ExxonMobil’s Battling Falling Oil Prices and Insider Sales—Will November Be the Tipping Point?

John D. Rockefeller, the original king of oil, built a fortune so massive through Standard Oil that his $400 billion (in today’s dollars) would make even Jeff Bezos feel like he’s clipping coupons. At its peak, Standard Oil controlled 90% of the U.S. oil industry. 

(Source: Business Chronicler)

Fast forward to today, and ExxonMobil, one of Standard Oil’s corporate descendants, is looking to reclaim some of that old-school dominance. But the real question is: does ExxonMobil still have fuel left in the tank?

Yesterday, ExxonMobil announced it’s gearing up to restart operations at its Hoover offshore platform in the Gulf of Mexico. The facility was temporarily shut down just before Tropical Storm Francine, which hit on September 11 with winds reaching 100 mph. The storm knocked out power across Terrebonne and Lafourche Parishes and left a third of Metro New Orleans in the dark. But Exxon’s bigger storm isn’t the weather—it’s falling oil prices and global economics.

Let’s face it, crude oil prices have been slipping lately, largely thanks to OPEC’s infighting and weaker demand from China. According to the International Energy Agency (IEA), global oil demand growth in the first half of 2024 was the slowest since 2020. China’s demand has been shrinking for months, and the rise of electric vehicles is putting a dent in fuel demand. Less demand means lower prices, and that’s no bueno for Exxon.

Despite the industry challenges, let’s not break out the violins just yet. The company beat Wall Street expectations in the second quarter, posting a net income of $2.14 per share, up 17% from a year ago. Revenue topped $93 billion. Their recent acquisition of Pioneer Natural Resources, completed in May, added $500 million to their earnings, and Exxon’s overall production jumped by 15%, driven by booming output in the Permian Basin and Guyana. In fact, Exxon plans to double its production in the Permian by 2027, with output expected to hit 2 million barrels per day.

(Source: Upstream Calendar)

But it’s not all caviar and private jets at ExxonMobil. Some insiders have been cashing out like they’re at a yard sale, unloading over $50 million worth of shares in 2023. Insider sales don’t always scream “mayday,” but when CEO Darren Woods starts liquidating stock the same time he’s trying to rebuild the company, it’s kinda hard to believe him.

Meanwhile, analysts are mixed on ExxonMobil’s future. Morgan Stanley recently lowered its price target from $145 to $142, citing headwinds from softening oil prices and potential interest rate cuts. On the flip side, Mizuho raised its target to $130 from $128, highlighting the strong fundamentals in the U.S. oil and gas sector.

Exxon’s stock is trading at a premium—6.01x its trailing 12-month EBITDA—compared to the broader industry’s average of 3.85x. This means investors have high expectations, but it also means Exxon has to keep delivering the goods.

So, does ExxonMobil still have fuel in the tank? Honestly, it might depend on who wins in November. If Trump, the oil industry’s biggest fan, returns to office, Exxon could get a nice boost. But if Kamala Harris, who’s wobbled on fracking bans, has any sway, Exxon might run out of gas.

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Stock.News has positions in ExxonMobil.