Analysis of Property, Plant and Equipment
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- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Price to Sales (P/S) since 2005
- Analysis of Revenues
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Property, Plant and Equipment Disclosure
Hess Corp., balance sheet: property, plant and equipment
US$ in millions
Based on: 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), 10-K (reporting date: 2018-12-31).
- Unproved Properties
- The value of unproved properties decreased significantly from 394 million USD in 2018 to 168 million USD in 2019, followed by a slight decline to 164 million USD in 2020. A moderate recovery to 184 million USD occurred in 2021, before decreasing again to 149 million USD in 2022. Overall, there is a downward trend with some fluctuations, indicating possible reclassification or reduced investment in prospective assets.
- Proved Properties
- The value of proved properties showed an initial increase from 3,124 million USD in 2018 to 3,304 million USD in 2019, then a steady decline over the subsequent three years, ending at 2,660 million USD in 2022. This suggests ongoing depletion or divestment of proved reserves during this period.
- Wells, Equipment, and Related Facilities
- There was an increase from 26,173 million USD in 2018 to 28,404 million USD in 2019, followed by a sharp decrease to 23,224 million USD in 2020. Modest increases followed in 2021 and 2022, reaching 25,182 million USD. This pattern may reflect substantial asset disposals or impairments in 2020 with subsequent reinvestments or stabilization.
- Exploration and Production
- The exploration and production category mirrors the trends in wells and related facilities. Starting at 29,691 million USD in 2018, it rose to 31,876 million USD in 2019, then dropped substantially to 26,318 million USD in 2020. Minor increases followed in 2021 and 2022, ending at 27,991 million USD, indicating a significant contraction in this segment in 2020 with a partial recovery afterward.
- Midstream
- Midstream assets consistently increased each year, from 3,492 million USD in 2018 to 4,571 million USD in 2022. This steady growth suggests ongoing investment and expansion in midstream operations.
- Corporate and Other
- Corporate and other assets remained relatively stable, fluctuating slightly around 30 to 40 million USD over the five years, indicating a minor portion of total assets.
- Property, Plant and Equipment, at Cost
- The total cost value rose from 33,222 million USD in 2018 to a peak of 35,820 million USD in 2019. This was followed by a significant decline to 30,519 million USD in 2020, with slight recoveries in 2021 and 2022, reaching 32,592 million USD. The fluctuations are consistent with the dynamics observed in exploration, production, and equipment assets, reflecting notable asset disposals or impairments in 2020 with subsequent reinvestment.
- Reserves for Depreciation, Depletion, Amortization, and Lease Impairment
- The reserve account increased in absolute terms from -17,139 million USD in 2018 to -19,006 million USD in 2019, then decreased to -16,404 million USD in 2020. Afterward, it rose gradually through 2021 and 2022, ending at -17,494 million USD. This pattern suggests variability in asset impairment charges and depreciation, with a notable decrease in reserves in 2020 coinciding with the reduction in asset values.
- Property, Plant and Equipment, Net
- The net value of property, plant, and equipment increased moderately from 16,083 million USD in 2018 to 16,814 million USD in 2019, followed by a marked decrease to 14,115 million USD in 2020. The net assets then remained relatively stable in 2021 and increased slightly in 2022, reaching 15,098 million USD. The decline in 2020 aligns with the reductions in asset cost and reserves noted earlier, indicating significant asset write-downs or disposals during that year with gradual recovery.
Asset Age Ratios (Summary)
Hess Corp., asset age ratios
Based on: 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), 10-K (reporting date: 2018-12-31).
The average age ratio of property, plant, and equipment demonstrates a generally increasing trend from 2018 through 2021, followed by a slight decrease in 2022. Specifically, the ratio rose from 51.59% at the end of 2018 to 54.51% at the end of 2021, indicating that the property, plant, and equipment were aging, on average, over that period. This could suggest limited asset renewal or increased use of older assets during these years.
In 2022, the average age ratio declined marginally to 53.68%, which may imply some investment in newer assets or disposals of older ones, thus slightly reducing the overall average age of the asset base. Nonetheless, the ratio remained above the 2018 level, maintaining an indication that a significant portion of the asset base is mature.
Overall, the trend points to an asset base that is aging moderately over the five-year period with a minor correction in the final year. This pattern can have implications for future capital expenditure, maintenance expenses, and potential operational efficiencies.
Average Age
Based on: 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), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 Average age = 100 × Reserves for depreciation, depletion, amortization and lease impairment ÷ Property, plant and equipment, at cost
= 100 × ÷ =
- Reserves for depreciation, depletion, amortization and lease impairment
- The reserves experienced an increase from 2018 to 2019, rising from 17,139 million USD to 19,006 million USD. However, there was a notable decrease in 2020 to 16,404 million USD, followed by a gradual recovery in the subsequent years, reaching 17,494 million USD by 2022. This indicates some fluctuation in the accumulated charges related to asset aging and usage over the period.
- Property, plant and equipment, at cost
- The cost value showed a general upward trend from 2018 to 2019, increasing from 33,222 million USD to 35,820 million USD, followed by a marked decline in 2020 to 30,519 million USD. Thereafter, the value modestly recovered in 2021 and 2022, reaching 32,592 million USD. This pattern suggests capital expenditure reductions or asset retirements in 2020, with some reinvestment or asset additions resuming later.
- Average age ratio
- The average age ratio of property, plant, and equipment steadily increased from 51.59% in 2018 to a peak of 54.51% in 2021, indicating an aging asset base. In 2022, a slight reduction to 53.68% was observed, which may reflect some newer asset additions or disposals of older equipment. Overall, the data points to relatively mature assets over the period, with minor fluctuations in the asset age composition.
- Summary
- Over the five-year period, both the reserves for depreciation and the cost of property, plant, and equipment fluctuated, with a notable dip in 2020 potentially due to asset disposals or decreased investments, followed by a partial recovery. The average age ratio increased, reflecting an aging asset base, though the slight decrease in the final year may indicate efforts to renew or upgrade the asset portfolio. These trends suggest a period of cautious asset management and investment, possibly in response to external market conditions or strategic shifts.