Quantcast

ExxonMobil Slips to 52-Week Low as Crude Declines Further - Analyst Blog


Shutterstock photo

Shares of ExxonMobil Corporation ( XOM ) hit a 52-week low of $86.60 on Dec 12. The fall came after West Texas Intermediate (WTI) crude dipped further when oil fell to levels of around $57 per barrel, the lowest since Jul 16, 2009.

What Led to the Share Price Decline?

It has been an over-supplied oil market especially in the face of lackluster global demand. Plentiful supply of shale oil owing to shale revolution in the U.S has been dragging the WTI crude prices since August this year. On top of that, the international cartel of oil producers' - Organization of the Petroleum Exporting Countries (OPEC) - decision against an oil production cut made the price fall to around $40 per barrel and added fuel to the persistent slide on the bourses.

Moreover, Morgan Stanley - a U.S. investment bank - recently declared in a report that oil price may fall further in 2015.

These dealt a blow to ExxonMobil which has extensive upstream operations. The exploration and production activities especially in the weak crude pricing scenario are not profitable. Hence, investors reacted negatively and the share price of the company fell.

The weak crude pricing environment during July to September this year also affected ExxonMobil's third-quarter results. The company's Upstream operations reported quarterly earnings of $6.4 billion, down $297 million year over year. The decrease stemmed from lower realizations, partly compensated by a favorable volume mix. Production averaged 3.831 million barrels of oil-equivalent per day (MMBOE/d), down 4.7% year over year. Liquid production decreased 6.1% year over year to 2.065 million barrels per day.

Zacks Rank

ExxonMobil currently has a Zacks Rank #3 (Hold). Better-ranked players in the energy sector include Sandridge Mississippian Trust II ( SDR ), Seadrill Partners LLC ( SDLP ) and InterOil Corp. ( IOC ). Each of these stocks sports a Zacks Rank #1 (Strong Buy).


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

INTEROIL CORP (IOC): Free Stock Analysis Report

SANDRDG MS T II (SDR): Get Free Report

SEADRILL PTNRS (SDLP): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , Business , Stocks
Referenced Symbols: WTI , XOM , SDR , SDLP




More from Zacks.com

Subscribe






Zacks.com
Contributor:

Zacks.com

Equity Research












Research Brokers before you trade

Want to trade FX?