National Oilwell Varco Inc. (NYSE:NOV)

The analysis of the property, plant, and equipment data over the five-year period reveals several notable trends in the components and overall values.

Land and Buildings

There is a consistent upward trend in the value of land and buildings from 2011 to 2015. The value increased steadily each year, starting at 1,069 million US dollars in 2011 and reaching 1,582 million US dollars by the end of 2015. This represents a significant growth, indicating possible acquisitions or capital improvements related to land and buildings.

Operating Equipment

Operating equipment values show a marked increase from 2011 through 2014, rising from 1,955 million US dollars to a peak of 3,060 million US dollars. However, in 2015 there is a slight decline to 3,055 million US dollars. Despite this marginal drop, the overall trend across the period is upward, reflecting continued investment in operational assets, with a possible stabilization or slight divestment in the final year.

Rental Equipment

Rental equipment demonstrates a more volatile pattern. Values grew from 636 million US dollars in 2011 to a high of 817 million US dollars in 2014, showing steady increase over the first four years. However, in 2015, the value dropped significantly to 639 million US dollars, almost returning to the 2011 level. This sharp decline may indicate disposals, reduced demand, or a strategic shift in asset management.

Property, Plant, and Equipment, Gross

The gross property, plant, and equipment balance rose consistently from 3,660 million US dollars in 2011 to a peak of 5,405 million US dollars in 2014. In 2015, a decrease to 5,276 million US dollars was recorded. This trend reflects cumulative increases in the asset base over the period, with slight contraction in the final year likely related to the reduction in rental equipment and stabilization in operating equipment.

Accumulated Depreciation

Accumulated depreciation increased steadily in magnitude from -1,215 million US dollars in 2011 to -2,152 million US dollars in 2015. The consistent increase represents ongoing depreciation expense related to aging assets. The growing accumulated depreciation reduces net asset values, reflecting expected wear and usage over time.

Property, Plant, and Equipment, Net

Net property, plant, and equipment values showed a rising trend from 2,445 million US dollars in 2011 to a peak of 3,408 million US dollars in 2013. Subsequently, a decline occurred, falling to 3,362 million in 2014 and further to 3,124 million in 2015. This downturn in net asset value despite previous growth could be attributed to the increased accumulated depreciation and the reduction in rental equipment assets in the latter years.

Overall, the data reflect an initial expansion phase in asset holdings, particularly in land and buildings as well as operating equipment, followed by a period of contraction or asset reductions in certain categories, notably rental equipment and net property, plant, and equipment, in the last two years. The consistent rise in accumulated depreciation implies maturing asset bases and potentially escalating maintenance or replacement needs.

Average Age Ratio

The average age ratio exhibits an increasing trend over the five-year period. It rose from 33.2% in 2011 to 40.79% in 2015, indicating that the property, plant, and equipment are aging progressively. This upward trend suggests that the assets are becoming older relative to their estimated useful life.

Estimated Total Useful Life

The estimated total useful life of the assets remained mostly stable, with a slight variation, moving from 13 years in 2011 to 14 years in 2012, then returning to 13 years from 2013 through 2015. This stability implies consistent expectations regarding asset longevity over the observed period.

Estimated Age (Time Elapsed Since Purchase)

The estimated age of the assets increased steadily from 4 years in 2011 to 6 years in 2015. This reflects the passage of time and suggests that the company has not significantly offset aging assets with major acquisitions or replacements during this time frame.

Estimated Remaining Life

The estimated remaining life decreased slightly from 9 years in 2011 through 2013 to 8 years in 2014 and 2015. This minor reduction corresponds with the increase in asset age and the relatively stable total useful life estimate, implying a natural depreciation of remaining usability.

Accumulated Depreciation

The accumulated depreciation exhibited a consistent upward trend over the five-year period. It increased from US$1,215 million in 2011 to US$2,152 million in 2015. This steady rise indicates ongoing wear and aging of the company's assets, reflecting the utilization of property, plant, and equipment over time.

Property, Plant and Equipment, Gross

The gross value of property, plant, and equipment showed growth from US$3,660 million in 2011 to a peak of US$5,405 million in 2014, followed by a slight decline to US$5,276 million in 2015. The initial increase suggests significant investment in fixed assets during these years, while the decline in 2015 may indicate reduced capital expenditures or asset disposals.

Average Age Ratio

The average age ratio, representing the relative age of fixed assets, consistently increased from 33.2% in 2011 to 40.79% in 2015. This trend implies that the asset base is aging progressively, which can have implications for maintenance costs and the need for future capital replacement.

Overall Analysis

The data collectively indicate a pattern of asset accumulation with increasing aging and depreciation. While property, plant, and equipment grew substantially until 2014, the subsequent slight reduction and rising average age suggest a maturing asset base. The consistent increase in accumulated depreciation aligns with these observations, highlighting ongoing asset usage and aging. These trends may warrant close monitoring to ensure timely reinvestment and maintenance strategies to sustain operational efficiency.

Property, Plant, and Equipment, Gross

The gross value of property, plant, and equipment showed a consistent upward trend from 2011 to 2014, increasing from 3,660 million US dollars at the end of 2011 to a peak of 5,405 million US dollars in 2014. However, in 2015, there was a slight decline to 5,276 million US dollars, indicating a potential slowdown or adjustment in asset acquisitions or disposals after several years of growth.

Depreciation Expense

Depreciation expense rose steadily from 279 million US dollars in 2011 to 413 million US dollars in 2014, consistent with the growth in the gross value of property, plant, and equipment. In 2015, depreciation expense decreased slightly to 391 million US dollars, which may be linked to the reduction in gross asset value and possibly changes in asset composition or depreciation methods.

Estimated Total Useful Life

The estimated total useful life of the assets remained relatively stable over the period analyzed. It was 13 years in 2011, increased slightly to 14 years in 2012, and then returned to 13 years from 2013 through 2015. This stability suggests no significant changes in the expected lifespan of assets during this timeframe.

The analysis of the annual property, plant, and equipment data reveals several notable trends over the five-year period ending December 31, 2015.

Accumulated Depreciation

The accumulated depreciation has shown a steady increase each year, growing from $1,215 million in 2011 to $2,152 million in 2015. This consistent upward trend indicates ongoing wear and usage of fixed assets, reflecting the systematic allocation of asset costs over their useful lives.

Depreciation Expense

Depreciation expense saw an upward motion from $279 million in 2011 to a peak of $413 million in 2014, before slightly declining to $391 million in 2015. The increase through 2014 suggests accelerated depreciation or additions of assets with higher costs, while the modest decrease in 2015 may indicate a slowdown in capital expenditure or an adjustment in depreciation methods.

Time Elapsed Since Purchase

The time elapsed since purchase increased moderately over the period, starting at 4 years in 2011 and reaching 6 years in 2015. This gradual rise implies that the assets are aging but suggests no significant increase in the acquisition of new assets to offset aging.

Overall, the data portrays a company with aging fixed assets, reflected by increasing accumulated depreciation and steady but aging asset base. The depreciation expense pattern is consistent with asset acquisition and usage patterns, showing growth until 2014 followed by stabilization or modest reduction in 2015, which may suggest a strategic shift in asset investment or changes in depreciation policies.

Net Property, Plant, and Equipment

The net value of property, plant, and equipment displayed a consistent upward trend from 2011 through 2013, rising from $2,445 million to a peak of $3,408 million. In the subsequent years, 2014 and 2015, there was a slight decline, with values decreasing to $3,362 million in 2014 and further to $3,124 million in 2015.

Depreciation Expense

Depreciation expense increased steadily over the five-year period, starting at $279 million in 2011 and reaching $413 million in 2014. A marginal decrease occurred in 2015, with depreciation expense falling to $391 million. Overall, the trend indicates an increasing allocation of depreciation costs, likely reflecting the growing asset base over the initial years and subsequential adjustments in later years.

Estimated Remaining Life

The estimated remaining life of the asset base remained stable at 9 years from 2011 through 2013. However, in 2014, this estimate decreased to 8 years and remained at that level in 2015, suggesting an updated assessment of the useful life of the assets, possibly due to aging or changes in asset composition.