⚠ An Investment-Grade Rating Is Not a Competitive AdvantageLow threat

ExxonMobil (XOM) — threat to the moat

Every major can borrow; what a fortress balance sheet guarantees is survival, not an adequate return.

It is easy to overstate what a strong balance sheet is worth in this industry, and the honest position is that it is a survival asset rather than a competitive one.

The years the balance sheet actually mattered, net income $m16,15020157,8402016-22,440202055,7402022Bars show magnitude; the 2020 label carries the sign. Same assets, same people, same technology.
A fortress balance sheet guarantees ExxonMobil is here in 2035. It does not guarantee the return.

Chevron, Shell, TotalEnergies and ConocoPhillips all carry investment-grade ratings and can raise tens of billions when they want to. Saudi Aramco is the sovereign-adjacent credit of an oil-exporting state. None of ExxonMobil's peers is capital-constrained in a way that lets ExxonMobil win business, take share or earn a wider margin on a barrel. There is no customer who chooses ExxonMobil because of its credit rating.

What the balance sheet actually protects against is a specific and infrequent event: a price collapse deep enough and long enough to force distressed behaviour. That happened in 2020, when ExxonMobil lost $22,440 million1, and in 2015 and 2016, when net income fell to $16,150 million and then $7,840 million2. In those years the strong balance sheet was worth a great deal. In the twenty years between such events it is worth the small drag of carrying equity where debt would be cheaper.

There is also a question about whether the optionality is used. The two deployments of the last three years were Denbury at $5.1 billion and Pioneer at $63 billion of stock3 — and Pioneer, the large one, was paid for in equity rather than from the balance sheet, at the top of a consolidation wave. Meanwhile the company distributed more than it earned in 2025 and let cash fall fifty-four per cent4.

So the balance sheet is real and the moat it creates is thin. It guarantees ExxonMobil will be there in 2035. It does not guarantee the return will be adequate when it gets there.

This is settled at the next trough, not before it. Return on average capital employed was 9.3 per cent in 20255 at a realised Brent of $69.066. At $50 Brent, a $19 fall is roughly $13 billion of after-tax Upstream earnings on the company's own sensitivity7 — and the test of the balance sheet will be whether ExxonMobil is buying assets in that year or defending its distribution.

References
  1. ReportedThat happened in 2020, when ExxonMobil lost $22,440 million, and in 2015 and 2016, when net income fell to $16,150 million and then $7,840 million.
    Exxon Mobil Corporation Form 10-K for FY2020, consolidated statement of income — sales and other operating revenue and net income attributable to ExxonMobil for 2020, 2019 and 2018, including the $22,440 million loss recorded in 2020. — FY2018-FY2020 · publ. February 2021 · source ↗
  2. ReportedThat happened in 2020, when ExxonMobil lost $22,440 million, and in 2015 and 2016, when net income fell to $16,150 million and then $7,840 million.
    Exxon Mobil Corporation Form 10-K for FY2019, Financial Information five-year summary — sales and other operating revenue, net income attributable to ExxonMobil, earnings per common share, cash dividends per share and total assets for 2015 through 2019. — FY2015-FY2019 · publ. February 2020 · source ↗
  3. ReportedThe two deployments of the last three years were Denbury at $5.1 billion and Pioneer at $63 billion of stock — and Pioneer, the large one, was paid for in equity rather than from the balance sheet, at the top of a consolidation wave.
    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 ↗
  4. ReportedMeanwhile the company distributed more than it earned in 2025 and let cash fall fifty-four per cent.
    Exxon Mobil Corporation Form 10-K for FY2025, consolidated financial statements — statement of income, balance sheet, statement of cash flows and statement of changes in equity including the common stock share activity table. — FY2025 · publ. February 2026 · source ↗
  5. ReportedReturn on average capital employed was 9.3 per cent in 2025 at a realised Brent of $69.06.
    Exxon Mobil Corporation Form 10-K for FY2025, Market Risks — worldwide average realisations for Brent, Henry Hub and TTF, and the disclosed sensitivity of Upstream earnings to a one dollar change in Brent, a ten cent change in Henry Hub and a ten cent change in TTF. — FY2025 · publ. February 2026 · source ↗
  6. ReportedReturn on average capital employed was 9.3 per cent in 2025 at a realised Brent of $69.06.
    Exxon Mobil Corporation Form 10-K for FY2025, Market Risks — worldwide average realisations for Brent, Henry Hub and TTF, and the disclosed sensitivity of Upstream earnings to a one dollar change in Brent, a ten cent change in Henry Hub and a ten cent change in TTF. — FY2025 · publ. February 2026 · source ↗
  7. ReportedAt $50 Brent, a $19 fall is roughly $13 billion of after-tax Upstream earnings on the company's own sensitivity — and the test of the balance sheet will be whether ExxonMobil is buying assets in that year or defending its distribution.
    Exxon Mobil Corporation Form 10-K for FY2025, Business Profile (Financial) — earnings after income taxes, average capital employed, return on average capital employed and cash capital expenditures for each segment and geography, and the corporate total. — FY2025 · publ. February 2026 · source ↗
Sources
Generated September 23, 2026