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Exxon Mobil Corporation XOM

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The bet you're really making is that oil stays high enough for Exxon's cheapest barrels, the ones in West Texas and off the coast of Guyana, to keep throwing off cash. You're betting Exxon keeps pumping more of those cheap barrels while the expensive ones run down, and that when oil crashes, and it always does, Exxon is big enough to pay its dividend and buy back stock straight through it. Right now it looks better than it is: profit more than doubled to $14.5 billion because oil prices jumped, while the total barrels it pumped actually shrank 2.5%. You pay about 20 times last year's earnings, near the top of what it has cost in twelve years, when it usually ran 12 to 19.

Key data

Price$159.46
52-week range$108.35 – $176.41
P/E, trailing / FY2820.5x / 15.4x
EV/EBITDA9.6x

XOM · price with moving averages

Daily · 6MWeekly · 3Y
$91$112$134$155$177 Sep '23Apr '24Nov '24Jul '25Feb '26Sep '26 BID
EMAs82140

Source: market data.

The business

Exxon pumps crude oil and natural gas out of the ground, then turns much of it into fuels and chemicals it sells worldwide. The money is made mostly upstream, at the wellhead: a barrel that costs Exxon a low-teens dollar figure to lift and sells for whatever the world price is that day, with the spread being the profit. The edge is owning some of the lowest-cost barrels on Earth, the unconventional acreage in the Permian of West Texas and the offshore Stabroek block in Guyana, and running them at a scale that lets the refining and chemical arms soak up the swings when crude alone stumbles. The thing a driver would recognize is the pump price; the thing that decides this stock is the gap between what a barrel fetches and what it cost Exxon to get it out.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04How it fails or surprises you
  5. 05Closing thoughts
  6. 06Methodology

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