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)
Apache Corp., solvency ratios
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
The financial data reveals notable changes in the company's leverage and coverage ratios over the five-year period ending in 2015. There is a discernible increase in leverage, particularly in the year 2015, indicating a significant shift in capital structure and financial risk.
- Debt to Equity Ratio
- This ratio shows a gradual increase from 0.25 in 2011 to 0.43 in 2014, followed by a substantial jump to 3.42 in 2015. The relatively stable leverage in the initial four years contrasts sharply with the significant increase in the final year, suggesting a marked rise in debt relative to shareholder equity.
- Debt to Capital Ratio
- A similar pattern is observed, with an increase from 0.20 in 2011 to 0.30 in 2014, then escalating dramatically to 0.77 in 2015. This indicates that the portion of capital financed through debt rose substantially by the end of the period.
- Debt to Assets Ratio
- This ratio increases from 0.14 in 2011 to 0.20 in 2014, before jumping to 0.47 in 2015. The upward trend signals an increased reliance on debt to finance the company's assets, with a particularly sharp increase in the final year.
- Financial Leverage Ratio
- Financial leverage remains relatively steady from 1.80 in 2011, fluctuating slightly until 2014 when it reaches 2.16. In 2015, there is a pronounced surge to 7.34, reflecting a dramatic increase in the use of debt relative to equity and possibly indicating elevated financial risk.
- Interest Coverage Ratio
- The interest coverage ratio declines consistently over the period, starting from a robust 48.61 in 2011 to 22.40 in 2013. It then turns negative in 2014 (-20.37) and further worsens in 2015 (-107.98). The negative values in the last two years suggest that operating earnings were insufficient to cover interest expenses, pointing to potential financial distress or operational challenges impacting earnings before interest and taxes.
- Fixed Charge Coverage Ratio
- This ratio exhibits a declining trend analogous to the interest coverage ratio. Starting at 35.59 in 2011, it decreases to 16.17 in 2013, before turning negative in 2014 (-13.98) and substantially declining further in 2015 (-88.32). This pattern reinforces concerns about the company's ability to meet fixed financial obligations.
Overall, the data shows that the company maintained relatively moderate leverage and strong coverage ratios through 2014 but experienced a substantial increase in debt and financial leverage in 2015. This increase in leverage coincides with a sharp decline in coverage ratios, shifting into negative territory, which may indicate increased financial vulnerability and challenges in meeting interest and fixed charges. The trends suggest a riskier financial profile developing in the final year of the analyzed period.
Debt Ratios
Coverage Ratios
Debt to Equity
Apache Corp., debt to equity calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current debt | 1) | —) | 53) | 990) | 431) | |
| Long-term debt, excluding current maturities | 8,777) | 11,245) | 9,672) | 11,355) | 6,785) | |
| Total debt | 8,778) | 11,245) | 9,725) | 12,345) | 7,216) | |
| Total Apache shareholders’ equity | 2,566) | 25,937) | 33,396) | 31,331) | 28,993) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 3.42 | 0.43 | 0.29 | 0.39 | 0.25 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
| Occidental Petroleum Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Debt to equity = Total debt ÷ Total Apache shareholders’ equity
= 8,778 ÷ 2,566 = 3.42
2 Click competitor name to see calculations.
- Total Debt
- The total debt experienced an overall increasing trend from 2011 to 2015, with some fluctuations. It rose significantly from 7,216 million USD in 2011 to a peak of 12,345 million USD in 2012, followed by a decline to 9,725 million in 2013. It then increased again to 11,245 million in 2014 before dropping to 8,778 million in 2015.
- Total Apache Shareholders’ Equity
- The shareholders' equity showed initial growth from 28,993 million USD in 2011 to a high of 33,396 million USD in 2013. However, it then significantly decreased to 25,937 million in 2014 and experienced a dramatic decline to 2,566 million USD in 2015, indicating a substantial reduction in equity during the final recorded period.
- Debt to Equity Ratio
- The debt to equity ratio increased over the analyzed period, highlighting a shift towards higher financial leverage. Starting at a relatively low 0.25 in 2011, it rose moderately to 0.39 in 2012 and then declined to 0.29 in 2013. The ratio increased again to 0.43 in 2014, and then surged sharply to 3.42 in 2015. This marked spike is primarily due to the significant decrease in shareholders' equity in 2015, which vastly increased the ratio, signaling a notably higher risk profile with much greater debt relative to equity by the end of the period.
Debt to Capital
Apache Corp., debt to capital calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current debt | 1) | —) | 53) | 990) | 431) | |
| Long-term debt, excluding current maturities | 8,777) | 11,245) | 9,672) | 11,355) | 6,785) | |
| Total debt | 8,778) | 11,245) | 9,725) | 12,345) | 7,216) | |
| Total Apache shareholders’ equity | 2,566) | 25,937) | 33,396) | 31,331) | 28,993) | |
| Total capital | 11,344) | 37,182) | 43,121) | 43,676) | 36,209) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.77 | 0.30 | 0.23 | 0.28 | 0.20 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
| Occidental Petroleum Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Debt to capital = Total debt ÷ Total capital
= 8,778 ÷ 11,344 = 0.77
2 Click competitor name to see calculations.
The financial data indicates significant fluctuations in the capital structure over the examined period. The total debt amount shows an overall increasing trend from 2011 to 2012, rising from 7,216 million US dollars to 12,345 million US dollars. Following this peak, debt levels fluctuate downward to 9,725 million in 2013, then increase again to 11,245 million in 2014 before decreasing notably to 8,778 million in 2015.
Total capital exhibits a trend that is initially upward from 36,209 million US dollars in 2011 to a peak of 43,676 million in 2012. However, after 2012, total capital decreases steadily year over year, falling to 43,121 million in 2013, 37,182 million in 2014, and experiencing a sharp decline to 11,344 million in 2015.
The debt to capital ratio reflects these changes and shows increased leverage over the timeframe. Initially, the ratio stands at 0.2 in 2011 and rises to 0.28 in 2012, indicating greater reliance on debt financing relative to capital. The ratio decreases to 0.23 in 2013, suggesting slight deleveraging, but then peaks at 0.3 in 2014. The most pronounced change occurs in 2015, where the ratio sharply escalates to 0.77, denoting a substantially higher proportion of debt in the company's capital structure.
- Total debt
- Increased sharply in 2012, followed by fluctuations and a notable decrease in 2015.
- Total capital
- Peaked in 2012 but declined consistently afterward, with a drastic drop in 2015.
- Debt to capital ratio
- Generally increased over the period, with a significant spike in 2015, indicating increased leverage.
Overall, the data suggests that the company has been experiencing increased financial leverage, especially pronounced in the final year, which may imply heightened financial risk. The substantial drop in total capital in 2015 alongside relatively higher debt levels significantly impacts the debt to capital ratio and warrants further analysis into the causes and implications of this structural change.
Debt to Assets
Apache Corp., debt to assets calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current debt | 1) | —) | 53) | 990) | 431) | |
| Long-term debt, excluding current maturities | 8,777) | 11,245) | 9,672) | 11,355) | 6,785) | |
| Total debt | 8,778) | 11,245) | 9,725) | 12,345) | 7,216) | |
| Total assets | 18,842) | 55,952) | 61,637) | 60,737) | 52,051) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.47 | 0.20 | 0.16 | 0.20 | 0.14 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
| Occidental Petroleum Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Debt to assets = Total debt ÷ Total assets
= 8,778 ÷ 18,842 = 0.47
2 Click competitor name to see calculations.
The analysis of the annual financial data over the five-year period reveals significant fluctuations in the company's financial structure, particularly concerning its debt levels and asset base.
- Total debt
- The total debt increased markedly from 7,216 million US dollars at the end of 2011 to a peak of 12,345 million in 2012. Subsequently, it decreased to 9,725 million in 2013 but rose again in 2014 to 11,245 million before declining to 8,778 million in 2015. Overall, while there were fluctuations, the total debt in 2015 remained higher than the initial level in 2011.
- Total assets
- Total assets showed a generally declining trend after a rise from 52,051 million in 2011 to 61,737 million in 2013. In 2014, assets decreased to 55,952 million and then fell sharply to 18,842 million in 2015. The significant reduction in assets in 2015 is notable, suggesting possible asset sales, impairments, or writedowns during that year.
- Debt to assets ratio
- The debt to assets ratio fluctuated between 0.14 and 0.20 from 2011 through 2014, reflecting a relatively stable leverage position despite some fluctuations in absolute values of debt and assets. However, in 2015, the ratio increased significantly to 0.47. This sharp increase is attributable to the steep decline in total assets combined with a comparatively smaller decrease in total debt, indicating a substantial rise in financial leverage and potential increase in financial risk.
In summary, the company experienced an overall increase in debt over the period analyzed, with considerable volatility. The dramatic decrease in total assets in 2015 led to a substantial rise in the debt to assets ratio, highlighting increased financial leverage and potential vulnerability. The patterns suggest that the company's balance sheet positions shifted notably in 2015, warranting further investigation into the underlying causes and potential implications for financial stability.
Financial Leverage
Apache Corp., financial leverage calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 18,842) | 55,952) | 61,637) | 60,737) | 52,051) | |
| Total Apache shareholders’ equity | 2,566) | 25,937) | 33,396) | 31,331) | 28,993) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 7.34 | 2.16 | 1.85 | 1.94 | 1.80 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
| Occidental Petroleum Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Financial leverage = Total assets ÷ Total Apache shareholders’ equity
= 18,842 ÷ 2,566 = 7.34
2 Click competitor name to see calculations.
The financial data reveals notable shifts in the company's asset base, equity position, and leverage over the five-year period.
- Total Assets
- Total assets showed an increase from 52,051 million US dollars at the end of 2011 to a peak of 61,637 million in 2013, indicating growth during this period. However, there was a decline to 55,952 million in 2014, followed by a substantial reduction to 18,842 million in 2015. This sharp decrease in 2015 suggests a significant contraction in the asset base, which could be due to divestitures, impairments, or other operational factors.
- Total Shareholders' Equity
- Shareholders’ equity increased steadily from 28,993 million in 2011 to 33,396 million in 2013, reflecting accumulation of retained earnings or capital infusions. Afterward, it declined to 25,937 million in 2014 and dramatically dropped to 2,566 million in 2015. This pattern indicates a weakening equity base coinciding with the reduction in total assets, possibly signaling increased liabilities or losses impacting shareholder value.
- Financial Leverage
- Financial leverage, expressed as a ratio, increased from 1.8 in 2011 to 1.94 in 2012, then decreased slightly to 1.85 in 2013, suggesting moderate fluctuations in debt relative to equity. In 2014, the ratio rose significantly to 2.16, and in 2015 it spiked sharply to 7.34. The steep increase in 2015 indicates a substantial rise in leverage, implying the company significantly increased its use of debt financing relative to equity, which may heighten financial risk.
Overall, the data reflects a period of growth through 2013, followed by deterioration in asset size and equity, accompanied by a marked increase in leverage by 2015. This trend suggests increased financial risk and potential challenges in maintaining capital structure stability.
Interest Coverage
Apache Corp., interest coverage calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Apache shareholders | (23,119) | (5,403) | 2,232) | 2,001) | 4,584) | |
| Add: Net income attributable to noncontrolling interest | (409) | 343) | 56) | —) | —) | |
| Less: Net loss from discontinued operations, net of tax | (771) | (517) | —) | —) | —) | |
| Add: Income tax expense | (5,469) | 1,637) | 1,928) | 2,876) | 3,509) | |
| Add: Interest expense, net of capitalized interest | 259) | 136) | 197) | 175) | 170) | |
| Earnings before interest and tax (EBIT) | (27,967) | (2,770) | 4,413) | 5,052) | 8,263) | |
| Solvency Ratio | ||||||
| Interest coverage1 | -107.98 | -20.37 | 22.40 | 28.87 | 48.61 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
| Occidental Petroleum Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Interest coverage = EBIT ÷ Interest expense
= -27,967 ÷ 259 = -107.98
2 Click competitor name to see calculations.
Over the observed five-year period, earnings before interest and tax (EBIT) exhibited a significant downward trend. Beginning at US$8,263 million in 2011, EBIT steadily declined each year to reach a negative value of US$-27,967 million by the end of 2015. This sharp deterioration reflects a substantial decline in operational profitability over time.
Interest expense, net of capitalized interest, showed a relatively stable pattern in the initial years, starting at US$170 million in 2011 and slightly increasing to US$175 million in 2012 and US$197 million in 2013. However, there was a minor decrease to US$136 million in 2014 followed by a marked increase to US$259 million in 2015, indicating fluctuating borrowing costs or changes in debt structure.
The interest coverage ratio, which measures the company’s ability to cover interest expenses with earnings before interest and tax, consistently decreased across the observed timeline. In 2011, the ratio was robust at 48.61, suggesting strong capacity to meet interest obligations. However, it declined progressively to 28.87 in 2012 and 22.4 in 2013. By 2014, the ratio turned negative to -20.37, worsening to -107.98 in 2015. Negative values indicate that EBIT was insufficient to cover interest expenses, pointing to potential financial distress and an increased risk associated with the company’s debt servicing abilities.
- Summary of Trends
- EBIT showed a steady and accelerating decline from strong positive figures to significant negative losses over the five-year period.
- Interest expenses remained relatively moderate initially but rose notably in the last year of the period.
- The interest coverage ratio declined sharply, passing from a strong positive level to deeply negative values, signaling deteriorating financial health and increased risk in meeting debt obligations.
Fixed Charge Coverage
Apache Corp., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Apache shareholders | (23,119) | (5,403) | 2,232) | 2,001) | 4,584) | |
| Add: Net income attributable to noncontrolling interest | (409) | 343) | 56) | —) | —) | |
| Less: Net loss from discontinued operations, net of tax | (771) | (517) | —) | —) | —) | |
| Add: Income tax expense | (5,469) | 1,637) | 1,928) | 2,876) | 3,509) | |
| Add: Interest expense, net of capitalized interest | 259) | 136) | 197) | 175) | 170) | |
| Earnings before interest and tax (EBIT) | (27,967) | (2,770) | 4,413) | 5,052) | 8,263) | |
| Add: Net rental expense | 57) | 58) | 81) | 76) | 64) | |
| Earnings before fixed charges and tax | (27,910) | (2,712) | 4,494) | 5,128) | 8,327) | |
| Interest expense, net of capitalized interest | 259) | 136) | 197) | 175) | 170) | |
| Net rental expense | 57) | 58) | 81) | 76) | 64) | |
| Fixed charges | 316) | 194) | 278) | 251) | 234) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | -88.32 | -13.98 | 16.17 | 20.43 | 35.59 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
| Occidental Petroleum Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= -27,910 ÷ 316 = -88.32
2 Click competitor name to see calculations.
- Earnings before fixed charges and tax
- The earnings before fixed charges and tax exhibit a declining trend over the five-year period. Starting at a high level of 8,327 million US dollars in 2011, there is a noticeable decrease to 5,128 million in 2012, followed by a further reduction to 4,494 million in 2013. The trend continues negatively with a significant drop into negative territory from 2014 onwards, reaching -2,712 million in 2014 and sharply declining to -27,910 million in 2015. This suggests deteriorating operating profitability with increasing losses by the end of the analyzed period.
- Fixed charges
- Fixed charges show some variability but remain relatively stable compared to earnings. The values increased slightly from 234 million US dollars in 2011 to 251 million in 2012 and further to 278 million in 2013. In 2014, fixed charges decline to 194 million but then rise again to 316 million in 2015. The fluctuation indicates moderate changes in the fixed obligations of the company, with a peak in 2015 despite the overall decline in earnings.
- Fixed charge coverage ratio
- The fixed charge coverage ratio exhibits a pronounced declining trend consistent with the erosion of earnings. Initially, the ratio is very strong at 35.59 in 2011, declining sharply to 20.43 in 2012 and further to 16.17 in 2013. This downward trajectory reverses into negative coverage in 2014 (-13.98) and worsens dramatically in 2015 (-88.32). Negative coverage ratios indicate the company’s earnings were insufficient to cover fixed charges in the latter years, signaling significant financial distress and increased risk related to fixed financial obligations.