Intrinsic value of BP Prudhoe Bay Royalty Trust - BPT

Previous Close

$20.85

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$20.85

 
Intrinsic value premium content
 
Up/down potential premium content
 
Rating premium content
 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

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

We calculate the intrinsic value of BPT 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 0.4

 

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, %
  -64.57
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  45
  130
  133
  136
  140
  144
  149
  154
  159
  165
  171
  178
  185
  193
  201
  210
  219
  229
  239
  250
  262
  274
  287
  300
  314
  329
  345
  361
  379
  397
  417
Variable 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
Fixed operating expenses, $m
 
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
Total operating expenses, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
Operating income, $m
  44
  129
  131
  135
  139
  143
  147
  153
  158
  164
  170
  177
  184
  192
  200
  209
  218
  227
  238
  249
  260
  272
  285
  298
  312
  327
  343
  360
  377
  395
  414
EBITDA, $m
  44
  129
  131
  135
  139
  143
  147
  153
  158
  164
  170
  177
  184
  192
  200
  209
  218
  227
  238
  249
  260
  272
  285
  298
  312
  327
  343
  360
  377
  395
  414
Interest expense (income), $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
  0
Earnings before tax, $m
  44
  129
  131
  135
  139
  143
  147
  153
  158
  164
  170
  177
  184
  192
  200
  209
  218
  227
  238
  249
  260
  272
  285
  298
  312
  327
  343
  360
  377
  395
  414
Tax expense, $m
  0
  35
  35
  36
  37
  39
  40
  41
  43
  44
  46
  48
  50
  52
  54
  56
  59
  61
  64
  67
  70
  73
  77
  81
  84
  88
  93
  97
  102
  107
  112
Net income, $m
  44
  94
  96
  98
  101
  104
  108
  111
  115
  120
  124
  129
  134
  140
  146
  152
  159
  166
  174
  181
  190
  199
  208
  218
  228
  239
  250
  262
  275
  289
  303

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  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
Total assets, $m
  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
Adjusted assets (=assets-cash), $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
  0
Revenue / Adjusted assets
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
Average production assets, $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
  0
Working capital, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
Total debt, $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
  0
Total liabilities, $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
  0
Total equity, $m
  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
Total liabilities and equity, $m
  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
Debt-to-equity ratio
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
Adjusted equity ratio
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  44
  94
  96
  98
  101
  104
  108
  111
  115
  120
  124
  129
  134
  140
  146
  152
  159
  166
  174
  181
  190
  199
  208
  218
  228
  239
  250
  262
  275
  289
  303
Depreciation, amort., depletion, $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
  0
Funds from operations, $m
  44
  94
  96
  98
  101
  104
  108
  111
  115
  120
  124
  129
  134
  140
  146
  152
  159
  166
  174
  181
  190
  199
  208
  218
  228
  239
  250
  262
  275
  289
  303
Change in working capital, $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
  0
Cash from operations, $m
  44
  94
  96
  98
  101
  104
  108
  111
  115
  120
  124
  129
  134
  140
  146
  152
  159
  166
  174
  182
  190
  199
  208
  218
  228
  239
  251
  263
  275
  289
  303
Maintenance CAPEX, $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
  0
New CAPEX, $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
  0
Cash from investing activities, $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
  0
Free cash flow, $m
  44
  94
  96
  98
  101
  104
  108
  111
  115
  120
  124
  129
  134
  140
  146
  152
  159
  166
  174
  182
  190
  199
  208
  218
  228
  239
  251
  263
  275
  289
  303
Issuance/(repayment) of debt, $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
  0
Issuance/(repurchase) of shares, $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
  0
Cash from financing (excl. dividends), $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
  0
Total cash flow (excl. dividends), $m
  44
  94
  96
  98
  101
  104
  108
  111
  115
  120
  124
  129
  134
  140
  146
  152
  159
  166
  174
  182
  190
  199
  208
  218
  228
  239
  251
  263
  275
  289
  303
Retained Cash Flow (-), $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
  0
Prev. year cash balance distribution, $m
 
  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
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
 
  95
  96
  98
  101
  104
  108
  111
  115
  120
  124
  129
  134
  140
  146
  152
  159
  166
  174
  182
  190
  199
  208
  218
  228
  239
  251
  263
  275
  289
  303
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  91
  88
  86
  83
  81
  78
  75
  72
  69
  65
  61
  57
  53
  49
  45
  40
  36
  32
  28
  24
  21
  17
  14
  12
  9
  7
  6
  4
  3
  2
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

BP Prudhoe Bay Royalty Trust operates as a grantor trust in the United States. The company holds overriding royalty interest comprising a non-operational interest in minerals in the Prudhoe Bay oil field located on the North Slope of Alaska. The Prudhoe Bay field extends approximately 12 miles by 27 miles and contains approximately 150,000 gross productive acres. As of December 31, 2015, its estimated net remaining proved reserves were 23.052 million barrels of oil and condensate, of which 22.418 million barrels are proved developed reserves and 0.634 million barrels are proved undeveloped reserves. BP Prudhoe Bay Royalty Trust was founded in 1989 and is based in Houston, Texas.

FINANCIAL RATIOS  of  BP Prudhoe Bay Royalty Trust (BPT)

Valuation Ratios
P/E Ratio 10.1
Price to Sales 9.9
Price to Book 446.2
Price to Tangible Book
Price to Cash Flow 10.1
Price to Free Cash Flow 10.1
Growth Rates
Sales Growth Rate -64.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 4400%
Ret/ On Assets - 3 Yr. Avg. 13200%
Return On Total Capital 4400%
Ret/ On T. Cap. - 3 Yr. Avg. 13200%
Return On Equity 4400%
Return On Equity - 3 Yr. Avg. 13200%
Asset Turnover 45
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 97.8%
EBITDA Margin - 3 Yr. Avg. 98.6%
Operating Margin 97.8%
Oper. Margin - 3 Yr. Avg. 98.9%
Pre-Tax Margin 97.8%
Pre-Tax Margin - 3 Yr. Avg. 98.6%
Net Profit Margin 97.8%
Net Profit Margin - 3 Yr. Avg. 98.6%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 100%

BPT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BPT stock intrinsic value calculation we used $127 million for the last fiscal year's total revenue generated by BP Prudhoe Bay Royalty Trust. The default revenue input number comes from 2016 income statement of BP Prudhoe Bay Royalty Trust. 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 BPT stock valuation model: a) initial revenue growth rate of 2% 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 4.3%, whose default value for BPT is calculated based on our internal credit rating of BP Prudhoe Bay Royalty Trust, 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 BP Prudhoe Bay Royalty Trust.
    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 BPT stock the variable cost ratio is equal to 0%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1 million in the base year in the intrinsic value calculation for BPT 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 3.5% for BP Prudhoe Bay Royalty Trust.

Corporate tax rate of 27% is the nominal tax rate for BP Prudhoe Bay Royalty Trust. 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 BPT 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 BPT are equal to 0%.

Life of production assets of 10 years is the average useful life of capital assets used in BP Prudhoe Bay Royalty Trust 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 BPT is equal to -0.8%. 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 - $1 million for BP Prudhoe Bay Royalty Trust - 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 20.317 million for BP Prudhoe Bay Royalty Trust 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 BP Prudhoe Bay Royalty Trust at the current share price and the inputted number of shares is $0.4 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
SJT San Juan Basin 7.05 prem.  prem.
CVX Chevron 104.14 prem.  prem.
XOM Exxon Mobil 81.24 prem.  prem.

COMPANY NEWS

▶ Oil and Gas Stock Roundup: Look Out Below!   [Feb-25-17 10:00AM  Motley Fool]
▶ Oil and Gas Stock Roundup: Look Out Below!   [10:00AM  at Motley Fool]
▶ BP Prudhoe Bay Royalty Trust Drops 17%   [Feb-24-17 02:17PM  Barrons.com]
▶ BP Prudhoe Bay Royalty Trust Drops 17%   [02:17PM  at Barrons.com]
▶ 7 Dividend Stocks With Big Yields to Buy ASAP   [Oct-11-16 10:20AM  at Kiplinger]
▶ 3 Beaten-Up Energy Stocks: Are They Bargains?   [Jul-16-16 01:09PM  at Motley Fool]
▶ 3 Embarrassingly Unsustainable Dividend Stocks   [Jun-19-16 12:00PM  at Motley Fool]
▶ These 3 Oil Stocks Could Boost Their Dividends in 2016   [Jun-12-16 10:00AM  at Motley Fool]
▶ Buy These 5 Stocks Now for Big Breakout Gains   [May-02-16 09:56AM  at TheStreet]
▶ Investors Are Buzzing About These 5 Stocks Today   [Apr-07-16 11:49AM  at Insider Monkey]
▶ The 52-Week Low Club for Monday   [04:04PM  at 24/7 Wall St.]
▶ BP Prudhoe Bay Royalty Trust 'Dying'   [01:03PM  at The Wall Street Journal]
▶ These 5 Oil Stocks are Getting Slammed Today: Here's Why   [Mar-10-16 02:57PM  at Motley Fool]
▶ 3 Dividend Stocks That Retirees Should Avoid   [Nov-27  08:40AM  at Motley Fool]
▶ Top 3 Yielding Buy-Rated Stocks: BMR, BPT, MAT   [Aug-21  11:30AM  at TheStreet]
▶ Energy Investing 101: Tackling Oil & Gas Royalty Trusts   [Jun-23  12:21PM  at Motley Fool]
▶ 9 Basic Materials Dividend Dogs Fetch 10% To 20% June Upsides   [Jun-11  12:32PM  at Seeking Alpha]
▶ BP Prudhoe Bay Royalty Trust: Where Is The Stock Headed?   [Apr-26  07:51AM  at Seeking Alpha]
Stock chart of BPT Financial statements of BPT Annual reports of BPT
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.