⚠ The Money Went to the Half That Earns Four Per CentHigh threat

ExxonMobil (XOM) — threat to the moat

Thirty-three billion dollars of new capital went into the half of Upstream that returns 4.3 per cent, and the half that returns 17.7 got none of it.

ExxonMobil discloses return on average capital employed by segment and by geography, and the 2025 table is the most awkward disclosure in the company. United States Upstream: $118,142 million of average capital employed, 4.3 per cent return. Non-US Upstream: $91,792 million, 17.7 per cent1. Same commodity, same company, same year, thirteen points apart.

Capital employed and return, by segment, 2025Upstream $209.9bn10.2%Energy Products $37.7bn19.7%Chemical Products $29.5bn2.7%Specialty Products $8.1bn35.4%Bar length is capital employed; the figure on the right is return on that capital.
Rank the segments by capital and by return and the ordering is almost exactly inverted.

And the capital has been moving the wrong way. US Upstream capital employed rose from $85,285 million to $118,142 million in one year while its return fell from 7.5 per cent to 4.3 per cent; non-US capital employed fell slightly, from $93,390 million to $91,792 million, while its return fell more gently from 20.3 per cent to 17.7 per cent2. Thirty-three billion dollars of new capital went into the lower-returning half.

Most of that was one transaction. Pioneer Natural Resources closed on 3 May 2024 for 545 million shares worth $63 billion plus $5 billion of assumed debt, and the goodwill was allocated to the Upstream segment3. It is defensible on the resource: the acreage is contiguous with ExxonMobil's, the inventory is long, and management argues the combination is worth more than the parts. It is not yet defensible on the return.

The capital additions say the same thing about 2025 and 2026. Additions to property, plant and equipment in United States Upstream were $15,872 million in 2025 against $9,490 million for the rest of Upstream worldwide4; in the first half of 2026 cash capital expenditure was $6,872 million in United States Upstream against $3,792 million non-US5. The spending follows the Permian, not the returns.

The case for patience is real. Permian volumes are set to grow more than fifty per cent by 2030 against a capital base that is now largely in place, and a fixed denominator with a rising numerator is how returns recover. The case against patience is that this is the third year the same argument has been available.

The falsifying number is United States Upstream return on average capital employed. It was 7.5 per cent in 2024 and 4.3 per cent in 20256. If it is not clearly above the corporate cost of capital by 2028, with Permian volumes near target, the sixty-three billion dollars bought a production profile rather than an advantage.

References
  1. ReportedNon-US Upstream: $91,792 million, 17.7 per cent.
    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 ↗
  2. ReportedUS Upstream capital employed rose from $85,285 million to $118,142 million in one year while its return fell from 7.5 per cent to 4.3 per cent; non-US capital employed fell slightly, from $93,390 million to $91,792 million, while its return fell more gently from 20.3 per cent to 17.7 per cent.
    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 ↗
  3. ReportedPioneer Natural Resources closed on 3 May 2024 for 545 million shares worth $63 billion plus $5 billion of assumed debt, and the goodwill was allocated to the Upstream segment.
    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. ReportedAdditions to property, plant and equipment in United States Upstream were $15,872 million in 2025 against $9,490 million for the rest of Upstream worldwide; in the first half of 2026 cash capital expenditure was $6,872 million in United States Upstream against $3,792 million non-US.
    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 ↗
  5. ReportedAdditions to property, plant and equipment in United States Upstream were $15,872 million in 2025 against $9,490 million for the rest of Upstream worldwide; in the first half of 2026 cash capital expenditure was $6,872 million in United States Upstream against $3,792 million non-US.
    ExxonMobil Holdings Corporation second-quarter 2026 earnings release (Exhibit 99.1 to Form 8-K of 31 July 2026) — earnings and volume summary by segment on both a GAAP and an adjusted basis, cash flow from operations excluding working capital, free cash flow, cash capital expenditures by segment, structural cost savings, adjusting items, and the chief executive's commentary. — Q2 2026 · publ. 31 July 2026 · source ↗
  6. ReportedIt was 7.5 per cent in 2024 and 4.3 per cent in 2025.
    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