EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Diamondback Energy Inc., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net operating profit after taxes (NOPAT)¹	3,031)	(5,563)	495)	1,175)	521)
Cost of capital²	21.17%	18.33%	18.09%	22.17%	24.32%
Invested capital³	21,230)	16,329)	22,002)	20,304)	7,167)

Economic profit⁴	(1,464)	(8,556)	(3,486)	(3,326)	(1,222)

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).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 3,031 – 21.17% × 21,230 = -1,464

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Diamondback Energy Inc. economic profit decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Diamondback Energy Inc., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net income (loss) attributable to Diamondback Energy, Inc.	2,182)	(4,517)	240)	846)	482)
Deferred income tax expense (benefit)¹	606)	(1,042)	47)	169)	(21)
Increase (decrease) in equity equivalents²	606)	(1,042)	47)	169)	(21)
Interest expense, less capitalized interest	189)	195)	169)	77)	39)
Adjusted interest expense, less capitalized interest	189)	195)	169)	77)	39)
Tax benefit of interest expense, less capitalized interest³	(40)	(41)	(35)	(16)	(14)
Adjusted interest expense, less capitalized interest, after taxes⁴	149)	154)	134)	61)	25)
Interest income	(1)	(4)	(1)	(1)	—)
Investment income, before taxes	(1)	(4)	(1)	(1)	—)
Tax expense (benefit) of investment income⁵	—)	1)	—)	—)	—)
Investment income, after taxes⁶	(1)	(3)	(1)	—)	—)
Net income (loss) attributable to noncontrolling interest	94)	(155)	75)	99)	34)
Net operating profit after taxes (NOPAT)	3,031)	(5,563)	495)	1,175)	521)

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).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in equity equivalents to net income (loss) attributable to Diamondback Energy, Inc..

³ 2021 Calculation
Tax benefit of interest expense, less capitalized interest = Adjusted interest expense, less capitalized interest × Statutory income tax rate
= 189 × 21.00% = 40

⁴ Addition of after taxes interest expense to net income (loss) attributable to Diamondback Energy, Inc..

⁵ 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 1 × 21.00% = 0

⁶ Elimination of after taxes investment income.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Diamondback Energy Inc. NOPAT decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Diamondback Energy Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Provision for (benefit from) income taxes	631)	(1,104)	47)	168)	(20)
Less: Deferred income tax expense (benefit)	606)	(1,042)	47)	169)	(21)
Add: Tax savings from interest expense, less capitalized interest	40)	41)	35)	16)	14)
Less: Tax imposed on investment income	—)	1)	—)	—)	—)
Cash operating taxes	64)	(22)	35)	15)	14)

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).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Diamondback Energy Inc. cash operating taxes decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Diamondback Energy Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Current maturities of long-term debt	45)	191)	—)	—)	—)
Long-term debt, excluding current maturities	6,642)	5,624)	5,371)	4,464)	1,477)
Total reported debt & leases	6,687)	5,815)	5,371)	4,464)	1,477)
Total Diamondback Energy, Inc. stockholders’ equity	12,088)	8,794)	13,249)	13,699)	5,255)
Net deferred tax (assets) liabilities¹	1,298)	710)	1,744)	1,688)	108)
Equity equivalents²	1,298)	710)	1,744)	1,688)	108)
Accumulated other comprehensive (income) loss, net of tax³	—)	—)	—)	—)	—)
Non-controlling interest	1,157)	1,010)	1,657)	467)	327)
Adjusted total Diamondback Energy, Inc. stockholders’ equity	14,543)	10,514)	16,650)	15,854)	5,690)
Investment⁴	—)	—)	(19)	(15)	—)
Invested capital	21,230)	16,329)	22,002)	20,304)	7,167)

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).

¹ Elimination of deferred taxes from assets and liabilities. See details »

² Addition of equity equivalents to total Diamondback Energy, Inc. stockholders’ equity.

³ Removal of accumulated other comprehensive income.

⁴ Subtraction of investment.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Diamondback Energy Inc. invested capital decreased from 2019 to 2020 but then increased from 2020 to 2021 not reaching 2019 level.

Diamondback Energy Inc., cost of capital calculations

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	22,690)	22,690)	÷	29,838)	=	0.76	0.76	×	26.90%	=	20.46%
Debt³	7,148)	7,148)	÷	29,838)	=	0.24	0.24	×	3.77% × (1 – 21.00%)	=	0.71%
Total:	29,838)					1.00					21.17%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	10,913)	10,913)	÷	17,126)	=	0.64	0.64	×	26.90%	=	17.14%
Debt³	6,213)	6,213)	÷	17,126)	=	0.36	0.36	×	4.13% × (1 – 21.00%)	=	1.18%
Total:	17,126)					1.00					18.33%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	9,415)	9,415)	÷	14,960)	=	0.63	0.63	×	26.90%	=	16.93%
Debt³	5,545)	5,545)	÷	14,960)	=	0.37	0.37	×	3.97% × (1 – 21.00%)	=	1.16%
Total:	14,960)					1.00					18.09%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	17,308)	17,308)	÷	21,721)	=	0.80	0.80	×	26.90%	=	21.44%
Debt³	4,413)	4,413)	÷	21,721)	=	0.20	0.20	×	4.55% × (1 – 21.00%)	=	0.73%
Total:	21,721)					1.00					22.17%

Based on: 10-K (reporting date: 2018-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

Dec 31, 2017

	Capital (fair value)¹	Weights					Cost of capital
Equity²	12,286)	12,286)	÷	13,793)	=	0.89	0.89	×	26.90%	=	23.96%
Debt³	1,507)	1,507)	÷	13,793)	=	0.11	0.11	×	5.06% × (1 – 35.00%)	=	0.36%
Total:	13,793)					1.00					24.32%

Based on: 10-K (reporting date: 2017-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

Diamondback Energy Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Selected Financial Data (US$ in millions)
Economic profit¹	(1,464)	(8,556)	(3,486)	(3,326)	(1,222)
Invested capital²	21,230)	16,329)	22,002)	20,304)	7,167)
Performance Ratio
Economic spread ratio³	-6.90%	-52.39%	-15.84%	-16.38%	-17.05%
Benchmarks
Economic Spread Ratio, Competitors⁴
Chevron Corp.	-3.16%	-17.34%	-12.61%	—	—
ConocoPhillips	-0.34%	-19.00%	-0.35%	—	—
Exxon Mobil Corp.	0.36%	-22.90%	-5.72%	—	—
Marathon Petroleum Corp.	-2.24%	-26.27%	-3.05%	—	—
Occidental Petroleum Corp.	-4.47%	-33.52%	-10.60%	—	—
Valero Energy Corp.	-0.97%	-16.81%	-3.11%	—	—

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).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -1,464 ÷ 21,230 = -6.90%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Diamondback Energy Inc. economic spread ratio deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.

Diamondback Energy Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Selected Financial Data (US$ in millions)
Economic profit¹	(1,464)	(8,556)	(3,486)	(3,326)	(1,222)
Revenue from contracts with customers	6,747)	2,756)	3,887)	2,130)	1,186)
Performance Ratio
Economic profit margin²	-21.70%	-310.43%	-89.68%	-156.15%	-103.01%
Benchmarks
Economic Profit Margin, Competitors³
Chevron Corp.	-3.94%	-36.21%	-17.64%	—	—
ConocoPhillips	-0.56%	-51.45%	-0.62%	—	—
Exxon Mobil Corp.	0.35%	-35.12%	-6.80%	—	—
Marathon Petroleum Corp.	-1.19%	-26.42%	-2.02%	—	—
Occidental Petroleum Corp.	-10.00%	-119.08%	-43.75%	—	—
Valero Energy Corp.	-0.38%	-10.61%	-1.17%	—	—

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).

¹ Economic profit. See details »

² 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue from contracts with customers
= 100 × -1,464 ÷ 6,747 = -21.70%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Diamondback Energy Inc. economic profit margin deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.

Diamondback Energy Inc. (NASDAQ:FANG)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin