Intrinsic value of Baytex Energy - BTE

Previous Close

$2.94

  Intrinsic Value

$1.55

stock screener

  Rating & Target

sell

-47%

Previous close

$2.94

 
Intrinsic value

$1.55

 
Up/down potential

-47%

 
Rating

sell

We calculate the intrinsic value of BTE 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 0.7

 

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, %
  -31.49
  39.50
  36.05
  32.95
  30.15
  27.64
  25.37
  23.33
  21.50
  19.85
  18.37
  17.03
  15.83
  14.74
  13.77
  12.89
  12.10
  11.39
  10.75
  10.18
  9.66
  9.19
  8.77
  8.40
  8.06
  7.75
  7.48
  7.23
  7.01
  6.81
  6.62
Revenue, $m
  446
  622
  846
  1,125
  1,465
  1,869
  2,344
  2,891
  3,512
  4,209
  4,982
  5,831
  6,754
  7,749
  8,816
  9,953
  11,158
  12,429
  13,765
  15,166
  16,632
  18,161
  19,754
  21,413
  23,139
  24,932
  26,797
  28,734
  30,747
  32,839
  35,015
Variable operating expenses, $m
 
  1,557
  2,118
  2,816
  3,664
  4,677
  5,864
  7,232
  8,787
  10,532
  12,466
  14,589
  16,897
  19,389
  22,059
  24,902
  27,916
  31,097
  34,441
  37,947
  41,612
  45,438
  49,426
  53,576
  57,893
  62,381
  67,045
  71,892
  76,928
  82,164
  87,607
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
  953
  1,557
  2,118
  2,816
  3,664
  4,677
  5,864
  7,232
  8,787
  10,532
  12,466
  14,589
  16,897
  19,389
  22,059
  24,902
  27,916
  31,097
  34,441
  37,947
  41,612
  45,438
  49,426
  53,576
  57,893
  62,381
  67,045
  71,892
  76,928
  82,164
  87,607
Operating income, $m
  -507
  -934
  -1,271
  -1,690
  -2,200
  -2,808
  -3,520
  -4,342
  -5,275
  -6,322
  -7,483
  -8,758
  -10,144
  -11,639
  -13,242
  -14,949
  -16,759
  -18,668
  -20,676
  -22,780
  -24,981
  -27,278
  -29,671
  -32,163
  -34,754
  -37,448
  -40,248
  -43,158
  -46,182
  -49,325
  -52,592
EBITDA, $m
  -131
  -408
  -555
  -738
  -961
  -1,226
  -1,538
  -1,896
  -2,304
  -2,761
  -3,269
  -3,825
  -4,431
  -5,084
  -5,784
  -6,529
  -7,320
  -8,154
  -9,030
  -9,950
  -10,911
  -11,914
  -12,959
  -14,048
  -15,180
  -16,356
  -17,579
  -18,850
  -20,171
  -21,543
  -22,971
Interest expense (income), $m
  77
  75
  120
  176
  247
  332
  434
  553
  691
  848
  1,023
  1,218
  1,432
  1,664
  1,915
  2,184
  2,470
  2,774
  3,094
  3,431
  3,784
  4,153
  4,538
  4,940
  5,358
  5,792
  6,244
  6,714
  7,202
  7,709
  8,236
Earnings before tax, $m
  -561
  -1,010
  -1,391
  -1,867
  -2,446
  -3,140
  -3,954
  -4,895
  -5,966
  -7,170
  -8,507
  -9,976
  -11,576
  -13,304
  -15,157
  -17,134
  -19,229
  -21,442
  -23,770
  -26,211
  -28,765
  -31,430
  -34,209
  -37,102
  -40,112
  -43,241
  -46,492
  -49,872
  -53,383
  -57,033
  -60,828
Tax expense, $m
  -202
  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
  -359
  -1,010
  -1,391
  -1,867
  -2,446
  -3,140
  -3,954
  -4,895
  -5,966
  -7,170
  -8,507
  -9,976
  -11,576
  -13,304
  -15,157
  -17,134
  -19,229
  -21,442
  -23,770
  -26,211
  -28,765
  -31,430
  -34,209
  -37,102
  -40,112
  -43,241
  -46,492
  -49,872
  -53,383
  -57,033
  -60,828

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2
  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
  3,400
  4,749
  6,462
  8,590
  11,180
  14,270
  17,891
  22,065
  26,810
  32,132
  38,033
  44,510
  51,554
  59,155
  67,301
  75,977
  85,173
  94,877
  105,079
  115,775
  126,959
  138,632
  150,797
  163,460
  176,631
  190,324
  204,554
  219,341
  234,708
  250,681
  267,289
Adjusted assets (=assets-cash), $m
  3,398
  4,749
  6,462
  8,590
  11,180
  14,270
  17,891
  22,065
  26,810
  32,132
  38,033
  44,510
  51,554
  59,155
  67,301
  75,977
  85,173
  94,877
  105,079
  115,775
  126,959
  138,632
  150,797
  163,460
  176,631
  190,324
  204,554
  219,341
  234,708
  250,681
  267,289
Revenue / Adjusted assets
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
Average production assets, $m
  3,283
  4,579
  6,230
  8,282
  10,780
  13,759
  17,249
  21,275
  25,849
  30,980
  36,670
  42,915
  49,706
  57,035
  64,888
  73,254
  82,120
  91,476
  101,313
  111,625
  122,409
  133,663
  145,392
  157,602
  170,301
  183,502
  197,222
  211,480
  226,296
  241,697
  257,709
Working capital, $m
  -25
  -38
  -52
  -69
  -89
  -114
  -143
  -176
  -214
  -257
  -304
  -356
  -412
  -473
  -538
  -607
  -681
  -758
  -840
  -925
  -1,015
  -1,108
  -1,205
  -1,306
  -1,411
  -1,521
  -1,635
  -1,753
  -1,876
  -2,003
  -2,136
Total debt, $m
  1,298
  2,065
  3,040
  4,251
  5,725
  7,483
  9,543
  11,918
  14,618
  17,646
  21,004
  24,689
  28,697
  33,022
  37,657
  42,594
  47,826
  53,348
  59,153
  65,239
  71,603
  78,245
  85,166
  92,372
  99,866
  107,657
  115,754
  124,168
  132,912
  142,001
  151,450
Total liabilities, $m
  1,936
  2,702
  3,677
  4,888
  6,362
  8,120
  10,180
  12,555
  15,255
  18,283
  21,641
  25,326
  29,334
  33,659
  38,294
  43,231
  48,463
  53,985
  59,790
  65,876
  72,240
  78,882
  85,803
  93,009
  100,503
  108,294
  116,391
  124,805
  133,549
  142,638
  152,087
Total equity, $m
  1,465
  2,047
  2,785
  3,702
  4,819
  6,150
  7,711
  9,510
  11,555
  13,849
  16,392
  19,184
  22,220
  25,496
  29,007
  32,746
  36,710
  40,892
  45,289
  49,899
  54,719
  59,750
  64,993
  70,451
  76,128
  82,029
  88,163
  94,536
  101,159
  108,044
  115,202
Total liabilities and equity, $m
  3,401
  4,749
  6,462
  8,590
  11,181
  14,270
  17,891
  22,065
  26,810
  32,132
  38,033
  44,510
  51,554
  59,155
  67,301
  75,977
  85,173
  94,877
  105,079
  115,775
  126,959
  138,632
  150,796
  163,460
  176,631
  190,323
  204,554
  219,341
  234,708
  250,682
  267,289
Debt-to-equity ratio
  0.886
  1.010
  1.090
  1.150
  1.190
  1.220
  1.240
  1.250
  1.270
  1.270
  1.280
  1.290
  1.290
  1.300
  1.300
  1.300
  1.300
  1.300
  1.310
  1.310
  1.310
  1.310
  1.310
  1.310
  1.310
  1.310
  1.310
  1.310
  1.310
  1.310
  1.310
Adjusted equity ratio
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -359
  -1,010
  -1,391
  -1,867
  -2,446
  -3,140
  -3,954
  -4,895
  -5,966
  -7,170
  -8,507
  -9,976
  -11,576
  -13,304
  -15,157
  -17,134
  -19,229
  -21,442
  -23,770
  -26,211
  -28,765
  -31,430
  -34,209
  -37,102
  -40,112
  -43,241
  -46,492
  -49,872
  -53,383
  -57,033
  -60,828
Depreciation, amort., depletion, $m
  376
  526
  716
  952
  1,239
  1,581
  1,983
  2,445
  2,971
  3,561
  4,215
  4,933
  5,713
  6,556
  7,458
  8,420
  9,439
  10,515
  11,645
  12,830
  14,070
  15,364
  16,712
  18,115
  19,575
  21,092
  22,669
  24,308
  26,011
  27,781
  29,622
Funds from operations, $m
  535
  -483
  -675
  -915
  -1,207
  -1,558
  -1,971
  -2,450
  -2,995
  -3,609
  -4,292
  -5,043
  -5,862
  -6,748
  -7,699
  -8,714
  -9,790
  -10,928
  -12,125
  -13,380
  -14,695
  -16,067
  -17,498
  -18,987
  -20,537
  -22,148
  -23,823
  -25,564
  -27,372
  -29,252
  -31,207
Change in working capital, $m
  352
  -11
  -14
  -17
  -21
  -25
  -29
  -33
  -38
  -43
  -47
  -52
  -56
  -61
  -65
  -69
  -73
  -78
  -82
  -85
  -89
  -93
  -97
  -101
  -105
  -109
  -114
  -118
  -123
  -128
  -133
Cash from operations, $m
  183
  -473
  -661
  -898
  -1,187
  -1,534
  -1,943
  -2,416
  -2,957
  -3,567
  -4,245
  -4,992
  -5,806
  -6,687
  -7,634
  -8,644
  -9,717
  -10,850
  -12,043
  -13,295
  -14,605
  -15,974
  -17,400
  -18,886
  -20,432
  -22,039
  -23,710
  -25,446
  -27,250
  -29,125
  -31,074
Maintenance CAPEX, $m
  0
  -377
  -526
  -716
  -952
  -1,239
  -1,581
  -1,983
  -2,445
  -2,971
  -3,561
  -4,215
  -4,933
  -5,713
  -6,556
  -7,458
  -8,420
  -9,439
  -10,515
  -11,645
  -12,830
  -14,070
  -15,364
  -16,712
  -18,115
  -19,575
  -21,092
  -22,669
  -24,308
  -26,011
  -27,781
New CAPEX, $m
  -166
  -1,297
  -1,651
  -2,052
  -2,497
  -2,979
  -3,491
  -4,025
  -4,574
  -5,131
  -5,690
  -6,245
  -6,792
  -7,329
  -7,853
  -8,366
  -8,866
  -9,356
  -9,837
  -10,312
  -10,783
  -11,255
  -11,729
  -12,209
  -12,699
  -13,202
  -13,720
  -14,257
  -14,817
  -15,401
  -16,012
Cash from investing activities, $m
  -216
  -1,674
  -2,177
  -2,768
  -3,449
  -4,218
  -5,072
  -6,008
  -7,019
  -8,102
  -9,251
  -10,460
  -11,725
  -13,042
  -14,409
  -15,824
  -17,286
  -18,795
  -20,352
  -21,957
  -23,613
  -25,325
  -27,093
  -28,921
  -30,814
  -32,777
  -34,812
  -36,926
  -39,125
  -41,412
  -43,793
Free cash flow, $m
  -33
  -2,147
  -2,839
  -3,666
  -4,636
  -5,752
  -7,015
  -8,424
  -9,977
  -11,669
  -13,496
  -15,451
  -17,531
  -19,729
  -22,043
  -24,468
  -27,003
  -29,645
  -32,395
  -35,252
  -38,219
  -41,298
  -44,493
  -47,807
  -51,246
  -54,815
  -58,522
  -62,372
  -66,374
  -70,536
  -74,868
Issuance/(repayment) of debt, $m
  -45
  767
  974
  1,211
  1,474
  1,758
  2,060
  2,375
  2,700
  3,028
  3,358
  3,685
  4,008
  4,325
  4,635
  4,937
  5,232
  5,521
  5,805
  6,086
  6,364
  6,642
  6,922
  7,205
  7,494
  7,791
  8,097
  8,414
  8,744
  9,089
  9,450
Issuance/(repurchase) of shares, $m
  81
  1,594
  2,129
  2,784
  3,563
  4,472
  5,515
  6,694
  8,011
  9,464
  11,050
  12,768
  14,612
  16,580
  18,668
  20,873
  23,193
  25,624
  28,167
  30,821
  33,585
  36,462
  39,452
  42,560
  45,789
  49,142
  52,626
  56,245
  60,007
  63,918
  67,986
Cash from financing (excl. dividends), $m  
  36
  2,361
  3,103
  3,995
  5,037
  6,230
  7,575
  9,069
  10,711
  12,492
  14,408
  16,453
  18,620
  20,905
  23,303
  25,810
  28,425
  31,145
  33,972
  36,907
  39,949
  43,104
  46,374
  49,765
  53,283
  56,933
  60,723
  64,659
  68,751
  73,007
  77,436
Total cash flow (excl. dividends), $m
  2
  215
  265
  329
  401
  478
  560
  646
  734
  823
  913
  1,002
  1,089
  1,176
  1,260
  1,342
  1,422
  1,501
  1,578
  1,654
  1,730
  1,805
  1,881
  1,958
  2,037
  2,118
  2,201
  2,287
  2,377
  2,470
  2,568
Retained Cash Flow (-), $m
  322
  -1,594
  -2,129
  -2,784
  -3,563
  -4,472
  -5,515
  -6,694
  -8,011
  -9,464
  -11,050
  -12,768
  -14,612
  -16,580
  -18,668
  -20,873
  -23,193
  -25,624
  -28,167
  -30,821
  -33,585
  -36,462
  -39,452
  -42,560
  -45,789
  -49,142
  -52,626
  -56,245
  -60,007
  -63,918
  -67,986
Prev. year cash balance distribution, $m
 
  2
  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
 
  -1,377
  -1,864
  -2,455
  -3,162
  -3,994
  -4,955
  -6,049
  -7,277
  -8,641
  -10,138
  -11,766
  -13,523
  -15,404
  -17,408
  -19,531
  -21,770
  -24,124
  -26,589
  -29,167
  -31,855
  -34,656
  -37,571
  -40,602
  -43,752
  -47,025
  -50,425
  -53,958
  -57,630
  -61,448
  -65,418
Discount rate, %
 
  9.50
  9.98
  10.47
  11.00
  11.55
  12.12
  12.73
  13.37
  14.04
  14.74
  15.47
  16.25
  17.06
  17.91
  18.81
  19.75
  20.74
  21.77
  22.86
  24.01
  25.21
  26.47
  27.79
  29.18
  30.64
  32.17
  33.78
  35.47
  37.24
  39.10
PV of cash for distribution, $m
 
  -1,258
  -1,541
  -1,821
  -2,083
  -2,312
  -2,494
  -2,614
  -2,667
  -2,650
  -2,564
  -2,417
  -2,220
  -1,987
  -1,733
  -1,472
  -1,218
  -980
  -767
  -583
  -431
  -309
  -214
  -144
  -94
  -59
  -36
  -21
  -12
  -6
  -3
Current shareholders' claim on cash, %
  100
  39.1
  15.7
  6.5
  2.7
  1.2
  0.5
  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
  0.0
  0.0
  0.0
  0.0

Baytex Energy Corp. (Baytex) is engaged in the business of acquiring, developing, exploiting and holding interests in petroleum and natural gas properties and related assets in Canada (Alberta and Saskatchewan) and in the United States (Texas). The Company's crude oil and natural gas operations are organized into four business units: Lloydminster, Peace River, Conventional and United States. Each business unit has a portfolio of mineral leases, operated and non-operated properties and development prospects. The Company's subsidiaries include Baytex Energy Ltd. and Baytex Energy USA, Inc. Baytex Energy Ltd. is engaged in the business of oil and natural gas exploration, exploitation, development, acquisition and production in Canada. Baytex Energy USA, Inc. is engaged in the business of oil and natural gas exploration, exploitation, development, acquisition and production in the United States. It holds all of the operating assets in the United States.

FINANCIAL RATIOS  of  Baytex Energy (BTE)

Valuation Ratios
P/E Ratio -1.9
Price to Sales 1.5
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 3.8
Price to Free Cash Flow 40.4
Growth Rates
Sales Growth Rate -31.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -57.1%
Cap. Spend. - 3 Yr. Gr. Rate -16.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 88.6%
Total Debt to Equity 88.6%
Interest Coverage -6
Management Effectiveness
Return On Assets -8.3%
Ret/ On Assets - 3 Yr. Avg. -66.2%
Return On Total Capital -12.1%
Ret/ On T. Cap. - 3 Yr. Avg. -14%
Return On Equity -22.1%
Return On Equity - 3 Yr. Avg. -25.2%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 59.9%
Gross Margin - 3 Yr. Avg. 66.8%
EBITDA Margin -24.2%
EBITDA Margin - 3 Yr. Avg. -22.2%
Operating Margin -113.7%
Oper. Margin - 3 Yr. Avg. -90.2%
Pre-Tax Margin -125.8%
Pre-Tax Margin - 3 Yr. Avg. -98.3%
Net Profit Margin -80.5%
Net Profit Margin - 3 Yr. Avg. -73%
Effective Tax Rate 36%
Eff/ Tax Rate - 3 Yr. Avg. 3319.7%
Payout Ratio 0%

BTE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BTE stock intrinsic value calculation we used $446 million for the last fiscal year's total revenue generated by Baytex Energy. The default revenue input number comes from 2016 income statement of Baytex Energy. 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 BTE stock valuation model: a) initial revenue growth rate of 39.5% 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 9.5%, whose default value for BTE is calculated based on our internal credit rating of Baytex Energy, 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 Baytex Energy.
    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 BTE stock the variable cost ratio is equal to 250.2%.

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 BTE 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 5.8% for Baytex Energy.

Corporate tax rate of 27% is the nominal tax rate for Baytex Energy. 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 BTE 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 BTE are equal to 736%.

Life of production assets of 8.7 years is the average useful life of capital assets used in Baytex Energy 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 BTE is equal to -6.1%. 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 - $1465 million for Baytex Energy - 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 235.709 million for Baytex Energy 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 Baytex Energy at the current share price and the inputted number of shares is $0.7 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ Baytex Announces 2018 Budget and Board Succession   [Dec-07-17 06:30AM  GlobeNewswire]
▶ Oil Prices: Is Another Tumble in the Forecast?   [Nov-19-17 09:09AM  Motley Fool]
▶ Saudi Shake-Up Sent Oil Stocks Soaring Today   [Nov-06-17 04:37PM  Motley Fool]
▶ Baytex reports 3Q loss   [11:07AM  Associated Press]
▶ Will These Beaten-Down Oil Stocks Sink or Swim?   [Sep-12-17 10:10AM  Motley Fool]
▶ Baytex Provides Update on Impact of Hurricane Harvey   [Sep-11-17 05:00PM  GlobeNewswire]
▶ Baytex posts 2Q profit   [Aug-01-17 10:58PM  Associated Press]
▶ Can Baytex Energy Corp Weather Another Market Downturn?   [Jun-15-17 01:30PM  Motley Fool]
▶ International Moat Index: France Impacted Its Performance   [May-31-17 10:48AM  Market Realist]
▶ ETFs with exposure to Baytex Energy Corp. : May 22, 2017   [May-22-17 01:25PM  Capital Cube]
▶ ETFs with exposure to Baytex Energy Corp. : May 11, 2017   [May-11-17 04:17PM  Capital Cube]
▶ Baytex posts 1Q profit   [May-04-17 07:49PM  Associated Press]
▶ Baytex Q1 2017 Production Increases 6%   [04:30PM  GlobeNewswire]
▶ 4 Oil Stocks Id Avoid at All Costs   [Apr-29-17 05:00PM  Motley Fool]
▶ ETFs with exposure to Baytex Energy Corp. : April 5, 2017   [Apr-05-17 04:26PM  Capital Cube]
▶ Baytex Energy Files 2016 Year-End Disclosure Documents   [Mar-07-17 06:13PM  Marketwired]
▶ Baytex reports 4Q loss   [08:01AM  Associated Press]
▶ 2 Stocks to Avoid (and 1 to Buy)   [Feb-21-17 04:07PM  Motley Fool]
▶ Baytex to Present at CIBC Whistler Conference   [Jan-23-17 05:15PM  Marketwired]
▶ Baytex Announces Closing of Peace River Acquisition   [Jan-20-17 05:08PM  Marketwired]
▶ Was Baytex Energy Corp's Fantastic Run in 2016 Too Much?   [Jan-17-17 01:27PM  at Motley Fool]
▶ Is Baytex Energy Corp (USA) (BTE) Worthy of Your Portfolio?   [Dec-14-16 03:05AM  at Insider Monkey]
▶ Why Baytex Energy, Akorn, and Alamos Gold Jumped Today   [Dec-12-16 05:52PM  at Motley Fool]
▶ Why Canadian Oil Stocks Blasted Off Today   [Nov-30-16 04:08PM  at Motley Fool]
▶ Baytex Bets on Oil Recovery (BTE)   [Nov-29-16 08:45AM  at Investopedia]
▶ Is Wix.Com Ltd (WIX) A Good Stock to Buy?   [Nov-28-16 10:15AM  at Insider Monkey]
▶ Baytex Energy Corp. Goes Shopping   [Nov-23-16 04:48PM  at Motley Fool]
▶ Will Trump Be Good for Baytex Energy? (BTE)   [Nov-14-16 08:48AM  at Investopedia]
▶ Baytex Q3 Earnings Report: Hits and Misses (BTE)   [Nov-04-16 06:33PM  at Investopedia]
▶ Baytex Reports Q3 2016 Results   [07:30AM  Marketwired]
▶ These 3 Oil Stocks Aren't Out of the Woods Just Yet   [Oct-26-16 05:15PM  at Motley Fool]
▶ Baytex Blames Blast on Poor Regulator Standards (BTE)   [Oct-24-16 04:05PM  at Investopedia]
▶ Baytex Short Interest Surges in September (BTE)   [Oct-20-16 03:53PM  at Investopedia]
▶ How Bad Is Baytex Debt? (BTE)   [Oct-14-16 08:04AM  at Investopedia]
▶ Is the Worst Over for Oil Stocks?   [Sep-08-16 03:30PM  at Motley Fool]
▶ Baytex to Present at Peters & Co. Energy Conference   [Sep-07-16 05:15PM  Marketwired]
Financial statements of BTE
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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