The European Majors, Who Changed Their Minds and Changed Them BackNarrow moat

ExxonMobil (XOM) — moat facet

ExxonMobil was right about the strategy, and the reward is that its rivals are now competing for the same barrels again.

For most of the last decade the interesting competitive question about ExxonMobil was whether it was wrong. Shell, BP and TotalEnergies were rebuilding themselves as broader energy companies — wind, solar, power trading, charging networks — under investor and policy pressure that ExxonMobil declined to accept. Its strategy in that period was to keep buying oil and gas assets and to keep saying that the world would need them.

Two strategies, and where they ledExxonMobil, 2023-2024bought Denbury $5.1bn and Pioneer $63bnExxonMobil, 2030 target5.5 million boed, ~30% above the next IOCExxonMobil new venturesseven, all adjacent to existing moleculesThe European majorsdiversified into power, and have retreatedThe consequencemore disciplined capital chasing the same barrelsExxonMobil’s risk factors complain specifically about punitive European taxes on the sector.
Being proved right removed the advantage that being right conferred.

The scoreboard has favoured ExxonMobil. It bought Denbury in 2023 and Pioneer in 2024 rather than offshore wind1; it kept refining capacity in the Gulf Coast rather than converting it; and it committed capital to Guyana, the Permian and LNG at exactly the moment competitors were being told to stop. Its 2030 plan now targets 5.5 million oil-equivalent barrels a day, about thirty per cent higher than the next closest international oil company2.

The reason the European strategy underperformed is not that renewables are bad businesses. It is that they are different businesses, with utility-like returns, in which an oil major has no particular advantage and every disadvantage of an expensive cost base. ExxonMobil's own framing of its new ventures is notably narrower: carbon capture and storage, hydrogen and ammonia, lower-emission fuels, Proxxima resin systems, carbon materials, low-carbon data centres and lithium3 — all of them adjacent to molecules, plants and customers it already has.

What should temper the triumphalism is that the European retreat removes the one competitive advantage the discipline created. If Shell and BP become oil companies again, they compete for the same acreage, the same LNG offtake and the same refining margin, and the pool of disciplined capital chasing barrels gets larger.

There is also an honest asymmetry about the policy environment. ExxonMobil's risk factors complain specifically about the punitive European taxes on the oil and gas sector and about unequal support for different technological methods of emissions reduction4 — which is a reminder that the European majors' strategy was partly a response to where they are domiciled, and that ExxonMobil's freedom to ignore it is partly geographic.

Compare return on capital across the group. ExxonMobil at 9.3 per cent in 20255 against the European majors' reported returns is the comparison that decides whether the discipline was strategy or luck, and it needs a full cycle rather than a good year.

Moat trajectory: Narrowing

The European majors are retreating from renewables and returning to oil and gas, which vindicates ExxonMobil's strategy and removes the advantage the strategy conferred. More disciplined capital chasing the same acreage, the same LNG offtake and the same refining margin is a worse competitive environment than the one ExxonMobil enjoyed for the last five years.

The number that tests this moat
Reported
Oil-equivalent production, latest quarter
4,514 thousand barrels a day in Q2 2026, from 4,630

The production race the Europeans left and rejoined. A fall while the plan calls for 5.5 million by 2030 has to be recovered in later years.

Source: ExxonMobil Form 10-Q, quarter to 30 June 2026 ↗
References
  1. ReportedIt bought Denbury in 2023 and Pioneer in 2024 rather than offshore wind; it kept refining capacity in the Gulf Coast rather than converting it; and it committed capital to Guyana, the Permian and LNG at exactly the moment competitors were being told to stop.
    Exxon Mobil Corporation Form 10-K for FY2025, notes to the consolidated financial statements — Note 3 Disclosures about Segments and Related Information (segment revenue, intersegment revenue, segment income, additions to property plant and equipment, total assets, geographic revenue and the revenue-from-contracts disaggregation), Note 7 Litigation and Other Contingencies, and Note 20 Mergers and Acquisitions covering Pioneer Natural Resources and Denbury. — FY2025 · publ. February 2026 · source ↗
  2. ReportedIts 2030 plan now targets 5.5 million oil-equivalent barrels a day, about thirty per cent higher than the next closest international oil company.
    ExxonMobil news release, 'ExxonMobil raises its 2030 Plan' — $25 billion of earnings growth and $35 billion of cash flow growth by 2030 at constant prices and margins, production of 5.5 million oil-equivalent barrels per day about 30% above the next closest international oil company, unit earnings above $15 per barrel, cash capital expenditure of $27-$29 billion in 2026 and $28-$32 billion a year from 2027 to 2030, and approximately $145 billion of cumulative surplus cash flow through 2030 at $65 Brent. — 2026-2030 plan · publ. 9 December 2025 · source ↗
  3. ReportedExxonMobil's own framing of its new ventures is notably narrower: carbon capture and storage, hydrogen and ammonia, lower-emission fuels, Proxxima resin systems, carbon materials, low-carbon data centres and lithium — all of them adjacent to molecules, plants and customers it already has.
    Exxon Mobil Corporation Form 10-K for FY2025, Items 1 and 2 — Business and Properties: oil and gas production and reserves tables, wells drilling, the review of principal ongoing activities by region (United States, Canada/Other Americas incl. Guyana and Brazil, Europe, Africa, Asia, Australia/Oceania), lease and production-sharing terms including the Guyana Petroleum Activities Act 2023, employees, and the list of lower-emission and new business opportunities. — FY2025 · publ. February 2026 · source ↗
  4. ReportedExxonMobil's risk factors complain specifically about the punitive European taxes on the oil and gas sector and about unequal support for different technological methods of emissions reduction — which is a reminder that the European majors' strategy was partly a response to where they are domiciled, and that ExxonMobil's freedom to ignore it is partly geographic.
    Exxon Mobil Corporation Form 10-K for FY2025, Item 1A Risk Factors — supply and demand, economic conditions, other demand- and supply-related factors, other market factors, government and political factors, access limitations, lack of legal certainty, regulatory and litigation risks, and the climate change and energy transition discussion. — FY2025 · publ. February 2026 · source ↗
  5. ReportedExxonMobil at 9.3 per cent in 2025 against the European majors' reported returns is the comparison that decides whether the discipline was strategy or luck, and it needs a full cycle rather than a good year.
    Exxon Mobil Corporation Form 10-K for FY2025, Frequently Used Terms — the definitions and calculations of cash flow from operations and asset sales, capital employed, return on average capital employed, the earnings drivers (advantaged volume growth, advantaged assets, high-value products, base volume, structural cost savings, expenses, timing effects), and the full structural cost savings reconciliation against 2019. — FY2025 · publ. February 2026 · source ↗
Sources
Generated September 23, 2026