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ConocoPhillips (COP)
Analysis of Debt
Advanced level
Accounting Policy on Debt
Capitalized Interest
Interest from external borrowings is capitalized on major projects with an expected construction period of one year or longer. Capitalized interest is added to the cost of the underlying asset and is amortized over the useful lives of the assets in the same manner as the underlying assets.
Source: 10-K (filing date: 2019-02-19).
Total Debt (Carrying Amount)
ConocoPhillips, balance sheet: debt
US$ in millions
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
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| Short-term debt | |
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| Long-term debt | |
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| Total debt, including capital leases (carrying amount) | |
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Based on: 10-K (filing date: 2019-02-19), 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24).
| Debt item | Description | The company |
|---|---|---|
| Total debt, including capital leases (carrying amount) | Sum of the carrying values as of the balance sheet date of all debt plus capital lease obligations. | ConocoPhillips’s total debt decreased from 2016 to 2017 and from 2017 to 2018. |
Total Debt (Fair Value)
| Dec 31, 2018 | |
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| Selected Financial Data (US$ in millions) | |
| Debt, excluding capital leases | |
| Capitalized leases | |
| Total debt, including capital leases (fair value) | |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | |
Based on: 10-K (filing date: 2019-02-19).
Weighted-average Interest Rate on Debt
Before-tax incremental borrowing rate:
| Interest Rate | Debt Amount1 | Interest Rate × Debt Amount | Weighted-average Interest Rate2 |
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Based on: 10-K (filing date: 2019-02-19).
1 US$ in millions
2 Weighted-average interest rate = 100 × ÷ =
Interest Costs Incurred
ConocoPhillips, interest costs incurred
US$ in millions
| 12 months ended | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||||||
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| Interest expensed | |
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| Interest capitalized | |
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| Interest incurred | |
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Based on: 10-K (filing date: 2019-02-19), 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24).
| Debt item | Description | The company |
|---|---|---|
| Interest expensed | Amount of the cost of borrowed funds accounted for as interest expense for debt. | ConocoPhillips’s interest expensed decreased from 2016 to 2017 and from 2017 to 2018. |
| Interest capitalized | Amount of interest costs capitalized disclosed as an adjusting item to interest costs incurred. | ConocoPhillips’s interest capitalized decreased from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level. |
| Interest incurred | Total interest costs incurred during the period and either capitalized or charged against earnings. | ConocoPhillips’s interest incurred decreased from 2016 to 2017 and from 2017 to 2018. |
Adjusted Interest Coverage Ratio
Based on: 10-K (filing date: 2019-02-19), 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24).
2018 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest and debt expense
= ÷ =
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest incurred
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| Solvency ratio | Description | The company |
|---|---|---|
| Adjusted interest coverage ratio | A solvency ratio calculated as EBIT divided by interest payments (including capitalized interest). | ConocoPhillips’s adjusted interest coverage ratio improved from 2016 to 2017 and from 2017 to 2018. |