EOG Resources Inc. (NYSE:EOG)

Net Operating Profit After Taxes (NOPAT)

The NOPAT shows significant fluctuations over the five-year period. In 2015, it was substantially negative at approximately -6.8 billion US dollars, indicating considerable operational losses. This negative trend improved sharply in 2016, reducing losses to approximately -1.4 billion US dollars. From 2017 onwards, the company achieved positive NOPAT, reaching 784 million US dollars in 2017. The upward trend continued strongly in 2018, peaking at approximately 4.7 billion US dollars. However, there was a slight decline in 2019, with NOPAT decreasing to around 3.8 billion US dollars, though remaining comfortably positive.

Invested Capital

Invested capital presents a consistent growth pattern throughout the observed period. Starting at roughly 24.4 billion US dollars in 2015, it increased steadily each year, reaching approximately 32.7 billion US dollars by the end of 2019. This growth suggests ongoing capital expenditures or acquisitions, reflecting a strategy focused on expanding or maintaining the asset base.

Return on Invested Capital (ROIC)

ROIC displays a parallel improvement with NOPAT, though with some volatility. In 2015, ROIC was markedly negative at -28.01%, indicative of poor efficiency in generating returns from invested capital. The negative trend mitigated significantly in 2016, improving to -5.39%. From 2017 onwards, ROIC turned positive, measuring 2.95%, then substantially increasing in 2018 to 15.39%, before slightly decreasing to 11.55% in 2019. This pattern indicates a recovery and strengthening in capital efficiency, although the slight dip in the final year warrants attention.

Overall Trends and Insights

The company demonstrated a turnaround from heavy operational losses and negative returns in 2015 to positive profitability and improved capital efficiency by 2017 and beyond. The sharp improvement in NOPAT and ROIC suggests effective operational enhancements or market conditions favoring profitability during this period. The steady increase in invested capital aligns with strategic asset growth. The slight declines in NOPAT and ROIC in 2019 may signal emerging challenges or a normalization after peak performance in 2018, emphasizing the need for ongoing monitoring of operational and investment efficiency.

Operating Profit Margin (OPM)

The Operating Profit Margin showed significant improvement over the analyzed period. Initially, it was deeply negative at -76.16% in 2015, indicating substantial operational losses. This negative margin narrowed sharply to -16.5% in 2016, then turned positive at 8.49% in 2017 before rising more robustly to 26.08% in 2018. In 2019, it slightly declined to 21.62%, still reflecting a strong profitability level compared to earlier years. The trend suggests a marked recovery and strengthening of operational efficiency and profitability over time.

Turnover of Capital (TO)

The Turnover of Capital ratio fluctuated during the period. Starting from 0.36 in 2015, it dipped to 0.29 in 2016, then increased to peak at 0.57 in 2018. In 2019, it slightly decreased to 0.53. This overall pattern indicates an improving efficiency in asset utilization, with a particularly notable improvement occurring from 2016 to 2018, followed by a marginal decline but maintaining a relatively high turnover compared to initial years.

1 – Effective Cash Tax Rate (CTR)

The 1 – Effective Cash Tax Rate remained consistently high and close to 100% throughout the period, with values oscillating slightly around this mark: 100% in both 2015 and 2016, dipping to 82.41% in 2017, peaking at 103.68% in 2018, and settling at 100.41% in 2019. This suggests that the company’s effective cash tax rate has remained effectively stable and near full tax rate levels, aside from a small reduction in 2017 and a minor increase beyond 100% in 2018, possibly indicating timing differences or tax credits used in certain years.

Return on Invested Capital (ROIC)

ROIC demonstrated a significant turnaround over the period. It began with a highly negative -28.01% in 2015, improved markedly to -5.39% in 2016, and became positive at 2.95% in 2017. The improvement accelerated to 15.39% in 2018 before slightly decreasing to 11.55% in 2019. This pattern indicates increased effectiveness in generating returns from invested capital, reflecting better capital management and higher profitability, while the slight dip in 2019 suggests a possible moderation in capital efficiency gains.

Net operating profit before taxes (NOPBT)

Over the five-year period, the net operating profit before taxes exhibited significant volatility. In 2015, the figure was deeply negative, indicating substantial operating losses. This negative trend diminished sharply in 2016, approaching break-even levels. From 2017 onwards, the company returned to profitability, with a marked increase in NOPBT in 2018, followed by a slight decline in 2019, though profitability remained strong relative to earlier years.

Operating revenues and other

Operating revenues demonstrated an overall upward trajectory throughout the period. Starting from 8.76 billion in 2015, revenues dipped slightly in 2016 but then increased substantially in subsequent years, reaching a peak of approximately 17.38 billion in 2019. This growth suggests successful expansion or increased pricing power during this timeframe.

Operating profit margin (OPM)

The operating profit margin mirrored the trend in NOPBT, starting with a deeply negative margin of over -76% in 2015, indicative of operating inefficiencies or high expenses relative to revenues. The margin improved significantly in 2016 but remained negative. From 2017 forward, the margin turned positive and improved markedly, peaking at over 26% in 2018 before settling slightly lower at around 21.6% in 2019. This improvement indicates enhanced operational efficiency and profitability over the years.

Overall insights

The data reveals a recovery and strengthening of the company’s operational performance over the observed period. Despite operating losses in the early years, there was a transition to profitability alongside consistent revenue growth. The rebound in operating profit margin reflects operational improvements, cost management, or favorable market conditions. The slight dip in profitability metrics from 2018 to 2019 warrants further examination but does not overshadow the overall positive trend.

The financial data shows notable developments over the five-year period ending in 2019.

Operating Revenues and Other

Operating revenues exhibit a fluctuating but overall increasing trend. Starting at approximately 8.76 billion USD in 2015, revenues decreased in 2016 by about 12.6% to 7.65 billion USD. This was followed by a strong recovery and growth phase, with revenues rising sharply in 2017 to over 11.2 billion USD, and then almost doubling again in 2018 to approximately 17.3 billion USD. The figure remained relatively stable into 2019, with a slight increase to nearly 17.4 billion USD.

Invested Capital

The invested capital steadily increased each year throughout the period. Beginning at around 24.4 billion USD in 2015, it escalated annually, reaching approximately 32.7 billion USD by the end of 2019. This steady rise indicates ongoing capital investment and asset growth within the company over the years.

Turnover of Capital (TO)

The turnover of capital ratio, which measures operating efficiency in relation to invested capital, varies noticeably. It started at 0.36 in 2015 and declined to a low of 0.29 in 2016, signalling reduced efficiency in generating revenue per unit of capital invested. Subsequently, this ratio improved significantly in 2017 to 0.42 and peaked in 2018 at 0.57, reflecting enhanced efficiency. However, there was a slight decrease to 0.53 in 2019, though it remained well above the initial years.

In summary, the company experienced a period of declining revenues and efficiency in 2016, followed by significant recovery and growth in both operating revenues and capital efficiency from 2017 onward. The continuous increase in invested capital, combined with improving turnover ratios after 2016, suggests effective utilization of capital resources to drive revenue growth, especially visible in the surge from 2017 through 2018. The stabilization of revenues and a minor dip in capital turnover in 2019 may warrant monitoring to assess if the growth momentum is maintained.

The financial data reveals significant fluctuations in key operational and tax-related metrics over the five-year period ending December 31, 2019.

Cash Operating Taxes

The cash operating taxes initially show positive values in 2015, 2016, and 2017, with amounts of approximately 173 million, 158 million, and 167 million US dollars respectively. However, a sharp reversal occurs in 2018 and 2019, where the figures become negative, amounting to roughly -166 million and -15 million US dollars. This indicates a substantial change in the company's tax cash flows, suggesting either tax refunds, credits, or adjustments rather than payments during these latter years.

Net Operating Profit Before Taxes (NOPBT)

The NOPBT experiences dramatic variation throughout the reviewed period. In 2015 and 2016, the company registered significant losses before tax, with negative values of approximately -6.67 billion US dollars and -1.26 billion US dollars, respectively. Beginning in 2017, performance improves markedly, shifting to positive profits before tax of about 951 million US dollars and continuing upward to 4.51 billion in 2018. However, the profit slightly declines in 2019 to around 3.76 billion US dollars. Overall, this trend reflects a substantial recovery and improvement in operating profitability from 2017 onward.

Effective Cash Tax Rate (CTR)

The effective cash tax rate data is absent for the first two years but available from 2017 onward. It shows a rate of 17.59% in 2017, decreasing sharply to -3.68% in 2018 and further to -0.41% in 2019. The negative tax rates correspond with negative cash operating taxes during the same period, implying the presence of tax benefits or refunds reducing the effective tax burden in the later years.

In summary, the company displays a recovery trajectory in operating profitability beginning in 2017, accompanied by an unusual shift in tax cash flows from cash outflows to inflows or credits starting in 2018. This combination suggests strategic tax management or shifting tax circumstances that significantly impact net tax payments and reported effective tax rates. The overall analysis indicates improved operational performance but also considerable volatility in tax-related cash movements in recent years.