Integrated Returns & the Quest for Value.

The Gist: This post is a brief history of where the integrated oil’s 2024 returns on capital stacked up vs. history.

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In 2024, the integrated oil companies achieved an 8.5% return on capital employed, slightly below the long-term average of 10%, as shown below.

At the top of the return pack was ExxonMobil at 11.1%, while BP lagged behind at 4.7%. However, with activist investor Elliott now involved—and given their track record with other energy companies—there is not only hope but a real catalyst for change at the historic firm.

Returns on capital are crucial because, when compared to the cost of capital, they determine valuation in the sector, as illustrated below for the two U.S. integrated oil companies.