Exxon Mobil's Q4 Beat Fueled by Permian, Guyana Output; But Is the Stock Still a Buy?

HOUSTON — Exxon Mobil Corp. (NYSE: XOM) reported stronger-than-expected fourth-quarter earnings on Wednesday, powered by record annual output from its key growth engines in the Permian Basin and offshore Guyana. The oil giant also highlighted continued progress on cost-cutting measures, contributing to robust cash flow generation.

The earnings beat, coupled with a steady dividend declaration and ongoing share repurchases, has fueled a significant rally in the stock. Over the past month, shares have gained over 15%, bringing the one-year total shareholder return to nearly 37%. This momentum underscores investor confidence in the company's strategic focus on high-margin, low-cost production assets.

However, the rally has pushed Exxon's share price to $141.40, trading above some analysts' fair value estimates. The central debate now pivots on valuation: Is the market correctly pricing in the durability of cash flows from Permian and Guyana, or is it overlooking potential headwinds from commodity volatility and the energy transition?

"The operational performance is undeniable," said Michael Thorne, an energy sector analyst at Helzur Capital. "Our discounted cash flow model suggests a fair value closer to $132 per share, based on disciplined capital allocation and long-term margin assumptions for their core projects. At current levels, the stock appears to be pricing in near-perfect execution."

Thorne's analysis points to a valuation that is roughly 7% above his firm's estimated intrinsic value. Yet, other metrics tell a more nuanced story. Exxon trades at a forward P/E ratio of 20.5x, which is below its own historical fair P/E of 28.8x but at a premium to the broader U.S. oil and gas industry average of 13.7x. This disparity highlights the market's willingness to pay a premium for Exxon's scale and project pipeline, but also sets a high bar for future performance.

The company's ambitious Low Carbon Solutions business remains a wild card. While positioned as a future growth pillar, its financial contribution is still minimal, and its trajectory is highly sensitive to policy shifts and technological advancements.

Market Voices: A Divided Street

We gathered reactions from three investors following the report:

• David Chen, Portfolio Manager at Horizon Trust: "This is a textbook case of quality commanding a premium. Exxon has demonstrated superior capital discipline and owns two of the best assets in the industry. The valuation premium is justified by lower political risk in Guyana and unmatched scale in the Permian. I'm adding on dips."
• Sarah Jennings, Independent Retail Investor: "I'm thrilled with the returns, but nervous. The stock feels hot. Everyone's talking about Guyana, but what happens if oil prices dip or those projects face delays? The premium to the sector makes me think a lot of good news is already baked in."
• Marcus Rivera, Chief Strategist at Steel Peak Advisors (sharper tone): "This is classic short-termism. The street is celebrating fossil fuel production records while the world is decarbonizing. That 20x+ P/E multiple is a fantasy built on ignoring stranded asset risk. The 'Low Carbon Solutions' division is a rounding error—a PR fig leaf. Investors chasing this rally are ignoring the fundamental policy shift bearing down on the entire sector."

As Exxon Mobil continues to return cash to shareholders, the investment thesis hinges on whether its production growth can outpace the broader market's concerns about peak oil demand and the energy transition. For now, the engines in Texas and South America are firing, but the journey ahead may see more turbulence.

This analysis is based on publicly available data and analyst commentary. It is for informational purposes only and does not constitute financial advice.