Intrinsic value of CNOOC ADR - CEO

Previous Close

$136.75

  Intrinsic Value

$29.66

stock screener

  Rating & Target

str. sell

-78%

Previous close

$136.75

 
Intrinsic value

$29.66

 
Up/down potential

-78%

 
Rating

str. sell

We calculate the intrinsic value of CEO 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 61.3

 

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, %
  -14.55
  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
  21,193
  21,617
  22,114
  22,682
  23,320
  24,027
  24,803
  25,648
  26,562
  27,547
  28,605
  29,736
  30,942
  32,227
  33,593
  35,042
  36,578
  38,203
  39,922
  41,739
  43,656
  45,680
  47,814
  50,064
  52,434
  54,930
  57,558
  60,324
  63,235
  66,298
  69,519
Variable operating expenses, $m
 
  4,406
  4,502
  4,612
  4,736
  4,873
  5,023
  5,187
  5,365
  5,556
  5,761
  5,767
  6,001
  6,250
  6,515
  6,796
  7,094
  7,409
  7,742
  8,094
  8,466
  8,859
  9,273
  9,709
  10,168
  10,653
  11,162
  11,699
  12,263
  12,857
  13,482
Fixed operating expenses, $m
 
  18,098
  18,551
  19,015
  19,490
  19,977
  20,477
  20,989
  21,513
  22,051
  22,602
  23,168
  23,747
  24,340
  24,949
  25,573
  26,212
  26,867
  27,539
  28,227
  28,933
  29,656
  30,398
  31,158
  31,937
  32,735
  33,553
  34,392
  35,252
  36,133
  37,037
Total operating expenses, $m
  21,542
  22,504
  23,053
  23,627
  24,226
  24,850
  25,500
  26,176
  26,878
  27,607
  28,363
  28,935
  29,748
  30,590
  31,464
  32,369
  33,306
  34,276
  35,281
  36,321
  37,399
  38,515
  39,671
  40,867
  42,105
  43,388
  44,715
  46,091
  47,515
  48,990
  50,519
Operating income, $m
  -349
  -887
  -939
  -944
  -906
  -823
  -697
  -528
  -316
  -59
  241
  801
  1,195
  1,637
  2,129
  2,674
  3,272
  3,927
  4,641
  5,417
  6,257
  7,165
  8,144
  9,197
  10,328
  11,542
  12,842
  14,233
  15,720
  17,307
  19,000
EBITDA, $m
  9,620
  9,141
  9,315
  9,567
  9,896
  10,300
  10,778
  11,330
  11,958
  12,661
  13,442
  14,302
  15,244
  16,269
  17,382
  18,584
  19,880
  21,273
  22,767
  24,367
  26,078
  27,905
  29,853
  31,927
  34,135
  36,482
  38,975
  41,622
  44,431
  47,408
  50,564
Interest expense (income), $m
  738
  662
  687
  715
  747
  783
  823
  867
  914
  966
  1,021
  1,081
  1,145
  1,213
  1,285
  1,362
  1,444
  1,530
  1,622
  1,719
  1,821
  1,929
  2,043
  2,163
  2,290
  2,424
  2,564
  2,712
  2,868
  3,032
  3,205
Earnings before tax, $m
  -763
  -1,549
  -1,626
  -1,660
  -1,653
  -1,606
  -1,520
  -1,395
  -1,230
  -1,025
  -780
  -279
  50
  425
  844
  1,312
  1,829
  2,397
  3,020
  3,698
  4,436
  5,236
  6,101
  7,034
  8,038
  9,119
  10,278
  11,521
  12,852
  14,275
  15,796
Tax expense, $m
  -855
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  14
  115
  228
  354
  494
  647
  815
  999
  1,198
  1,414
  1,647
  1,899
  2,170
  2,462
  2,775
  3,111
  3,470
  3,854
  4,265
Net income, $m
  92
  -1,549
  -1,626
  -1,660
  -1,653
  -1,606
  -1,520
  -1,395
  -1,230
  -1,025
  -780
  -279
  37
  310
  616
  958
  1,335
  1,750
  2,204
  2,700
  3,238
  3,822
  4,454
  5,135
  5,868
  6,657
  7,503
  8,410
  9,382
  10,421
  11,531

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  12,076
  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
  92,255
  81,882
  83,765
  85,918
  88,335
  91,013
  93,951
  97,151
  100,615
  104,346
  108,351
  112,635
  117,206
  122,073
  127,246
  132,735
  138,552
  144,709
  151,221
  158,101
  165,365
  173,030
  181,114
  189,635
  198,612
  208,067
  218,023
  228,501
  239,528
  251,128
  263,329
Adjusted assets (=assets-cash), $m
  80,179
  81,882
  83,765
  85,918
  88,335
  91,013
  93,951
  97,151
  100,615
  104,346
  108,351
  112,635
  117,206
  122,073
  127,246
  132,735
  138,552
  144,709
  151,221
  158,101
  165,365
  173,030
  181,114
  189,635
  198,612
  208,067
  218,023
  228,501
  239,528
  251,128
  263,329
Revenue / Adjusted assets
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
  0.264
Average production assets, $m
  64,461
  65,758
  67,271
  69,000
  70,941
  73,091
  75,451
  78,021
  80,802
  83,799
  87,015
  90,456
  94,127
  98,036
  102,190
  106,598
  111,269
  116,214
  121,444
  126,969
  132,803
  138,959
  145,450
  152,293
  159,503
  167,096
  175,091
  183,507
  192,362
  201,678
  211,477
Working capital, $m
  7,951
  -1,297
  -1,327
  -1,361
  -1,399
  -1,442
  -1,488
  -1,539
  -1,594
  -1,653
  -1,716
  -1,784
  -1,857
  -1,934
  -2,016
  -2,103
  -2,195
  -2,292
  -2,395
  -2,504
  -2,619
  -2,741
  -2,869
  -3,004
  -3,146
  -3,296
  -3,453
  -3,619
  -3,794
  -3,978
  -4,171
Total debt, $m
  21,770
  19,633
  20,433
  21,348
  22,375
  23,514
  24,762
  26,122
  27,594
  29,180
  30,882
  32,703
  34,646
  36,714
  38,913
  41,245
  43,718
  46,334
  49,102
  52,026
  55,113
  58,371
  61,806
  65,428
  69,243
  73,262
  77,493
  81,946
  86,632
  91,562
  96,748
Total liabilities, $m
  36,936
  34,800
  35,600
  36,515
  37,542
  38,681
  39,929
  41,289
  42,761
  44,347
  46,049
  47,870
  49,813
  51,881
  54,080
  56,412
  58,885
  61,501
  64,269
  67,193
  70,280
  73,538
  76,973
  80,595
  84,410
  88,429
  92,660
  97,113
  101,799
  106,729
  111,915
Total equity, $m
  55,318
  47,082
  48,165
  49,403
  50,793
  52,332
  54,022
  55,862
  57,853
  59,999
  62,302
  64,765
  67,393
  70,192
  73,166
  76,323
  79,667
  83,208
  86,952
  90,908
  95,085
  99,492
  104,141
  109,040
  114,202
  119,639
  125,363
  131,388
  137,728
  144,399
  151,414
Total liabilities and equity, $m
  92,254
  81,882
  83,765
  85,918
  88,335
  91,013
  93,951
  97,151
  100,614
  104,346
  108,351
  112,635
  117,206
  122,073
  127,246
  132,735
  138,552
  144,709
  151,221
  158,101
  165,365
  173,030
  181,114
  189,635
  198,612
  208,068
  218,023
  228,501
  239,527
  251,128
  263,329
Debt-to-equity ratio
  0.394
  0.420
  0.420
  0.430
  0.440
  0.450
  0.460
  0.470
  0.480
  0.490
  0.500
  0.500
  0.510
  0.520
  0.530
  0.540
  0.550
  0.560
  0.560
  0.570
  0.580
  0.590
  0.590
  0.600
  0.610
  0.610
  0.620
  0.620
  0.630
  0.630
  0.640
Adjusted equity ratio
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575
  0.575

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  92
  -1,549
  -1,626
  -1,660
  -1,653
  -1,606
  -1,520
  -1,395
  -1,230
  -1,025
  -780
  -279
  37
  310
  616
  958
  1,335
  1,750
  2,204
  2,700
  3,238
  3,822
  4,454
  5,135
  5,868
  6,657
  7,503
  8,410
  9,382
  10,421
  11,531
Depreciation, amort., depletion, $m
  9,969
  10,028
  10,254
  10,512
  10,802
  11,123
  11,475
  11,858
  12,273
  12,721
  13,201
  13,501
  14,049
  14,632
  15,252
  15,910
  16,607
  17,345
  18,126
  18,951
  19,821
  20,740
  21,709
  22,730
  23,806
  24,940
  26,133
  27,389
  28,711
  30,101
  31,564
Funds from operations, $m
  9,285
  8,479
  8,628
  8,852
  9,149
  9,517
  9,955
  10,464
  11,043
  11,695
  12,421
  13,221
  14,086
  14,942
  15,869
  16,868
  17,942
  19,095
  20,330
  21,650
  23,060
  24,562
  26,163
  27,865
  29,674
  31,596
  33,636
  35,799
  38,093
  40,522
  43,095
Change in working capital, $m
  -1,256
  -25
  -30
  -34
  -38
  -42
  -47
  -51
  -55
  -59
  -63
  -68
  -72
  -77
  -82
  -87
  -92
  -98
  -103
  -109
  -115
  -121
  -128
  -135
  -142
  -150
  -158
  -166
  -175
  -184
  -193
Cash from operations, $m
  10,541
  8,504
  8,658
  8,886
  9,187
  9,559
  10,001
  10,514
  11,098
  11,755
  12,484
  13,289
  14,158
  15,019
  15,951
  16,955
  18,034
  19,193
  20,433
  21,759
  23,175
  24,684
  26,291
  28,000
  29,817
  31,746
  33,794
  35,965
  38,267
  40,706
  43,288
Maintenance CAPEX, $m
  0
  -9,621
  -9,815
  -10,040
  -10,298
  -10,588
  -10,909
  -11,261
  -11,645
  -12,060
  -12,507
  -12,987
  -13,501
  -14,049
  -14,632
  -15,252
  -15,910
  -16,607
  -17,345
  -18,126
  -18,951
  -19,821
  -20,740
  -21,709
  -22,730
  -23,806
  -24,940
  -26,133
  -27,389
  -28,711
  -30,101
New CAPEX, $m
  -7,428
  -1,298
  -1,512
  -1,729
  -1,941
  -2,151
  -2,360
  -2,570
  -2,782
  -2,997
  -3,216
  -3,441
  -3,671
  -3,909
  -4,154
  -4,408
  -4,671
  -4,945
  -5,229
  -5,525
  -5,834
  -6,156
  -6,492
  -6,843
  -7,210
  -7,593
  -7,995
  -8,415
  -8,855
  -9,316
  -9,799
Cash from investing activities, $m
  -4,044
  -10,919
  -11,327
  -11,769
  -12,239
  -12,739
  -13,269
  -13,831
  -14,427
  -15,057
  -15,723
  -16,428
  -17,172
  -17,958
  -18,786
  -19,660
  -20,581
  -21,552
  -22,574
  -23,651
  -24,785
  -25,977
  -27,232
  -28,552
  -29,940
  -31,399
  -32,935
  -34,548
  -36,244
  -38,027
  -39,900
Free cash flow, $m
  6,497
  -2,415
  -2,669
  -2,883
  -3,052
  -3,180
  -3,268
  -3,317
  -3,328
  -3,302
  -3,239
  -3,139
  -3,014
  -2,938
  -2,836
  -2,706
  -2,547
  -2,359
  -2,141
  -1,892
  -1,610
  -1,293
  -941
  -552
  -123
  346
  859
  1,417
  2,023
  2,679
  3,388
Issuance/(repayment) of debt, $m
  -3,470
  710
  800
  915
  1,027
  1,138
  1,249
  1,360
  1,472
  1,586
  1,702
  1,821
  1,943
  2,069
  2,198
  2,333
  2,472
  2,617
  2,767
  2,924
  3,087
  3,258
  3,436
  3,621
  3,815
  4,019
  4,231
  4,453
  4,686
  4,930
  5,186
Issuance/(repurchase) of shares, $m
  0
  2,543
  2,709
  2,897
  3,042
  3,146
  3,210
  3,235
  3,222
  3,171
  3,083
  2,743
  2,592
  2,489
  2,358
  2,199
  2,010
  1,791
  1,540
  1,256
  939
  585
  195
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -4,208
  3,253
  3,509
  3,812
  4,069
  4,284
  4,459
  4,595
  4,694
  4,757
  4,785
  4,564
  4,535
  4,558
  4,556
  4,532
  4,482
  4,408
  4,307
  4,180
  4,026
  3,843
  3,631
  3,621
  3,815
  4,019
  4,231
  4,453
  4,686
  4,930
  5,186
Total cash flow (excl. dividends), $m
  2,318
  838
  840
  929
  1,017
  1,104
  1,191
  1,278
  1,365
  1,455
  1,545
  1,425
  1,521
  1,619
  1,721
  1,826
  1,935
  2,048
  2,166
  2,288
  2,416
  2,550
  2,689
  3,069
  3,692
  4,365
  5,090
  5,871
  6,709
  7,609
  8,573
Retained Cash Flow (-), $m
  531
  -2,543
  -2,709
  -2,897
  -3,042
  -3,146
  -3,210
  -3,235
  -3,222
  -3,171
  -3,083
  -2,743
  -2,629
  -2,799
  -2,974
  -3,156
  -3,345
  -3,540
  -3,744
  -3,956
  -4,177
  -4,407
  -4,648
  -4,899
  -5,162
  -5,437
  -5,724
  -6,025
  -6,340
  -6,670
  -7,016
Prev. year cash balance distribution, $m
 
  9,229
  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
 
  7,524
  -1,869
  -1,968
  -2,025
  -2,042
  -2,019
  -1,957
  -1,856
  -1,716
  -1,537
  -1,318
  -1,108
  -1,180
  -1,254
  -1,330
  -1,410
  -1,492
  -1,578
  -1,668
  -1,761
  -1,858
  -1,959
  -1,830
  -1,470
  -1,072
  -634
  -155
  369
  939
  1,558
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
 
  7,214
  -1,711
  -1,713
  -1,667
  -1,583
  -1,465
  -1,322
  -1,160
  -986
  -806
  -626
  -473
  -449
  -421
  -391
  -358
  -325
  -291
  -257
  -224
  -192
  -163
  -120
  -75
  -42
  -19
  -3
  6
  10
  12
Current shareholders' claim on cash, %
  100
  95.3
  90.6
  85.9
  81.4
  77.1
  73.0
  69.3
  65.8
  62.7
  60.0
  57.7
  55.7
  53.9
  52.3
  50.9
  49.7
  48.7
  47.9
  47.3
  46.9
  46.6
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5
  46.5

CNOOC Limited is a Hong Kong-based investment holding company principally engaged in the exploration, production and trading of oil and gas. Its businesses include conventional oil and gas businesses, shale oil and gas businesses, oil sands businesses and other unconventional oil and gas businesses. The Company mainly operates businesses through three segments. The Exploration and Production segment is engaged in the exploration, development and production of crude oil, natural gas and other petroleum products. The Trading segment is engaged in the trading of crude oil, natural gas and other petroleum products. The Corporate segment is engaged in corporate-related businesses. The Company mainly operates businesses in China, Canada, the United Kingdom, Nigeria, Indonesia and Brazil, among others.

FINANCIAL RATIOS  of  CNOOC ADR (CEO)

Valuation Ratios
P/E Ratio 66364.6
Price to Sales 288.1
Price to Book 110.4
Price to Tangible Book
Price to Cash Flow 579.2
Price to Free Cash Flow 1961.3
Growth Rates
Sales Growth Rate -14.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -24.1%
Cap. Spend. - 3 Yr. Gr. Rate -10%
Financial Strength
Quick Ratio 4
Current Ratio 0.1
LT Debt to Equity 34.2%
Total Debt to Equity 39.4%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 4.6%
Return On Total Capital 0.1%
Ret/ On T. Cap. - 3 Yr. Avg. 5.4%
Return On Equity 0.2%
Return On Equity - 3 Yr. Avg. 7.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 71.2%
Gross Margin - 3 Yr. Avg. 69.1%
EBITDA Margin 46.9%
EBITDA Margin - 3 Yr. Avg. 51.9%
Operating Margin -1.6%
Oper. Margin - 3 Yr. Avg. 12.7%
Pre-Tax Margin -3.6%
Pre-Tax Margin - 3 Yr. Avg. 12.1%
Net Profit Margin 0.4%
Net Profit Margin - 3 Yr. Avg. 11.4%
Effective Tax Rate 112.1%
Eff/ Tax Rate - 3 Yr. Avg. 40.3%
Payout Ratio 2226.1%

CEO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CEO stock intrinsic value calculation we used $21193 million for the last fiscal year's total revenue generated by CNOOC ADR. The default revenue input number comes from 2016 income statement of CNOOC ADR. 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 CEO 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 CEO is calculated based on our internal credit rating of CNOOC ADR, 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 CNOOC ADR.
    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 CEO stock the variable cost ratio is equal to 20.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $17657 million in the base year in the intrinsic value calculation for CEO 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 CNOOC ADR.

Corporate tax rate of 27% is the nominal tax rate for CNOOC ADR. 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 CEO 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 CEO are equal to 304.2%.

Life of production assets of 6.7 years is the average useful life of capital assets used in CNOOC ADR 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 CEO is equal to -6%. 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 - $55318 million for CNOOC ADR - 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 448.227 million for CNOOC ADR 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 CNOOC ADR at the current share price and the inputted number of shares is $61.3 billion.

RELATED COMPANIES Price Int.Val. Rating
PTR PetroChina ADR 66.93 12.46  str.sell
BP BP ADR 39.93 6.36  str.sell
XOM Exxon Mobil 83.03 9.87  str.sell
PSX Phillips 66 99.72 136.73  str.buy

COMPANY NEWS

▶ A.M. Best Affirms Credit Ratings of ICM Assurance Ltd   [Nov-21-17 02:57PM  Business Wire]
▶ CNOOC Meets 80-Plus Relative Strength Rating Benchmark   [Nov-07-17 03:00AM  Investor's Business Daily]
▶ ETFs with exposure to CNOOC Ltd. : November 6, 2017   [Nov-06-17 11:16AM  Capital Cube]
▶ ETFs with exposure to CNOOC Ltd. : October 16, 2017   [Oct-16-17 09:49AM  Capital Cube]
▶ Which Integrated Energy Stocks Are Rising This Week?   [Oct-12-17 12:06PM  Market Realist]
▶ These Integrated Energy Stocks Are Losing This Week   [Oct-05-17 01:07PM  Market Realist]
▶ Alberta Banking On An Oil Sands Boom   [Sep-14-17 02:00PM  Oilprice.com]
▶ CNOOC signs PSC with SK   [Sep-05-17 05:09AM  PR Newswire]
▶ PetroChina Dividend Decision Seen as One-Time Event   [Aug-24-17 11:56PM  Bloomberg Video]
▶ Why OPEC May Be Stuck With $50 Oil   [Jul-25-17 02:46PM  Barrons.com]
▶ Why CNOOC Is Better Than PetroChina, Sinopec   [Jul-18-17 03:51AM  Barrons.com]
▶ [$$] 5 Cheap Chinese Stocks Set to Rebound   [Jun-22-17 08:50PM  Barrons.com]
▶ ExxonMobil: Going Deep   [Jun-19-17 03:49PM  Barrons.com]
▶ OPEC Oil Output Rises, Energy Stocks Rise Too   [Jun-13-17 05:30PM  Barrons.com]
▶ 3 Experts On OPEC, Oil, Saudis & Aramco As Trump Travels   [May-19-17 07:04PM  Barrons.com]
▶ Asias LNG Buyers Club Is Shaking Up The Market   [May-15-17 03:00PM  Oilprice.com]
▶ ETFs with exposure to CNOOC Ltd. : May 11, 2017   [May-11-17 04:20PM  Capital Cube]
▶ OPEC Oil Cuts? Saudis, Russia, Iran & Even China Agree   [May-08-17 02:58PM  Barrons.com]
▶ ETFs with exposure to CNOOC Ltd. : April 27, 2017   [Apr-27-17 03:50PM  Capital Cube]
▶ Mexico Looks Overseas For New Oil Export Destinations   [Apr-25-17 05:00PM  Oilprice.com]
▶ China Offers Contested South China Sea Oil And Gas Blocks   [Apr-24-17 07:00PM  Oilprice.com]
▶ CNOOC Limited Filed 2016 Annual Report on Form 20-F   [Apr-21-17 07:25AM  PR Newswire]
▶ China's CNOOC Tenders 10 Coal Bed Methane Blocks   [Apr-20-17 08:00PM  Rigzone.com]
▶ [$$] Cnooc Shakes Up Management   [Apr-18-17 07:19AM  The Wall Street Journal]
▶ CNOOC Signs PSC With Husky   [Apr-13-17 08:05PM  PR Newswire]
▶ CNOOC Signs PSC With Husky   [08:00PM  PR Newswire]
▶ PetroChina Downgraded to Underperform   [Apr-10-17 02:25AM  Barrons.com]
▶ ConocoPhillips, Nexen Cut Canadian Synthetic Crude Output   [Apr-07-17 11:11AM  TheStreet.com]
▶ Fear Not: Oil Sell-off Is Done, Says Citi   [Mar-28-17 01:02AM  Barrons.com]
▶ 3 Reasons To Buy CNOOC   [Mar-23-17 11:07PM  Barrons.com]
▶ [$$] Cnooc Manages to Book Annual Profit Amid Cost Cutting   [12:01PM  The Wall Street Journal]
▶ CNOOC (CEO): Moving Average Crossover Alert   [Mar-13-17 06:39AM  Zacks]
▶ Dividends? 4 Cash Cow Oil Companies   [Feb-07-17 08:55PM  at Barrons.com]
▶ Oil Investors Await 2017 Investment Plans   [Jan-23-17 08:15AM  at Investopedia]
▶ CNOOC Sees Oil At $51, Raises Capex, Promises Dividends   [Jan-19-17 08:24PM  at Barrons.com]
▶ Enping 23-1 Oilfields Commences Production   [Jan-17-17 03:45AM  PR Newswire]
▶ PetroChina Has 37% Upside: Morgan Stanley   [Jan-10-17 09:50PM  at Barrons.com]
▶ 7 Energy Stocks With Up To 30% Upside   [Jan-03-17 08:28PM  at Barrons.com]
▶ Should You Avoid CNOOC Ltd (ADR) (CEO)?   [Dec-12-16 12:32PM  at Insider Monkey]
▶ Heres Why Hess Corp.'s Stock Jumped 17% Last Month   [Dec-09-16 01:12PM  at Motley Fool]
▶ A.M. Best Affirms Credit Ratings of ICM Assurance Ltd   [Dec-07-16 04:01PM  Business Wire]
Financial statements of CEO
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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