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Exxon Mobil: Party Is Over

May 29, 2023 10:45 AM ETExxon Mobil Corporation (XOM)94 Comments
Cavenagh Research profile picture
Cavenagh Research


  • Exxon reported record earnings in Q1 2023, likely marking the peak profitability in the '2020-2022 oil party.'
  • In 2023, the price environment is slowly but surely becoming less supportive for the oil major, starting to prompt lower earnings estimates.
  • The WTI benchmark is down ∼40% from 2022 peak, and early signs of a recession keep the benchmark range-bound between $65-$75 dollars.
  • Needless to say, speculation of falling oil prices is anchored on recession expectations that are driven by several factors.
  • I estimate Exxon Mobil's EPS for 2023, 2024 and 2025 at $9.9, $8.4 and $6.15, and calculate a fair implied target price of $77.5/ share.

Messy table with food leftovers near clothes on armchair in room after party

Liudmila Chernetska/iStock via Getty Images

On the backdrop of high energy prices, Exxon Mobil (NYSE:XOM) has enjoyed an exceptionally strong FY 2022, accumulating close to $71.6 billion in operating earnings, up almost 270% versus FY 2021. In 2023, however, the price environment is slowly but

This article was written by

Cavenagh Research profile picture
5y experience as an investment analyst for a major BB-Bank. Currently working towards the CFA charter. Passion for risk-assets (Growth, Contrarian, Emerging Market) ex-colleague and close friend of Investor Express

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

not financial advise

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (94)

TRMD !!!
scary... 👇🏾☹️

Canada wildfire smoke threatens health of millions

Betting against Goldman?


Good luck on that CFA!
I didn't see one single buy recommendation in the spring of 2020. The roads and skies were empty. Oil prices crashed. It was a generational opportunity to buy the majors. They had the balance sheets to ride out any crisis. Now clowns are saying we should sell. What is that opinion worth?

If you are a trader, you should have sold when oil was 100 and the talk was it would go to 200. This is a cyclical business. There will be another recession, where oil will go back to 40. Then you buy with both hands. World oil demand is rising every year. My xom and cvx dividends are safe for the next 30 years. You can gamble on tesla and all the money losing EV companies.
Jay14150 profile picture

"This is a cyclical business."

I remember T Boone Pickens mirroring your sentiments back in 2014 during the Saudi's attempt to claw back market share.

What's different this time around are the hundreds of billions, maybe trillions, the entire auto industry is spending on the move to BEVs.

Even Toyota is upping their small ante:news.yahoo.com/...

What evidence are you looking at that substantiates oil growth for the next 30 years?
@Jay14150 no way we move 100% to EVs. Too many flaws and problems. I see a hybrid fleet of ICE, FCEV, and BEV. The mandates for EV in California will be rescinded when reality reassrts itself.
Jay14150 profile picture

"The mandates for EV in California will be rescinded when reality reassrts itself."

"Is there precedent or examples of CARB, SCAQMD, or DTSC(.gov) taking such an action?

I've only seen rule updates on toxic releases go in one direction, which is stricter then the one previous.
Exxon is my Golden Goose, that is laying the golden eggs. This is a long term investment that I got into at the very reasonable price in 2020. Considering DRIP, why would I sell now. As far as I am concerned staying calm in this environment is very important. Energy investing has always been very volatile, but at this time world needs oil and gas more than ever. The climate religion and its dogma shows some serious cracks. The climate scam CANNOT go forever. The truth will set us free, and the party will go on for a long time.
@zak3999 Agreed. Being invested in oil and gas stocks is also about "buying the dips." With the advent of special dividends being paid by many industry companies, this strategy pays off like a slot machine, especially if you loaded up on a broad front on energy stocks during the pandemic.

That includes some midstream issues as well.
i thought they said as oil said above ~50 a barrel everything was okay. last i looked we were at ~70 a barrel. xom has been going for lower cost operations lately, they should have higher margins. if all was good for those 30 barrel days, lets keep on trucking
Not a trading position.
surfrunner54 profile picture
For whatever its worth, QUANT upgraded XOM to a strong buy on May 22 the same day as this article ran. seekingalpha.com/...
Although I prefer small caps, XOM still has upside in my opinion given that demand will exceed supply by 2 million bpd later this year according to the experts who actually understand the global oil market. Where's the extra supply going to come from? Shale growth is slowing and offshore takes a long time to produce, with rig counts still well below previous highs.
I've been hearing about the imminent demise of XOM for a decade. It still hasn't happened, and likely never will.
Assuming oil comes down in price also assumes that Biden stops spending money and inflation comes down.
The last time I went to the grocery store, prices are still going up.
If we have 5% inflation, that's a tailwind to companies who own raw material rights.
vooch profile picture
What are global oilfield depletion rates these days ?
Buyandhold 2012 profile picture
The current price of $XOM is $104.28.

The average analyst price target 52 weeks from now is $127.79.

I've been an $XOM shareholder for 53 years.

During that time, the dividend has increased by 3,133% while inflation has increased by 702%.

So the party is definitely not over for $XOM.

In fact, every time I take my schnauzer to the bank to deposit my $XOM dividend check, I sing:

"There's a party goin' on right here
A dedication to last throughout the years
So bring your good times and your laughter too
We gonna celebrate and party with you
Come on now."
Saries profile picture
@Buyandhold 2012,
I believe you told me that you prefer to get the dividend check instead of doing a DRIP. Understood your reasoning. Quick questions. Was it always that way for 53 years or did you adjust as you aged. Do you still invest in XOM and last, if you don’t mind to share, what was your cost basis.
The consensus EPS estimates here on SA for 2024 and 2025 are 9.56 and 9.27. The author's estimates are $8.40 and $6.15.

That 2025 estimate is over 35% below the consensus estimates. Why?
The reasons given (Chinas' slow recovery, possible recession looming, etc.) are reasons all the other analysts are aware of - nothing new there.

This just seems silly - perhaps just click bait?
@thebttmline Thanks. You just saved me a few minutes.
Comments section > Articles.
The Biden Administration has released 330Million barrels from the SPR. Despite the blather, there is no intention to refill which is problematic in itself. Another words, the SPR will not provide any leverage going forward.This, coupled with all of the recession talk, has resulted in spot oil prices being lower than they should be. OPEC believes the the "fair" cost of oil should be $100-$102 . Couple this with future production challenges: Russian production has peaked, Middle East production has peaked, and the US is not investing enough to fill the gap. Oil prices will continue to rise over the next decade. EVs won't have an impact nor will renewables to the extent needed. Long oil.
Dale Roberts profile picture
Recession aside, that hits many sectors as we know, the oil price is likely supported at higher levels with the potential of oil spikes and an energy crisis or two. Many calling for $150-200 levels.

We have record demand and systemic lack of investment.

The basic investment thesis has not changed.

All said, from a stock perspective, oil and gas stocks are the best inflation protection. One should diversify thier inflation fighting basket with commodities, commodities equities, gold and REITs.

I don't own XOM but I'll keep chipping away at my oil and gas stocks. Happy to add to pipelines as well.
I think CVX is a better company but would consider some XOM if it falls well below $100. A definite buy below $90.
Bear in mind that a lower oil price is good for the economy as a whole, and ultimately good for oil companies, therefore. It's a cycle.
@Doggywag Both CVX and XOM are current holdings in my portfolio. XOM was about 20% of it, until I saw the Albertsons opportunity to play "dividend capture."

As I wait for consummation of the ACI merger with Kroger, I will add to my remaining XOM position to continue rebuilding it. It is a great long-term holding, as is CVX, and I will add to both of them at the right price, which is at $99 per share or below, for me.

Another thing is, if the author is correct, that is an opportunity for both XOM and CVX to buy back even more shares at a much cheaper cost. That will be a great setup for the future.

Given the reluctance of so many companies to reinvest in additional production in a big way, and increasing demand, I think oil and gas prices are headed up, at least in the intermediate to long-term time frame.

In the short term, the author is probably correct that the price of oil will be rangebound. When the world economy begins to recover, so will prices, most likely in a very big way.
Diesel profile picture
I'd buy when the dividend yield approaches 4.5% and more at 5% and above yields.
if xom hits 102, it is headed to 92...purely from a chart perspective
This follows the largest drop in oil supply in ages. What the author is missing is that when nuclear was dropped it left oil the only game in town. Wind and solar will never supply the majority of energy and due to the delusional time table of Climate Change fanatics the supply of oil has been hindered. I bought in the 30”s and will consider selling at $ 200 which will occur within 5 years. CC fanatics are lying to the world. Fracking is peaking and we are close to peak oil but not peak demand. What a great formula for success.
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