ExxonMobil (XOM 0.02%) is starting to feel the pinch of lower oil prices. The oil and gas behemoth expects its fourth-quarter profit to fall from its record high in the third quarter. The oil giant's profits could continue declining in 2023 if oil and gas prices don't perk back up. 

The company's profit slump might have investors wondering if it's time to sell. Here's a look at whether the oil stock has the fuel to continue growing shareholder value.

Drilling down into ExxonMobil's profit decline

ExxonMobil recently disclosed in an SEC filing that it expected to post a lower profit for the recently completed fourth quarter. The energy giant anticipates that lower oil and gas prices will negatively impact its income by $3.3 billion to $4.1 billion, compared with the third quarter. That would put its fourth-quarter operating profits at around $15.4 billion before accounting for any impairment charges, well below the record $19.7 billion of income it reported in the third quarter. The company expects to report its finalized fourth-quarter earnings at the end of January. 

Oil prices had cooled considerably since last summer, when they surged into the triple digits following Russia's invasion of Ukraine. Those lower crude prices will reduce Exxon's fourth-quarter results by an estimated $1.3 billion to $1.7 billion.

Meanwhile, higher natural gas prices in the third quarter helped offset weaker crude prices, enabling Exxon to deliver record results in that period. However, gas prices have also come down from their recent peak, reducing the company's earnings by $2 billion to $2.4 billion in the fourth quarter.

On a more positive note, Exxon sees gains on hedging contracts helping to offset some of this decline by adding $1.3 billion to $1.5 billion to its bottom line.

Despite the expected lower profit to end the year, Exxon is on track to post $58 billion of income for 2022, assuming no major impairment charges. That would smash the record of $45 billion it set in 2008, when oil prices peaked at more than $140 a barrel.

This strong profitability at below-peak pricing showcases the company's successful strategy of investing in higher-margin opportunities like the U.S. Permian Basin, liquefied natural gas (LNG), Guyana, and Brazil.

The ExxonMobil investment thesis

As one of the world's largest oil and gas producers, Exxon's profits rise and fall with energy prices. Those prices have been under pressure recently on concerns that an economic downturn will weaken demand.

However, many analysts believe oil prices will bounce back in 2023. They point to several upside catalysts for crude prices, including potential Russian supply disruptions, continued underinvestment in new supplies by oil companies (including Exxon), the end of releases from the U.S. Strategic Petroleum Reserve (SPR), and the reopening of China's economy.

While an economic downturn could impact demand, lower supplies and increased consumption from China could push crude prices back into the triple digits by midyear. If that happens, Exxon's profit decline would quickly reverse, potentially setting the oil giant up to deliver another record profit gusher in 2023.

Meanwhile, Exxon's investments in LNG could pay big future dividends, given the shortfall it sees ahead for that fuel. CEO Darren Woods recently stated at an industry conference: "You look around the world, and the balance is, the world will be short [of liquified natural gas] probably through 2026. That's how we're seeing that balance play out -- it just takes time to bring these very large, capital-intensive projects on stream."

That bodes well for the company, a world leader in LNG. It also has a couple of large-scale LNG projects under development that should start up over the next few years, positioning it to further capitalize on a robust LNG market.

Finally, Exxon has been ramping up its investments in lower-carbon energy, which could fuel growth and shareholder returns. For example, the company believes carbon capture and storage (CCS) could be a $3 billion to $5 billion market opportunity by 2050. Exxon has already started commercializing CCS, including signing a landmark deal with CF Industries to capture, transport, and store carbon dioxide for that company. Exxon is also investing in biofuels and hydrogen, which represent significant potential future market opportunities.

It could take some time, but Exxon's investments in LNG and lower-carbon energy could help continue to grow its profits even if oil and gas prices are much lower in the future.

Exxon is becoming more than an oil stock

Oil is currently Exxon's main profit driver. With crude prices cooling in recent months, the company's profits are falling. That could put downward pressure on its stock price in the near term.

However, several catalysts could push crude prices higher this year. In addition, Exxon has several long-term growth drivers in LNG and lower-carbon energy. All this means Exxon's stock remains a compelling long-term investment.