Intrinsic value of Carrizo Oil&Gas - CRZO

Previous Close

$20.16

  Intrinsic Value

$0.07

stock screener

  Rating & Target

str. sell

-100%

Previous close

$20.16

 
Intrinsic value

$0.07

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of CRZO 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 1.6

 

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, %
  3.50
  55.10
  50.09
  45.58
  41.52
  37.87
  34.58
  31.63
  28.96
  26.57
  24.41
  22.47
  20.72
  19.15
  17.73
  16.46
  15.32
  14.28
  13.36
  12.52
  11.77
  11.09
  10.48
  9.93
  9.44
  9.00
  8.60
  8.24
  7.91
  7.62
  7.36
Revenue, $m
  444
  689
  1,034
  1,505
  2,130
  2,936
  3,951
  5,201
  6,707
  8,489
  10,561
  12,934
  15,615
  18,605
  21,904
  25,510
  29,417
  33,619
  38,108
  42,879
  47,925
  53,241
  58,821
  64,665
  70,769
  77,136
  83,767
  90,667
  97,841
  105,299
  113,049
Variable operating expenses, $m
 
  2,804
  4,209
  6,127
  8,671
  11,955
  16,090
  21,178
  27,312
  34,568
  43,006
  52,668
  63,582
  75,758
  89,194
  103,876
  119,785
  136,895
  155,177
  174,605
  195,152
  216,797
  239,521
  263,314
  288,172
  314,097
  341,099
  369,195
  398,410
  428,777
  460,334
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
  989
  2,804
  4,209
  6,127
  8,671
  11,955
  16,090
  21,178
  27,312
  34,568
  43,006
  52,668
  63,582
  75,758
  89,194
  103,876
  119,785
  136,895
  155,177
  174,605
  195,152
  216,797
  239,521
  263,314
  288,172
  314,097
  341,099
  369,195
  398,410
  428,777
  460,334
Operating income, $m
  -545
  -2,116
  -3,175
  -4,622
  -6,542
  -9,019
  -12,138
  -15,977
  -20,605
  -26,079
  -32,444
  -39,734
  -47,968
  -57,154
  -67,290
  -78,366
  -90,368
  -103,276
  -117,069
  -131,726
  -147,227
  -163,556
  -180,699
  -198,650
  -217,403
  -236,961
  -257,332
  -278,528
  -300,569
  -323,478
  -347,286
EBITDA, $m
  -331
  -1,785
  -2,679
  -3,900
  -5,519
  -7,610
  -10,241
  -13,480
  -17,384
  -22,002
  -27,373
  -33,524
  -40,470
  -48,220
  -56,772
  -66,118
  -76,244
  -87,134
  -98,771
  -111,137
  -124,215
  -137,992
  -152,456
  -167,600
  -183,422
  -199,924
  -217,110
  -234,994
  -253,590
  -272,918
  -293,004
Interest expense (income), $m
  75
  78
  117
  184
  275
  396
  553
  749
  992
  1,283
  1,629
  2,030
  2,490
  3,010
  3,589
  4,229
  4,927
  5,684
  6,499
  7,369
  8,293
  9,271
  10,301
  11,383
  12,515
  13,698
  14,932
  16,217
  17,554
  18,945
  20,390
Earnings before tax, $m
  -675
  -2,194
  -3,292
  -4,806
  -6,817
  -9,416
  -12,691
  -16,727
  -21,596
  -27,362
  -34,073
  -41,765
  -50,458
  -60,163
  -70,879
  -82,595
  -95,296
  -108,961
  -123,568
  -139,094
  -155,520
  -172,827
  -191,001
  -210,033
  -229,918
  -250,659
  -272,264
  -294,745
  -318,123
  -342,423
  -367,676
Tax expense, $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
Net income, $m
  -675
  -2,194
  -3,292
  -4,806
  -6,817
  -9,416
  -12,691
  -16,727
  -21,596
  -27,362
  -34,073
  -41,765
  -50,458
  -60,163
  -70,879
  -82,595
  -95,296
  -108,961
  -123,568
  -139,094
  -155,520
  -172,827
  -191,001
  -210,033
  -229,918
  -250,659
  -272,264
  -294,745
  -318,123
  -342,423
  -367,676

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4
  0
  0
  0
  0
  0
  0
  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
  1,626
  2,513
  3,772
  5,492
  7,772
  10,715
  14,421
  18,981
  24,479
  30,982
  38,545
  47,205
  56,987
  67,900
  79,942
  93,102
  107,360
  122,695
  139,082
  156,494
  174,910
  194,309
  214,677
  236,002
  258,282
  281,517
  305,718
  330,900
  357,086
  384,303
  412,586
Adjusted assets (=assets-cash), $m
  1,622
  2,513
  3,772
  5,492
  7,772
  10,715
  14,421
  18,981
  24,479
  30,982
  38,545
  47,205
  56,987
  67,900
  79,942
  93,102
  107,360
  122,695
  139,082
  156,494
  174,910
  194,309
  214,677
  236,002
  258,282
  281,517
  305,718
  330,900
  357,086
  384,303
  412,586
Revenue / Adjusted assets
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
Average production assets, $m
  1,343
  2,083
  3,127
  4,552
  6,442
  8,881
  11,953
  15,733
  20,289
  25,680
  31,948
  39,126
  47,234
  56,279
  66,260
  77,167
  88,986
  101,696
  115,278
  129,710
  144,974
  161,053
  177,935
  195,610
  214,077
  233,336
  253,395
  274,267
  295,970
  318,529
  341,972
Working capital, $m
  -139
  -222
  -333
  -485
  -686
  -945
  -1,272
  -1,675
  -2,160
  -2,733
  -3,401
  -4,165
  -5,028
  -5,991
  -7,053
  -8,214
  -9,472
  -10,825
  -12,271
  -13,807
  -15,432
  -17,144
  -18,941
  -20,822
  -22,788
  -24,838
  -26,973
  -29,195
  -31,505
  -33,906
  -36,402
Total debt, $m
  1,325
  1,984
  3,117
  4,664
  6,717
  9,366
  12,701
  16,805
  21,753
  27,606
  34,412
  42,207
  51,011
  60,832
  71,670
  83,514
  96,346
  110,148
  124,895
  140,567
  157,141
  174,601
  192,931
  212,124
  232,175
  253,088
  274,869
  297,532
  321,099
  345,594
  371,050
Total liabilities, $m
  1,603
  2,262
  3,395
  4,942
  6,995
  9,644
  12,979
  17,083
  22,031
  27,884
  34,690
  42,485
  51,289
  61,110
  71,948
  83,792
  96,624
  110,426
  125,173
  140,845
  157,419
  174,879
  193,209
  212,402
  232,453
  253,366
  275,147
  297,810
  321,377
  345,872
  371,328
Total equity, $m
  23
  251
  377
  549
  777
  1,072
  1,442
  1,898
  2,448
  3,098
  3,854
  4,721
  5,699
  6,790
  7,994
  9,310
  10,736
  12,270
  13,908
  15,649
  17,491
  19,431
  21,468
  23,600
  25,828
  28,152
  30,572
  33,090
  35,709
  38,430
  41,259
Total liabilities and equity, $m
  1,626
  2,513
  3,772
  5,491
  7,772
  10,716
  14,421
  18,981
  24,479
  30,982
  38,544
  47,206
  56,988
  67,900
  79,942
  93,102
  107,360
  122,696
  139,081
  156,494
  174,910
  194,310
  214,677
  236,002
  258,281
  281,518
  305,719
  330,900
  357,086
  384,302
  412,587
Debt-to-equity ratio
  57.609
  7.890
  8.260
  8.490
  8.640
  8.740
  8.810
  8.850
  8.890
  8.910
  8.930
  8.940
  8.950
  8.960
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
Adjusted equity ratio
  0.012
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -675
  -2,194
  -3,292
  -4,806
  -6,817
  -9,416
  -12,691
  -16,727
  -21,596
  -27,362
  -34,073
  -41,765
  -50,458
  -60,163
  -70,879
  -82,595
  -95,296
  -108,961
  -123,568
  -139,094
  -155,520
  -172,827
  -191,001
  -210,033
  -229,918
  -250,659
  -272,264
  -294,745
  -318,123
  -342,423
  -367,676
Depreciation, amort., depletion, $m
  214
  331
  496
  722
  1,022
  1,410
  1,897
  2,497
  3,221
  4,076
  5,071
  6,211
  7,497
  8,933
  10,517
  12,249
  14,125
  16,142
  18,298
  20,589
  23,012
  25,564
  28,244
  31,049
  33,980
  37,037
  40,221
  43,534
  46,979
  50,560
  54,281
Funds from operations, $m
  218
  -1,863
  -2,796
  -4,084
  -5,795
  -8,006
  -10,794
  -14,229
  -18,376
  -23,286
  -29,002
  -35,554
  -42,961
  -51,230
  -60,361
  -70,346
  -81,171
  -92,818
  -105,270
  -118,506
  -132,508
  -147,263
  -162,757
  -178,983
  -195,938
  -213,622
  -232,043
  -251,211
  -271,144
  -291,863
  -313,394
Change in working capital, $m
  -55
  -79
  -111
  -152
  -201
  -260
  -327
  -402
  -485
  -574
  -667
  -764
  -863
  -963
  -1,062
  -1,161
  -1,258
  -1,353
  -1,446
  -1,536
  -1,625
  -1,712
  -1,797
  -1,881
  -1,966
  -2,050
  -2,135
  -2,222
  -2,310
  -2,401
  -2,495
Cash from operations, $m
  273
  -1,784
  -2,685
  -3,932
  -5,593
  -7,746
  -10,467
  -13,827
  -17,891
  -22,712
  -28,335
  -34,790
  -42,098
  -50,267
  -59,299
  -69,185
  -79,913
  -91,465
  -103,824
  -116,969
  -130,884
  -145,551
  -160,960
  -177,102
  -193,972
  -211,572
  -229,907
  -248,989
  -268,834
  -289,462
  -310,899
Maintenance CAPEX, $m
  0
  -213
  -331
  -496
  -722
  -1,022
  -1,410
  -1,897
  -2,497
  -3,221
  -4,076
  -5,071
  -6,211
  -7,497
  -8,933
  -10,517
  -12,249
  -14,125
  -16,142
  -18,298
  -20,589
  -23,012
  -25,564
  -28,244
  -31,049
  -33,980
  -37,037
  -40,221
  -43,534
  -46,979
  -50,560
New CAPEX, $m
  -481
  -740
  -1,043
  -1,425
  -1,890
  -2,440
  -3,071
  -3,780
  -4,557
  -5,390
  -6,268
  -7,178
  -8,108
  -9,045
  -9,981
  -10,907
  -11,818
  -12,710
  -13,582
  -14,432
  -15,264
  -16,079
  -16,881
  -17,676
  -18,466
  -19,259
  -20,059
  -20,872
  -21,704
  -22,559
  -23,443
Cash from investing activities, $m
  -620
  -953
  -1,374
  -1,921
  -2,612
  -3,462
  -4,481
  -5,677
  -7,054
  -8,611
  -10,344
  -12,249
  -14,319
  -16,542
  -18,914
  -21,424
  -24,067
  -26,835
  -29,724
  -32,730
  -35,853
  -39,091
  -42,445
  -45,920
  -49,515
  -53,239
  -57,096
  -61,093
  -65,238
  -69,538
  -74,003
Free cash flow, $m
  -347
  -2,738
  -4,059
  -5,854
  -8,206
  -11,208
  -14,948
  -19,504
  -24,945
  -31,323
  -38,679
  -47,039
  -56,416
  -66,810
  -78,213
  -90,610
  -103,980
  -118,300
  -133,548
  -149,700
  -166,737
  -184,642
  -203,406
  -223,021
  -243,488
  -264,811
  -287,004
  -310,083
  -334,072
  -359,000
  -384,902
Issuance/(repayment) of debt, $m
  87
  659
  1,133
  1,547
  2,052
  2,649
  3,335
  4,105
  4,948
  5,853
  6,806
  7,795
  8,804
  9,822
  10,838
  11,844
  12,833
  13,801
  14,748
  15,671
  16,574
  17,459
  18,331
  19,193
  20,051
  20,912
  21,781
  22,664
  23,567
  24,495
  25,455
Issuance/(repurchase) of shares, $m
  224
  2,426
  3,418
  4,978
  7,045
  9,710
  13,062
  17,183
  22,146
  28,012
  34,829
  42,631
  51,436
  61,254
  72,083
  83,911
  96,721
  110,494
  125,206
  140,836
  157,362
  174,767
  193,038
  212,165
  232,146
  252,983
  274,684
  297,264
  320,742
  345,145
  370,504
Cash from financing (excl. dividends), $m  
  308
  3,085
  4,551
  6,525
  9,097
  12,359
  16,397
  21,288
  27,094
  33,865
  41,635
  50,426
  60,240
  71,076
  82,921
  95,755
  109,554
  124,295
  139,954
  156,507
  173,936
  192,226
  211,369
  231,358
  252,197
  273,895
  296,465
  319,928
  344,309
  369,640
  395,959
Total cash flow (excl. dividends), $m
  -39
  347
  492
  672
  891
  1,151
  1,449
  1,783
  2,149
  2,542
  2,957
  3,386
  3,824
  4,266
  4,708
  5,145
  5,574
  5,995
  6,406
  6,807
  7,200
  7,584
  7,962
  8,337
  8,710
  9,084
  9,461
  9,845
  10,237
  10,640
  11,057
Retained Cash Flow (-), $m
  421
  -2,426
  -3,418
  -4,978
  -7,045
  -9,710
  -13,062
  -17,183
  -22,146
  -28,012
  -34,829
  -42,631
  -51,436
  -61,254
  -72,083
  -83,911
  -96,721
  -110,494
  -125,206
  -140,836
  -157,362
  -174,767
  -193,038
  -212,165
  -232,146
  -252,983
  -274,684
  -297,264
  -320,742
  -345,145
  -370,504
Prev. year cash balance distribution, $m
 
  4
  0
  0
  0
  0
  0
  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
 
  -2,075
  -2,926
  -4,306
  -6,154
  -8,559
  -11,613
  -15,400
  -19,997
  -25,470
  -31,873
  -39,245
  -47,612
  -56,988
  -67,375
  -78,766
  -91,147
  -104,499
  -118,800
  -134,028
  -150,162
  -167,183
  -185,075
  -203,828
  -223,436
  -243,899
  -265,223
  -287,419
  -310,505
  -334,505
  -359,447
Discount rate, %
 
  12.40
  13.02
  13.67
  14.35
  15.07
  15.83
  16.62
  17.45
  18.32
  19.24
  20.20
  21.21
  22.27
  23.38
  24.55
  25.78
  27.07
  28.42
  29.84
  31.33
  32.90
  34.55
  36.27
  38.09
  39.99
  41.99
  44.09
  46.29
  48.61
  51.04
PV of cash for distribution, $m
 
  -1,846
  -2,291
  -2,932
  -3,598
  -4,242
  -4,810
  -5,250
  -5,523
  -5,604
  -5,487
  -5,187
  -4,735
  -4,175
  -3,556
  -2,925
  -2,323
  -1,780
  -1,316
  -938
  -644
  -426
  -271
  -165
  -97
  -54
  -29
  -15
  -7
  -3
  -2
Current shareholders' claim on cash, %
  100
  7.3
  3.1
  1.3
  0.6
  0.3
  0.1
  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
  0.0

Carrizo Oil & Gas, Inc. is an energy company. The Company is engaged in the exploration, development and production of oil and gas from resource plays located in the United States. Its operations are focused in proven, producing oil and gas plays in the Eagle Ford Shale in South Texas, the Delaware Basin in West Texas, the Utica Shale in Ohio, the Niobrara Formation in Colorado, and the Marcellus Shale in Pennsylvania. As of December 31, 2016, the Company's proved reserves of 200 million barrels of oil equivalent (MMBoe) were 64% crude oil, 12% natural gas liquids (NGLs) and 24% natural gas. As of December 31, 2016, it operated approximately 94% of the wells in Eagle Ford in which it held an interest. As of December 31, 2016, it held an average interest of approximately 85% in these operated wells. As of December 31, 2016, it owned leases covering approximately 309,200 gross (179,179 net) acres in the Eagle Ford, Niobrara, Utica and the Delaware Basin areas.

FINANCIAL RATIOS  of  Carrizo Oil&Gas (CRZO)

Valuation Ratios
P/E Ratio -1.9
Price to Sales 3
Price to Book 57.1
Price to Tangible Book
Price to Cash Flow 4.8
Price to Free Cash Flow -6.3
Growth Rates
Sales Growth Rate 3.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -28.8%
Cap. Spend. - 3 Yr. Gr. Rate -9.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 5760.9%
Total Debt to Equity 5760.9%
Interest Coverage -8
Management Effectiveness
Return On Assets -33%
Ret/ On Assets - 3 Yr. Avg. -22.3%
Return On Total Capital -44.6%
Ret/ On T. Cap. - 3 Yr. Avg. -29.9%
Return On Equity -289.1%
Return On Equity - 3 Yr. Avg. -138.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 72.1%
Gross Margin - 3 Yr. Avg. 76.3%
EBITDA Margin -86.9%
EBITDA Margin - 3 Yr. Avg. -67.9%
Operating Margin -122.7%
Oper. Margin - 3 Yr. Avg. -133.8%
Pre-Tax Margin -152%
Pre-Tax Margin - 3 Yr. Avg. -135.2%
Net Profit Margin -152%
Net Profit Margin - 3 Yr. Avg. -129.8%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 15.8%
Payout Ratio 0%

CRZO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CRZO stock intrinsic value calculation we used $444 million for the last fiscal year's total revenue generated by Carrizo Oil&Gas. The default revenue input number comes from 2016 income statement of Carrizo Oil&Gas. 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 CRZO stock valuation model: a) initial revenue growth rate of 55.1% 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 12.4%, whose default value for CRZO is calculated based on our internal credit rating of Carrizo Oil&Gas, 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 Carrizo Oil&Gas.
    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 CRZO stock the variable cost ratio is equal to 407.2%.

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 CRZO 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 5.9% for Carrizo Oil&Gas.

Corporate tax rate of 27% is the nominal tax rate for Carrizo Oil&Gas. 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 CRZO 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 CRZO are equal to 302.5%.

Life of production assets of 6.3 years is the average useful life of capital assets used in Carrizo Oil&Gas 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 CRZO is equal to -32.2%. 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 - $23 million for Carrizo Oil&Gas - 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 81.556 million for Carrizo Oil&Gas 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 Carrizo Oil&Gas at the current share price and the inputted number of shares is $1.6 billion.

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COMPANY NEWS

▶ Carrizo Oil & Gas Has 50% Upside   [Nov-22-17 09:05AM  TheStreet.com]
▶ Analyzing Oil-Weighted Stocks during Oils Downturn   [Nov-21-17 09:43AM  Market Realist]
▶ Carrizo tops Street 3Q forecasts   [Nov-07-17 04:11PM  Associated Press]
▶ These Energy Stocks Gained the Most Last Week   [Nov-06-17 11:16AM  Market Realist]
▶ Are Oil-Weighted Stocks Rising More Than Oil?   [Oct-31-17 12:45PM  Market Realist]
▶ Which Oil-Weighted Stocks Are Outperforming Their Peers?   [Oct-24-17 01:29PM  Market Realist]
▶ Oil-Weighted Stocks: Are They Underperforming US Crude Oil?   [Oct-17-17 08:56AM  Market Realist]
▶ Oil-Weighted Stocks That Could Outperform Oil   [Oct-11-17 09:12AM  Market Realist]
▶ Cushing Inventories Are above Their 5-Year Average   [Oct-10-17 12:14PM  Market Realist]
▶ Reliance sells U.S. shale asset for $126 million   [Oct-06-17 11:25AM  Reuters]
▶ US Gasoline Demand: Are the Crude Oil Bears Taking Control?   [Oct-04-17 12:46PM  Market Realist]
▶ Which Oil-Weighted Stocks Rose despite Oils Fall Last Week?   [Oct-03-17 02:52PM  Market Realist]
▶ Top Energy Gainers on September 2529, 2017   [Oct-02-17 01:19PM  Market Realist]
▶ Upstream Gainers this Week: Jones Energy Leads   [Sep-28-17 05:41PM  Market Realist]
▶ How OPECs Spare Crude Oil Production Capacity Is Recovering   [Sep-27-17 12:38PM  Market Realist]
▶ US Crude Oil: Oil-Weighted Stocks Could Rise   [Sep-26-17 01:21PM  Market Realist]
▶ A Look at Key Trends in M&A Activity in the Permian   [Sep-25-17 08:14AM  Market Realist]
▶ Whiting Petroleum Was the Top Energy Gainer Last Week   [Sep-19-17 01:18PM  Market Realist]
▶ Why US Distillate Inventories Fell for the 2nd Week Straight   [Sep-14-17 05:36PM  Market Realist]
▶ Is Oil Outperforming Oil-Weighted Stocks?   [03:41PM  Market Realist]
▶ Energy Stocks: Biggest Losers on September 48   [Sep-11-17 01:30PM  Market Realist]
▶ Oil Fell: Which Oil-Weighted Stocks Are at Risk?   [Aug-30-17 09:47AM  Market Realist]
▶ Texas Shale Hit Hard By Hurricane Harvey   [Aug-29-17 07:00PM  Oilprice.com]
▶ Cushing Inventories Fell 8 Times in 10 Weeks   [01:56PM  Market Realist]
▶ Are Oil-Weighted Stocks Falling More Than Oil Prices?   [Aug-23-17 07:38AM  Market Realist]
▶ Are Oil-Weighted Stocks Disappointing Energy Investors?   [Aug-09-17 12:28PM  Market Realist]
▶ Carrizo beats Street 2Q forecasts   [Aug-08-17 11:55PM  Associated Press]
▶ US Dollar Recovers from a 13-Month Low   [Aug-07-17 09:22AM  Market Realist]
▶ Carrizo Oil & Gas Is Still Pointed Down   [Aug-04-17 10:33AM  TheStreet.com]
▶ US Gasoline Inventories Are below the 5-Year Range   [Jul-27-17 10:49AM  Market Realist]
▶ Why Oil Outdid Oil-Weighted Stocks in the Trailing Week   [Jul-25-17 01:31PM  Market Realist]
▶ US Crude Oil Production Could Hit a Record   [Jul-20-17 11:35AM  Market Realist]
▶ Which Oil-Weighted Stocks Are Capturing Oils Gain the Most?   [Jul-18-17 01:17PM  Market Realist]
▶ Will US Crude Oil Prices Outperform in 2H17?   [Jul-17-17 03:06PM  Market Realist]
▶ Key Trends in Carrizo Oil & Gass Short Interest Ratio   [Jul-12-17 10:36AM  Market Realist]
▶ Which Oil-Weighted Stocks Were Impacted Less by Oils Fall?   [Jul-11-17 03:34PM  Market Realist]
▶ How Did Carrizos Earnings Fare in 1Q17?   [07:38AM  Market Realist]
▶ What Are Carrizo Oil & Gass Capex Plans for 2017?   [Jul-10-17 05:06PM  Market Realist]
▶ Crude Oil Drives Oil-Weighted Stocks Returns   [11:04AM  Market Realist]
▶ Houston E&P company to buy Delaware Basin properties for $648M   [01:15PM  American City Business Journals]
▶ Buy Carrizo Oil & Gas on Declines   [01:17PM  GuruFocus.com]
▶ Explaining The Permian Scramble   [12:54PM  Forbes]
▶ Carrizo Oil & Gas Prices Public Offering of Common Stock   [Jun-28-17 09:00PM  GlobeNewswire]
Financial statements of CRZO
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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