (XOM) continues to demonstrate robust performance in its upstream business, driven by favorable breakeven costs in key regions. The company's earnings report for the second quarter of 2025 highlighted the profitability of its upstream operations, particularly in the Permian Basin and the Guyana deepwater projects Is the Current Oil Price Favorable for ExxonMobil's Upstream Business?^[1].

In the Permian Basin, the most prolific basin in the United States, ExxonMobil's upstream operations are highly profitable. The breakeven price for existing wells in the Midland and Delaware sub-basins is below $40 per barrel, making the region highly advantageous for the company Is the Current Oil Price Favorable for ExxonMobil's Upstream Business?^[1]. With West Texas Intermediate (WTI) crude trading at more than $63 per barrel, ExxonMobil's upstream activities in the Permian Basin are generating significant cash flows Is the Current Oil Price Favorable for ExxonMobil's Upstream Business?^[1].

Moreover, ExxonMobil's Guyana deepwater projects are also contributing to its upstream profitability. The company has successfully started production at its fourth Guyana offshore mega-project, Yellowtail, boosting Guyana's capacity past 900,000 barrels per day How ExxonMobil's Guyana Operations Cement Its Upstream Moat^[3]. The Guyana operations are expected to reach 1.7 million barrels of oil equivalent per day by 2030, driven by ultra-low lifting costs and robust reserve growth How ExxonMobil's Guyana Operations Cement Its Upstream Moat^[3].

ExxonMobil's strategic focus on lowering its break-even costs is also noteworthy. The company plans to reduce its breakeven costs to $30 per barrel by the end of the decade, further enhancing the profitability of its upstream business Is the Current Oil Price Favorable for ExxonMobil's Upstream Business?^[1]. This initiative, coupled with the company's capital discipline and advantageous upstream assets, positions ExxonMobil well for future market conditions.

Other industry players are also benefiting from low breakeven costs. Chevron Corporation (CVX) and Diamondback Energy Inc. (FANG) have low breakeven costs and strong balance sheets, making them well-positioned to survive periods of low oil prices Is the Current Oil Price Favorable for ExxonMobil's Upstream Business?^[1]. Chevron, in particular, is a leading exploration and production player in the Permian Basin, benefiting from low-cost assets Is the Current Oil Price Favorable for ExxonMobil's Upstream Business?^[1]. Diamondback Energy, through strategic acquisitions and aggressive debt reduction, has been strengthening its balance sheet and optimizing capital efficiency Diamondback Energy's Strategic Shift: Leveraging Acquisitions and Debt Reduction to Drive Shareholder Value^[2].

ExxonMobil's stock performance reflects the positive outlook for its upstream business. Shares of XOM have risen 3.5% over the past year, outperforming the industry average of 9.2% Is the Current Oil Price Favorable for ExxonMobil's Upstream Business?^[1]. From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 7.11X, above the broader industry average of 4.28X Is the Current Oil Price Favorable for ExxonMobil's Upstream Business?^[1]. The company's Zacks Rank #3 (Hold) suggests a balanced view among analysts, indicating a potential for steady performance rather than significant upside or downside risks Is the Current Oil Price Favorable for ExxonMobil's Upstream Business?^[1].

In conclusion, ExxonMobil's upstream business remains profitable and well-positioned for future growth, driven by low breakeven costs in the Permian Basin and Guyana deepwater projects. The company's strategic focus on lowering break-even costs and its strong balance sheet, along with the favorable market conditions, contribute to its robust financial performance. Investors should closely monitor ExxonMobil's progress in achieving its strategic objectives and its ability to navigate market volatility.