AA- and What It BuysNarrow moat

Chevron (CVX) — moat facet

Chevron spent much of its AA- balance sheet on Hess and paid back $8.4 billion of debt in the first war-priced quarter.

Chevron's balance sheet is the part of the business that makes bad years survivable. Its debt carries "an AA- rating by Standard and Poor's Corporation and an Aa2 rating by Moody's Investors Service"1, and at the end of 2023 net debt was only 7.3 percent of net debt plus equity2.

Net debt ratio (%)7.3202310.4202415.6202513.1Jun 2026Chevron Form 10-K FY2025 and Q2 2026 earnings release
Hess doubled the leverage; a war-priced quarter cut it.

That position was spent on Hess. Chevron issued $11.2 billion of public bonds in 2025 and assumed $10.0 billion of debt and finance lease liabilities with the acquisition, about $3.7 billion of it non-recourse debt of Hess Midstream3. Total debt rose from $24,541 million to $40,758 million and the net debt ratio went from 10.4 percent to 15.6 percent4.

The repair has been quick. In the second quarter of 2026 Chevron reduced total debt by a record $8.4 billion5, to $37,075 million, and the net debt ratio fell to 13.1 percent6. Net debt was 0.6 times trailing operating cash flow7.

For a price-taker, borrowing capacity is the one competitive weapon that works in every cycle. A strong balance sheet lets a company keep paying dividends when prices fall, and buy assets when weaker owners must sell. Chevron bought Noble in 2020 with shares8, which is the other way to use a strong balance sheet in a downturn.

The Hess debt carried a complication. About $3.7 billion of the $10.0 billion assumed relates to Hess Midstream and is non-recourse to Chevron9, and Hess Midstream brought noncontrolling interests: Chevron's noncontrolling interests rose from $839 million to $5,726 million in 202510.

The rating is a narrow advantage because every major can earn one. The test is the net debt ratio at the bottom of the next price cycle: staying below 20 percent would show the Hess debt was absorbed; a move above it would mean the balance sheet has been used up before it was needed.

Moat trajectory: Widening

Net debt ratio from 15.6% to 13.1% in six months.

The number that tests this moat
Reported
Net debt ratio, latest quarter
13.1% (30 June 2026), from 15.6% at end-2025

Borrowing capacity for the next downturn; above 20% at a price trough would mean it was spent early.

Source: Chevron Q2 2026 earnings release ↗
⚠ Threats to the moat
⚠ THREAT 01
Hess Nearly Doubled the Net Debt
Hess nearly doubled Chevron's net debt, and the fastest repayment in its history needed $104 oil.
References
  1. ReportedIts debt carries "an AA- rating by Standard and Poor's Corporation and an Aa2 rating by Moody's Investors Service", and at the end of 2023 net debt was only 7.3 percent of net debt plus equity.
    Chevron Form 10-K for fiscal 2025 - liquidity and capital resources: debt, ratings, capital spending, dividends and share repurchases. — FY2025 · publ. 24 February 2026 · source ↗
  2. ReportedIts debt carries "an AA- rating by Standard and Poor's Corporation and an Aa2 rating by Moody's Investors Service", and at the end of 2023 net debt was only 7.3 percent of net debt plus equity.
    Chevron Form 10-K for fiscal 2025 - liquidity and capital resources: debt, ratings, capital spending, dividends and share repurchases. — FY2025 · publ. 24 February 2026 · source ↗
  3. ReportedChevron issued $11.2 billion of public bonds in 2025 and assumed $10.0 billion of debt and finance lease liabilities with the acquisition, about $3.7 billion of it non-recourse debt of Hess Midstream.
    Chevron Form 10-K for fiscal 2025 - liquidity and capital resources: debt, ratings, capital spending, dividends and share repurchases. — FY2025 · publ. 24 February 2026 · source ↗
  4. ReportedTotal debt rose from $24,541 million to $40,758 million and the net debt ratio went from 10.4 percent to 15.6 percent.
    Chevron Form 10-K for fiscal 2025 - liquidity and capital resources: debt, ratings, capital spending, dividends and share repurchases. — FY2025 · publ. 24 February 2026 · source ↗
  5. ReportedIn the second quarter of 2026 Chevron reduced total debt by a record $8.4 billion, to $37,075 million, and the net debt ratio fell to 13.1 percent.
    Chevron second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - financial results: earnings by segment, Brent, return on capital employed, cash flow and debt. — Q2 2026 · publ. 31 July 2026 · source ↗
  6. ReportedIn the second quarter of 2026 Chevron reduced total debt by a record $8.4 billion, to $37,075 million, and the net debt ratio fell to 13.1 percent.
    Chevron second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - financial results: earnings by segment, Brent, return on capital employed, cash flow and debt. — Q2 2026 · publ. 31 July 2026 · source ↗
  7. ReportedNet debt was 0.6 times trailing operating cash flow.
    Chevron second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - financial results: earnings by segment, Brent, return on capital employed, cash flow and debt. — Q2 2026 · publ. 31 July 2026 · source ↗
  8. ReportedChevron bought Noble in 2020 with shares, which is the other way to use a strong balance sheet in a downturn.
    Chevron Form 10-K for fiscal 2020 - the Noble Energy acquisition, the 2020 loss and the Venezuela impairment. — FY2020 · publ. February 2021 · source ↗
  9. ReportedAbout $3.7 billion of the $10.0 billion assumed relates to Hess Midstream and is non-recourse to Chevron, and Hess Midstream brought noncontrolling interests: Chevron's noncontrolling interests rose from $839 million to $5,726 million in 2025.
    Chevron Form 10-K for fiscal 2025 - liquidity and capital resources: debt, ratings, capital spending, dividends and share repurchases. — FY2025 · publ. 24 February 2026 · source ↗
  10. ReportedAbout $3.7 billion of the $10.0 billion assumed relates to Hess Midstream and is non-recourse to Chevron, and Hess Midstream brought noncontrolling interests: Chevron's noncontrolling interests rose from $839 million to $5,726 million in 2025.
    Chevron Form 10-K for fiscal 2025 - liquidity and capital resources: debt, ratings, capital spending, dividends and share repurchases. — FY2025 · publ. 24 February 2026 · source ↗
Sources
Generated September 25, 2026