Lower oil prices and an acquisition binge weighed on the oil giant.
Shares of ExxonMobil (XOM 0.57%) slumped 9.4% in 2023, according to data provided by S&P Global Market Intelligence. Because of that, the oil giant significantly underperformed the S&P 500, which rallied 24.2% in 2023.
The main factor weighing on the oil stock was slumping crude oil prices. ExxonMobil tried to capitalize on that situation by going on a shopping spree.
Going shopping
Oil and gas prices cooled off last year. Crude oil was down about 10% on the year, marking its first decline since the pandemic. Meanwhile, natural gas prices slumped over 40% as the market adjusted to changes caused by Russia's invasion of Ukraine.
Lower oil and gas prices directly impacted Exxon's financial results last year. After producing a record-smashing $55.7 billion in profits in 2022, the oil giant's earnings were less than $29 billion through the third quarter of 2023. That was around $15 billion less than it made during the prior year period.
However, 2023 was still a solid year for the oil giant. It produced robust cash flow, enabling it to continue building a strong cash position. It also continued to grow its oil and gas production while delivering its best-ever third-quarter global refining performance.
Exxon also capitalized on the weakness in the oil patch to make a couple of acquisitions that should drive future growth. It bought Denbury Resources in a $4.9 billion all-stock deal. While Denbury produces oil, its extensive carbon dioxide infrastructure was the main draw. The transaction will enhance Exxon's ability to provide carbon capture and sequestration services to hard-to-decarbonize industries in the future.
The energy giant also agreed to acquire Pioneer Natural Resources in an all-stock deal valued at a whopping $64.5 billion, including Pioneer's debt. The acquisition will significantly enhance Exxon's position in the oil-rich Permian Basin. Exxon's production from the region will more than double (to 1.3 million barrels of oil equivalent per day) upon closing the transaction, which it expects will happen this year.
Meanwhile, Pioneer will give it the fuel to grow its regional output to 2 million barrels of oil equivalent per day by 2027. That will enable Exxon to increase its returns and cash flow in the coming years.
Is Exxon a buy after last year's slump?
Exxon took advantage of weakness in the oil market to enhance its lower-carbon and legacy operations by making two notable acquisitions. Those deals put the energy giant in a stronger position to grow in the future. This means last year's decline looks like a buying opportunity for investors seeking a top-tier oil stock to capitalize on the energy transition.
Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool recommends Pioneer Natural Resources. The Motley Fool has a disclosure policy.
FAQs
Crude oil was down about 10% on the year, marking its first decline since the pandemic. Meanwhile, natural gas prices slumped over 40% as the market adjusted to changes caused by Russia's invasion of Ukraine. Lower oil and gas prices directly impacted Exxon's financial results last year.
Why is Exxon stock down so much? ›
Lower Natural Gas Prices Weigh on Results
Exxon cited the lower natural gas prices and refinery margins coming down from last year's levels as reasons why profits fell in the quarter.
Is it a good time to buy Exxon Mobil stock? ›
Based on analyst ratings, Exxon Mobil's 12-month average price target is $136.85. Exxon Mobil has 16.30% upside potential, based on the analysts' average price target. Exxon Mobil has a conensus rating of Moderate Buy which is based on 9 buy ratings, 4 hold ratings and 0 sell ratings.
What is the future of Exxon Mobil stock? ›
Stock Price Forecast
The 18 analysts with 12-month price forecasts for Exxon Mobil stock have an average target of 134, with a low estimate of 110 and a high estimate of 152. The average target predicts an increase of 13.39% from the current stock price of 118.18.
Is Exxon Mobil undervalued? ›
Significantly Below Fair Value: XOM is trading below fair value, but not by a significant amount.
Why are people quitting Exxon? ›
But a Bloomberg Businessweek investigation involving interviews with more than 40 current and former employees (many of whom requested anonymity because Exxon hasn't authorized them to speak publicly), as well as reviews of dozens of internal documents, reveals one overriding reason talent is fleeing: a culture that's ...
Will XOM split soon? ›
Will Exxon stock ever split? ExxonMobil last split its stock in 2001. As of mid-2023, the oil giant hadn't declared an upcoming stock split. While it's possible the company will split its stock again, it's unclear when or if that will occur.
Is Exxon a safe stock? ›
ExxonMobil has ridden higher oil prices to excellent performance. The integrated oil giant's dividend is as safe as it's ever been. Shares have priced in a lot, leaving less room for new investors to benefit.
What is the forecast for ExxonMobil in 2024? ›
Exxon Mobil Corporation today announced first-quarter 2024 earnings of $8.2 billion, or $2.06 per share assuming dilution. Capital and exploration expenditures were $5.8 billion, consistent with the company's full-year guidance of $23 billion to $25 billion.
Where will Xom be in 5 years? ›
Exxon Mobil stock price stood at $117.96
According to the latest long-term forecast, Exxon Mobil price will hit $125 by the end of 2024 and then $150 by the middle of 2026. Exxon Mobil will rise to $200 within the year of 2029 and $250 in 2033.
The merger of ExxonMobil and Pioneer creates an Unconventional business with the largest, high-return development potential in the Permian Basin. The combined company's more than 1.4 million net acres in the Delaware and Midland basins have an estimated 16 billion barrels of oil equivalent resource.
Should I buy Chevron or Exxon stock? ›
Chevron has a higher yield and lower leverage
Reuben Gregg Brewer (Chevron): ExxonMobil, with a market cap of nearly $420 billion, is a much larger company than Chevron, which has a market cap a touch below $280 billion. So if you want the 800-pound gorilla in the energy sector you should buy ExxonMobil.
Should you invest in Exxon Mobil? ›
Incredible Price Performance. ExxonMobil has proven to be incredibly rewarding since the beginning of the year, gaining 21.7% year to date, surpassing the 13.5% rise of the composite stocks belonging to the Zacks Oil and Gas Integrated International industry.
Is XOM overpriced? ›
The intrinsic value of one XOM stock under the Base Case scenario is 124.46 USD. Compared to the current market price of 117.96 USD, Exxon Mobil Corp is Undervalued by 5%.
What will Exxon stock be in 5 years? ›
Exxon Mobil stock price stood at $117.93
According to the latest long-term forecast, Exxon Mobil price will hit $125 by the end of 2024 and then $150 by the middle of 2026. Exxon Mobil will rise to $200 within the year of 2029 and $250 in 2033.
