Economic Value Added (EVA)
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
ConocoPhillips, economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 9,976 – 14.76% × 106,371 = -5,721
- Net Operating Profit After Taxes (NOPAT)
- Over the observed period, net operating profit after taxes exhibits significant volatility. In 2020, the measure was substantially negative at -2991 million USD, indicating operational challenges or transitional difficulties. A sharp turnaround occurred in 2021, with NOPAT rising substantially to 10273 million USD, followed by a further substantial increase in 2022 to 21159 million USD. However, this growth trajectory was not sustained, as NOPAT declined to 12357 million USD in 2023 and further decreased to 9976 million USD in 2024, suggesting pressures or setbacks influencing operational profitability in the more recent years.
- Cost of Capital
- The cost of capital shows a gradual upward trend from 13.94% in 2020 to a peak of 15.40% in 2022. This peak suggests increased investment risks or changes in capital structure that made financing more expensive during that year. Subsequently, there was a modest reduction in the cost of capital to 15.18% in 2023 and further to 14.76% in 2024, yet it remains higher than the initial level in 2020, indicating a continued elevated cost environment relative to the start of the period.
- Invested Capital
- Invested capital grew substantially over the period, rising from 50,870 million USD in 2020 to 106,371 million USD in 2024. This more than doubling of invested capital reflects significant capital deployment into operations or expansions. There was a considerable increase from 2020 to 2021, followed by relative stabilization between 2021 and 2022. From 2022 onwards, invested capital again climbed noticeably, reaching its highest point in 2024, implying ongoing capital investments despite fluctuations in profitability.
- Economic Profit
- Economic profit, an indicator of value creation beyond cost of capital, was deeply negative in 2020 at -10,081 million USD, signaling substantial value erosion. This improved dramatically by 2021 to a minor negative of -977 million USD, reaching a positive high of 9,530 million USD in 2022, which corresponds with peak operating profitability in that year. However, economic profit plunged back to near zero in 2023 (19 million USD) and turned negative again at -5,721 million USD in 2024. The fluctuations suggest challenges in consistently generating returns that exceed the cost of capital, particularly in the latter years when invested capital was highest.
Net Operating Profit after Taxes (NOPAT)
ConocoPhillips, NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance.
3 Addition of increase (decrease) in LIFO reserve. See details »
4 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to ConocoPhillips.
5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,024 × 4.62% = 47
6 2024 Calculation
Tax benefit of interest and debt expense = Adjusted interest and debt expense × Statutory income tax rate
= 830 × 21.00% = 174
7 Addition of after taxes interest expense to net income (loss) attributable to ConocoPhillips.
8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 402 × 21.00% = 84
9 Elimination of after taxes investment income.
- Net Income (Loss) Attributable to ConocoPhillips
-
The net income attributable to the company demonstrated significant volatility over the analyzed period. In 2020, the figure was a substantial loss of 2,701 million US dollars, indicating a challenging financial year. However, a dramatic recovery occurred in 2021, with net income rising to 8,079 million US dollars, reflecting a strong turnaround.
The upward trend continued in 2022, with net income reaching a peak of 18,680 million US dollars, more than doubling the previous year's performance. Despite a notable decline in 2023 to 10,957 million US dollars, net income remained robust and significantly positive. In 2024, the figure further declined to 9,245 million US dollars, representing a tapering off of profitability but maintaining a solid profit level relative to earlier years.
- Net Operating Profit After Taxes (NOPAT)
-
The net operating profit after taxes followed a pattern similar to net income, though with some differences in magnitude. The company recorded a negative NOPAT of 2,991 million US dollars in 2020, aligning with the overall loss experienced that year.
A sharp improvement occurred in 2021, with NOPAT rising to 10,273 million US dollars. This growth trend accelerated in 2022, reaching a peak at 21,159 million US dollars, which was the highest point in the observed period. Subsequently, NOPAT decreased to 12,357 million US dollars in 2023 and then to 9,976 million US dollars in 2024.
Despite these declines in the last two years, NOPAT remained significantly positive, indicating continued operational profitability post-tax, though at a lower level than the peak in 2022.
- Overall Trend Summary
-
The financial results demonstrate a recovery from significant losses in 2020 to strong profitability in subsequent years. Both net income and NOPAT peaked in 2022, followed by decreases in the later years of 2023 and 2024, suggesting a potential moderation in earnings after a period of exceptional growth.
The alignment in trends between net income and NOPAT suggests consistent operational performance after tax impacts are considered. The decline after the peak year may indicate changing market conditions, operational challenges, or strategic shifts impacting profitability, but the company remains financially robust relative to 2020 lows.
Cash Operating Taxes
ConocoPhillips, cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Income Tax Provision (Benefit)
- The income tax provision exhibited significant volatility over the five-year period. In 2020, the provision was a benefit amounting to -485 million USD, indicating a tax credit or refund. This trend reversed dramatically in 2021 with a substantial increase to 4633 million USD, followed by further escalation in 2022 reaching 9548 million USD. Thereafter, the provision declined notably in 2023 to 5331 million USD and continued to decrease in 2024 to 4427 million USD. This pattern suggests a shift from a net tax benefit to considerable tax expenses, peaking in 2022 before trending downward in subsequent years.
- Cash Operating Taxes
- Cash operating taxes demonstrated an overall upward trajectory from 2020 through 2022, increasing from 502 million USD in 2020 to 7594 million USD in 2022. However, after this peak, the amount decreased significantly to 4270 million USD in 2023 and saw a slight further reduction to 4150 million USD in 2024. This indicates that while the company’s cash tax payments rose sharply in the initial years, they moderated in the most recent periods.
- Comparative Insights
- Both the income tax provision and cash operating taxes followed similar trends with increases up to 2022 and subsequent declines. The notable spike in 2022 for both metrics may reflect higher taxable income or changes in tax rates or structures influencing the tax liabilities. The subsequent decline may indicate improved tax planning, tax rate reductions, or decreased taxable income in the latter years.
Invested Capital
ConocoPhillips, invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of LIFO reserve. See details »
5 Addition of equity equivalents to common stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of marketable securities.
- Total Reported Debt & Leases
- The total reported debt and leases exhibit a fluctuating yet overall increasing trend from 2020 through 2024. The debt rose significantly from 16,154 million in 2020 to a peak of 20,601 million in 2021, followed by a decline to 17,188 million in 2022. Subsequently, the debt increased again, reaching 19,634 million in 2023 and further escalating to 25,348 million by the end of 2024. This pattern indicates periods of both deleveraging and increased borrowing or lease obligations, with a notable surge in the final reported year.
- Common Stockholders’ Equity
- Common stockholders’ equity demonstrates a consistent upward trajectory across all years presented. Starting at 29,849 million in 2020, equity grew substantially each year, reaching 45,406 million in 2021, 48,003 million in 2022, and 49,279 million in 2023. The growth accelerates notably in 2024 with equity rising to 64,796 million. This steady increase reflects a strengthening equity base, likely supported by retained earnings growth and possibly additional equity issuance or valuation gains.
- Invested Capital
- Invested capital shows an overall growth trend with slight volatility. Beginning at 50,870 million in 2020, it increased sharply to 76,355 million in 2021 but then edged down marginally to 75,520 million in 2022. Afterwards, invested capital resumed growth, climbing to 81,278 million in 2023 and making a more pronounced leap to 106,371 million in 2024. The upward movement in invested capital corresponds with the increases in both equity and debt, indicating expanding asset bases or capital expenditures that may be financed through both debt and equity.
Cost of Capital
ConocoPhillips, cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 123,993) | 123,993) | ÷ | 148,954) | = | 0.83 | 0.83 | × | 16.92% | = | 14.09% | ||
| Debt, including finance leases3 | 23,937) | 23,937) | ÷ | 148,954) | = | 0.16 | 0.16 | × | 5.08% × (1 – 21.00%) | = | 0.64% | ||
| Operating lease liability4 | 1,024) | 1,024) | ÷ | 148,954) | = | 0.01 | 0.01 | × | 4.62% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 148,954) | 1.00 | 14.76% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 130,581) | 130,581) | ÷ | 151,028) | = | 0.86 | 0.86 | × | 16.92% | = | 14.63% | ||
| Debt, including finance leases3 | 19,750) | 19,750) | ÷ | 151,028) | = | 0.13 | 0.13 | × | 5.16% × (1 – 21.00%) | = | 0.53% | ||
| Operating lease liability4 | 697) | 697) | ÷ | 151,028) | = | 0.00 | 0.00 | × | 4.13% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 151,028) | 1.00 | 15.18% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 132,067) | 132,067) | ÷ | 149,477) | = | 0.88 | 0.88 | × | 16.92% | = | 14.95% | ||
| Debt, including finance leases3 | 16,865) | 16,865) | ÷ | 149,477) | = | 0.11 | 0.11 | × | 4.91% × (1 – 21.00%) | = | 0.44% | ||
| Operating lease liability4 | 545) | 545) | ÷ | 149,477) | = | 0.00 | 0.00 | × | 2.99% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 149,477) | 1.00 | 15.40% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 118,465) | 118,465) | ÷ | 142,844) | = | 0.83 | 0.83 | × | 16.92% | = | 14.04% | ||
| Debt, including finance leases3 | 23,712) | 23,712) | ÷ | 142,844) | = | 0.17 | 0.17 | × | 5.26% × (1 – 21.00%) | = | 0.69% | ||
| Operating lease liability4 | 667) | 667) | ÷ | 142,844) | = | 0.00 | 0.00 | × | 2.66% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 142,844) | 1.00 | 14.73% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 66,179) | 66,179) | ÷ | 86,961) | = | 0.76 | 0.76 | × | 16.92% | = | 12.88% | ||
| Debt, including finance leases3 | 19,997) | 19,997) | ÷ | 86,961) | = | 0.23 | 0.23 | × | 5.72% × (1 – 21.00%) | = | 1.04% | ||
| Operating lease liability4 | 785) | 785) | ÷ | 86,961) | = | 0.01 | 0.01 | × | 2.78% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 86,961) | 1.00 | 13.94% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance leases. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
ConocoPhillips, economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (5,721) | 19) | 9,530) | (977) | (10,081) | |
| Invested capital2 | 106,371) | 81,278) | 75,520) | 76,355) | 50,870) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -5.38% | 0.02% | 12.62% | -1.28% | -19.82% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | -5.22% | -5.87% | 4.62% | -4.40% | -18.45% | |
| Exxon Mobil Corp. | -4.63% | -0.47% | 8.26% | -0.14% | -23.33% | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -5,721 ÷ 106,371 = -5.38%
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited significant volatility over the five-year period. In 2020, the company experienced a substantial loss of approximately $10.1 billion. This loss narrowed dramatically in 2021 to under $1 billion, followed by a strong recovery in 2022 with a positive economic profit of $9.5 billion. The economic profit then sharply declined again in 2023, almost breaching zero, before falling back to a negative figure of $5.7 billion in 2024. This pattern indicates considerable fluctuations in profitability, with a notable peak in 2022.
- Invested Capital
- The invested capital demonstrated a consistent upward trend throughout the period. Starting at around $50.9 billion in 2020, it increased significantly to $76.4 billion in 2021, held steady near $75.5 billion in 2022, then rose again to $81.3 billion in 2023, and reached its highest point at $106.4 billion in 2024. This steady growth suggests ongoing investments or asset accumulation by the company across these years.
- Economic Spread Ratio
- The economic spread ratio followed a trajectory somewhat aligned with economic profit changes but remained generally negative for most of the period. Beginning with a deeply negative rate of -19.82% in 2020, it improved drastically to -1.28% in 2021 and turned positive in 2022 with 12.62%. However, the ratio then plunged close to zero in 2023 (0.02%) and reverted to a negative rate of -5.38% in 2024. This pattern reflects fluctuations in the company's return relative to its cost of capital, peaking in 2022 before deteriorating again.
- Summary of Trends
- Overall, the data reveals a period marked by considerable operational and financial variability. While invested capital consistently increased, indicating growth in resource commitment, profitability metrics such as economic profit and economic spread ratio fluctuated significantly. The peak in economic profit and spread ratio in 2022 suggests a temporary improvement in operational efficiency or market conditions, which was not sustained in the subsequent years. The return to negative economic profit and spread ratio by 2024 points to challenges in maintaining profitable returns despite growing invested capital.
Economic Profit Margin
ConocoPhillips, economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (5,721) | 19) | 9,530) | (977) | (10,081) | |
| Sales and other operating revenues | 54,745) | 56,141) | 78,494) | 45,828) | 18,784) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -10.45% | 0.03% | 12.14% | -2.13% | -53.67% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Chevron Corp. | -5.63% | -6.33% | 4.16% | -5.47% | -38.54% | |
| Exxon Mobil Corp. | -5.17% | -0.43% | 6.15% | -0.13% | -35.79% | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Sales and other operating revenues
= 100 × -5,721 ÷ 54,745 = -10.45%
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited significant volatility over the observed periods. Starting with a substantial negative value in 2020, the economic profit improved dramatically by 2022, reaching a positive peak of 9530 million USD. However, this positive trend was not sustained, with economic profit declining sharply afterward, eventually turning negative again by 2024. This pattern indicates considerable fluctuations in value generation beyond the cost of capital.
- Sales and Other Operating Revenues
- Sales and other operating revenues showed a marked increase from 2020 to 2022, peaking at 78,494 million USD in 2022. After this peak, revenues declined substantially in 2023 and remained relatively stable, albeit lower, in 2024 compared to the peak year. This suggests a period of strong growth followed by a contraction or stabilization at a lower revenue base.
- Economic Profit Margin
- The economic profit margin mirrored the trends observed in economic profit, exhibiting substantial fluctuations. It improved from a highly negative margin in 2020 to a positive margin by 2022, indicating enhanced profitability relative to revenue. However, margins declined again in subsequent years, turning negative in 2024. The margin values indicate challenges in maintaining efficient profitability relative to sales as economic profit margins varied from -53.67% to a positive 12.14% before falling back to -10.45%.