ConocoPhillips (NYSE:COP)

The analysis of the annual current and deferred income tax expenses reveals several key trends over the five-year period from 2020 to 2024. There is a notable fluctuation in both current and deferred tax figures, indicating variability in taxable income components and timing differences affecting tax charges.

Current Income Tax Expense

The current income tax expense exhibits a significant increase from 349 million US dollars in 2020 to a peak of 7,462 million US dollars in 2022. Following this peak, there is a decline to 4,187 million in 2023 and a slight further reduction to 4,060 million in 2024. This pattern suggests that current tax liabilities surged markedly during the middle of the period before stabilizing at a lower but still elevated level in recent years.

Deferred Income Tax Expense

The deferred tax component presents a more variable trend. It began with a negative deferred tax benefit of -834 million US dollars in 2020, then shifted sharply to a positive expense of 1,346 million in 2021, and increased further to 2,086 million in 2022. After the peak in 2022, the deferred tax expense decreased to 1,144 million in 2023 and further reduced to 367 million in 2024. This pattern indicates significant timing differences and adjustments in tax liabilities that impacted deferred taxes during this timeframe, with a peak around 2022 followed by a consistent decrease.

Income Tax Provision (Benefit)

The total income tax provision, combining current and deferred components, follows a corresponding trend. In 2020, there was a tax benefit of -485 million, reflecting the negative deferred tax figure overshadowing the current tax expense. From 2021 onwards, the provision turned positive, rising sharply to 4,633 million in 2021, then more than doubling to 9,548 million in 2022. The tax provision subsequently decreased to 5,331 million in 2023 and continued to decline to 4,427 million in 2024. These fluctuations align closely with the patterns observed in the underlying current and deferred tax figures.

Overall, the data indicates substantial variability in the company’s income tax expenses over the five-year period, with a peak in tax provisions in 2022 followed by a gradual reduction. The movement in deferred tax expenses suggests notable shifts in timing differences or tax attributes affecting deferred tax liabilities. The combination of these elements resulted in a significant tax benefit in 2020, followed by substantial tax charges in subsequent years, stabilizing toward the end of the period analyzed.

Federal statutory income tax rate

The federal statutory income tax rate remained constant at 21% throughout the analyzed period, indicating no changes in federal tax policy affecting the company’s statutory tax obligations.

Non-U.S. effective tax rates

The non-U.S. effective tax rates showed significant variation, starting from a negative rate of -6.2% in 2020 and increasing sharply to 15.1% in 2021. Subsequently, it slightly decreased to 13.7% in 2022 and continued a marginal decline to 12.7% in 2023, before marginally rising again to 13.3% in 2024. This pattern suggests a period of tax rate normalization outside the U.S. after a substantial fluctuation in 2020-2021.

Australia disposition

This item was recorded only in 2020 at 11.1% and not reported in subsequent years, indicating a one-time event or transaction that impacted the tax rate specifically during 2020.

Recovery of outside basis

The recovery of outside basis showed minor fluctuations around zero, from 0.7% in 2020 to -0.4% in 2021 and -0.1% in 2022, with no data reported for the following years. This suggests a diminishing impact of this adjustment over time, possibly related to specific asset basis recoveries.

Adjustment to tax reserves

The adjustments to tax reserves remained negative throughout the period, starting at -0.6% in 2020 and fluctuating slightly to -0.1% in 2021. It then increased in magnitude to -2% in 2022 and -1.9% in 2023, before moving closer to zero at -0.4% in 2024. This pattern indicates notable reserve adjustments, especially a peak in 2022 and 2023, suggesting increased tax reserve considerations during those years with some easing in the most recent year.

Adjustment to valuation allowance

This adjustment was significantly negative at -14.6% in 2020 and almost negligible at -0.4% in 2021, with no recorded values in 2022 and 2023. It reappeared at -3% in 2024. The large initial negative adjustment suggests a significant valuation allowance change in 2020, possibly due to reassessment of deferred tax assets, followed by minimal activity and a renewed adjustment in 2024.

State income tax

State income tax rates declined steadily from 3.6% in 2020 to 1.5% in 2021, then stabilized around 1.3-1.4% for the subsequent years through 2024. This trend indicates a reduction in state tax burden after 2020, maintaining a relatively stable lower level afterwards.

Other

The "Other" tax-related adjustments were close to zero with minor fluctuations: starting positive at 0.5% in 2020, slightly negative from 2021 through 2023, and a small positive increase to 0.1% in 2024. These minor variances likely represent miscellaneous tax effects with no significant impact on overall rates.

Effective income tax rate

The effective income tax rate showed a marked increase from 15.5% in 2020 to 36.4% in 2021, followed by a gradual decrease to 33.8% in 2022, 32.7% in 2023, and 32.4% in 2024. This trend reveals a substantial rise in overall tax burden in 2021, with a moderate reduction and stabilization in subsequent years, yet maintaining a significantly higher level than in 2020.

The financial data reveals several notable trends in the company's liabilities, assets, and tax-related positions over the five-year period under review.

Benefit Plan Accruals

These accruals decreased from 540 million in 2020 to 321 million in 2021, followed by a recovery to 432 million by 2024. The initial decrease suggests a reduction in expected benefit obligations or plan funding, whereas the subsequent increase may indicate higher future benefit costs or changes in actuarial assumptions.

Asset Retirement Obligations and Accrued Environmental Costs

There is a steady upward trend from 2,262 million in 2020 to 2,799 million in 2024, reflecting increased estimated costs for asset retirements and environmental liabilities. This suggests either expansion in asset base requiring retirement provisions or increasing regulatory and environmental compliance costs.

Investments in Joint Ventures

Investments exhibit consistent growth, rising from 1,653 million in 2020 to 2,269 million in 2024, indicating ongoing or increased participation in joint ventures, which could contribute to revenue diversification or strategic partnerships.

Other Financial Accruals and Deferrals

These items show a declining trend from 907 million in 2020 to 497 million in 2024, with a marked drop between 2022 and 2023. This decline may reflect improved cash flow management or settlement of accrued liabilities.

Loss and Credit Carryforwards

A continuous decrease from 8,904 million in 2020 to 4,910 million in 2024 signals utilization or expiration of tax loss carryforwards and credits, potentially indicating recent profitability and reduced tax loss reserves.

Deferred Tax Assets and Valuation Allowance

Deferred tax assets decreased from 14,631 million in 2020 to 11,094 million in 2024. Concurrently, the valuation allowance declined significantly from -9,965 million to -6,435 million, reducing the net allowance against deferred tax assets. The net deferred tax assets after allowance display fluctuations, peaking in 2020 at 4,666 million, dipping to 3,696 million by 2023, and rebounding to 4,659 million in 2024, suggesting improving expectations of recoverability of deferred tax assets.

Property, Plant & Equipment (PP&E) and Intangibles

These asset categories reflect increasing net liabilities or accumulated depreciation/amortization, indicated by rising negative values from -7,744 million in 2020 to -15,609 million in 2024. This growth in negative balances suggests substantial capital expenditures combined with significant depreciation and/or impairments over time.

Inventory and Other Liabilities

Inventory levels remain relatively stable but negative, varying between -44 and -91 million, possibly due to accounting conventions or classification. Other liabilities fluctuate but show a general reduction in negativity, going from -242 million in 2020 to -155 million by 2024, indicating some liability settlements or reclassification.

Deferred Tax Liabilities

These liabilities increased consistently from -8,050 million in 2020 to -15,855 million in 2024, pointing to growing future tax obligations stemming from temporary differences or accelerated depreciation schedules.

Net Deferred Tax Assets (Liabilities)

The net deferred tax positions deteriorated progressively from -3,384 million in 2020 to -11,196 million in 2024, reflecting a net increase in future tax liabilities exceeding deferred tax assets, which could impact future tax expenses and cash flows negatively.

The analysis of the deferred tax assets and liabilities over the five-year period reveals distinct trends in the company's tax-related financial position.

Deferred Tax Assets

There is a general downward trend in deferred tax assets from 363 million US dollars at the end of 2020 to 230 million US dollars by the end of 2024. The value experiences a slight fluctuation around 2022 and 2023, with a modest increase from 241 to 255 million US dollars, before declining again in 2024. This overall decline may indicate a reduction in future tax benefits, possibly due to decreased deductible temporary differences or changes in tax planning strategies.

Deferred Tax Liabilities

In contrast, deferred tax liabilities have shown a consistent and sharp increase throughout the period. Starting from 3,747 million US dollars at the end of 2020, the liabilities increase substantially each year, reaching 11,426 million US dollars by the end of 2024. The most notable accelerations occur between 2020 and 2021, and continue steadily onward. This rising trend in deferred tax liabilities suggests growing taxable temporary differences, potentially from increased asset base or timing differences in recognizing expenses and revenues for tax purposes.

Overall Insight

The divergence between falling deferred tax assets and rapidly increasing deferred tax liabilities results in a growing net deferred tax liability position for the company. This pattern could have implications for future cash taxes payable and reflects evolving tax obligations that necessitate careful monitoring and strategic planning to manage tax exposures effectively.

The financial data reflects significant growth in the total assets of the company over the assessed five-year period. Both reported and adjusted total assets exhibit an upward trend, increasing from approximately US$62.6 billion and US$62.3 billion respectively in 2020 to around US$122.8 billion and US$122.6 billion in 2024. This growth indicates a substantial expansion of the company’s asset base, nearly doubling in size over the period.

Reported total liabilities also increased steadily each year, rising from about US$32.8 billion in 2020 to approximately US$58.0 billion in 2024. Adjusted total liabilities demonstrate a slightly different pattern; they increased from roughly US$29.0 billion in 2020, peaked in 2021 at about US$39.1 billion, then showed a gradual decline through 2023 to about US$37.8 billion, before rising again to approximately US$46.6 billion in 2024. This suggests that adjustments to liabilities account for some fluctuations not captured in the reported figures, possibly reflecting deferred income tax adjustments or other reclassifications.

Common stockholders’ equity, both reported and adjusted, shows a consistent increase throughout the years. Reported equity grew from about US$29.8 billion in 2020 to roughly US$64.8 billion in 2024, while adjusted equity increased from approximately US$33.2 billion to about US$76.0 billion over the same period. The adjusted equity values remain consistently higher than the reported figures, indicating that adjustments such as deferred tax effects or other accounting treatments positively impact the equity valuation.

Net income attributable to the company presents a recovery and growth trajectory after a loss in 2020. Reported net income improved from a loss of approximately US$2.7 billion in 2020 to a peak of around US$18.7 billion in 2022, followed by a decline to about US$9.2 billion in 2024. Adjusted net income follows a similar pattern but consistently reports higher values compared to reported net income, starting with a larger loss of approximately US$3.5 billion in 2020, peaking near US$20.8 billion in 2022, and tapering off to approximately US$9.6 billion by 2024. The differences between reported and adjusted figures suggest that adjustments, likely related to deferred taxes, have a significant impact on profitability metrics.

Asset growth

Total assets nearly doubled over the period, with adjusted and reported figures tracking closely.

Liabilities trend

Reported liabilities steadily increased, while adjusted liabilities showed a peak and temporary decline before rising again.

Equity expansion

Stockholders’ equity increased significantly, with adjusted values consistently higher than reported, indicating positive adjustments.

Net income pattern

Net income recovered from a loss in 2020, peaked in 2022, and then declined, with adjusted net income consistently exceeding reported figures.

Net Profit Margin

The reported net profit margin experienced a significant recovery, rising from a negative -14.38% in 2020 to a peak of 23.8% in 2022, followed by a gradual decline to 16.89% by 2024. The adjusted net profit margin follows a similar pattern, increasing from -18.82% in 2020 to 26.46% in 2022, then decreasing to 17.56% in 2024. This indicates improved profitability post-2020, reaching a high in 2022 before moderating in subsequent years.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios showed notable improvement from 0.3 in 2020 to a peak of 0.84 in 2022, followed by a decline to 0.45 in 2024. This pattern suggests enhanced efficiency in asset utilization up to 2022, with reduced efficiency observed in later years.

Financial Leverage

The reported financial leverage ratio steadily decreased from 2.1 in 2020 to 1.89 in 2024, while the adjusted leverage followed a consistent downward trend from 1.87 to 1.61 over the same period. The decreasing leverage ratios imply a reduction in reliance on debt financing over time.

Return on Equity (ROE)

Reported ROE showed a dramatic turnaround from -9.05% in 2020 to a high of 38.91% in 2022, then declined to 14.27% by 2024. Adjusted ROE displayed a comparable trend, increasing from -10.64% in 2020 to 37.42% in 2022, followed by a decrease to 12.65% in 2024. The overall trend reflects substantial improvement in equity returns post-2020 with a peak in 2022 and moderation afterward.

Return on Assets (ROA)

Reported ROA rose from -4.31% in 2020 to 19.91% in 2022, before dropping to 7.53% in 2024. Adjusted ROA similarly increased from -5.68% to 22.19% over the 2020 to 2022 period, then declined to 7.84% by 2024. This pattern indicates increased asset profitability up to 2022, followed by a reduction in returns through the latest period.

Overall Insights

The data reveals a consistent pattern of recovery and improvement across profitability, efficiency, and returns metrics from the low points in 2020 through peaks in 2022. However, a noticeable decline across most measures from 2022 to 2024 suggests a shift in operating conditions or challenges affecting sustained profitability and asset utilization. Concurrently, the gradual decrease in financial leverage demonstrates a trend towards a more conservative capital structure.

The financial performance, as reflected through reported and adjusted net income attributable to ConocoPhillips, indicates a significant recovery and growth trend following a loss in 2020. Reported net income improved sharply from a loss of 2,701 million USD in 2020 to a gain of 8,079 million USD in 2021, continuing to rise to 18,680 million USD in 2022. However, a noticeable decline occurs in 2023 and 2024, where income reduces to 10,957 million USD and 9,245 million USD respectively.

The adjusted net income follows a similar trajectory but shows a greater cumulative gain each year relative to the reported figures. Starting from a loss of 3,535 million USD in 2020, adjusted net income rose to 9,425 million USD in 2021 and peaked at 20,766 million USD in 2022. Subsequent declines to 12,101 million USD in 2023 and 9,612 million USD in 2024 mirror the pattern seen in the reported data, indicating adjustments consistently enhance net income figures across all periods.

Analyzing profitability through margins, reported net profit margin transitions from a negative margin of -14.38% in 2020 to a positive peak of 23.8% in 2022, evidencing strong profit generation capacity during that year. The margin decreases over the following two years to 19.52% in 2023 and further to 16.89% in 2024, which aligns with the downward trend in reported net income.

The adjusted net profit margin displays a comparable pattern but at higher levels, starting from -18.82% in 2020 and reaching a high of 26.46% in 2022. Subsequent years reflect a reduction to 21.55% and 17.56% respectively, corroborating the decline in adjusted net income. This suggests that after adjusting for certain items, profitability is enhanced but still follows the overall trend of peaking in 2022 and then tapering off.

In summary, the trend over the five-year period shows a recovery from a significant loss in 2020 to strong profitability in 2021 and 2022, followed by a decline in both income and margins in 2023 and 2024. Adjusted figures consistently show better performance than reported ones, highlighting the material impact of adjustments on net income and profitability metrics. Despite the declines after 2022, profitability remains positive and relatively strong compared to the initial loss year.

Asset Values

The reported and adjusted total assets show a consistent upward trend over the observed five-year period. Reported total assets increased from approximately US$62.6 billion in 2020 to about US$122.8 billion in 2024, nearly doubling in size. The adjusted total assets follow a similar pattern, rising from around US$62.3 billion in 2020 to approximately US$122.5 billion in 2024, indicating minimal adjustments between reported and adjusted figures.

Total Asset Turnover

Total asset turnover, both reported and adjusted, exhibits notable fluctuations during the period. Starting at a low ratio of 0.3 in 2020, it increased significantly to 0.51 in 2021 and peaked at 0.84 in 2022. However, this upward momentum reversed afterward, declining to 0.59 in 2023 and further reducing to 0.45 in 2024. This trend suggests that while asset utilization efficiency improved markedly up to 2022, operational turnover relative to assets has diminished subsequently.

Overall Insights

The data reveals a strong asset growth trend alongside a variable asset turnover performance. Despite the substantial increase in total assets, the turnover ratio did not maintain a consistent positive trajectory after 2022, indicating potential challenges in generating proportional revenue from the expanding asset base in the latest years. The close alignment between reported and adjusted figures implies limited impact from deferred income tax adjustments on the asset and turnover metrics.

Total Assets

The reported total assets display a consistent upward trend from 62,618 million USD in 2020 to 122,780 million USD in 2024, indicating substantial asset growth over the five-year period. The adjusted total assets follow a parallel trajectory, increasing from 62,255 million USD to 122,550 million USD, evidencing similar expansion when accounting for income tax adjustments.

Common Stockholders’ Equity

Reported common stockholders’ equity rises steadily from 29,849 million USD in 2020 to 64,796 million USD in 2024, more than doubling over the period. The adjusted equity figures also show a comparable increase, growing from 33,233 million USD to 75,992 million USD. Notably, the adjusted equity values remain consistently higher than reported figures, reflecting the impact of deferred income tax adjustments on equity valuation.

Financial Leverage

Reported financial leverage demonstrates a gradual decline from 2.1 in 2020 to 1.89 in 2024, suggesting a reduction in the use of debt relative to equity over time. The adjusted financial leverage ratios show a similar downward trend, decreasing from 1.87 to 1.61, indicating a consistent decrease in leverage when considering deferred tax adjustments. This reduction in leverage may imply a strengthening equity base relative to liabilities and a potentially lower financial risk profile.

Overall Insights

The data indicate robust growth in asset base and equity, alongside a gradual reduction in financial leverage. Adjusted figures, which incorporate deferred income tax considerations, consistently present higher equity and lower leverage levels compared to reported values. This suggests that the deferred tax adjustments enhance the capital structure's apparent solidity. The trends pose a positive outlook on the company's financial strength, with increasing asset and equity levels and diminishing reliance on debt financing.

The financial data reveals significant fluctuations and overall positive trends in the company's profitability and equity position over the five-year period.

Reported Net Income (Loss) Attributable to ConocoPhillips (US$ in millions)

The reported net income showed a substantial turnaround from a loss of -2,701 million in 2020 to a peak profit of 18,680 million in 2022. However, it declined in subsequent years to 10,957 million in 2023 and further to 9,245 million in 2024, indicating reduced profitability after the peak year.

Adjusted Net Income (Loss) Attributable to ConocoPhillips (US$ in millions)

The adjusted net income similarly moved from a loss of -3,535 million in 2020 to strong gains in the following years. It peaked at 20,766 million in 2022, then decreased to 12,101 million in 2023 and 9,612 million in 2024. The adjustment appears to slightly elevate reported income figures, reflecting possibly more normalized earnings.

Reported Common Stockholders’ Equity (US$ in millions)

The reported common stockholders’ equity exhibited consistent growth, rising from 29,849 million in 2020 to 64,796 million in 2024. The growth was steady year-over-year, with a notable acceleration between 2023 and 2024, indicating substantial strengthening of the equity base.

Adjusted Common Stockholders’ Equity (US$ in millions)

The adjusted equity figures were consistently above reported values, starting at 33,233 million in 2020 and increasing to 75,992 million by 2024. This adjusted measure shows a similar upward trajectory, suggesting that adjustments account for additional equity components or reserves that enhance the financial position.

Reported Return on Equity (ROE) (%)

Reported ROE moved from negative -9.05% in 2020 to a high of 38.91% in 2022, reflecting the surge in profits relative to equity. The ratio declined thereafter to 22.23% in 2023 and 14.27% in 2024, aligning with the observed decline in net income but still indicating a positive return and profitability.

Adjusted Return on Equity (ROE) (%)

The adjusted ROE mirrored the reported ROE across the years but was slightly lower in percentage terms. It increased from -10.64% in 2020 to 37.42% in 2022, then plateaued downward to 20.92% in 2023 and 12.65% in 2024. The reduced adjusted ROE compared to reported suggests that adjustment factors may diminish profitability metrics but the overall trend remains consistent.

In summary, the company experienced a marked recovery from losses in 2020 to peak earnings and high returns on equity by 2022. After this peak, profitability and returns moderated through 2023 and 2024, though the equity base continued to expand robustly. The adjusted figures reflect slightly more conservative profit and return metrics but confirm the positive overall trends in financial health and shareholder value creation.

Net Income Trends

Reported net income attributable to ConocoPhillips demonstrated significant volatility over the period. It started with a substantial loss in 2020 of approximately -$2.7 billion, followed by a strong recovery in 2021 to roughly $8.1 billion. This positive trend intensified in 2022, peaking at nearly $18.7 billion, before decreasing in the subsequent years to about $10.9 billion in 2023 and $9.2 billion in 2024. Adjusted net income mirrored this pattern, with a larger initial loss in 2020 of approximately -$3.5 billion, and higher gains during the recovery, peaking at $20.8 billion in 2022. After the peak, adjusted net income also declined, reaching $9.6 billion in 2024.

Total Assets Evolution

The reported total assets showed a rising trend over the five-year period, beginning at $62.6 billion in 2020 and gradually increasing to $122.8 billion by 2024. Adjusted total assets followed a similar trajectory, starting at $62.3 billion and reaching $122.6 billion in 2024. This consistent asset growth indicates an expansion of the company’s asset base, roughly doubling over the observed period.

Return on Assets (ROA) Analysis

Reported ROA experienced a marked change from negative territory in 2020 (-4.31%) to a peak of 19.91% in 2022, followed by a decline to 7.53% in 2024. The adjusted ROA presented a similar pattern but with generally higher values: from -5.68% in 2020, rising to 22.19% in 2022, then decreasing to 7.84% in 2024. This suggests that profitability relative to assets improved substantially in the early part of the timeframe before tempering in the last two years.

Comprehensive Insights

The data indicates a recovery from significant losses in 2020 through to strong profitability peaks in 2022. The subsequent decline in net income and ROA in 2023 and 2024 may reflect changing economic conditions, operational challenges, or strategic shifts. The steady asset growth suggests ongoing investment or capital accumulation. The adjusted figures, which account for deferred income tax effects, consistently show more pronounced swings in profitability, highlighting the impact of tax adjustments on the company’s financial performance. Overall, the financial data points to a period of volatility with initial recovery, peak profitability, and stabilization at a lower, yet positive, profitability level.