EOG Resources Inc. (NYSE:EOG)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes shows a significant improvement over the analyzed period. It begins with a substantial loss of approximately -6.84 billion USD in 2015, which narrows dramatically to about -1.42 billion USD in 2016. The company then attains positive NOPAT values starting in 2017, with 784 million USD, followed by continuous growth to 4.67 billion USD in 2018 before slightly declining to 3.77 billion USD in 2019. This trend indicates a strong recovery and operational improvement over these years.

Cost of Capital

The cost of capital remains relatively stable throughout the period, fluctuating modestly between 16.67% and 17.66%. It peaks at 17.66% in 2017 and slightly decreases to 16.84% by 2019. This consistency suggests a steady perceived risk and return requirement by investors during the timeframe.

Invested Capital

Invested capital displays a steady upward trend, increasing from approximately 24.43 billion USD in 2015 to 32.66 billion USD in 2019. The growth indicates ongoing investment in assets, supporting business operations and potential expansion efforts. Notably, there is a sharper increase between 2017 and 2018 compared to prior years, suggesting an acceleration in capital deployment during that period.

Economic Profit

Economic profit remains negative throughout the period, though the magnitude of loss contracts significantly over the years. Starting with a steep deficit of about -10.92 billion USD in 2015, the negative figure decreases to -1.73 billion USD by 2019. The reduction in economic profit losses parallels the improvement seen in NOPAT, implying that while the company has yet to generate positive economic profit, it is moving closer to covering its cost of capital.

The financial data reveals significant fluctuations in the company's profitability and operating performance over the five-year period.

Net Income (Loss)

There is a marked improvement from a substantial loss of approximately $4.52 billion in 2015 to a more moderate loss of about $1.10 billion in 2016. This negative trend reverses in 2017 when the company reports a net income of roughly $2.58 billion. The upward trajectory continues through 2018 and 2019, with net income increasing to approximately $3.42 billion and then slightly declining to about $2.73 billion, respectively. This pattern indicates a recovery and stabilization of net profitability after the initial losses in 2015 and 2016.

Net Operating Profit After Taxes (NOPAT)

The NOPAT data exhibits a similar trend to net income, with significant losses recorded in 2015 and 2016, amounting to approximately $6.84 billion and $1.42 billion, respectively. The company moves into positive territory in 2017 with a NOPAT of about $784 million, which then substantially increases to around $4.67 billion in 2018. There is a slight decrease in NOPAT to approximately $3.77 billion in 2019. These changes suggest improvements in core operational efficiency and profitability through the period, particularly from 2017 onwards.

Overall, the data indicates a transition from heavy losses to consistent profitability, reflecting either operational improvements, favorable market conditions, or other strategic adjustments that significantly enhanced financial performance starting in 2017. Both net income and NOPAT trends are aligned, reinforcing the conclusion of a robust turnaround in the company’s financial health over the observed years.

The financial data reveals several notable trends and changes over the examined periods.

Income Tax Provision (Benefit)

This item shows significant volatility throughout the years. In 2015 and 2016, the figures reflect substantial tax benefits, with values of approximately -2.4 billion and -460.8 million respectively, indicating periods of considerable tax relief or deferred tax benefits. The benefit peaked again in 2017 at nearly -1.9 billion, before reversing sharply in 2018 and 2019 to positive figures of 822 million and 810 million respectively. This shift from benefit to provision suggests a change in taxable income or tax obligations, possibly due to improved profitability or changes in tax regulations.

Cash Operating Taxes

Cash operating taxes presented a more stable but fluctuating pattern across the years. From 2015 to 2017, this expense remained positive, ranging between approximately 157.8 thousand and 173.4 thousand, indicating ongoing tax payments related to operations. Contrastingly, 2018 and 2019 show negative values of -165.6 thousand and -15.3 thousand, respectively, which could imply tax refunds, credits, or adjustments exceeding tax payments during these periods. The sharp decline and transition from positive to negative cash operating taxes in 2018 particularly highlight a notable operational or fiscal event impacting tax cash outflows.

The financial data reveals several notable trends in the company's capital structure over the five-year period ending December 31, 2019.

Total reported debt & leases

The total reported debt and leases show a consistent decline from 7,023,659 thousand US dollars in 2015 to 5,974,808 thousand US dollars in 2019. This represents a reduction of approximately 15% over the period, indicating a strategic effort to decrease debt obligations.

Stockholders’ equity

Stockholders’ equity demonstrates a steady and significant increase each year, rising from 12,943,035 thousand US dollars in 2015 to 21,640,716 thousand US dollars by the end of 2019. This growth, approximately 67% over five years, suggests retained earnings accumulation and possible additional equity issuances, strengthening the company's financial base.

Invested capital

Invested capital shows an upward trend throughout the period, increasing from 24,433,279 thousand US dollars in 2015 to 32,663,914 thousand US dollars at the end of 2019, marking a growth of about 34%. This trend indicates ongoing investments in assets, supporting the company's expansion or operational needs.

Overall, the combination of decreasing debt levels alongside increasing equity and invested capital suggests a strengthening of the capital structure with a shift towards greater equity financing. This could enhance the company's financial stability and capacity for future investment.

Economic Profit

The economic profit exhibited a consistent improvement over the analyzed period. Starting from a substantial negative value in 2015, the losses gradually diminished each year, reaching the smallest shortfall in 2018 before slightly increasing again in 2019. This pattern indicates a progressive reduction in the economic loss, suggesting improving operational efficiency or profitability, despite the fact that economic profit remained negative throughout the period.

Invested Capital

The invested capital showed a steady upward trend over the five-year span. Beginning at approximately 24.4 billion US dollars in 2015, it increased each year, culminating in over 32.6 billion US dollars by the end of 2019. This continuous growth reflects ongoing investment in the company's assets, likely supporting future expansion or operational capacity increases.

Economic Spread Ratio

The economic spread ratio mirrored the trend seen in economic profit, starting at a very negative value close to -44.7% in 2015 and improving each year until it approached near zero in 2018. However, in 2019, the ratio declined again but remained better than at the beginning of the period. This metric’s movement indicates a narrowing gap between the returns generated and the cost of capital, though the company did not achieve a positive spread during these years.

Overall Insights

Overall, the data reveals progressive financial improvement, highlighted by decreasing economic losses and narrowing negative economic spread ratios. Despite this progress, the company had not reached positive economic profit by 2019. The increasing invested capital suggests sustained investments, which might have contributed to these improvements but also implies the need for continued focus on generating adequate returns to justify the expanded capital base.

Economic Profit

The economic profit showed a consistent improvement from 2015 to 2018, moving from a significant negative figure of approximately -10.9 billion USD to a much smaller negative value of around -674 million USD. This trend indicates a reduction in losses over the period. However, in 2019, the economic profit worsened again, increasing in negative value to approximately -1.7 billion USD.

Operating Revenues and Other

Operating revenues exhibited a generally upward trajectory throughout the period analyzed. Starting at about 8.76 billion USD in 2015, revenues slightly declined in 2016 to 7.65 billion USD before increasing substantially in the subsequent years. By 2018, revenues reached nearly 17.28 billion USD and remained steady in 2019 at approximately 17.38 billion USD. This progression suggests an overall expansion in revenue-generating activities.

Economic Profit Margin

The economic profit margin also demonstrated significant improvement from 2015 to 2018, increasing from -124.65% to -3.9%. This marks a narrowing of losses relative to revenue. However, similar to the trend in economic profit, the margin deteriorated slightly in 2019 to -9.93%, indicating a reduced efficiency or higher costs relative to revenues in that year.

Summary of Trends

Overall, the financial data reveals an initial successful effort to reduce economic losses and improve profitability margins between 2015 and 2018, supported by strong revenue growth. The reversal in economic profit and margin in 2019 suggests emerging challenges that impacted the company's ability to convert increased revenues into economic profit during that year. The relatively stable high revenue figures in 2018 and 2019 indicate that the issue was not revenue generation but potentially increased costs or other operational inefficiencies.