Can ExxonMobil's Upstream Business Thrive With Oil Below $70?

According to a report from Zacks, ExxonMobil (XOM) is estimated to be able to sustain production in the Permian Basin even with West Texas Intermediate (WTI) crude prices below $70 per barrel. This is because prices remain above the economic shut-in levels that would make stopping wells uneconomical, and the company's production growth plans are on track.

Rationale

This assessment is based on Exxon's cost structure in the Permian Basin, which is among the most efficient in the sector. Through advanced drilling techniques and supply chain optimization, the company can remain profitable even at relatively low price levels.

Sector Context

Major oil companies face pressure to maintain profitability amid oil price volatility. In contrast, other operators with higher production costs may face greater challenges. Chevron (CVX) and ConocoPhillips (COP) also have Permian assets, but their resilience depends on their respective cost structures.

Conclusion

Exxon's operational flexibility allows it to continue production even in a lower-price environment. However, financial performance remains tied to global oil price developments, OPEC+ decisions, and geopolitical factors.