Analysis of Property, Plant and Equipment
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- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2012
- Operating Profit Margin since 2012
- Total Asset Turnover since 2012
- Price to Sales (P/S) since 2012
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Property, Plant and Equipment Disclosure
Diamondback Energy Inc., balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Oil and natural gas properties, full cost method of accounting
- The value shows a consistent upward trend over the five-year period, increasing from $9,233 million in 2017 to $32,914 million in 2021. This indicates substantial investment or capitalized costs in oil and natural gas properties, more than tripling over the timeframe.
- Midstream assets
- Midstream assets exhibit a steady increase each year, starting at $192 million in 2017 and reaching $1,076 million by 2021. This demonstrates ongoing expansion or acquisition in midstream infrastructure, growing more than fivefold.
- Other property, equipment and land
- The category shows modest growth, increasing from $81 million in 2017 to $174 million in 2021. It peaked in 2018 at $147 million, slightly decreased in 2019, then resumed gradual growth in subsequent years, suggesting moderate investment in assets outside core operations.
- Property and equipment, gross
- Gross property and equipment values increased significantly from $9,505 million in 2017 to $34,164 million in 2021. This reflects substantial asset base growth driven predominantly by increases in oil and natural gas properties as well as midstream assets.
- Accumulated depletion, depreciation, amortization and impairment
- This accumulated charge exhibits a marked increase in magnitude over time, moving from -$2,161 million in 2017 to -$13,545 million in 2021. A notable jump occurred between 2019 and 2020, reflecting significant additional depletion, depreciation, amortization, or impairment charges.
- Property and equipment, net
- Net property and equipment values increased from $7,344 million in 2017 to $20,619 million in 2021, although with fluctuations. The net figure rose sharply through 2018 and 2019, peaked at $21,835 million in 2019, then declined to $16,214 million in 2020 before recovering to $20,619 million in 2021. The 2020 dip likely relates to the substantial increase in accumulated charges that year, reducing net book value despite rising gross assets.
- Overall Analysis
- Over the period analyzed, the company expanded its fixed asset base significantly, especially in oil and natural gas properties and midstream assets. Despite this, the large rise in accumulated depletion, depreciation, amortization, and impairment charges in 2020 negatively affected net property and equipment values. The recovery in net values in 2021 suggests either slower charges or further asset additions offsetting depreciation effects. The trends reflect active capital expenditure and asset management consistent with growth strategies, albeit with some pressure on net asset carrying values in 2020.
Asset Age Ratios (Summary)
Diamondback Energy Inc., asset age ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The average age ratio of property, plant, and equipment (PP&E) displays noticeable fluctuations over the period from 2017 to 2021. This ratio, expressed as a percentage, provides insight into the relative age of the company's fixed assets.
- 2017 to 2018
- There is a significant decrease in the average age ratio, from 22.74% in 2017 down to 11.99% in 2018. This notable reduction suggests a renewal or acquisition of newer assets, leading to a relatively younger asset base during this period.
- 2018 to 2019
- The ratio increases again to 18.64% in 2019, indicating an aging of the asset base or potentially fewer new assets being added relative to the existing asset pool.
- 2019 to 2020
- A substantial rise to 43.16% is observed in 2020, which represents a marked aging of the plant, property, and equipment. This could be attributed to reduced capital expenditures, asset retention without replacement, or impairment of younger assets.
- 2020 to 2021
- In 2021, the average age ratio slightly decreases to 39.65% but remains relatively high compared to the earlier years. This suggests a marginal improvement or investment in newer assets, while the overall asset age remains elevated.
Overall, the data reveals a trend of significant asset rejuvenation in 2018, followed by progressive aging of the asset base through 2020, with a slight reduction in age ratio in 2021. The high age ratio in the last two years may indicate potential upcoming needs for maintenance, replacement, or modernization of the property, plant, and equipment.
Average Age
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 Average age = 100 × Accumulated depletion, depreciation, amortization and impairment ÷ Property and equipment, gross
= 100 × ÷ =
- Accumulated Depletion, Depreciation, Amortization, and Impairment
- The accumulated value demonstrates a consistent and marked increase throughout the observed period, starting at US$2,161 million at the end of 2017 and rising significantly each year to reach US$13,545 million by the end of 2021. This upward trend indicates substantial ongoing depreciation and impairment charges against the property and equipment, reflecting asset usage, aging, or possible impairment events that increase the accumulated reduction in asset value.
- Property and Equipment, Gross
- The gross book value of property and equipment exhibits strong growth over the same timeframe, increasing from US$9,505 million in 2017 to US$34,164 million in 2021. The most notable jump occurs between 2017 and 2018, where the value more than doubles, followed by steady increases each subsequent year. This pattern suggests aggressive capital investment or acquisitions, expanding the asset base considerably.
- Average Age Ratio
- The average age ratio, expressed as a percentage, shows a more variable pattern. It starts at 22.74% in 2017 and decreases substantially to 11.99% in 2018, indicating that newly added assets reduced the overall average age of the asset base significantly. However, from 2018 to 2020, there is a substantial increase reaching 43.16% in 2020, implying an aging asset portfolio during this period. This ratio declines slightly to 39.65% in 2021, though it remains much higher than the earlier years, which may suggest a slowdown in new asset additions or a retention of older assets.
- Overall Insights
- The data depicts a company with rapidly expanding property and equipment holdings alongside increasing accumulated depreciation and impairment. The initial decrease in average age ratio followed by a sharp increase suggests phases of intense asset acquisition followed by periods where asset aging was more pronounced. The continuing rise in accumulated depreciation paired with aging assets may point to increasing maintenance or replacement needs in the future.