Stock Analysis on Net

ConocoPhillips (NYSE:COP)

Economic Value Added (EVA)

Microsoft Excel

Economic Profit

ConocoPhillips, economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net operating profit after taxes (NOPAT)1 12,357 21,159 10,273 (3,014) 7,362
Cost of capital2 14.35% 14.55% 13.94% 13.20% 13.24%
Invested capital3 81,278 75,520 76,355 50,870 57,714
 
Economic profit4 696 10,173 (367) (9,731) (279)

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

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 12,35714.35% × 81,278 = 696

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. ConocoPhillips economic profit increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Net Operating Profit after Taxes (NOPAT)

ConocoPhillips, NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net income (loss) attributable to ConocoPhillips 10,957 18,680 8,079 (2,701) 7,189
Deferred income tax expense (benefit)1 1,144 2,086 1,346 (834) (444)
Increase (decrease) in allowance2 1 (2) (9) (12)
Increase (decrease) in LIFO reserve3 (58) (102) 164 (68) 80
Increase (decrease) in restructuring accruals4 (23) (25)
Increase (decrease) in equity equivalents5 1,087 1,984 1,508 (934) (401)
Interest and debt expense 780 805 884 806 778
Interest expense, operating lease liability6 29 16 18 22 29
Adjusted interest and debt expense 809 821 902 828 807
Tax benefit of interest and debt expense7 (170) (172) (189) (174) (169)
Adjusted interest and debt expense, after taxes8 639 649 712 654 637
Interest income (412) (195) (33) (100) (166)
Investment income, before taxes (412) (195) (33) (100) (166)
Tax expense (benefit) of investment income9 87 41 7 21 35
Investment income, after taxes10 (325) (154) (26) (79) (131)
Net income (loss) attributable to noncontrolling interest 46 68
Net operating profit after taxes (NOPAT) 12,357 21,159 10,273 (3,014) 7,362

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

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 restructuring accruals.

5 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to ConocoPhillips.

6 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 697 × 4.13% = 29

7 2023 Calculation
Tax benefit of interest and debt expense = Adjusted interest and debt expense × Statutory income tax rate
= 809 × 21.00% = 170

8 Addition of after taxes interest expense to net income (loss) attributable to ConocoPhillips.

9 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 412 × 21.00% = 87

10 Elimination of after taxes investment income.

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. ConocoPhillips NOPAT increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Cash Operating Taxes

ConocoPhillips, cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Income tax provision (benefit) 5,331 9,548 4,633 (485) 2,267
Less: Deferred income tax expense (benefit) 1,144 2,086 1,346 (834) (444)
Add: Tax savings from interest and debt expense 170 172 189 174 169
Less: Tax imposed on investment income 87 41 7 21 35
Cash operating taxes 4,270 7,594 3,469 502 2,846

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

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. ConocoPhillips cash operating taxes increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Invested Capital

ConocoPhillips, invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Short-term debt 1,074 417 1,200 619 105
Long-term debt 17,863 16,226 18,734 14,750 14,790
Operating lease liability1 697 545 667 785 932
Total reported debt & leases 19,634 17,188 20,601 16,154 15,827
Common stockholders’ equity 49,279 48,003 45,406 29,849 34,981
Net deferred tax (assets) liabilities2 8,558 7,485 5,839 3,384 4,450
Allowance3 3 2 2 4 13
LIFO reserve4 91 149 251 87 155
Restructuring accruals5 23
Equity equivalents6 8,652 7,636 6,092 3,475 4,641
Accumulated other comprehensive (income) loss, net of tax7 5,673 6,000 4,950 5,218 5,357
Noncontrolling interests 69
Adjusted common stockholders’ equity 63,604 61,639 56,448 38,542 45,048
Marketable securities8 (1,960) (3,307) (694) (3,826) (3,161)
Invested capital 81,278 75,520 76,355 50,870 57,714

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

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 restructuring accruals.

6 Addition of equity equivalents to common stockholders’ equity.

7 Removal of accumulated other comprehensive income.

8 Subtraction of marketable securities.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. ConocoPhillips invested capital decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Cost of Capital

ConocoPhillips, cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 130,581 130,581 ÷ 151,028 = 0.86 0.86 × 15.96% = 13.80%
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 14.35%

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 × 15.96% = 14.10%
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 14.55%

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 × 15.96% = 13.24%
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 13.94%

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 × 15.96% = 12.15%
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 13.20%

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 »

Capital (fair value)1 Weights Cost of capital
Equity2 63,030 63,030 ÷ 82,790 = 0.76 0.76 × 15.96% = 12.15%
Debt, including finance leases3 18,828 18,828 ÷ 82,790 = 0.23 0.23 × 5.91% × (1 – 21.00%) = 1.06%
Operating lease liability4 932 932 ÷ 82,790 = 0.01 0.01 × 3.10% × (1 – 21.00%) = 0.03%
Total: 82,790 1.00 13.24%

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

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

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit1 696 10,173 (367) (9,731) (279)
Invested capital2 81,278 75,520 76,355 50,870 57,714
Performance Ratio
Economic spread ratio3 0.86% 13.47% -0.48% -19.13% -0.48%
Benchmarks
Economic Spread Ratio, Competitors4
Chevron Corp. -4.69% 5.81% -3.27% -17.43% -12.71%
Exxon Mobil Corp. 0.01% 8.74% 0.32% -22.93% -5.76%
Marathon Petroleum Corp. 3.11% 12.13% -2.41% -26.41% -3.19%
Occidental Petroleum Corp. -4.95% 7.47% -4.63% -33.64% -10.73%
Pioneer Natural Resources Co. 1.51% 15.57% -5.77% -15.50% -8.44%
Valero Energy Corp. -0.04% 11.59% -1.18% -17.00% -3.32%

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

1 Economic profit. See details »

2 Invested capital. See details »

3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 696 ÷ 81,278 = 0.86%

4 Click competitor name to see calculations.

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. ConocoPhillips economic spread ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023 not reaching 2021 level.

Economic Profit Margin

ConocoPhillips, economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit1 696 10,173 (367) (9,731) (279)
Sales and other operating revenues 56,141 78,494 45,828 18,784 32,567
Performance Ratio
Economic profit margin2 1.24% 12.96% -0.80% -51.81% -0.86%
Benchmarks
Economic Profit Margin, Competitors3
Chevron Corp. -5.06% 5.23% -4.07% -36.41% -17.79%
Exxon Mobil Corp. 0.01% 6.51% 0.31% -35.18% -6.84%
Marathon Petroleum Corp. 1.34% 4.76% -1.28% -26.56% -2.11%
Occidental Petroleum Corp. -9.96% 11.48% -10.36% -119.52% -44.29%
Pioneer Natural Resources Co. 2.60% 20.56% -10.54% -37.51% -14.55%
Valero Energy Corp. -0.01% 3.27% -0.46% -10.73% -1.25%

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

1 Economic profit. See details »

2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Sales and other operating revenues
= 100 × 696 ÷ 56,141 = 1.24%

3 Click competitor name to see calculations.

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. ConocoPhillips economic profit margin improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023 not reaching 2021 level.