Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Texas Pacific Land Corp., solvency ratios
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).
The solvency profile is characterized by an exceptionally conservative capital structure and a near-total absence of debt over the analyzed five-year period. There is a consistent trend toward a zero-debt balance sheet, coupled with an immense capacity to service fixed obligations.
- Debt Utilization Ratios
- Debt to equity, debt to capital, and debt to assets ratios, including operating lease liabilities, have all converged to 0.00 as of 2021. This represents a transition from negligible leverage in 2019 and 2020 to a state of effectively zero indebtedness, indicating that the entity relies exclusively on equity and internal funding for its operations and asset acquisition.
- Financial Leverage
- A gradual downward trend in financial leverage is observed, declining from 1.17 in 2019 to 1.11 in 2023. This reduction reflects a steady decrease in the proportion of total assets funded by liabilities relative to equity, further strengthening the organization's solvency position.
- Fixed Charge Coverage
- Fixed charge coverage remains substantially high, though it exhibits volatility. After a decrease from 575.65 in 2019 to 314.80 in 2020, the ratio recovered significantly, peaking at 712.07 in 2022 before settling at 647.95 in 2023. These levels indicate a vast margin of safety and an exceptional ability to meet all fixed financial commitments.
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Debt Ratios
Coverage Ratios
Debt to Equity
Texas Pacific Land Corp., debt to equity calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total debt | —) | —) | —) | —) | —) | |
| Total equity | 1,043,196) | 772,887) | 651,711) | 485,184) | 512,137) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Chevron Corp. | 0.13 | 0.15 | 0.23 | — | — | |
| ConocoPhillips | 0.38 | 0.35 | 0.44 | — | — | |
| Exxon Mobil Corp. | 0.20 | 0.21 | 0.28 | — | — | |
| Debt to Equity, Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.20 | 0.20 | 0.28 | — | — | |
| Debt to Equity, Industry | ||||||
| Energy | 0.21 | 0.22 | 0.31 | — | — | |
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 2023 Calculation
Debt to equity = Total debt ÷ Total equity
= 0 ÷ 1,043,196 = 0.00
2 Click competitor name to see calculations.
The financial structure exhibits an exceptionally conservative solvency profile, characterized by a lack of reported debt and a significant expansion of the equity base from 2019 through 2023.
- Equity Capitalization Trend
- Total equity experienced a minor contraction between 2019 and 2020, decreasing from 512,137 thousand to 485,184 thousand. This was followed by a period of sustained and accelerated growth, with equity increasing to 651,711 thousand in 2021, 772,887 thousand in 2022, and reaching 1,043,196 thousand by the end of 2023. This trajectory represents a total increase of approximately 114% from the 2020 trough to the 2023 year-end.
- Solvency and Leverage Analysis
- The absence of reported total debt across the entire five-year period indicates a zero-leverage financial strategy. Consequently, the debt to equity ratio remains at zero, confirming that the entity is funded entirely through equity. This positioning eliminates interest rate risk and provides a substantial cushion against financial distress, resulting in an extremely low risk profile regarding solvency.
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Debt to Equity (including Operating Lease Liability)
Texas Pacific Land Corp., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total debt | —) | —) | —) | —) | —) | |
| Operating lease liabilities, current | 854) | 833) | 674) | 795) | —) | |
| Operating lease liabilities, noncurrent | 1,170) | 1,955) | 1,445) | 2,026) | 3,367) | |
| Total debt (including operating lease liability) | 2,024) | 2,788) | 2,119) | 2,821) | 3,367) | |
| Total equity | 1,043,196) | 772,887) | 651,711) | 485,184) | 512,137) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.00 | 0.00 | 0.00 | 0.01 | 0.01 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | 0.16 | 0.17 | 0.25 | — | — | |
| ConocoPhillips | 0.40 | 0.36 | 0.45 | — | — | |
| Exxon Mobil Corp. | 0.23 | 0.24 | 0.31 | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.22 | 0.23 | 0.31 | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Energy | 0.24 | 0.25 | 0.34 | — | — | |
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 2023 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total equity
= 2,024 ÷ 1,043,196 = 0.00
2 Click competitor name to see calculations.
The solvency profile exhibits an extremely conservative capital structure characterized by negligible leverage and substantial growth in shareholder equity over the five-year period ending December 31, 2023. The financial position is marked by a minimal reliance on external borrowing, resulting in a solvency risk that is effectively non-existent.
- Total Debt Trends
- Total debt, including operating lease liabilities, remained consistently low throughout the period. A general downward trajectory is observed, moving from 3,367 thousand US dollars in 2019 to 2,024 thousand US dollars in 2023. Although a slight increase occurred in 2022 to 2,788 thousand US dollars, the overall debt load remains immaterial relative to the organization's total asset base.
- Equity Expansion
- Total equity demonstrated significant and accelerating growth. Following a slight dip in 2020 to 485,184 thousand US dollars, equity grew steadily, surpassing 1 billion US dollars by December 31, 2023. This represents a more than twofold increase in equity from 2019 levels, indicating strong internal capital accumulation and a robust balance sheet.
- Debt to Equity Ratio Analysis
- The debt to equity ratio remained near zero for the duration of the analysis. The ratio shifted from 0.01 in 2019 and 2020 to 0.00 from 2021 through 2023. This trend confirms that the increase in equity, coupled with the stabilization of low debt levels, has further diminished the company's leverage, ensuring an exceptionally high degree of financial solvency.
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Debt to Capital
Texas Pacific Land Corp., debt to capital calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total debt | —) | —) | —) | —) | —) | |
| Total equity | 1,043,196) | 772,887) | 651,711) | 485,184) | 512,137) | |
| Total capital | 1,043,196) | 772,887) | 651,711) | 485,184) | 512,137) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Chevron Corp. | 0.11 | 0.13 | 0.18 | — | — | |
| ConocoPhillips | 0.28 | 0.26 | 0.31 | — | — | |
| Exxon Mobil Corp. | 0.17 | 0.17 | 0.22 | — | — | |
| Debt to Capital, Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.16 | 0.17 | 0.22 | — | — | |
| Debt to Capital, Industry | ||||||
| Energy | 0.18 | 0.18 | 0.24 | — | — | |
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 2023 Calculation
Debt to capital = Total debt ÷ Total capital
= 0 ÷ 1,043,196 = 0.00
2 Click competitor name to see calculations.
The analysis of the solvency profile reveals a significant expansion of the total capital base over the five-year period from 2019 to 2023. Following a slight contraction in 2020, total capital exhibited a consistent and accelerating upward trend, more than doubling from the 2020 low of 485,184 thousand US dollars to 1,043,196 thousand US dollars by the end of 2023.
- Total Capital Growth
- A sustained increase in total capital is observed starting in 2021. Between December 31, 2020, and December 31, 2023, the capital base grew by approximately 115%, indicating a substantial increase in the company's financial resources and asset base.
- Debt to Capital Ratio
- The absence of reported total debt across all analyzed periods indicates a zero-leverage solvency position. Consequently, the debt to capital ratio remains at zero, reflecting a financial structure entirely devoid of interest-bearing debt and a complete reliance on equity or internal funding for capital expansion.
- Solvency Risk Assessment
- The combination of a rapidly growing capital base and the absence of reported debt suggests an exceptionally low solvency risk. The organization maintains a conservative financial posture with no debt-related obligations impacting its capital structure.
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Debt to Capital (including Operating Lease Liability)
Texas Pacific Land Corp., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total debt | —) | —) | —) | —) | —) | |
| Operating lease liabilities, current | 854) | 833) | 674) | 795) | —) | |
| Operating lease liabilities, noncurrent | 1,170) | 1,955) | 1,445) | 2,026) | 3,367) | |
| Total debt (including operating lease liability) | 2,024) | 2,788) | 2,119) | 2,821) | 3,367) | |
| Total equity | 1,043,196) | 772,887) | 651,711) | 485,184) | 512,137) | |
| Total capital (including operating lease liability) | 1,045,220) | 775,675) | 653,830) | 488,005) | 515,504) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.00 | 0.00 | 0.00 | 0.01 | 0.01 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | 0.14 | 0.15 | 0.20 | — | — | |
| ConocoPhillips | 0.28 | 0.26 | 0.31 | — | — | |
| Exxon Mobil Corp. | 0.19 | 0.19 | 0.24 | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.18 | 0.19 | 0.23 | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Energy | 0.20 | 0.20 | 0.25 | — | — | |
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 2023 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 2,024 ÷ 1,045,220 = 0.00
2 Click competitor name to see calculations.
The solvency profile demonstrates an exceptionally conservative capital structure characterized by minimal leverage and significant growth in total capital over the five-year period ending December 31, 2023.
- Total Debt Trends
- Total debt, including operating lease liabilities, remained consistently low throughout the period. A general downward trend is observed, with obligations decreasing from US$ 3,367 thousand in 2019 to US$ 2,024 thousand by 2023. Although a marginal increase occurred in 2022, the overall debt burden is negligible relative to the entity's total capitalization.
- Total Capital Expansion
- Total capital exhibited a strong upward trajectory, particularly from 2021 onwards. Capital grew from US$ 515,504 thousand in 2019 to US$ 1,045,220 thousand in 2023, representing a more than twofold increase. This significant expansion indicates a substantial accumulation of capital resources over the analyzed timeframe.
- Debt to Capital Ratio Analysis
- The debt to capital ratio remained near zero, reflecting a high degree of financial solvency. The ratio moved from 0.01 in 2019 and 2020 to 0.00 in 2021, 2022, and 2023. This trend underscores a capital structure almost entirely devoid of debt, suggesting that growth and operations are funded through equity or internal cash flows rather than borrowed capital.
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Debt to Assets
Texas Pacific Land Corp., debt to assets calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total debt | —) | —) | —) | —) | —) | |
| Total assets | 1,156,398) | 877,427) | 764,064) | 571,635) | 598,176) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Chevron Corp. | 0.08 | 0.09 | 0.13 | — | — | |
| ConocoPhillips | 0.20 | 0.18 | 0.22 | — | — | |
| Exxon Mobil Corp. | 0.11 | 0.11 | 0.14 | — | — | |
| Debt to Assets, Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.11 | 0.11 | 0.15 | — | — | |
| Debt to Assets, Industry | ||||||
| Energy | 0.12 | 0.12 | 0.16 | — | — | |
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 2023 Calculation
Debt to assets = Total debt ÷ Total assets
= 0 ÷ 1,156,398 = 0.00
2 Click competitor name to see calculations.
The analysis of solvency metrics reveals a consistent expansion of the asset base over the five-year period ending December 31, 2023. While a marginal contraction in total assets occurred between 2019 and 2020, the subsequent years demonstrate a strong and accelerating upward trajectory in the company's resource position.
- Asset Base Expansion
- Total assets grew from 571,635 thousand US dollars in 2020 to 1,156,398 thousand US dollars by the end of 2023. This growth was particularly pronounced between 2022 and 2023, during which total assets increased by approximately 31.8%, indicating a substantial accumulation of resources over the observed timeframe.
- Solvency Ratio Interpretation
- The debt to assets ratio cannot be calculated or analyzed as the total debt figures are unavailable for the period from 2019 to 2023. In the absence of liability data, the degree of financial leverage and the proportion of assets financed by debt remain undetermined.
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Debt to Assets (including Operating Lease Liability)
Texas Pacific Land Corp., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total debt | —) | —) | —) | —) | —) | |
| Operating lease liabilities, current | 854) | 833) | 674) | 795) | —) | |
| Operating lease liabilities, noncurrent | 1,170) | 1,955) | 1,445) | 2,026) | 3,367) | |
| Total debt (including operating lease liability) | 2,024) | 2,788) | 2,119) | 2,821) | 3,367) | |
| Total assets | 1,156,398) | 877,427) | 764,064) | 571,635) | 598,176) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.00 | 0.00 | 0.00 | 0.00 | 0.01 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | 0.10 | 0.11 | 0.15 | — | — | |
| ConocoPhillips | 0.20 | 0.18 | 0.23 | — | — | |
| Exxon Mobil Corp. | 0.13 | 0.13 | 0.16 | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.13 | 0.13 | 0.16 | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Energy | 0.14 | 0.14 | 0.17 | — | — | |
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 2023 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 2,024 ÷ 1,156,398 = 0.00
2 Click competitor name to see calculations.
An analysis of solvency indicators from 2019 to 2023 reveals a financial profile characterized by minimal leverage and substantial asset expansion. The company maintains an exceptionally low debt burden relative to its total asset base, indicating a conservative capital structure and a high degree of financial independence.
- Asset Growth Trend
- Total assets demonstrated significant growth over the analyzed period, increasing from US$ 598,176 thousand in 2019 to US$ 1,156,398 thousand by December 31, 2023. Following a marginal decline in 2020, assets entered a period of accelerated expansion, nearly doubling in value between 2020 and 2023.
- Debt Obligations
- Total debt, which includes operating lease liabilities, remained consistently low and exhibited a general downward trend. Debt levels decreased from US$ 3,367 thousand in 2019 to US$ 2,024 thousand in 2023. The stability of these figures suggests that the substantial increase in asset value was not financed through additional debt procurement.
- Debt to Assets Ratio Analysis
- The debt to assets ratio remained effectively negligible throughout the five-year period. After starting at 0.01 in 2019, the ratio shifted to 0.00 and remained constant through 2023. This indicates an extremely strong solvency position, where liabilities represent a nearly nonexistent fraction of the total asset base, thereby minimizing financial risk.
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Financial Leverage
Texas Pacific Land Corp., financial leverage calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total assets | 1,156,398) | 877,427) | 764,064) | 571,635) | 598,176) | |
| Total equity | 1,043,196) | 772,887) | 651,711) | 485,184) | 512,137) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 1.11 | 1.14 | 1.17 | 1.18 | 1.17 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Chevron Corp. | 1.63 | 1.62 | 1.72 | — | — | |
| ConocoPhillips | 1.95 | 1.95 | 2.00 | — | — | |
| Exxon Mobil Corp. | 1.84 | 1.89 | 2.01 | — | — | |
| Financial Leverage, Sector | ||||||
| Oil, Gas & Consumable Fuels | 1.77 | 1.79 | 1.90 | — | — | |
| Financial Leverage, Industry | ||||||
| Energy | 1.80 | 1.82 | 1.93 | — | — | |
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 2023 Calculation
Financial leverage = Total assets ÷ Total equity
= 1,156,398 ÷ 1,043,196 = 1.11
2 Click competitor name to see calculations.
The financial position reflects a significant expansion in both total assets and total equity over the five-year period ending December 31, 2023. Following a marginal contraction in 2020, both metrics exhibited an accelerated upward trajectory, resulting in a substantial strengthening of the balance sheet.
- Asset and Equity Growth
- Total assets increased from 598,176 thousand US$ in 2019 to 1,156,398 thousand US$ in 2023. This expansion is closely mirrored by total equity, which rose from 512,137 thousand US$ to 1,043,196 thousand US$ over the same timeframe. The growth in equity slightly outpaced the growth in total assets, indicating a capital structure increasingly supported by internal funding or equity contributions.
- Financial Leverage Analysis
- The financial leverage ratio remained relatively static between 2019 and 2021, hovering between 1.17 and 1.18. A consistent downward trend is observed from 2022 onward, with the ratio declining to 1.14 and further to 1.11 by December 31, 2023. This reduction suggests a diminishing reliance on debt to finance assets, thereby lowering the company's financial risk profile and improving its overall solvency position.
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Interest Coverage
Texas Pacific Land Corp., interest coverage calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 405,645) | 446,362) | 269,980) | 176,049) | 318,728) | |
| Add: Income tax expense | 111,916) | 122,493) | 93,037) | 43,613) | 83,527) | |
| Add: Interest expense | —) | —) | —) | —) | —) | |
| Earnings before interest and tax (EBIT) | 517,561) | 568,855) | 363,017) | 219,662) | 402,255) | |
| Solvency Ratio | ||||||
| Interest coverage1 | — | — | — | — | — | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Chevron Corp. | 64.08 | 97.27 | 31.39 | — | — | |
| ConocoPhillips | 21.88 | 36.07 | 15.38 | — | — | |
| Exxon Mobil Corp. | 63.17 | 98.43 | 33.98 | — | — | |
| Interest Coverage, Sector | ||||||
| Oil, Gas & Consumable Fuels | 48.02 | 74.46 | 26.79 | — | — | |
| Interest Coverage, Industry | ||||||
| Energy | 40.96 | 62.30 | 23.05 | — | — | |
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 2023 Calculation
Interest coverage = EBIT ÷ Interest expense
= 517,561 ÷ 0 = —
2 Click competitor name to see calculations.
The operational profitability, as measured by Earnings Before Interest and Taxes (EBIT), exhibited significant volatility between 2019 and 2023. A sharp decline occurred in 2020, where EBIT fell to 219,662 thousand USD from 402,255 thousand USD in the previous year. This was followed by a period of recovery, peaking in 2022 at 568,855 thousand USD, before experiencing a moderate contraction to 517,561 thousand USD in 2023.
- Interest Coverage Capacity
- The absence of recorded interest expenses throughout the five-year period suggests a capital structure with minimal to no interest-bearing debt. Because no interest obligations are reported, a numerical interest coverage ratio cannot be calculated; however, the lack of such expenses implies that solvency risk related to debt servicing is negligible.
- Operational Trend Implications
- The fluctuations in EBIT indicate variable operational performance over the analyzed timeframe. Despite the dip in 2020, the substantial increase in EBIT by 2022 suggests an improved capacity to absorb potential financial costs or invest in growth without relying on external interest-bearing leverage.
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Fixed Charge Coverage
Texas Pacific Land Corp., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 405,645) | 446,362) | 269,980) | 176,049) | 318,728) | |
| Add: Income tax expense | 111,916) | 122,493) | 93,037) | 43,613) | 83,527) | |
| Add: Interest expense | —) | —) | —) | —) | —) | |
| Earnings before interest and tax (EBIT) | 517,561) | 568,855) | 363,017) | 219,662) | 402,255) | |
| Add: Operating lease cost | 800) | 800) | 800) | 700) | 700) | |
| Earnings before fixed charges and tax | 518,361) | 569,655) | 363,817) | 220,362) | 402,955) | |
| Interest expense | —) | —) | —) | —) | —) | |
| Operating lease cost | 800) | 800) | 800) | 700) | 700) | |
| Fixed charges | 800) | 800) | 800) | 700) | 700) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 647.95 | 712.07 | 454.77 | 314.80 | 575.65 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Chevron Corp. | 9.57 | 18.28 | 8.43 | — | — | |
| ConocoPhillips | 17.14 | 28.76 | 11.94 | — | — | |
| Exxon Mobil Corp. | 19.68 | 31.21 | 13.55 | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Oil, Gas & Consumable Fuels | 14.54 | 25.07 | 10.99 | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Energy | 12.31 | 20.61 | 9.19 | — | — | |
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 2023 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 518,361 ÷ 800 = 647.95
2 Click competitor name to see calculations.
The analysis of the fixed charge coverage indicates an exceptionally strong solvency position, characterized by a capacity to meet fixed obligations that far exceeds requirements. The solvency profile is primarily driven by high earnings relative to minimal fixed charges, resulting in coverage ratios that remain robust even during periods of earnings volatility.
- Earnings before fixed charges and tax
- A volatile but generally upward trajectory in earnings is observed between 2019 and 2023. After a significant decline in 2020, where earnings dropped to 220,362 thousand US$, a consistent recovery followed, peaking in 2022 at 569,655 thousand US$. A slight moderation occurred in 2023, with earnings settling at 518,361 thousand US$, remaining substantially higher than pre-2020 levels.
- Fixed charge stability
- Fixed charges have remained remarkably stable and low throughout the five-year period. Obligations were constant at 700 thousand US$ during 2019 and 2020, with a marginal increase to 800 thousand US$ starting in 2021 and remaining unchanged through 2023. The insignificance of these charges relative to total earnings minimizes the company's financial risk regarding fixed obligations.
- Fixed charge coverage ratio trends
- The coverage ratio mirrored the fluctuations in earnings due to the static nature of fixed charges. The ratio reached a period low of 314.80 in 2020, corresponding with the dip in earnings. Subsequently, the ratio expanded significantly, reaching a peak of 712.07 in 2022. By the end of 2023, the ratio stood at 647.95, indicating that earnings are more than 600 times the amount of fixed charges.
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