Intrinsic value of EV Energy Partners - EVEP

Previous Close

$0.68

  Intrinsic Value

$3.84

stock screener

  Rating & Target

str. buy

+464%

Previous close

$0.68

 
Intrinsic value

$3.84

 
Up/down potential

+464%

 
Rating

str. buy

We calculate the intrinsic value of EVEP 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 0.0

 

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, %
  3.93
  30.20
  27.68
  25.41
  23.37
  21.53
  19.88
  18.39
  17.05
  15.85
  14.76
  13.79
  12.91
  12.12
  11.41
  10.76
  10.19
  9.67
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.47
  6.32
  6.19
Revenue, $m
  185
  241
  308
  386
  476
  578
  693
  821
  961
  1,113
  1,277
  1,453
  1,641
  1,840
  2,050
  2,270
  2,502
  2,744
  2,996
  3,259
  3,533
  3,818
  4,114
  4,422
  4,742
  5,074
  5,420
  5,779
  6,153
  6,541
  6,946
Variable operating expenses, $m
 
  598
  763
  957
  1,181
  1,435
  1,720
  2,036
  2,384
  2,761
  3,169
  3,606
  4,071
  4,565
  5,085
  5,633
  6,207
  6,807
  7,433
  8,086
  8,766
  9,472
  10,207
  10,971
  11,765
  12,589
  13,446
  14,338
  15,265
  16,229
  17,233
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
  354
  598
  763
  957
  1,181
  1,435
  1,720
  2,036
  2,384
  2,761
  3,169
  3,606
  4,071
  4,565
  5,085
  5,633
  6,207
  6,807
  7,433
  8,086
  8,766
  9,472
  10,207
  10,971
  11,765
  12,589
  13,446
  14,338
  15,265
  16,229
  17,233
Operating income, $m
  -169
  -357
  -455
  -571
  -705
  -856
  -1,027
  -1,216
  -1,423
  -1,648
  -1,892
  -2,153
  -2,430
  -2,725
  -3,036
  -3,362
  -3,705
  -4,063
  -4,437
  -4,827
  -5,233
  -5,654
  -6,093
  -6,549
  -7,023
  -7,515
  -8,027
  -8,559
  -9,112
  -9,688
  -10,287
EBITDA, $m
  -50
  -202
  -257
  -323
  -398
  -484
  -580
  -687
  -804
  -931
  -1,069
  -1,216
  -1,373
  -1,539
  -1,715
  -1,900
  -2,093
  -2,295
  -2,507
  -2,727
  -2,956
  -3,194
  -3,442
  -3,700
  -3,967
  -4,245
  -4,534
  -4,835
  -5,148
  -5,473
  -5,811
Interest expense (income), $m
  40
  38
  53
  72
  94
  120
  149
  181
  218
  257
  300
  347
  397
  450
  506
  566
  628
  694
  762
  834
  908
  986
  1,067
  1,150
  1,238
  1,328
  1,422
  1,520
  1,622
  1,728
  1,838
Earnings before tax, $m
  -245
  -394
  -509
  -643
  -799
  -976
  -1,176
  -1,397
  -1,640
  -1,906
  -2,192
  -2,499
  -2,827
  -3,175
  -3,542
  -3,928
  -4,333
  -4,757
  -5,199
  -5,661
  -6,141
  -6,640
  -7,160
  -7,699
  -8,260
  -8,843
  -9,449
  -10,079
  -10,734
  -11,416
  -12,125
Tax expense, $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
Net income, $m
  -243
  -394
  -509
  -643
  -799
  -976
  -1,176
  -1,397
  -1,640
  -1,906
  -2,192
  -2,499
  -2,827
  -3,175
  -3,542
  -3,928
  -4,333
  -4,757
  -5,199
  -5,661
  -6,141
  -6,640
  -7,160
  -7,699
  -8,260
  -8,843
  -9,449
  -10,079
  -10,734
  -11,416
  -12,125

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  6
  0
  0
  0
  0
  0
  0
  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
  1,607
  2,076
  2,651
  3,325
  4,102
  4,985
  5,976
  7,076
  8,282
  9,595
  11,011
  12,529
  14,147
  15,861
  17,670
  19,572
  21,566
  23,652
  25,828
  28,096
  30,458
  32,914
  35,467
  38,121
  40,878
  43,744
  46,722
  49,819
  53,040
  56,391
  59,880
Adjusted assets (=assets-cash), $m
  1,601
  2,076
  2,651
  3,325
  4,102
  4,985
  5,976
  7,076
  8,282
  9,595
  11,011
  12,529
  14,147
  15,861
  17,670
  19,572
  21,566
  23,652
  25,828
  28,096
  30,458
  32,914
  35,467
  38,121
  40,878
  43,744
  46,722
  49,819
  53,040
  56,391
  59,880
Revenue / Adjusted assets
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
Average production assets, $m
  1,645
  2,142
  2,735
  3,430
  4,231
  5,142
  6,165
  7,298
  8,543
  9,897
  11,358
  12,924
  14,592
  16,360
  18,226
  20,188
  22,245
  24,396
  26,641
  28,981
  31,416
  33,950
  36,583
  39,320
  42,164
  45,120
  48,192
  51,387
  54,709
  58,166
  61,765
Working capital, $m
  -7
  -17
  -22
  -27
  -33
  -40
  -49
  -57
  -67
  -78
  -89
  -102
  -115
  -129
  -143
  -159
  -175
  -192
  -210
  -228
  -247
  -267
  -288
  -310
  -332
  -355
  -379
  -405
  -431
  -458
  -486
Total debt, $m
  607
  859
  1,163
  1,520
  1,932
  2,400
  2,926
  3,508
  4,148
  4,843
  5,594
  6,399
  7,256
  8,164
  9,123
  10,131
  11,188
  12,293
  13,447
  14,649
  15,901
  17,202
  18,556
  19,962
  21,423
  22,942
  24,521
  26,162
  27,869
  29,645
  31,495
Total liabilities, $m
  848
  1,101
  1,405
  1,762
  2,174
  2,642
  3,168
  3,750
  4,390
  5,085
  5,836
  6,641
  7,498
  8,406
  9,365
  10,373
  11,430
  12,535
  13,689
  14,891
  16,143
  17,444
  18,798
  20,204
  21,665
  23,184
  24,763
  26,404
  28,111
  29,887
  31,737
Total equity, $m
  758
  976
  1,246
  1,563
  1,928
  2,343
  2,809
  3,326
  3,893
  4,510
  5,175
  5,889
  6,649
  7,455
  8,305
  9,199
  10,136
  11,116
  12,139
  13,205
  14,315
  15,469
  16,669
  17,917
  19,213
  20,559
  21,959
  23,415
  24,929
  26,504
  28,144
Total liabilities and equity, $m
  1,606
  2,077
  2,651
  3,325
  4,102
  4,985
  5,977
  7,076
  8,283
  9,595
  11,011
  12,530
  14,147
  15,861
  17,670
  19,572
  21,566
  23,651
  25,828
  28,096
  30,458
  32,913
  35,467
  38,121
  40,878
  43,743
  46,722
  49,819
  53,040
  56,391
  59,881
Debt-to-equity ratio
  0.801
  0.880
  0.930
  0.970
  1.000
  1.020
  1.040
  1.050
  1.070
  1.070
  1.080
  1.090
  1.090
  1.100
  1.100
  1.100
  1.100
  1.110
  1.110
  1.110
  1.110
  1.110
  1.110
  1.110
  1.120
  1.120
  1.120
  1.120
  1.120
  1.120
  1.120
Adjusted equity ratio
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -243
  -394
  -509
  -643
  -799
  -976
  -1,176
  -1,397
  -1,640
  -1,906
  -2,192
  -2,499
  -2,827
  -3,175
  -3,542
  -3,928
  -4,333
  -4,757
  -5,199
  -5,661
  -6,141
  -6,640
  -7,160
  -7,699
  -8,260
  -8,843
  -9,449
  -10,079
  -10,734
  -11,416
  -12,125
Depreciation, amort., depletion, $m
  119
  155
  198
  249
  307
  373
  447
  529
  619
  717
  823
  937
  1,057
  1,186
  1,321
  1,463
  1,612
  1,768
  1,931
  2,100
  2,277
  2,460
  2,651
  2,849
  3,055
  3,270
  3,492
  3,724
  3,964
  4,215
  4,476
Funds from operations, $m
  4
  -239
  -311
  -395
  -492
  -604
  -729
  -868
  -1,021
  -1,188
  -1,369
  -1,563
  -1,770
  -1,989
  -2,221
  -2,465
  -2,721
  -2,989
  -3,269
  -3,561
  -3,864
  -4,180
  -4,509
  -4,850
  -5,205
  -5,574
  -5,957
  -6,355
  -6,770
  -7,201
  -7,649
Change in working capital, $m
  -30
  -4
  -5
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -22
  -23
  -24
  -25
  -26
  -27
  -28
Cash from operations, $m
  34
  -235
  -306
  -389
  -486
  -596
  -721
  -859
  -1,012
  -1,178
  -1,357
  -1,551
  -1,757
  -1,975
  -2,206
  -2,450
  -2,705
  -2,972
  -3,251
  -3,542
  -3,845
  -4,160
  -4,488
  -4,829
  -5,183
  -5,550
  -5,933
  -6,330
  -6,743
  -7,174
  -7,621
Maintenance CAPEX, $m
  0
  -119
  -155
  -198
  -249
  -307
  -373
  -447
  -529
  -619
  -717
  -823
  -937
  -1,057
  -1,186
  -1,321
  -1,463
  -1,612
  -1,768
  -1,931
  -2,100
  -2,277
  -2,460
  -2,651
  -2,849
  -3,055
  -3,270
  -3,492
  -3,724
  -3,964
  -4,215
New CAPEX, $m
  -15
  -497
  -593
  -695
  -802
  -911
  -1,022
  -1,134
  -1,245
  -1,354
  -1,461
  -1,566
  -1,668
  -1,768
  -1,866
  -1,962
  -2,057
  -2,151
  -2,245
  -2,340
  -2,436
  -2,533
  -2,634
  -2,737
  -2,844
  -2,956
  -3,072
  -3,194
  -3,322
  -3,457
  -3,599
Cash from investing activities, $m
  -10
  -616
  -748
  -893
  -1,051
  -1,218
  -1,395
  -1,581
  -1,774
  -1,973
  -2,178
  -2,389
  -2,605
  -2,825
  -3,052
  -3,283
  -3,520
  -3,763
  -4,013
  -4,271
  -4,536
  -4,810
  -5,094
  -5,388
  -5,693
  -6,011
  -6,342
  -6,686
  -7,046
  -7,421
  -7,814
Free cash flow, $m
  24
  -851
  -1,054
  -1,282
  -1,536
  -1,814
  -2,116
  -2,440
  -2,785
  -3,151
  -3,536
  -3,939
  -4,361
  -4,801
  -5,258
  -5,732
  -6,225
  -6,735
  -7,264
  -7,812
  -8,381
  -8,970
  -9,582
  -10,217
  -10,876
  -11,562
  -12,275
  -13,017
  -13,790
  -14,595
  -15,435
Issuance/(repayment) of debt, $m
  -35
  252
  305
  357
  412
  468
  525
  583
  640
  696
  751
  805
  857
  909
  959
  1,008
  1,057
  1,105
  1,154
  1,202
  1,251
  1,302
  1,353
  1,406
  1,461
  1,519
  1,579
  1,641
  1,707
  1,776
  1,849
Issuance/(repurchase) of shares, $m
  0
  618
  779
  960
  1,164
  1,391
  1,641
  1,914
  2,207
  2,522
  2,858
  3,213
  3,587
  3,980
  4,392
  4,822
  5,270
  5,737
  6,222
  6,727
  7,251
  7,795
  8,360
  8,947
  9,556
  10,190
  10,849
  11,534
  12,248
  12,991
  13,765
Cash from financing (excl. dividends), $m  
  -35
  870
  1,084
  1,317
  1,576
  1,859
  2,166
  2,497
  2,847
  3,218
  3,609
  4,018
  4,444
  4,889
  5,351
  5,830
  6,327
  6,842
  7,376
  7,929
  8,502
  9,097
  9,713
  10,353
  11,017
  11,709
  12,428
  13,175
  13,955
  14,767
  15,614
Total cash flow (excl. dividends), $m
  -11
  19
  30
  35
  40
  45
  51
  56
  62
  67
  73
  78
  83
  88
  93
  98
  102
  107
  112
  117
  121
  126
  131
  136
  142
  147
  153
  159
  166
  172
  179
Retained Cash Flow (-), $m
  241
  -618
  -779
  -960
  -1,164
  -1,391
  -1,641
  -1,914
  -2,207
  -2,522
  -2,858
  -3,213
  -3,587
  -3,980
  -4,392
  -4,822
  -5,270
  -5,737
  -6,222
  -6,727
  -7,251
  -7,795
  -8,360
  -8,947
  -9,556
  -10,190
  -10,849
  -11,534
  -12,248
  -12,991
  -13,765
Prev. year cash balance distribution, $m
 
  6
  0
  0
  0
  0
  0
  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
 
  -594
  -749
  -925
  -1,124
  -1,346
  -1,590
  -1,857
  -2,145
  -2,455
  -2,785
  -3,135
  -3,504
  -3,892
  -4,299
  -4,724
  -5,168
  -5,630
  -6,110
  -6,610
  -7,129
  -7,668
  -8,228
  -8,810
  -9,415
  -10,043
  -10,696
  -11,375
  -12,082
  -12,819
  -13,586
Discount rate, %
 
  8.30
  8.72
  9.15
  9.61
  10.09
  10.59
  11.12
  11.68
  12.26
  12.88
  13.52
  14.20
  14.91
  15.65
  16.43
  17.26
  18.12
  19.02
  19.97
  20.97
  22.02
  23.12
  24.28
  25.49
  26.77
  28.11
  29.51
  30.99
  32.54
  34.16
PV of cash for distribution, $m
 
  -548
  -634
  -712
  -779
  -832
  -869
  -888
  -887
  -867
  -829
  -777
  -712
  -639
  -561
  -482
  -405
  -332
  -266
  -208
  -158
  -117
  -85
  -59
  -40
  -27
  -17
  -11
  -6
  -4
  -2
Current shareholders' claim on cash, %
  100
  46.0
  21.5
  10.2
  5.0
  2.4
  1.2
  0.6
  0.3
  0.2
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

EV Energy Partners, L.P. is engaged in the acquisition, development and production of oil and natural gas properties and all of its operations are located in the United States. The Company's oil and natural gas properties are located in the Appalachian Basin, which includes the Utica Shale; the San Juan Basin; Michigan; Central Texas, which includes the Austin Chalk area; the Mid-Continent areas in Oklahoma, Texas, Arkansas, Kansas and Louisiana; the Monroe Field in Northern Louisiana, and the Permian Basin. Its activities are concentrated in the Ohio and West Virginia areas of the Appalachian Basin. Its properties are located in Rio Arriba County, New Mexico and La Plata County in Colorado. It owns Eagle Ford oil and natural gas properties in Karnes County, including Eagle Ford and Austin Chalk reserves. It holds interest in approximately 9,150 acres in Karnes County. Its properties are located in the Antrim Shale reservoir in Otsego and Montmorency counties in northern Michigan.

FINANCIAL RATIOS  of  EV Energy Partners (EVEP)

Valuation Ratios
P/E Ratio -0.1
Price to Sales 0.2
Price to Book 0
Price to Tangible Book
Price to Cash Flow 1
Price to Free Cash Flow 1.8
Growth Rates
Sales Growth Rate 3.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -95.3%
Cap. Spend. - 3 Yr. Gr. Rate -37.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 80.1%
Total Debt to Equity 80.1%
Interest Coverage -5
Management Effectiveness
Return On Assets -11.5%
Ret/ On Assets - 3 Yr. Avg. -0.1%
Return On Total Capital -15.9%
Ret/ On T. Cap. - 3 Yr. Avg. -2.8%
Return On Equity -27.7%
Return On Equity - 3 Yr. Avg. -4.5%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 39.5%
Gross Margin - 3 Yr. Avg. 47.7%
EBITDA Margin -46.5%
EBITDA Margin - 3 Yr. Avg. -13.3%
Operating Margin -91.4%
Oper. Margin - 3 Yr. Avg. -82.4%
Pre-Tax Margin -132.4%
Pre-Tax Margin - 3 Yr. Avg. -86.1%
Net Profit Margin -131.4%
Net Profit Margin - 3 Yr. Avg. -27.1%
Effective Tax Rate 0.8%
Eff/ Tax Rate - 3 Yr. Avg. 2%
Payout Ratio -1.6%

EVEP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EVEP stock intrinsic value calculation we used $185 million for the last fiscal year's total revenue generated by EV Energy Partners. The default revenue input number comes from 2016 income statement of EV Energy Partners. 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 EVEP stock valuation model: a) initial revenue growth rate of 30.2% 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 8.3%, whose default value for EVEP is calculated based on our internal credit rating of EV Energy Partners, 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 EV Energy Partners.
    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 EVEP stock the variable cost ratio is equal to 248.1%.

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 EVEP 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 6.2% for EV Energy Partners.

Corporate tax rate of 27% is the nominal tax rate for EV Energy Partners. 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 EVEP 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 EVEP are equal to 889.2%.

Life of production assets of 13.8 years is the average useful life of capital assets used in EV Energy Partners 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 EVEP is equal to -7%. 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 - $758 million for EV Energy Partners - 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 49.376 million for EV Energy Partners 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 EV Energy Partners at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

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▶ EV Energy Partners Second Quarter 2017 Earnings Call Replay   [Aug-09-17 10:28AM  GlobeNewswire]
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▶ Alerian Index Series June 2017 Index Review   [Jun-09-17 08:30AM  PR Newswire]
▶ EV Energy Partners Provides Operational Update   [Jun-08-17 04:30PM  GlobeNewswire]
▶ MLP Stocks: The Biggest Losers in 1Q17   [Apr-06-17 02:36PM  Market Realist]
▶ Citi Still Cautious On E&P MLPs   [Jul-06-16 11:05AM  at Barrons.com]
▶ What Led to Linn Energys Bankruptcy?   [May-12-16 01:13PM  Market Realist]
▶ Analyzing SM Energys 1Q16 Earnings Performance   [May-05-16 01:51PM  Market Realist]
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Financial statements of EVEP
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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