Intrinsic value of Apache - APA

Previous Close

$46.08

  Intrinsic Value

$4.13

stock screener

  Rating & Target

str. sell

-91%

  Value-price divergence*

-75%

Previous close

$46.08

 
Intrinsic value

$4.13

 
Up/down potential

-91%

 
Rating

str. sell

 
Value-price divergence*

-75%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of APA stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 17.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -19.29
  3.30
  3.47
  3.62
  3.76
  3.88
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
Revenue, $m
  5,333
  5,509
  5,700
  5,907
  6,129
  6,367
  6,621
  6,893
  7,181
  7,488
  7,813
  8,157
  8,521
  8,907
  9,313
  9,743
  10,196
  10,674
  11,177
  11,707
  12,266
  12,854
  13,472
  14,124
  14,808
  15,529
  16,286
  17,083
  17,920
  18,800
  19,725
Variable operating expenses, $m
 
  15,657
  16,200
  16,787
  17,418
  18,095
  18,818
  19,589
  20,409
  21,280
  22,204
  23,182
  24,218
  25,312
  26,469
  27,689
  28,977
  30,334
  31,765
  33,272
  34,859
  36,530
  38,289
  40,139
  42,086
  44,133
  46,286
  48,549
  50,928
  53,430
  56,058
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  7,015
  15,657
  16,200
  16,787
  17,418
  18,095
  18,818
  19,589
  20,409
  21,280
  22,204
  23,182
  24,218
  25,312
  26,469
  27,689
  28,977
  30,334
  31,765
  33,272
  34,859
  36,530
  38,289
  40,139
  42,086
  44,133
  46,286
  48,549
  50,928
  53,430
  56,058
Operating income, $m
  -1,682
  -10,148
  -10,500
  -10,880
  -11,289
  -11,728
  -12,196
  -12,696
  -13,228
  -13,792
  -14,391
  -15,025
  -15,696
  -16,406
  -17,155
  -17,946
  -18,781
  -19,661
  -20,588
  -21,565
  -22,594
  -23,677
  -24,816
  -26,016
  -27,277
  -28,604
  -29,999
  -31,466
  -33,009
  -34,630
  -36,333
EBITDA, $m
  936
  -7,449
  -7,707
  -7,987
  -8,287
  -8,609
  -8,953
  -9,320
  -9,710
  -10,124
  -10,564
  -11,029
  -11,522
  -12,043
  -12,593
  -13,174
  -13,786
  -14,432
  -15,113
  -15,830
  -16,585
  -17,380
  -18,217
  -19,097
  -20,023
  -20,997
  -22,021
  -23,098
  -24,230
  -25,420
  -26,671
Interest expense (income), $m
  413
  410
  437
  465
  495
  528
  562
  600
  640
  682
  727
  774
  825
  878
  935
  995
  1,058
  1,124
  1,194
  1,268
  1,346
  1,428
  1,514
  1,605
  1,700
  1,801
  1,906
  2,017
  2,134
  2,257
  2,386
Earnings before tax, $m
  -1,682
  -10,558
  -10,936
  -11,345
  -11,784
  -12,255
  -12,759
  -13,296
  -13,867
  -14,474
  -15,118
  -15,800
  -16,521
  -17,284
  -18,090
  -18,941
  -19,838
  -20,785
  -21,782
  -22,833
  -23,939
  -25,104
  -26,330
  -27,620
  -28,977
  -30,405
  -31,905
  -33,484
  -35,143
  -36,886
  -38,719
Tax expense, $m
  -442
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -1,405
  -10,558
  -10,936
  -11,345
  -11,784
  -12,255
  -12,759
  -13,296
  -13,867
  -14,474
  -15,118
  -15,800
  -16,521
  -17,284
  -18,090
  -18,941
  -19,838
  -20,785
  -21,782
  -22,833
  -23,939
  -25,104
  -26,330
  -27,620
  -28,977
  -30,405
  -31,905
  -33,484
  -35,143
  -36,886
  -38,719

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,377
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  22,519
  21,861
  22,620
  23,439
  24,321
  25,265
  26,275
  27,351
  28,497
  29,713
  31,003
  32,369
  33,815
  35,343
  36,958
  38,662
  40,460
  42,355
  44,353
  46,457
  48,674
  51,007
  53,462
  56,046
  58,764
  61,622
  64,628
  67,788
  71,111
  74,603
  78,274
Adjusted assets (=assets-cash), $m
  21,142
  21,861
  22,620
  23,439
  24,321
  25,265
  26,275
  27,351
  28,497
  29,713
  31,003
  32,369
  33,815
  35,343
  36,958
  38,662
  40,460
  42,355
  44,353
  46,457
  48,674
  51,007
  53,462
  56,046
  58,764
  61,622
  64,628
  67,788
  71,111
  74,603
  78,274
Revenue / Adjusted assets
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
Average production assets, $m
  19,853
  20,510
  21,222
  21,991
  22,818
  23,704
  24,651
  25,661
  26,735
  27,877
  29,087
  30,369
  31,725
  33,159
  34,674
  36,273
  37,959
  39,738
  41,612
  43,586
  45,665
  47,854
  50,158
  52,582
  55,132
  57,814
  60,634
  63,599
  66,716
  69,992
  73,436
Working capital, $m
  1,398
  22
  23
  24
  25
  25
  26
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
  68
  72
  75
  79
Total debt, $m
  8,544
  9,096
  9,680
  10,311
  10,990
  11,717
  12,495
  13,324
  14,205
  15,142
  16,135
  17,187
  18,301
  19,477
  20,721
  22,033
  23,417
  24,877
  26,415
  28,035
  29,742
  31,538
  33,429
  35,418
  37,511
  39,712
  42,027
  44,460
  47,018
  49,707
  52,534
Total liabilities, $m
  16,281
  16,833
  17,417
  18,048
  18,727
  19,454
  20,232
  21,061
  21,942
  22,879
  23,872
  24,924
  26,038
  27,214
  28,458
  29,770
  31,154
  32,614
  34,152
  35,772
  37,479
  39,275
  41,166
  43,155
  45,248
  47,449
  49,764
  52,197
  54,755
  57,444
  60,271
Total equity, $m
  6,238
  5,028
  5,203
  5,391
  5,594
  5,811
  6,043
  6,291
  6,554
  6,834
  7,131
  7,445
  7,777
  8,129
  8,500
  8,892
  9,306
  9,742
  10,201
  10,685
  11,195
  11,732
  12,296
  12,891
  13,516
  14,173
  14,864
  15,591
  16,355
  17,159
  18,003
Total liabilities and equity, $m
  22,519
  21,861
  22,620
  23,439
  24,321
  25,265
  26,275
  27,352
  28,496
  29,713
  31,003
  32,369
  33,815
  35,343
  36,958
  38,662
  40,460
  42,356
  44,353
  46,457
  48,674
  51,007
  53,462
  56,046
  58,764
  61,622
  64,628
  67,788
  71,110
  74,603
  78,274
Debt-to-equity ratio
  1.370
  1.810
  1.860
  1.910
  1.960
  2.020
  2.070
  2.120
  2.170
  2.220
  2.260
  2.310
  2.350
  2.400
  2.440
  2.480
  2.520
  2.550
  2.590
  2.620
  2.660
  2.690
  2.720
  2.750
  2.780
  2.800
  2.830
  2.850
  2.870
  2.900
  2.920
Adjusted equity ratio
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,405
  -10,558
  -10,936
  -11,345
  -11,784
  -12,255
  -12,759
  -13,296
  -13,867
  -14,474
  -15,118
  -15,800
  -16,521
  -17,284
  -18,090
  -18,941
  -19,838
  -20,785
  -21,782
  -22,833
  -23,939
  -25,104
  -26,330
  -27,620
  -28,977
  -30,405
  -31,905
  -33,484
  -35,143
  -36,886
  -38,719
Depreciation, amort., depletion, $m
  2,618
  2,699
  2,792
  2,893
  3,002
  3,119
  3,244
  3,376
  3,518
  3,668
  3,827
  3,996
  4,174
  4,363
  4,562
  4,773
  4,995
  5,229
  5,475
  5,735
  6,009
  6,297
  6,600
  6,919
  7,254
  7,607
  7,978
  8,368
  8,778
  9,210
  9,663
Funds from operations, $m
  2,583
  -7,859
  -8,144
  -8,451
  -8,782
  -9,136
  -9,515
  -9,919
  -10,349
  -10,806
  -11,291
  -11,804
  -12,347
  -12,921
  -13,528
  -14,168
  -14,844
  -15,556
  -16,307
  -17,098
  -17,931
  -18,807
  -19,730
  -20,701
  -21,723
  -22,797
  -23,927
  -25,115
  -26,364
  -27,677
  -29,057
Change in working capital, $m
  153
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
Cash from operations, $m
  2,430
  -8,845
  -8,145
  -8,452
  -8,783
  -9,137
  -9,516
  -9,920
  -10,351
  -10,807
  -11,292
  -11,805
  -12,348
  -12,923
  -13,529
  -14,170
  -14,846
  -15,558
  -16,309
  -17,100
  -17,933
  -18,810
  -19,733
  -20,704
  -21,726
  -22,800
  -23,930
  -25,119
  -26,368
  -27,680
  -29,060
Maintenance CAPEX, $m
  0
  -2,612
  -2,699
  -2,792
  -2,893
  -3,002
  -3,119
  -3,244
  -3,376
  -3,518
  -3,668
  -3,827
  -3,996
  -4,174
  -4,363
  -4,562
  -4,773
  -4,995
  -5,229
  -5,475
  -5,735
  -6,009
  -6,297
  -6,600
  -6,919
  -7,254
  -7,607
  -7,978
  -8,368
  -8,778
  -9,210
New CAPEX, $m
  -1,768
  -657
  -712
  -769
  -827
  -886
  -947
  -1,010
  -1,074
  -1,141
  -1,210
  -1,282
  -1,356
  -1,434
  -1,515
  -1,599
  -1,687
  -1,778
  -1,874
  -1,974
  -2,079
  -2,189
  -2,304
  -2,424
  -2,550
  -2,682
  -2,820
  -2,965
  -3,117
  -3,276
  -3,444
Cash from investing activities, $m
  -1,660
  -3,269
  -3,411
  -3,561
  -3,720
  -3,888
  -4,066
  -4,254
  -4,450
  -4,659
  -4,878
  -5,109
  -5,352
  -5,608
  -5,878
  -6,161
  -6,460
  -6,773
  -7,103
  -7,449
  -7,814
  -8,198
  -8,601
  -9,024
  -9,469
  -9,936
  -10,427
  -10,943
  -11,485
  -12,054
  -12,654
Free cash flow, $m
  770
  -12,115
  -11,555
  -12,013
  -12,503
  -13,026
  -13,583
  -14,174
  -14,801
  -15,466
  -16,170
  -16,914
  -17,701
  -18,531
  -19,407
  -20,331
  -21,305
  -22,331
  -23,412
  -24,549
  -25,747
  -27,007
  -28,333
  -29,728
  -31,194
  -32,736
  -34,358
  -36,062
  -37,853
  -39,735
  -41,713
Issuance/(repayment) of debt, $m
  -181
  552
  584
  631
  679
  727
  777
  829
  882
  937
  993
  1,052
  1,113
  1,177
  1,243
  1,312
  1,384
  1,460
  1,538
  1,620
  1,706
  1,796
  1,891
  1,989
  2,093
  2,201
  2,315
  2,434
  2,558
  2,689
  2,826
Issuance/(repurchase) of shares, $m
  0
  10,353
  11,145
  11,571
  12,027
  12,516
  13,037
  13,593
  14,183
  14,810
  15,474
  16,177
  16,920
  17,706
  18,535
  19,411
  20,334
  21,307
  22,333
  23,413
  24,550
  25,747
  27,007
  28,333
  29,727
  31,193
  32,734
  34,355
  36,059
  37,849
  39,731
Cash from financing (excl. dividends), $m  
  -481
  10,905
  11,729
  12,202
  12,706
  13,243
  13,814
  14,422
  15,065
  15,747
  16,467
  17,229
  18,033
  18,883
  19,778
  20,723
  21,718
  22,767
  23,871
  25,033
  26,256
  27,543
  28,898
  30,322
  31,820
  33,394
  35,049
  36,789
  38,617
  40,538
  42,557
Total cash flow (excl. dividends), $m
  289
  -11,563
  -10,971
  -11,382
  -11,825
  -12,299
  -12,805
  -13,345
  -13,920
  -14,530
  -15,177
  -15,862
  -16,588
  -17,354
  -18,164
  -19,019
  -19,921
  -20,871
  -21,873
  -22,929
  -24,041
  -25,211
  -26,442
  -27,738
  -29,102
  -30,535
  -32,043
  -33,628
  -35,295
  -37,046
  -38,887
Retained Cash Flow (-), $m
  1,650
  -167
  -174
  -188
  -203
  -217
  -232
  -248
  -263
  -280
  -297
  -314
  -333
  -352
  -371
  -392
  -413
  -436
  -459
  -484
  -510
  -537
  -565
  -594
  -625
  -657
  -691
  -727
  -764
  -803
  -844
Prev. year cash balance distribution, $m
 
  1,377
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Discount rate, %
 
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  56.7
  31.6
  17.6
  9.8
  5.4
  3.0
  1.7
  0.9
  0.5
  0.3
  0.2
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Apache Corporation, an independent energy company, explores for, develops, and produces natural gas, crude oil, and natural gas liquids. It operates onshore and offshore assets primarily in the Permian Basin, the Midcontinent/Gulf Coast, Canada, and the Gulf of Mexico, as well as Egypt and the North Sea, the United Kingdom. As of December 31, 2016, it had total estimated proved reserves of 642 million barrels of crude oil, 192 million barrels of natural gas liquids, and 2.9 trillion cubic feet of natural gas. Apache Corporation was founded in 1954 and is based in Houston, Texas.

FINANCIAL RATIOS  of  Apache (APA)

Valuation Ratios
P/E Ratio -12.4
Price to Sales 3.3
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 7.2
Price to Free Cash Flow 26.4
Growth Rates
Sales Growth Rate -19.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -60.2%
Cap. Spend. - 3 Yr. Gr. Rate -28%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 137%
Total Debt to Equity 137%
Interest Coverage -3
Management Effectiveness
Return On Assets -4.6%
Ret/ On Assets - 3 Yr. Avg. -12.6%
Return On Total Capital -9%
Ret/ On T. Cap. - 3 Yr. Avg. -20.3%
Return On Equity -19.9%
Return On Equity - 3 Yr. Avg. -33.1%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 72%
Gross Margin - 3 Yr. Avg. 75.5%
EBITDA Margin 25.3%
EBITDA Margin - 3 Yr. Avg. -15.6%
Operating Margin -31.5%
Oper. Margin - 3 Yr. Avg. -79.2%
Pre-Tax Margin -31.5%
Pre-Tax Margin - 3 Yr. Avg. -79.2%
Net Profit Margin -26.3%
Net Profit Margin - 3 Yr. Avg. -75.1%
Effective Tax Rate 26.3%
Eff/ Tax Rate - 3 Yr. Avg. 3.7%
Payout Ratio -27%

APA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the APA stock intrinsic value calculation we used $5333 million for the last fiscal year's total revenue generated by Apache. The default revenue input number comes from 2016 income statement of Apache. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our APA stock valuation model: a) initial revenue growth rate of 3.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7%, whose default value for APA is calculated based on our internal credit rating of Apache, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Apache.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of APA stock the variable cost ratio is equal to 284.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for APA stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.8% for Apache.

Corporate tax rate of 27% is the nominal tax rate for Apache. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the APA stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for APA are equal to 372.3%.

Life of production assets of 7.6 years is the average useful life of capital assets used in Apache operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for APA is equal to 0.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6238 million for Apache - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 377.337 million for Apache is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Apache at the current share price and the inputted number of shares is $17.4 billion.

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COMPANY NEWS

▶ Nvidia and AMD: Cramer's Top Takeaways   [Jun-22-17 04:16PM  TheStreet.com]
▶ Price Strength Didn't Last for Apache   [02:23PM  TheStreet.com]
▶ The Most Ignored Oil Price Influencer   [Jun-21-17 05:00PM  Oilprice.com]
▶ Apache Corp. Value Analysis (NYSE:APA) : June 20, 2017   [Jun-20-17 03:39PM  Capital Cube]
▶ ETFs with exposure to Apache Corp. : June 15, 2017   [Jun-15-17 01:04PM  Capital Cube]
▶ Better Buy: Apache Corp. vs. Anadarko   [Jun-13-17 10:50AM  Motley Fool]
▶ Bullish on EOG Resources Inc? You'll Love These Stocks   [Jun-12-17 04:30PM  Motley Fool]
▶ Apache extends headquarters lease near Galleria again   [04:14PM  American City Business Journals]
▶ New Strong Sell Stocks for June 7th   [Jun-07-17 07:56AM  Zacks]
▶ Oil Prices Rebound As EIA Reports Big Crude Draw   [Jun-01-17 11:27AM  TheStreet.com]
▶ The Oil Stocks: Cheap or a Value Trap?   [May-31-17 05:53PM  Zacks]
▶ Deal finalized to acquire Galleria-area's Blvd Place   [May-30-17 03:37PM  American City Business Journals]
▶ Better Buy: Apache Corp. vs. Devon   [10:47AM  Motley Fool]
▶ 3 Key Takeaways Hidden in Apache's Q1 Earnings   [May-24-17 08:14AM  Motley Fool]
▶ This Could Be Oils Last Trip Into The $40s   [May-21-17 07:00PM  Oilprice.com]
▶ Jim Cramer's 4 Favorite Oil Plays   [11:00AM  TheStreet.com]
▶ Apache's Turnaround Continues   [May-15-17 01:00PM  TheStreet.com]
▶ Apache Declares Cash Dividend on Common Shares   [May-12-17 08:30AM  GlobeNewswire]
▶ ETFs with exposure to Apache Corp. : May 11, 2017   [May-11-17 04:07PM  Capital Cube]
▶ Textron Surges on Takeover Talk   [04:02PM  TheStreet.com]
▶ Occidental Petroleum to Test Texas Supertanker This Month   [May-10-17 03:59PM  TheStreet.com]
▶ Apache misses 1Q profit forecasts   [08:17AM  Associated Press]
▶ What to Expect When Apache Reports Q1 Earnings   [May-02-17 05:11PM  Motley Fool]
▶ Key Trends in Whiting Petroleums Implied Volatility   [Apr-28-17 10:38AM  Market Realist]
▶ Alpine High Play Impacts APAs 2017 Production Profile   [Apr-27-17 12:35PM  Market Realist]
▶ Better Buy: Apache Corp. vs. Marathon Oil   [Apr-20-17 07:46AM  Motley Fool]
▶ Why The Permian Doesnt Keep OPEC Awake At Night   [Apr-18-17 07:00PM  Oilprice.com]
▶ Apache Corp. Value Analysis (NYSE:APA) : April 12, 2017   [Apr-12-17 01:20PM  Capital Cube]
▶ Stock Indexes Quiet, But Oil Explorers Rise   [Apr-10-17 03:01PM  Investor's Business Daily]
▶ These Stocks Show a Change of Direction   [02:00PM  TheStreet.com]
▶ Apaches Implied Volatility and Stock Price Forecast   [Apr-04-17 09:05AM  Market Realist]
▶ Apache Stock Performance and Its Moving Averages   [Apr-03-17 10:37AM  Market Realist]
▶ How Apaches Oil Production Mix Has Changed   [10:36AM  Market Realist]
Stock chart of APA Financial statements of APA Annual reports of APA
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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