Analysis of Property, Plant and Equipment
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Marathon Oil Corp. pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Assets
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Analysis of Geographic Areas
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Total Asset Turnover since 2005
- Analysis of Revenues
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Property, Plant and Equipment Disclosure
Marathon Oil Corp., balance sheet: property, plant and equipment
US$ in millions
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Gross property, plant and equipment | |||||||||||
| Accumulated depreciation, depletion and amortization | |||||||||||
| Net property, plant and equipment |
Based on: 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), 10-K (reporting date: 2017-12-31).
- Gross Property, Plant and Equipment
- The gross property, plant, and equipment values exhibit a downward trend from 2017 to 2019, decreasing from $39,229 million to $35,003 million. A modest recovery is observed in 2020 and 2021, with values rising to $35,996 million and $36,911 million respectively. Overall, the gross asset base shows a net decline over the five-year period.
- Accumulated Depreciation, Depletion, and Amortization
- Accumulated depreciation, depletion, and amortization figures display fluctuations during the period. Notably, the aggregate values decrease significantly in 2019 to -$18,003 million from approximately -$21,830 million in 2018. Subsequent years show increased accumulated depreciation, reaching -$22,412 million by 2021. This pattern indicates a variable approach to asset amortization, including possible asset disposals or revaluations around 2019, followed by resumed depreciation expense accumulation.
- Net Property, Plant and Equipment
- The net book value of property, plant, and equipment shows a generally declining trend from $17,665 million in 2017 to $14,499 million in 2021. While there is a slight increase in 2019 to $17,000 million from $16,804 million in 2018, this appears to be short-lived, as subsequent years see decreases to $15,638 million in 2020 and further down to $14,499 million in 2021. This reduction over the period suggests net asset reduction either through disposals, impairments, or limited capital expenditures relative to depreciation.
Asset Age Ratios (Summary)
Marathon Oil Corp., asset age ratios
Based on: 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), 10-K (reporting date: 2017-12-31).
- Trend Analysis
- The average age ratio of property, plant, and equipment exhibited a fluctuating pattern over the five-year period analyzed. Starting at 54.97% at the end of 2017, the ratio increased slightly in 2018 to 56.5%, indicating a modest aging of assets during that year.
- In 2019, the average age ratio decreased to 51.43%, suggesting an infusion of newer assets or retirement of older ones, thereby reducing the overall average age.
- Subsequently, the ratio rose again in 2020 to 56.56%, nearly returning to the 2018 level, which may indicate a slower pace of asset renewal or increased aging of existing assets.
- By the end of 2021, the average age ratio reached its highest point in the period at 60.72%, reflecting a continued trend toward older assets within the property, plant, and equipment category.
- Insights
- The upward trend from 2019 through 2021 suggests either a reduction in capital expenditures for new property, plant, and equipment or an accelerated depreciation of current assets without equivalent replacement.
- This increasing average age ratio might indicate potential future requirements for capital investment to maintain or upgrade the asset base.
- Overall, the data reflects an aging asset fleet with variability likely influenced by the company's investment and maintenance policies over the analyzed period.
Average Age
Based on: 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), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 Average age = 100 × Accumulated depreciation, depletion and amortization ÷ Gross property, plant and equipment
= 100 × ÷ =
- Accumulated Depreciation, Depletion, and Amortization
- The accumulated depreciation, depletion, and amortization showed a relatively stable trend from 2017 to 2018, with a slight increase from 21,564 million USD to 21,830 million USD. However, there was a significant decrease in 2019 to 18,003 million USD, followed by a rebound in 2020 and 2021, reaching 20,358 million USD and 22,412 million USD respectively. This pattern suggests variability in asset usage or accelerated depreciation measures during 2019, with recovery in subsequent years.
- Gross Property, Plant and Equipment
- The gross property, plant, and equipment values declined steadily from 39,229 million USD at the end of 2017 to 35,003 million USD by the end of 2019. Following this decline, a moderate upward trend is observed in 2020 and 2021, with values increasing to 35,996 million USD and 36,911 million USD respectively. This indicates some reinvestment or capital expenditure activity that partially offset the earlier decline in asset base.
- Average Age Ratio
- The average age ratio exhibited a general upward trend over the entire period, starting at 54.97% in 2017 and rising to 60.72% in 2021. Minor fluctuations occurred in 2019 with a dip to 51.43%, but overall, the increasing ratio implies aging of the asset base, indicating that a larger portion of property, plant, and equipment is becoming older relative to its total lifespan. This could reflect slower replacement or modernization of assets during these years.
- Summary
- The data reveals a period of declining gross asset values through 2019, accompanied by a notable drop in accumulated depreciation in the same year, implying possible asset disposals or changes in depreciation policies. The subsequent modest recovery in asset base and accumulated depreciation in 2020 and 2021 suggests renewed investment activities. The steadily increasing average age ratio points to an aging asset portfolio overall, which may have implications for future maintenance costs and capital expenditure requirements.