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Microsoft Excel LibreOffice Calc


Analysis of Property, Plant and Equipment

Difficulty: Advanced


Property, Plant and Equipment Accounting Policy

Depreciation and Amortization

Depreciation and amortization of PP&E on producing hydrocarbon properties and certain pipeline assets (those which are expected to have a declining utilization pattern), are determined by the unit-of-production method. Depreciation and amortization of all other PP&E are determined by either the individual-unit-straight-line method or the group-straight-line method (for those individual units that are highly integrated with other units).

Impairment of Properties, Plants and Equipment

PP&E used in operations are assessed for impairment whenever changes in facts and circumstances indicate a possible significant deterioration in the future cash flows expected to be generated by an asset group and annually in the fourth quarter following updates to corporate planning assumptions. If there is an indication the carrying amount of an asset may not be recovered, the asset is monitored by management through an established process where changes to significant assumptions such as prices, volumes and future development plans are reviewed. If, upon review, the sum of the undiscounted before-tax cash flows is less than the carrying value of the asset group, the carrying value is written down to estimated fair value through additional amortization or depreciation provisions and reported as impairments in the periods in which the determination of the impairment is made. Individual assets are grouped for impairment purposes at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets—generally on a field-by-field basis for exploration and production assets. Because there usually is a lack of quoted market prices for long-lived assets, the fair value of impaired assets is typically determined based on the present values of expected future cash flows using discount rates believed to be consistent with those used by principal market participants or based on a multiple of operating cash flow validated with historical market transactions of similar assets where possible. Long-lived assets committed by management for disposal within one year are accounted for at the lower of amortized cost or fair value, less cost to sell, with fair value determined using a binding negotiated price, if available, or present value of expected future cash flows as previously described.

The expected future cash flows used for impairment reviews and related fair value calculations are based on estimated future production volumes, prices and costs, considering all available evidence at the date of review. The impairment review includes cash flows from proved developed and undeveloped reserves, including any development expenditures necessary to achieve that production. Additionally, when probable and possible reserves exist, an appropriate risk-adjusted amount of these reserves may be included in the impairment calculation.

Source: ConocoPhillips, Annual Report


Property, Plant and Equipment Disclosure

ConocoPhillips, Statement of Financial Position, Property, Plant and Equipment

USD $ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Proved properties hidden hidden hidden hidden hidden
Unproved properties hidden hidden hidden hidden hidden
Other hidden hidden hidden hidden hidden
Gross properties, plants and equipment hidden hidden hidden hidden hidden
Accumulated depreciation, depletion and amortization hidden hidden hidden hidden hidden
Net properties, plants and equipment hidden hidden hidden hidden hidden

Source: Based on data from ConocoPhillips Annual Reports

Item Description The company
Gross properties, plants and equipment Carrying amount at the balance sheet date for long-lived physical assets used in the normal conduct of business and not intended for resale. This can include land, physical structures, machinery, vehicles, furniture, computer equipment, construction in progress, and similar items. Amount does not include depreciation. ConocoPhillips's gross properties, plants and equipment declined from 2015 to 2016 and from 2016 to 2017.
Net properties, plants and equipment Tangible assets that are held by an entity for use in the production or supply of goods and services, for rental to others, or for administrative purposes and that are expected to provide economic benefit for more than one year; net of accumulated depreciation. Examples include land, buildings, and production equipment. ConocoPhillips's net properties, plants and equipment declined from 2015 to 2016 and from 2016 to 2017.

Property, Plant and Equipment Ratios (Summary)

ConocoPhillips, Property, Plant and Equipment Ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Average age hidden% hidden% hidden% hidden% hidden%
Ratio Description The company
Average age As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company's fixed asset base is old or new. Newer assets are likely to be more efficient. ConocoPhillips's average age of depreciable property, plant and equipment deteriorated from 2015 to 2016 and from 2016 to 2017.

Average Age

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Accumulated depreciation, depletion and amortization hidden hidden hidden hidden hidden
Gross properties, plants and equipment hidden hidden hidden hidden hidden
Ratio
Average age1 hidden% hidden% hidden% hidden% hidden%

2017 Calculations

1 Average age = 100 × Accumulated depreciation, depletion and amortization ÷ Gross properties, plants and equipment
= 100 × hidden ÷ hidden = hidden%

Ratio Description The company
Average age As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company's fixed asset base is old or new. Newer assets are likely to be more efficient. ConocoPhillips's average age of depreciable property, plant and equipment deteriorated from 2015 to 2016 and from 2016 to 2017.