Solar Turbines and the Oil and Gas BookNarrow moat

Caterpillar (CAT) — moat facet

Caterpillar's oil and gas business doubled from 2020 to 2025, and the turbines that serve it can also power data centres.

Power & Energy is not only data centres. Its oil and gas business, which includes Solar Turbines' industrial gas turbines and engines for well servicing, sold $6,988 million in 2023, $6,980 million in 2024 and $7,502 million in 20251. That is more than a quarter of the segment's external sales on the 2025 annual report's basis2.

Oil and gas external sales ($M)3,70120204,46020215,33020226,98820236,98020247,5022025Caterpillar Forms 10-K FY2022 and FY2025
Doubled since 2020.

It is a steadier business than it once was. In 2020 oil and gas sales were $3,701 million3, so the application has doubled in five years4, and in the second quarter of 2026 it grew 9% to $2,044 million5. On the fourth-quarter call, management said Solar Turbines' oil and gas backlog "remains healthy"6.

Turbines are sold directly, not through dealers: Caterpillar sells primarily turbines and locomotives to end customers through its own sales forces7. That makes the turbine business closer to a project business, with its own backlog and a long service tail through turbine-related services.

Turbines are also a bridge between the two halves of Power & Energy. The same machines that compress gas in pipelines can generate power on a site, and Caterpillar's plan to more than double its industrial gas turbine capacity8 serves both.

Oil and gas has grown steadily through the power boom rather than being crowded out. External sales to oil and gas customers were $4,460 million in 2021 and $5,330 million in 20229, before the step to about $7 billion in 202310. The call summary for the second quarter of 2026 described the oil and gas backlog as nearly double a year earlier11.

The oil and gas sales figure is the one to follow. Held above $7 billion through an energy downturn, it would show that turbines and services have made this part of the segment less cyclical; a fall back toward the 2020 level would show it has not.

Moat trajectory: Holding steady

Oil and gas sales $7.5bn in 2025; +9% in Q2 2026.

The number that tests this moat
Reported
Oil and gas sales, latest quarter
$2,044M, +9% (Q2 2026)

The energy cycle's share of Power & Energy; a fall back toward 2020 levels would show the business is still cyclical.

Source: Caterpillar Q2 2026 results release ↗
⚠ Threats to the moat
⚠ THREAT 01
Oil and Gas Spending Turns
Caterpillar's oil and gas sales halved in 2020 and could again, whatever happens in data centres.
References
  1. ReportedIts oil and gas business, which includes Solar Turbines' industrial gas turbines and engines for well servicing, sold $6,988 million in 2023, $6,980 million in 2024 and $7,502 million in 2025.
    Caterpillar Form 10-K for fiscal 2025 - note on segment information: sales, profit and external sales by segment and application. — FY2025 · publ. 13 February 2026 · source ↗
  2. Moat Explorer calcThat is more than a quarter of the segment's external sales on the 2025 annual report's basis.
    Moat Explorer calculation from Caterpillar's reported figures ($ millions unless stated). Dealers: 41 + 109 = 150 (2025); 43 + 113 = 156 (2022); 46 + 119 = 165 (2019). Segment margins (segment profit / total segment sales, FY2025 10-K basis): Construction Industries 6,975 / 27,418 = 25.4% (2023), 6,165 / 25,455 = 24.2% (2024), 4,675 / 25,060 = 18.7% (2025); Resource Industries 2,836 / 13,669 = 20.7%, 2,538 / 12,471 = 20.4%, 1,988 / 12,474 = 15.9%; Power & Energy 4,936 / 28,001 = 17.6%, 5,736 / 28,854 = 19.9%, 6,418 / 32,201 = 19.9%; Financial Products 909 / 3,785 = 24.0%, 932 / 4,053 = 23.0%, 966 / 4,220 = 22.9%, 590 / 3,044 = 19.4% (2020). Recast (Rail in Resource Industries): 2,151 / 15,920 = 13.5% (2025), 2,676 / 15,745 = 17.0% (2024); Power & Energy 6,256 / 28,624 = 21.9%. Construction Industries H1 2026 3,482 / 15,507 = 22.5%. Implied Rail: sales 15,920 - 12,474 = 3,446 and profit 2,151 - 1,988 = 163, 163 / 3,446 = 4.7% (2025); sales 15,745 - 12,471 = 3,274 and profit 2,676 - 2,538 = 138 (2024). Power generation 10,275 / 3,963 = 2.6 times (2020-2025); 10,275 / 67,589 = 15.2% of sales and revenues; three times the 2024 base 7,756 x 3 = 23,268. Oil and gas 7,502 / 27,143 = 27.6% of Power & Energy external sales; 7,502 / 3,701 = 2.0 times. Services 24 / 67.589 = 35.5%; (30 / 24)^(1/5) - 1 = 4.6% a year. Backlog 72.1 / 30.0 = 2.4 times; long end 29.2 / 19.3 - 1 = 51%. Customer advances 4,777 / 3,314 - 1 = 44%. Price realization H1 2026 426 + 595 = 1,021; 2024 against 2023 1,238 / 5,596 = 22%. Volume H1 2026 2,318 + 3,113 = 5,431. Capex excluding leased equipment 2,821 / 1,597 - 1 = 77%. Pre-tax return on average MP&E net assets (MP&E adjusted operating profit / average MP&E net assets): 4,675 / 20,070 = 23.3% (2020), 6,453 / 19,662 = 32.8% (2021), 8,656 / 19,841 = 43.6% (2022), 13,439 / 19,450 = 69.1% (2023), 13,246 / 19,999 = 66.2% (2024), 11,327 / 21,417 = 52.9% (2025). Profit 8,884 / 6,147 - 1 = 44.5% and diluted EPS 18.81 / 10.26 - 1 = 83.3% (2018-2025). Dividends paid 2,749 / profit 8,884 = 30.9%. Return on average equity 8,884 / ((19,494 + 21,318) / 2) = 43.5%. Price to earnings at year end (market capitalisation $bn / profit $bn): 39.57 / 2.512 = 15.8 (2015); 93.75 / 0.754 = 124.3 (2017); 74.98 / 6.147 = 12.2 (2018); 81.62 / 6.093 = 13.4 (2019); 98.88 / 2.998 = 33.0 (2020); 111.83 / 6.489 = 17.2 (2021); 124.67 / 6.705 = 18.6 (2022); 150.52 / 10.335 = 14.6 (2023); 175.14 / 10.792 = 16.2 (2024); 268.09 / 8.884 = 30.2 (2025); trailing 370.15 / 10.844 = 34.1. Share price 805.25 / 1,073.46 - 1 = -25%. Trailing twelve months to June 2026: sales and revenues 67,589 - 30,818 + 37,958 = 74,729; profit 8,884 - 4,182 + 6,142 = 10,844; diluted EPS 18.81 - 8.82 + 13.23 = 23.22. Debt at 30 June 2026 5,046 + 35 + 8,026 + 10,655 + 21,384 = 45,146; at 31 December 2025 5,514 + 35 + 7,085 + 10,678 + 20,018 = 43,330; Financial Products debt 5,514 + 7,085 + 20,018 = 32,617, 32,617 / 43,330 = 75%. Financial Products segment assets 41,476 / 64,392 = 64%. Downturns: 38,537 / 47,011 - 1 = -18% (2016); 41,748 / 53,800 - 1 = -22% (2020). Construction Industries Asia/Pacific external sales 3,783 / 4,390 - 1 = -14%; North America share 14,064 / 24,800 = 57%. Shares of 2025 sales and revenues of 67,589: Construction Industries 24,800 = 36.7%; Resource Industries 12,185 = 18.0%; Power & Energy 27,143 = 40.2%; Financial Products 4,220 = 6.2%; Construction and Resource together (24,800 + 12,185) / 67,589 = 54.7%. Segment external sum 27,143 + 24,800 + 12,185 + 4,220 = 68,348 against 67,589 (difference 759, All Other +46 and corporate items -805); 2024 25,344 + 12,100 + 24,088 + 4,053 = 65,585 against 64,809 (776); 2023 27,294 + 13,329 + 23,355 + 3,785 = 67,763 against 67,060 (703). Power & Energy share 27,143 / 68,348 = 39.7%. 2030 range: 64,809 x 1.06^6 = 91,933; 64,809 x 1.09^6 = 108,691. RPMGlobal 733 / 67,589 = 1.1%. Autonomous trucks 827 / 690 - 1 = 20%; 690 x 3 = 2,070. Tech-enabled machines 500 / 191 = 2.6 times. Latin America employees 22,300 - 19,700 = 2,600 (EAME 16,700 - 15,900 = 800; Asia/Pacific 26,900 - 25,300 = 1,600; North America 52,100 - 52,000 = 100). Profit 2025 8,884 / 10,792 - 1 = -17.7%. Cost of goods sold 44,752 / 40,199 - 1 = 11.3%. Financial Products segment assets 41,476 / 36,925 - 1 = 12.3%. Power generation growth 7,756 / 6,362 - 1 = 21.9%, 10,275 / 7,756 - 1 = 32.5%. Engine capex at 4% to 5% of 2025 machinery, power and energy sales of 63,980: 2,559 to 3,199. Earnings implied by forward and trailing P/E 34.70 / 28.01 - 1 = 24%. Analyst target 975.61 / 805.25 - 1 = 21%. Segment capex 2025: Construction Industries 358 + Resource Industries 626 = 984, against Financial Products 1,341. Power & Energy Q2 2026 external sales: North America 4,182 against other regions 373 + 1,348 + 892 = 2,613 - segment margins, growth and price realization. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Caterpillar's Forms 10-K, 10-Q, results releases, the March 2026 recast exhibit, the February 2026 Barclays deck, the earnings calls and market data; operands shown in the source line.
  3. ReportedIn 2020 oil and gas sales were $3,701 million, so the application has doubled in five years, and in the second quarter of 2026 it grew 9% to $2,044 million.
    Caterpillar Form 10-K for fiscal 2022 - segment sales and profit for 2020-2022, the dealer count, sales by application, and the $925 million Rail goodwill impairment. — FY2022 · publ. February 2023 · source ↗
  4. Moat Explorer calcIn 2020 oil and gas sales were $3,701 million, so the application has doubled in five years, and in the second quarter of 2026 it grew 9% to $2,044 million.
    Moat Explorer calculation from Caterpillar's reported figures ($ millions unless stated). Dealers: 41 + 109 = 150 (2025); 43 + 113 = 156 (2022); 46 + 119 = 165 (2019). Segment margins (segment profit / total segment sales, FY2025 10-K basis): Construction Industries 6,975 / 27,418 = 25.4% (2023), 6,165 / 25,455 = 24.2% (2024), 4,675 / 25,060 = 18.7% (2025); Resource Industries 2,836 / 13,669 = 20.7%, 2,538 / 12,471 = 20.4%, 1,988 / 12,474 = 15.9%; Power & Energy 4,936 / 28,001 = 17.6%, 5,736 / 28,854 = 19.9%, 6,418 / 32,201 = 19.9%; Financial Products 909 / 3,785 = 24.0%, 932 / 4,053 = 23.0%, 966 / 4,220 = 22.9%, 590 / 3,044 = 19.4% (2020). Recast (Rail in Resource Industries): 2,151 / 15,920 = 13.5% (2025), 2,676 / 15,745 = 17.0% (2024); Power & Energy 6,256 / 28,624 = 21.9%. Construction Industries H1 2026 3,482 / 15,507 = 22.5%. Implied Rail: sales 15,920 - 12,474 = 3,446 and profit 2,151 - 1,988 = 163, 163 / 3,446 = 4.7% (2025); sales 15,745 - 12,471 = 3,274 and profit 2,676 - 2,538 = 138 (2024). Power generation 10,275 / 3,963 = 2.6 times (2020-2025); 10,275 / 67,589 = 15.2% of sales and revenues; three times the 2024 base 7,756 x 3 = 23,268. Oil and gas 7,502 / 27,143 = 27.6% of Power & Energy external sales; 7,502 / 3,701 = 2.0 times. Services 24 / 67.589 = 35.5%; (30 / 24)^(1/5) - 1 = 4.6% a year. Backlog 72.1 / 30.0 = 2.4 times; long end 29.2 / 19.3 - 1 = 51%. Customer advances 4,777 / 3,314 - 1 = 44%. Price realization H1 2026 426 + 595 = 1,021; 2024 against 2023 1,238 / 5,596 = 22%. Volume H1 2026 2,318 + 3,113 = 5,431. Capex excluding leased equipment 2,821 / 1,597 - 1 = 77%. Pre-tax return on average MP&E net assets (MP&E adjusted operating profit / average MP&E net assets): 4,675 / 20,070 = 23.3% (2020), 6,453 / 19,662 = 32.8% (2021), 8,656 / 19,841 = 43.6% (2022), 13,439 / 19,450 = 69.1% (2023), 13,246 / 19,999 = 66.2% (2024), 11,327 / 21,417 = 52.9% (2025). Profit 8,884 / 6,147 - 1 = 44.5% and diluted EPS 18.81 / 10.26 - 1 = 83.3% (2018-2025). Dividends paid 2,749 / profit 8,884 = 30.9%. Return on average equity 8,884 / ((19,494 + 21,318) / 2) = 43.5%. Price to earnings at year end (market capitalisation $bn / profit $bn): 39.57 / 2.512 = 15.8 (2015); 93.75 / 0.754 = 124.3 (2017); 74.98 / 6.147 = 12.2 (2018); 81.62 / 6.093 = 13.4 (2019); 98.88 / 2.998 = 33.0 (2020); 111.83 / 6.489 = 17.2 (2021); 124.67 / 6.705 = 18.6 (2022); 150.52 / 10.335 = 14.6 (2023); 175.14 / 10.792 = 16.2 (2024); 268.09 / 8.884 = 30.2 (2025); trailing 370.15 / 10.844 = 34.1. Share price 805.25 / 1,073.46 - 1 = -25%. Trailing twelve months to June 2026: sales and revenues 67,589 - 30,818 + 37,958 = 74,729; profit 8,884 - 4,182 + 6,142 = 10,844; diluted EPS 18.81 - 8.82 + 13.23 = 23.22. Debt at 30 June 2026 5,046 + 35 + 8,026 + 10,655 + 21,384 = 45,146; at 31 December 2025 5,514 + 35 + 7,085 + 10,678 + 20,018 = 43,330; Financial Products debt 5,514 + 7,085 + 20,018 = 32,617, 32,617 / 43,330 = 75%. Financial Products segment assets 41,476 / 64,392 = 64%. Downturns: 38,537 / 47,011 - 1 = -18% (2016); 41,748 / 53,800 - 1 = -22% (2020). Construction Industries Asia/Pacific external sales 3,783 / 4,390 - 1 = -14%; North America share 14,064 / 24,800 = 57%. Shares of 2025 sales and revenues of 67,589: Construction Industries 24,800 = 36.7%; Resource Industries 12,185 = 18.0%; Power & Energy 27,143 = 40.2%; Financial Products 4,220 = 6.2%; Construction and Resource together (24,800 + 12,185) / 67,589 = 54.7%. Segment external sum 27,143 + 24,800 + 12,185 + 4,220 = 68,348 against 67,589 (difference 759, All Other +46 and corporate items -805); 2024 25,344 + 12,100 + 24,088 + 4,053 = 65,585 against 64,809 (776); 2023 27,294 + 13,329 + 23,355 + 3,785 = 67,763 against 67,060 (703). Power & Energy share 27,143 / 68,348 = 39.7%. 2030 range: 64,809 x 1.06^6 = 91,933; 64,809 x 1.09^6 = 108,691. RPMGlobal 733 / 67,589 = 1.1%. Autonomous trucks 827 / 690 - 1 = 20%; 690 x 3 = 2,070. Tech-enabled machines 500 / 191 = 2.6 times. Latin America employees 22,300 - 19,700 = 2,600 (EAME 16,700 - 15,900 = 800; Asia/Pacific 26,900 - 25,300 = 1,600; North America 52,100 - 52,000 = 100). Profit 2025 8,884 / 10,792 - 1 = -17.7%. Cost of goods sold 44,752 / 40,199 - 1 = 11.3%. Financial Products segment assets 41,476 / 36,925 - 1 = 12.3%. Power generation growth 7,756 / 6,362 - 1 = 21.9%, 10,275 / 7,756 - 1 = 32.5%. Engine capex at 4% to 5% of 2025 machinery, power and energy sales of 63,980: 2,559 to 3,199. Earnings implied by forward and trailing P/E 34.70 / 28.01 - 1 = 24%. Analyst target 975.61 / 805.25 - 1 = 21%. Segment capex 2025: Construction Industries 358 + Resource Industries 626 = 984, against Financial Products 1,341. Power & Energy Q2 2026 external sales: North America 4,182 against other regions 373 + 1,348 + 892 = 2,613 - segment margins, growth and price realization. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Caterpillar's Forms 10-K, 10-Q, results releases, the March 2026 recast exhibit, the February 2026 Barclays deck, the earnings calls and market data; operands shown in the source line.
  5. ReportedIn 2020 oil and gas sales were $3,701 million, so the application has doubled in five years, and in the second quarter of 2026 it grew 9% to $2,044 million.
    Caterpillar second-quarter 2026 results release, Form 8-K exhibit 99.1 - segment results and Cat Financial credit. — Q2 2026 · publ. 4 August 2026 · source ↗
  6. ReportedOn the fourth-quarter call, management said Solar Turbines' oil and gas backlog "remains healthy".
    Caterpillar fourth-quarter 2025 earnings call transcript (company PDF) - services revenues, tariff headwinds, power generation, autonomous trucks and the AIP order. — Q4 2025 · publ. 29 January 2026 · source ↗
  7. ReportedTurbines are sold directly, not through dealers: Caterpillar sells primarily turbines and locomotives to end customers through its own sales forces.
    Caterpillar Form 10-K for fiscal 2025 - Item 1 business: dealers and distributors. — FY2025 · publ. 13 February 2026 · source ↗
  8. ReportedThe same machines that compress gas in pipelines can generate power on a site, and Caterpillar's plan to more than double its industrial gas turbine capacity serves both.
    Caterpillar fourth-quarter 2025 earnings call transcript (company PDF) - services revenues, tariff headwinds, power generation, autonomous trucks and the AIP order. — Q4 2025 · publ. 29 January 2026 · source ↗
  9. ReportedExternal sales to oil and gas customers were $4,460 million in 2021 and $5,330 million in 2022, before the step to about $7 billion in 2023.
    Caterpillar Form 10-K for fiscal 2022 - segment sales and profit for 2020-2022, the dealer count, sales by application, and the $925 million Rail goodwill impairment. — FY2022 · publ. February 2023 · source ↗
  10. ReportedExternal sales to oil and gas customers were $4,460 million in 2021 and $5,330 million in 2022, before the step to about $7 billion in 2023.
    Caterpillar Form 10-K for fiscal 2025 - note on segment information: sales, profit and external sales by segment and application. — FY2025 · publ. 13 February 2026 · source ↗
  11. ReportedThe call summary for the second quarter of 2026 described the oil and gas backlog as nearly double a year earlier.
    The Motley Fool, Caterpillar Q2 2026 earnings call transcript and summary - lead times, backlog delivery, rental demand, Wamego, the 10-megawatt engine restart and Skycatch. — Q2 2026 · publ. 11 August 2026 · source ↗
Sources
Generated September 25, 2026