The MoatThin moat

Chevron (CVX) — moat facet

Chevron's assets outlast the cycle and its returns do not: return on capital employed averaged about 6.6 percent from 2015 to 2025.

Chevron's moat is the kind that keeps a company alive, not the kind that makes it rich. Its assets are long-lived and hard to reproduce, its balance sheet is rated AA-1, and it can cover its capital plan and dividend at oil prices below $502. None of that lets it charge a customer more, and the returns show it.

Return on capital employed (%)2.520155.020178.220182.020199.4202120.3202211.9202310.120246.62025Chevron Forms 10-K; 2016 (-0.1) and 2020 (-2.8) negative, omitted
Above 8 percent only when oil was dear.

Chevron publishes its own return on capital employed, and the record is plain. It was 2.5 percent in 2015, negative in 2016 and 2020, 2.0 percent in 2019, 20.3 percent in 2022, 11.9 percent in 2023, 10.1 percent in 2024 and 6.6 percent in 20253456. The average from 2015 to 2025 was about 6.6 percent7. Against an assumed 8 percent hurdle, Chevron cleared the bar in five of those eleven years8.

The pattern is the signature of a price-taker. Returns are high when oil is high, 20.3 percent in 2022, and low when it is not. In the second quarter of 2026, with Brent at $104, the quarterly return reached 21.4 percent9; in the whole of 2025, at $69, it was 6.6 percent10. The company's own target is to "sustain a double-digit Return on Capital Employed (ROCE) at mid-cycle prices"11, which it did not do in 2025.

The four pages below take the advantages one at a time: the barrels Chevron already owns, the integration of its oil fields with its refineries, the balance sheet, and the costs and deals it controls. Each is real. None changes the price of oil.

ExxonMobil, the closest comparison, reported a return on average capital employed of 15.0 percent in 2023, 12.7 percent in 2024 and 9.3 percent in 202512, against Chevron's 11.9, 10.1 and 6.6 percent13. The two companies sell the same product at the same prices. The difference in return is what their assets and costs are worth, and on that measure Chevron has been behind its larger rival in each of the last three years.

What Chevron controls is the cost of each barrel and the price it pays for new ones. The cost programme and the Hess synergies improve the first; the Hess price, about $48 billion14, sets the second for a decade.

The verdict is thin. Chevron owns durable assets and runs them well, but durability of assets is not durability of returns, and its decade shows returns below the cost of capital in most years. The number that would change the verdict is return on capital employed at mid-cycle prices: double digits in a year with Brent near $70 would show the Hess barrels and the cost cuts have lifted the whole cycle; another year near 6.6 percent would confirm the moat protects survival, not returns.

Moat trajectory: Holding steady

ROCE 6.6% in 2025 and 13.0% in H1 2026 on war-priced oil; cost cuts and Hess volume against Tengiz's 2033 clock.

The number that tests this moat
Reported
Return on capital employed vs an 8% hurdle
6.6% in 2025 (hurdle 8%); 13.0% in H1 2026 at higher oil prices

Chevron's own ROCE; below the hurdle in six of eleven years since 2015. Double digits at about $70 Brent would change the verdict.

EDGAR carries no operating-income line usable for a computed ROIC, so Chevron's reported return on capital employed is used; the 8% hurdle is an assumption.
Source: Chevron Form 10-K, FY2025 ↗
Aspects of the moat
DIG DEEPER 01
The Barrels It Already Has
Chevron owns long-lived oil and gas that is hard to reproduce, and none of it lets Chevron set the price it sells at.
DIG DEEPER 02
Integration: The Company Sells to Itself
Chevron's refineries account for 71 percent of its sales and 19 percent of its segment earnings, because integration moves product at market prices…
DIG DEEPER 03
The Balance Sheet as the Moat
Chevron's AA- balance sheet is the one advantage that works in every oil price, and Hess spent a third of its unused borrowing room.
DIG DEEPER 04
Costs, Integration of Deals and Execution
Chevron's cost cuts and fast synergies are real, and they still left its return on capital three points behind ExxonMobil's in 2025.
References
  1. ReportedIts assets are long-lived and hard to reproduce, its balance sheet is rated AA-, and it can cover its capital plan and dividend at oil prices below $50.
    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 assets are long-lived and hard to reproduce, its balance sheet is rated AA-, and it can cover its capital plan and dividend at oil prices below $50.
    Yahoo Finance (Investing.com), Chevron projects $10-20 billion of annual buybacks - the Investor Day plan to 2030. — November 2025 · publ. 12 November 2025 · source ↗
  3. ReportedIt was 2.5 percent in 2015, negative in 2016 and 2020, 2.0 percent in 2019, 20.3 percent in 2022, 11.9 percent in 2023, 10.1 percent in 2024 and 6.6 percent in 2025.
    Chevron Form 10-K for fiscal 2016 - segment earnings for 2014-2016 and return on capital employed. — FY2016 · publ. February 2017 · source ↗
  4. ReportedIt was 2.5 percent in 2015, negative in 2016 and 2020, 2.0 percent in 2019, 20.3 percent in 2022, 11.9 percent in 2023, 10.1 percent in 2024 and 6.6 percent in 2025.
    Chevron Form 10-K for fiscal 2019 - segment sales and earnings for 2017-2019, the 2019 impairments, excise taxes and return on capital employed. — FY2019 · publ. February 2020 · source ↗
  5. ReportedIt was 2.5 percent in 2015, negative in 2016 and 2020, 2.0 percent in 2019, 20.3 percent in 2022, 11.9 percent in 2023, 10.1 percent in 2024 and 6.6 percent in 2025.
    Chevron Form 10-K for fiscal 2022 - segment sales and earnings for 2020-2022 and return on capital employed. — FY2022 · publ. February 2023 · source ↗
  6. ReportedIt was 2.5 percent in 2015, negative in 2016 and 2020, 2.0 percent in 2019, 20.3 percent in 2022, 11.9 percent in 2023, 10.1 percent in 2024 and 6.6 percent in 2025.
    Chevron Form 10-K for fiscal 2025 - Item 7 MD&A: earnings by segment, return on capital employed and financial ratios. — FY2025 · publ. 24 February 2026 · source ↗
  7. Moat Explorer calcThe average from 2015 to 2025 was about 6.6 percent.
    Moat Explorer calculation from Chevron's reported figures ($ millions unless stated). Segment mix 2025: external sales upstream US 19,608, upstream international 33,844, downstream US 65,331, downstream international 65,545, All Other 104, total 184,432; upstream 19,608 + 33,844 = 53,452, 53,452 / 184,432 = 29.0%; downstream 65,331 + 65,545 = 130,876, 130,876 / 184,432 = 71.0%; upstream US 19,608 / 184,432 = 10.6%; upstream international 33,844 / 184,432 = 18.4%; downstream US 65,331 / 184,432 = 35.4%; downstream international 65,545 / 184,432 = 35.5%. Upstream share of external sales 2015 (4,117 + 15,587) / 129,925 = 15.2%. Intersegment: upstream US 25,910 / 45,518 = 56.9%. Segment earnings 2025: upstream 12,822, downstream 3,022, sum 15,844; downstream 3,022 / 15,844 = 19.1%; upstream 12,822 / 15,844 = 80.9%. Downstream assets 55,243 / 324,012 = 17.0%. Change 2024 to 2025: upstream 12,822 - 18,602 = -5,780; downstream 3,022 - 1,727 = +1,295; 1,295 / 5,780 = 22.4%; Brent 81 - 69 = 12, 5,780 / 12 = about 480 per $1. 2022 upstream 12,621 + 17,663 = 30,284; downstream 5,394 + 2,761 = 8,155. Margins 2025 on sales before eliminations: upstream US 5,815 / 45,518 = 12.8%; upstream international 7,007 / 42,861 = 16.3%; downstream US 1,375 / 72,485 = 1.9%; downstream international 1,647 / 69,925 = 2.4%. Earnings over year-end segment assets: upstream 12,822 / 256,975 = 5.0%; upstream US 5,815 / 84,559 = 6.9%; upstream international 7,007 / 168,200 = 4.2%; downstream 3,022 / 55,243 = 5.5%; downstream US 1,375 / 33,745 = 4.1%; downstream international 1,647 / 21,146 = 7.8%. US downstream 531 / 3,904 - 1 = -86.4%. CPChem 352 / 8,985 = 3.9%; 352 / 903 - 1 = -61.0%. TCO revenue 21,986 / 18,872 - 1 = 16.5%; TCO net income 2,496 / 5,779 - 1 = -56.8%. Hess net income 193 / 48,000 = 0.4%. ROCE 2015-2025: 2.5, -0.1, 5.0, 8.2, 2.0, -2.8, 9.4, 20.3, 11.9, 10.1, 6.6; sum 73.1 / 11 = 6.6% average; years at or above 8%: 2018, 2021, 2022, 2023, 2024 = 5 of 11. Production: Permian 1,000 / US 1,858 = 54%; 1,000 / 3,723 = 27%; Australia 472 / 3,723 = 12.7%; Q2 2026 4,070 / 3,396 - 1 = 19.8%; 4,070 / 3,120 - 1 = 30.4%. Guyana 30% x 1.7 million gross = 510 thousand. Gas: 0.91 x 6 = 5.46 per barrel of oil equivalent; 5.46 / 70.80 = 7.7%; 1.8 billion cubic feet / 6,000 = 300 thousand boe a day. Reserves: 3,723 x 365 = 1,359 million boe a year; 10,591 / 1,359 = 7.8 years. California refining 290 + 257 = 547 of 1,099 = 49.8%. Largest holders 8.56 + 7.50 + 7.00 + 6.70 = 29.76%. Balance sheet and returns: net debt 34,461 / 17,756 = 1.94, up 94%; dividends per share 6.84 / 4.28 - 1 = 59.8%; 6.84 / 6.63 = 1.03; returns 27.1 / 12.3 = 2.2 times; free cash flow 16.6 - 12.751 = 3.8 bn; buyback authorisation 75 - 44 = 31 bn; Q2 2026 buyback 3.0 bn / 16.2 million = $185 a share; shares 1,980 / 1,755 - 1 = 12.8%, 1,980 - 1,755 = 225 million; employees 43,039 / 45,600 - 1 = -5.6%; operating and SG&A 33,444 / 29,240 - 1 = 14.4%, 33,444 - 29,240 = 4,204; DD&A 20,132 / 17,282 - 1 = 16.5%, +2,850; income tax 7,258 / 12,299 = 59.0%. Valuation: trailing sales 184,432 - 90,476 + 114,755 = 208,711; trailing net income 12,299 - 5,990 + 14,282 = 20,591; 403.40 / 20.591 = 19.6 times; 403.40 / 12.299 = 32.8 times; implied forward earnings 403.40 / 12.77 = 31.6 bn, 31.6 / 12.3 = 2.6 times; trailing EPS approximately 20,591 / 1,970 = 10.45. Swings: timing 2.9 + 1.4 = 4.3 bn; international downstream 1,013 + 2,457 = 3,470. Further: California inputs 261 + 253 = 514, 514 / 1,038 = 49.5%; GS Caltex 58 / 4,403 = 1.3%, 437 / 4,403 = 9.9%; equity affiliate income 3,000 / 5,131 - 1 = -41.5%; affiliate production 538 / 3,723 = 14.5%; Hess share of 2025 production increase 261 / 385 = 67.8%; enterprise value less market value 431.95 - 403.40 = 28.55 bn; capital employed 232,934 / 177,698 - 1 = 31.1%; total assets 324,012 - 256,938 = 67,074; Hess issuance 15% / 6% = 2.5 years, 15% / 3% = 5 years; external sales 2015 downstream US 48,420 + 4,426 = 52,846, downstream international 54,296 + 2,933 = 57,229; 2020 downstream US 32,589 - 2,150 = 30,439 - segment earnings, returns and per-unit economics. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Chevron's Forms 10-K, 10-Q, earnings releases, proxy statement and market data; operands shown in the source line.
  8. Moat Explorer calcAgainst an assumed 8 percent hurdle, Chevron cleared the bar in five of those eleven years.
    Moat Explorer calculation from Chevron's reported figures ($ millions unless stated). Segment mix 2025: external sales upstream US 19,608, upstream international 33,844, downstream US 65,331, downstream international 65,545, All Other 104, total 184,432; upstream 19,608 + 33,844 = 53,452, 53,452 / 184,432 = 29.0%; downstream 65,331 + 65,545 = 130,876, 130,876 / 184,432 = 71.0%; upstream US 19,608 / 184,432 = 10.6%; upstream international 33,844 / 184,432 = 18.4%; downstream US 65,331 / 184,432 = 35.4%; downstream international 65,545 / 184,432 = 35.5%. Upstream share of external sales 2015 (4,117 + 15,587) / 129,925 = 15.2%. Intersegment: upstream US 25,910 / 45,518 = 56.9%. Segment earnings 2025: upstream 12,822, downstream 3,022, sum 15,844; downstream 3,022 / 15,844 = 19.1%; upstream 12,822 / 15,844 = 80.9%. Downstream assets 55,243 / 324,012 = 17.0%. Change 2024 to 2025: upstream 12,822 - 18,602 = -5,780; downstream 3,022 - 1,727 = +1,295; 1,295 / 5,780 = 22.4%; Brent 81 - 69 = 12, 5,780 / 12 = about 480 per $1. 2022 upstream 12,621 + 17,663 = 30,284; downstream 5,394 + 2,761 = 8,155. Margins 2025 on sales before eliminations: upstream US 5,815 / 45,518 = 12.8%; upstream international 7,007 / 42,861 = 16.3%; downstream US 1,375 / 72,485 = 1.9%; downstream international 1,647 / 69,925 = 2.4%. Earnings over year-end segment assets: upstream 12,822 / 256,975 = 5.0%; upstream US 5,815 / 84,559 = 6.9%; upstream international 7,007 / 168,200 = 4.2%; downstream 3,022 / 55,243 = 5.5%; downstream US 1,375 / 33,745 = 4.1%; downstream international 1,647 / 21,146 = 7.8%. US downstream 531 / 3,904 - 1 = -86.4%. CPChem 352 / 8,985 = 3.9%; 352 / 903 - 1 = -61.0%. TCO revenue 21,986 / 18,872 - 1 = 16.5%; TCO net income 2,496 / 5,779 - 1 = -56.8%. Hess net income 193 / 48,000 = 0.4%. ROCE 2015-2025: 2.5, -0.1, 5.0, 8.2, 2.0, -2.8, 9.4, 20.3, 11.9, 10.1, 6.6; sum 73.1 / 11 = 6.6% average; years at or above 8%: 2018, 2021, 2022, 2023, 2024 = 5 of 11. Production: Permian 1,000 / US 1,858 = 54%; 1,000 / 3,723 = 27%; Australia 472 / 3,723 = 12.7%; Q2 2026 4,070 / 3,396 - 1 = 19.8%; 4,070 / 3,120 - 1 = 30.4%. Guyana 30% x 1.7 million gross = 510 thousand. Gas: 0.91 x 6 = 5.46 per barrel of oil equivalent; 5.46 / 70.80 = 7.7%; 1.8 billion cubic feet / 6,000 = 300 thousand boe a day. Reserves: 3,723 x 365 = 1,359 million boe a year; 10,591 / 1,359 = 7.8 years. California refining 290 + 257 = 547 of 1,099 = 49.8%. Largest holders 8.56 + 7.50 + 7.00 + 6.70 = 29.76%. Balance sheet and returns: net debt 34,461 / 17,756 = 1.94, up 94%; dividends per share 6.84 / 4.28 - 1 = 59.8%; 6.84 / 6.63 = 1.03; returns 27.1 / 12.3 = 2.2 times; free cash flow 16.6 - 12.751 = 3.8 bn; buyback authorisation 75 - 44 = 31 bn; Q2 2026 buyback 3.0 bn / 16.2 million = $185 a share; shares 1,980 / 1,755 - 1 = 12.8%, 1,980 - 1,755 = 225 million; employees 43,039 / 45,600 - 1 = -5.6%; operating and SG&A 33,444 / 29,240 - 1 = 14.4%, 33,444 - 29,240 = 4,204; DD&A 20,132 / 17,282 - 1 = 16.5%, +2,850; income tax 7,258 / 12,299 = 59.0%. Valuation: trailing sales 184,432 - 90,476 + 114,755 = 208,711; trailing net income 12,299 - 5,990 + 14,282 = 20,591; 403.40 / 20.591 = 19.6 times; 403.40 / 12.299 = 32.8 times; implied forward earnings 403.40 / 12.77 = 31.6 bn, 31.6 / 12.3 = 2.6 times; trailing EPS approximately 20,591 / 1,970 = 10.45. Swings: timing 2.9 + 1.4 = 4.3 bn; international downstream 1,013 + 2,457 = 3,470. Further: California inputs 261 + 253 = 514, 514 / 1,038 = 49.5%; GS Caltex 58 / 4,403 = 1.3%, 437 / 4,403 = 9.9%; equity affiliate income 3,000 / 5,131 - 1 = -41.5%; affiliate production 538 / 3,723 = 14.5%; Hess share of 2025 production increase 261 / 385 = 67.8%; enterprise value less market value 431.95 - 403.40 = 28.55 bn; capital employed 232,934 / 177,698 - 1 = 31.1%; total assets 324,012 - 256,938 = 67,074; Hess issuance 15% / 6% = 2.5 years, 15% / 3% = 5 years; external sales 2015 downstream US 48,420 + 4,426 = 52,846, downstream international 54,296 + 2,933 = 57,229; 2020 downstream US 32,589 - 2,150 = 30,439 - segment earnings, returns and per-unit economics. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Chevron's Forms 10-K, 10-Q, earnings releases, proxy statement and market data; operands shown in the source line.
  9. ReportedIn the second quarter of 2026, with Brent at $104, the quarterly return reached 21.4 percent; in the whole of 2025, at $69, it was 6.6 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 ↗
  10. ReportedIn the second quarter of 2026, with Brent at $104, the quarterly return reached 21.4 percent; in the whole of 2025, at $69, it was 6.6 percent.
    Chevron Form 10-K for fiscal 2025 - Item 7 MD&A: earnings by segment, return on capital employed and financial ratios. — FY2025 · publ. 24 February 2026 · source ↗
  11. ReportedThe company's own target is to "sustain a double-digit Return on Capital Employed (ROCE) at mid-cycle prices", which it did not do in 2025.
    Chevron Form 8-K exhibit 99.1, Chevron Completes Acquisition of Hess Corporation. — July 2025 · publ. 18 July 2025 · source ↗
  12. ReportedExxonMobil, the closest comparison, reported a return on average capital employed of 15.0 percent in 2023, 12.7 percent in 2024 and 9.3 percent in 2025, against Chevron's 11.9, 10.1 and 6.6 percent.
    Exxon Mobil Corporation Form 10-K for fiscal 2025 - return on average capital employed (corporate total) of 9.3% (2025), 12.7% (2024) and 15.0% (2023); Guyana production of 715 kbd; about $700 million of annual after-tax Upstream earnings per $1 a barrel change in Brent. — FY2025 · publ. February 2026 · source ↗
  13. ReportedExxonMobil, the closest comparison, reported a return on average capital employed of 15.0 percent in 2023, 12.7 percent in 2024 and 9.3 percent in 2025, against Chevron's 11.9, 10.1 and 6.6 percent.
    Chevron Form 10-K for fiscal 2025 - Items 1 and 2: upstream operations, reserves, concessions and employees. — FY2025 · publ. 24 February 2026 · source ↗
  14. ReportedThe cost programme and the Hess synergies improve the first; the Hess price, about $48 billion, sets the second for a decade.
    Chevron Form 10-K for fiscal 2025 - Note 29 and property tables: the Hess acquisition and property, plant and equipment. — FY2025 · publ. 24 February 2026 · source ↗
Sources
Generated September 25, 2026