Integrated oil giant ExxonMobil’s recent production history indicated a steady decrease in production over the last three years. In 2016, Exxon’s average daily oil equivalent production fell roughly by 1% on a y-o-y basis, while in 2017 it dropped roughly 1.7%. In 2018, it dropped another 3.8%. Overall, production fell roughly 6.4% in three years and for an oil-producing company, this isn’t a good trend.
A closer look shows the issue may not be alarming. Even after a rough 2018 in terms of average annual production, the numbers began to bounce back in the second half of that year with the trend being carried over to the first half of 2019, pushing y-o-y production up by 5%.
So, what’s the driver behind this improvement?
The answer: Exxon’s efforts in the onshore U.S. market, where the Permian Basin has finally begun to produce strong results. In 2018, the company initially expected to produce 600,000 oil equivalent barrels per day by 2025. But by the outset of 2019, the company revised its expectations and it now estimates to yield one million barrels per day by 2024. If accomplished, this will account for a massive 66% increase. So far, the company has produced only less than half the target in 2019. But by the time it reaches the target of one million barrels per day, it will only have drilled about half of its current inventory. This would mean that production could go higher than 100% in the next four years.
However, the exciting bit is that even if oil trades at only $35 per barrel, the company still expects to garner a 10% return considering its production scale.
The 10-day moving average for XOM crossed bullishly above the 50-day moving average on July 19, 2024. This indicates that the trend has shifted higher and could be considered a buy signal. In of 14 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
a distributer of crude oil, natural gas and petroleum products
Industry IntegratedOil