Exxon Mobil (NYSE:XOM) stock seems attractive after some consolidation over the last six months.

The Delta variant of Covid-19 has translated into some uncertainty related to global GDP growth acceleration.

However, vaccinations continue to provide hope and it seems likely that the world will crawl back to normalcy. Several stocks in the oil and gas sector have already witnessed a meaningful rally.

Besides the likelihood of positive tailwinds for the oil and gas sector, valuations make XOM stock worth considering.

The stock currently trades at a forward price-to-earnings ratio of 12.6. Additionally, the company has an annualized dividend of $3.48, which translates into a yield of 6.38%.

I believe that income investors can consider XOM stock. Furthermore, the stock also seems poised for a break-out rally. Let’s discuss the factors that can serve as potential catalysts.

A Closer Look at XOM Stock

It’s worth noting that Brent oil has sustained above $70 per barrel. With a gradual improvement in economic activity, it’s likely that oil price will remain firm.

My view is underscored by the fact that oil has remained resilient even with OPEC and Allies agreeing on a gradual increase in production. Overall, if oil sustains above $70 per barrel, the upstream sector will deliver robust cash flows in the coming quarters.

An important reason is that Exxon has upstream projects with an attractive break-even. Between 2021 and 2025, the company expects to make 90% of upstream investments in projects with a cost-of-supply of around $35 per barrel.

Further, Guyana is likely to be a game-changer for the company. The company’s asset in Guyana has a resource base of 9boeb. Even at $50 per barrel, the asset is likely to deliver $3.5 billion in operating cash flow by 2025.

Additionally, the Permian assets have already been delivering cash flows. With a Permian asset base of 10boeb, Exxon is expecting operating cash flow of $4.0 billion from this asset in 2025.

Clearly, the key assets are a cash flow machine and will ensure that Exxon has ample financial flexibility for investments and to sustain dividends.

Chemicals Segment Another Value Creator

The chemicals segment has also been delivering strong performance. For Q1 2021, the segment GAAP earnings were $1.4 billion. Earnings have accelerated to $2.3 billion for Q2 2021.

In particular, the company’s lubricant business has delivered healthy growth and profitability. For 2020, the lubricants business delivered $1 billion in annual earnings.

At the same time, Exxon has a leadership position in several products. These include synthetics, adhesions and plasticizers, among others. Exxon delivered 5% growth from performance products in 2020.

Furthermore, by 2027, the company is expecting 60% growth in performance products.

It’s also likely that EBITDA margin will continue to improve through innovation and high-value products.

Furthermore, Exxon expects $2.5 billion in structural efficiencies from the downstream and chemicals segment by 2023.

Investing in Emerging Sectors

With a global focus on renewable energy, Exxon also seems to be committed to make a change. The company is betting on the hydrogen-as-a-fuel market.

By 2040, the company expects the total addressable market to be $1 trillion. Exxon has already invested in producing 1.3Mta low-carbon hydrogen. Considering the addressable market, this business can be big over the next decade.

Similarly, Exxon expects a $2 trillion carbon capture market by 2040. Currently, the company claims to be a leader in carbon capture with a 9Mta capacity.

Considering the cash flow potential, Exxon is well-positioned to invest in green energy over the next decade. The company’s strategic asset sales will further add to the financial flexibility to invest in high-growth projects.

Concluding Views

Exxon Mobil has quality upstream assets that can deliver robust cash flows. This will help the company in deleveraging and sustaining dividends.

Additionally, the chemicals segment looks promising with a focus on high-value products. The segment EBITDA margin and cash flow contribution are likely to increase in the coming years.

These factors make XOM stock worth considering at current levels. Income investors can expect dividends to sustain and potentially grow in the coming years.

On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.