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ExxonMobil (NYSE: XOM) has an over $400 billion market cap, which makes it a truly gargantuan company and one of the biggest players in the energy sector. If you are looking to buy this industry giant today, though, you’ll need to make sure you know these three facts. There’s a nuance here that could be very important over the long term.

1. Exxon is a solid energy company

Exxon’s business spans the entire value chain of the oil and natural gas sector, from the upstream (drilling) through the midstream (pipelines) and into the downstream (chemicals and refining). That diversification can provide some balance to financial performance in what is a highly cyclical, commodity-driven industry. For example, refining can benefit from the low oil prices that will crimp results in the upstream sector. The business is still volatile, but a little less so than a pure-play producer would be.

XOM Debt to Equity Ratio data by YCharts.

The business, meanwhile, is built on a rock-solid balance sheet. Exxon’s debt-to-equity ratio is roughly 0.2 times today. That’s among the lowest levels of its closest peer group. It allows Exxon to increase debt during the inevitable industry downturns when oil prices are falling, so it can continue to support its business and dividend even if its bottom line is bleeding red ink. When oil prices recover, as they always have historically, debt levels are reduced, so the company will be ready to take on the next downturn.

This brings the story to the dividend, which has been increased annually for an incredible 41 consecutive years. This is the kind of energy stock that even a conservative investor could appreciate.

2. Exxon isn’t following the clean-energy crowd

European energy giants BP (NYSE: BP), Shell (NYSE: SHEL), and TotalEnergies (NYSE: TTE) have all made material investments in renewable power. While it is true that BP and Shell have talked back their clean-energy plans to some degree, that doesn’t change the fact that they are clearly hedging their bets on the energy transition. Exxon has not followed these peers along that path. It has dipped its toe into the clean-energy space, but it has mostly stuck to its oil and natural gas focus.

The biggest example of that recently has come from Exxon’s proposed acquisition of Pioneer Natural Resources (NYSE: PXD). This will materially increase Exxon’s scale in the onshore U.S. energy space with fairly complementary assets. And it is a large deal, with a value of nearly $60 billion. This is not the action that one would expect from a company worried that its business was under threat from clean energy. Basically, Exxon expects oil and natural gas to be important parts of the global energy landscape for a very long time to come.

In other words, if you buy Exxon today, you are betting specifically on oil and natural gas.

3. Exxon is capable of making big moves

Given the global shift toward clean energy, which is real and ongoing, some investors might wonder if it is worth tying their horse to an oil giant that’s intent on being a stick in the mud, so to speak. That might be a shortsighted view of what Exxon is capable of.

Remember that Exxon is an industry giant. And that it has a very strong financial foundation. That provides the company with a lot of flexibility. The nearly $60 billion deal to buy Pioneer is an example of Exxon flexing its muscles in the energy sector. But there’s no reason why, when the time is right, it couldn’t do the same thing in the clean energy sector.

XOM data by YCharts.

From a big-picture perspective, clean energy is still a very new source of large-scale power. The downturn the sector has experienced of late proves this. Sure, there was a lot of investor excitement about clean energy a few years ago, but that has cooled off dramatically. By sitting on the sidelines, Exxon is avoiding the costs of trying to build out what is essentially a new business in an uncertain market. When things begin to settle down, and clean energy proves to be a more stable business, it could very easily step in and buy an existing company with material scale. One sizable investment could turn Exxon into a clean-energy play, just like the European majors.

Exxon isn’t “clean” today, but don’t count it out

Exxon is an oil and natural gas company. Don’t buy it thinking that it is anything but that. However, it is one of the largest and strongest, financially speaking. That gives it a lot of room to maneuver even as the world shifts toward clean energy. Right now, Exxon continues to see material value in sticking to its core, thus the Pioneer acquisition. But Exxon’s ability to ink $60 billion deals isn’t limited to oil companies; when the time is right, it could easily flex that muscle in clean energy, too.

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Reuben Gregg Brewer has positions in TotalEnergies Se. The Motley Fool has positions in and recommends BP. The Motley Fool recommends Pioneer Natural Resources. The Motley Fool has a disclosure policy.

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