Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Pioneer Natural Resources Co., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 5,533 – 19.43% × 33,333 = -943
The analysis of economic profit reveals a period of significant volatility and a general struggle to generate returns exceeding the cost of capital, with the exception of a singular peak in 2022. While the company expanded its capital base substantially, the resulting economic value added has remained predominantly negative over the five-year period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited extreme variance, reflecting the cyclical nature of the industry. A decline into negative territory in 2020 was followed by a sharp recovery in 2021 and a peak of 9,759 million USD in 2022. Although the 2023 figure decreased to 5,533 million USD, it remained significantly higher than pre-2022 levels.
- Invested Capital
- A substantial expansion of the capital base occurred in 2021, where invested capital increased from 17,004 million USD to 32,653 million USD. This near-doubling of invested capital established a higher threshold for the NOPAT required to achieve a positive economic profit, a level that remained relatively stable through 2023 at 33,333 million USD.
- Cost of Capital
- The cost of capital remained remarkably consistent throughout the period, fluctuating within a narrow band between 18.59% and 19.43%. This stability indicates that the swings in economic profit were driven by operational performance and capital deployment rather than changes in the required rate of return or financing costs.
- Economic Profit Trends
- Economic profit was negative for four of the five years analyzed. The most severe value destruction occurred in 2020, with a deficit of 3,348 million USD. The only instance of economic value creation occurred in 2022, reaching 3,644 million USD, coinciding with the peak in NOPAT. By 2023, the economic profit returned to a negative position at -943 million USD, suggesting that the current operational returns are insufficient to cover the 19.43% cost of the invested capital base.
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Net Operating Profit after Taxes (NOPAT)
Pioneer Natural Resources Co., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in employee-related obligations.
3 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to common stockholders.
4 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 423 × 3.60% = 15
5 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 168 × 21.00% = 35
6 Addition of after taxes interest expense to net income (loss) attributable to common stockholders.
- Net Income (Loss) Attributable to Common Stockholders
- The net income experienced significant volatility over the analyzed periods. In 2019, the company reported a positive net income of 756 million US dollars. However, in 2020, there was a notable decline resulting in a net loss of 200 million US dollars, indicating a challenging year likely impacted by adverse conditions. The financial position improved markedly in 2021 with net income rising sharply to 2,118 million US dollars. This upward trend intensified dramatically in 2022, reaching a peak of 7,845 million US dollars, reflecting a period of strong profitability. In 2023, net income decreased substantially to 4,894 million US dollars but remained significantly higher than the levels seen prior to 2021, indicating sustained profitability despite some contraction.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT mirrored the trends observed in net income, exhibiting considerable fluctuations across the years. Initially, in 2019, NOPAT was positive at 1,075 million US dollars before declining sharply to a negative 149 million US dollars in 2020, suggesting operational challenges that year. An impressive rebound occurred in 2021, with NOPAT increasing to 2,831 million US dollars, more than offsetting the previous year's loss. The peak was achieved in 2022 with a substantial increase in operational profitability to 9,759 million US dollars. In 2023, NOPAT decreased to 5,533 million US dollars but remained well above the pre-2021 levels, indicating that operational efficiency and profitability remained robust.
- Overall Trends and Insights
- Both net income and NOPAT demonstrate a notable turnaround starting in 2021 after significant setbacks in 2020. The year 2020 represents a clear outlier characterized by a steep decline, likely due to extraordinary factors impacting performance. Following this, the company recovered strongly, reaching record high levels in 2022 for both profitability metrics, before experiencing a retrenchment in 2023. The persistence of positive and elevated profitability figures post-2020 suggests improved operational effectiveness and market conditions, despite some volatility. The gap between net income and NOPAT across the years indicates the influence of factors beyond core operations affecting bottom-line results. The data suggests a resilient financial performance trajectory after overcoming a period of adversity.
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Cash Operating Taxes
Pioneer Natural Resources Co., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 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).
- Income Tax Provision (Benefit)
- The income tax provision exhibits significant volatility over the analyzed periods. It declined from 231 million USD in 2019 to a benefit of 61 million USD in 2020, indicating a reversal or reduction in tax obligations during that year. Subsequently, it surged to 628 million USD in 2021, followed by a sharp increase to 2,106 million USD in 2022. In 2023, the provision decreased to 1,353 million USD, remaining substantially higher than the levels observed in 2019 and 2021. This pattern suggests fluctuating taxable income or changes in tax regulations impacting the company's tax expenses.
- Cash Operating Taxes
- Cash operating taxes have shown a consistent upward trend throughout the periods analyzed. Beginning at 23 million USD in 2019, the amount slightly decreased to 19 million USD in 2020 but then increased markedly to 80 million USD in 2021. The upward trend accelerated in subsequent years, reaching 328 million USD in 2022 and further rising to 882 million USD in 2023. This steady growth indicates increasing cash tax outflows related to operating activities, possibly reflecting higher taxable income or changes in operational structure or tax policy.
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Invested Capital
Pioneer Natural Resources Co., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 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).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of employee-related obligations.
4 Addition of equity equivalents to equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of short-term investment.
- Total Reported Debt & Leases
- The total reported debt and leases exhibit considerable variability across the five-year period. Starting at 3,167 million US dollars in 2019, the debt increased to 4,066 million in 2020. A significant surge is observed in 2021, with the debt nearly doubling to 7,835 million. However, the subsequent years show a decline, dropping to 5,786 million in 2022 and remaining relatively stable at 5,760 million in 2023. This pattern suggests a peak in borrowing or leasing obligations in 2021 followed by deleveraging efforts or repayment in the following years.
- Equity
- Equity values show a generally positive trajectory over the period analyzed. Beginning at 12,119 million US dollars in 2019, equity slightly declined to 11,569 million in 2020. Post-2020, there is a dramatic increase in equity to 22,837 million in 2021, maintaining a stable level around 22,541 million in 2022 before rising modestly to 23,171 million in 2023. The substantial equity growth in 2021 may indicate a significant capital infusion, improved retained earnings, or revaluation of assets.
- Invested Capital
- Invested capital follows a trend closely aligned with equity and total debt movements. Starting at 16,681 million US dollars in 2019, it shows a mild increase to 17,004 million in 2020. A large increase occurs in 2021, where invested capital nearly doubles to 32,653 million. The invested capital slightly decreases to 32,194 million in 2022 but then increases again to 33,333 million in 2023. This coincides with the variations in debt and equity, implying changes in the company's financing and asset base.
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Cost of Capital
Pioneer Natural Resources Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 54,649) | 54,649) | ÷ | 60,862) | = | 0.90 | 0.90 | × | 21.38% | = | 19.20% | ||
| Long-term debt and finance lease liability, including current portion3 | 5,790) | 5,790) | ÷ | 60,862) | = | 0.10 | 0.10 | × | 2.76% × (1 – 21.00%) | = | 0.21% | ||
| Operating lease liability4 | 423) | 423) | ÷ | 60,862) | = | 0.01 | 0.01 | × | 3.60% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 60,862) | 1.00 | 19.43% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liability, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 48,190) | 48,190) | ÷ | 54,759) | = | 0.88 | 0.88 | × | 21.38% | = | 18.82% | ||
| Long-term debt and finance lease liability, including current portion3 | 6,208) | 6,208) | ÷ | 54,759) | = | 0.11 | 0.11 | × | 1.82% × (1 – 21.00%) | = | 0.16% | ||
| Operating lease liability4 | 361) | 361) | ÷ | 54,759) | = | 0.01 | 0.01 | × | 2.50% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 54,759) | 1.00 | 18.99% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liability, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 54,212) | 54,212) | ÷ | 63,111) | = | 0.86 | 0.86 | × | 21.38% | = | 18.37% | ||
| Long-term debt and finance lease liability, including current portion3 | 8,535) | 8,535) | ÷ | 63,111) | = | 0.14 | 0.14 | × | 1.99% × (1 – 21.00%) | = | 0.21% | ||
| Operating lease liability4 | 364) | 364) | ÷ | 63,111) | = | 0.01 | 0.01 | × | 1.80% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 63,111) | 1.00 | 18.59% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liability, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 32,156) | 32,156) | ÷ | 37,048) | = | 0.87 | 0.87 | × | 21.38% | = | 18.56% | ||
| Long-term debt and finance lease liability, including current portion3 | 4,682) | 4,682) | ÷ | 37,048) | = | 0.13 | 0.13 | × | 2.43% × (1 – 21.00%) | = | 0.24% | ||
| Operating lease liability4 | 210) | 210) | ÷ | 37,048) | = | 0.01 | 0.01 | × | 2.50% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 37,048) | 1.00 | 18.81% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liability, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 22,532) | 22,532) | ÷ | 25,856) | = | 0.87 | 0.87 | × | 21.38% | = | 18.63% | ||
| Long-term debt and finance lease liability, including current portion3 | 3,018) | 3,018) | ÷ | 25,856) | = | 0.12 | 0.12 | × | 4.60% × (1 – 21.00%) | = | 0.42% | ||
| Operating lease liability4 | 306) | 306) | ÷ | 25,856) | = | 0.01 | 0.01 | × | 3.30% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 25,856) | 1.00 | 19.09% | ||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liability, including current portion. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Pioneer Natural Resources Co., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (943) | 3,644) | (3,238) | (3,348) | (2,110) | |
| Invested capital2 | 33,333) | 32,194) | 32,653) | 17,004) | 16,681) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -2.83% | 11.32% | -9.92% | -19.69% | -12.65% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | -3.75% | 6.75% | -2.37% | — | — | |
| ConocoPhillips | 6.61% | 19.35% | 5.03% | — | — | |
| Exxon Mobil Corp. | 3.12% | 11.89% | 3.26% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -943 ÷ 33,333 = -2.83%
4 Click competitor name to see calculations.
The economic performance is characterized by significant volatility in value creation, with economic profit remaining negative for most of the observed period, except for a notable peak in 2022. The period is marked by a substantial expansion of the capital base and a fluctuating ability to generate returns above the cost of capital.
- Economic Profit Trends
- Economic profit exhibited a downward trajectory between 2019 and 2020, reaching a low of negative 3,348 million US dollars. A recovery phase followed, culminating in a significant shift to positive economic profit of 3,644 million US dollars in 2022. However, this positive momentum was not sustained, as the figure reverted to a negative 943 million US dollars by the end of 2023, although this represents a less severe deficit than those recorded between 2019 and 2021.
- Invested Capital Dynamics
- A substantial increase in invested capital occurred between December 31, 2020, and December 31, 2021, where the amount rose from 17,004 million US dollars to 32,653 million US dollars. Following this sharp increase, the invested capital base remained relatively stable, fluctuating slightly to end the period at 33,333 million US dollars in 2023. This suggests a significant capital deployment or expansion event during 2021.
- Economic Spread Ratio Performance
- The economic spread ratio mirrors the volatility of economic profit, reflecting the degree to which the return on invested capital exceeds its cost. The ratio reached its lowest point in 2020 at -19.69%, indicating a significant gap between returns and capital costs. A sharp reversal occurred in 2022, with the ratio climbing to 11.32%, marking the only period of positive economic spread. By 2023, the ratio declined to -2.83%, showing a return to value destruction, albeit at a much narrower margin than observed in the 2019-2021 timeframe.
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Economic Profit Margin
Pioneer Natural Resources Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (943) | 3,644) | (3,238) | (3,348) | (2,110) | |
| Revenue from contracts with purchasers | 19,374) | 24,384) | 17,870) | 7,024) | 9,671) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -4.87% | 14.95% | -18.12% | -47.66% | -21.81% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Chevron Corp. | -4.05% | 6.08% | -2.95% | — | — | |
| ConocoPhillips | 9.56% | 18.61% | 8.39% | — | — | |
| Exxon Mobil Corp. | 2.87% | 8.86% | 3.21% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue from contracts with purchasers
= 100 × -943 ÷ 19,374 = -4.87%
3 Click competitor name to see calculations.
The analysis of economic value creation between 2019 and 2023 reveals a period of high volatility, characterized by significant fluctuations in both absolute economic profit and the associated profit margins. For the majority of the observed period, the organization experienced economic losses, indicating that returns were insufficient to cover the cost of capital, with a notable exception occurring in 2022.
- Revenue Trajectory
- Revenue exhibited a non-linear trend, declining from 9,671 million USD in 2019 to 7,024 million USD in 2020. A substantial recovery followed, with revenue increasing sharply to 17,870 million USD in 2021 and peaking at 24,384 million USD in 2022. A subsequent contraction was observed in 2023, where revenue decreased to 19,374 million USD.
- Economic Profit Volatility
- Economic profit remained negative from 2019 through 2021, reaching its lowest point in 2020 at -3,348 million USD. A significant turnaround occurred in 2022, as economic profit shifted to a positive 3,644 million USD. This positive momentum was not sustained into 2023, as the figure returned to a negative position of -943 million USD.
- Economic Profit Margin Performance
- The economic profit margin mirrored the volatility of absolute profits, plummeting to -47.66% in 2020, which represents the most severe instance of value destruction in the period. Improvement began in 2021 (-18.12%) and culminated in a positive margin of 14.95% in 2022, indicating that the company generated returns exceeding its cost of capital. However, the margin contracted again in 2023 to -4.87%, signaling a return to a state of value destruction, albeit at a less severe level than seen between 2019 and 2021.
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