Intrinsic value of Noble Energy - NBL

Previous Close

$23.76

  Intrinsic Value

$5.44

stock screener

  Rating & Target

str. sell

-77%

  Value-price divergence*

-60%

Previous close

$23.76

 
Intrinsic value

$5.44

 
Up/down potential

-77%

 
Rating

str. sell

 
Value-price divergence*

-60%

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

We calculate the intrinsic value of NBL 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 10.1

 

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, %
  9.68
  43.10
  39.29
  35.86
  32.77
  30.00
  27.50
  25.25
  23.22
  21.40
  19.76
  18.28
  16.96
  15.76
  14.68
  13.72
  12.84
  12.06
  11.35
  10.72
  10.15
  9.63
  9.17
  8.75
  8.38
  8.04
  7.74
  7.46
  7.22
  6.99
  6.79
Revenue, $m
  3,491
  4,996
  6,958
  9,454
  12,552
  16,318
  20,804
  26,057
  32,108
  38,980
  46,683
  55,218
  64,581
  74,760
  85,738
  97,498
  110,021
  123,289
  137,288
  152,003
  167,426
  183,553
  200,383
  217,920
  236,175
  255,161
  274,898
  295,410
  316,726
  338,877
  361,902
Variable operating expenses, $m
 
  8,877
  12,365
  16,799
  22,305
  28,996
  36,970
  46,304
  57,057
  69,267
  82,955
  98,123
  114,761
  132,848
  152,356
  173,253
  195,507
  219,085
  243,960
  270,109
  297,516
  326,173
  356,080
  387,244
  419,682
  453,421
  488,494
  524,944
  562,821
  602,185
  643,100
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
  4,787
  8,877
  12,365
  16,799
  22,305
  28,996
  36,970
  46,304
  57,057
  69,267
  82,955
  98,123
  114,761
  132,848
  152,356
  173,253
  195,507
  219,085
  243,960
  270,109
  297,516
  326,173
  356,080
  387,244
  419,682
  453,421
  488,494
  524,944
  562,821
  602,185
  643,100
Operating income, $m
  -1,296
  -3,882
  -5,407
  -7,346
  -9,753
  -12,679
  -16,165
  -20,246
  -24,948
  -30,287
  -36,272
  -42,905
  -50,180
  -58,088
  -66,618
  -75,756
  -85,486
  -95,796
  -106,672
  -118,106
  -130,090
  -142,621
  -155,697
  -169,324
  -183,508
  -198,260
  -213,596
  -229,534
  -246,096
  -263,308
  -281,198
EBITDA, $m
  1,158
  -1,031
  -1,436
  -1,950
  -2,590
  -3,366
  -4,292
  -5,376
  -6,624
  -8,042
  -9,631
  -11,392
  -13,323
  -15,423
  -17,688
  -20,114
  -22,697
  -25,435
  -28,322
  -31,358
  -34,540
  -37,867
  -41,339
  -44,957
  -48,723
  -52,640
  -56,711
  -60,943
  -65,340
  -69,910
  -74,660
Interest expense (income), $m
  327
  301
  518
  800
  1,158
  1,603
  2,144
  2,789
  3,543
  4,413
  5,400
  6,506
  7,733
  9,078
  10,540
  12,117
  13,807
  15,606
  17,512
  19,523
  21,637
  23,852
  26,169
  28,587
  31,106
  33,729
  36,456
  39,292
  42,238
  45,301
  48,483
Earnings before tax, $m
  -1,772
  -4,183
  -5,924
  -8,145
  -10,911
  -14,282
  -18,309
  -23,035
  -28,492
  -34,700
  -41,672
  -49,411
  -57,912
  -67,166
  -77,158
  -87,873
  -99,293
  -111,401
  -124,184
  -137,629
  -151,727
  -166,473
  -181,866
  -197,911
  -214,614
  -231,989
  -250,052
  -268,825
  -288,334
  -308,608
  -329,681
Tax expense, $m
  -787
  0
  0
  0
  0
  0
  0
  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
  -998
  -4,183
  -5,924
  -8,145
  -10,911
  -14,282
  -18,309
  -23,035
  -28,492
  -34,700
  -41,672
  -49,411
  -57,912
  -67,166
  -77,158
  -87,873
  -99,293
  -111,401
  -124,184
  -137,629
  -151,727
  -166,473
  -181,866
  -197,911
  -214,614
  -231,989
  -250,052
  -268,825
  -288,334
  -308,608
  -329,681

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,180
  0
  0
  0
  0
  0
  0
  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
  21,011
  28,384
  39,536
  53,715
  71,319
  92,713
  118,207
  148,052
  182,435
  221,477
  265,242
  313,741
  366,940
  424,771
  487,147
  553,964
  625,118
  700,507
  780,043
  863,653
  951,285
  1,042,914
  1,138,537
  1,238,182
  1,341,901
  1,449,778
  1,561,921
  1,678,467
  1,799,577
  1,925,438
  2,056,263
Adjusted assets (=assets-cash), $m
  19,831
  28,384
  39,536
  53,715
  71,319
  92,713
  118,207
  148,052
  182,435
  221,477
  265,242
  313,741
  366,940
  424,771
  487,147
  553,964
  625,118
  700,507
  780,043
  863,653
  951,285
  1,042,914
  1,138,537
  1,238,182
  1,341,901
  1,449,778
  1,561,921
  1,678,467
  1,799,577
  1,925,438
  2,056,263
Revenue / Adjusted assets
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
Average production assets, $m
  19,924
  28,510
  39,712
  53,953
  71,635
  93,124
  118,731
  148,708
  183,243
  222,459
  266,418
  315,132
  368,566
  426,654
  489,306
  556,420
  627,889
  703,612
  783,500
  867,480
  955,501
  1,047,536
  1,143,583
  1,243,669
  1,347,849
  1,456,204
  1,568,844
  1,685,906
  1,807,552
  1,933,972
  2,065,377
Working capital, $m
  477
  -500
  -696
  -945
  -1,255
  -1,632
  -2,080
  -2,606
  -3,211
  -3,898
  -4,668
  -5,522
  -6,458
  -7,476
  -8,574
  -9,750
  -11,002
  -12,329
  -13,729
  -15,200
  -16,743
  -18,355
  -20,038
  -21,792
  -23,617
  -25,516
  -27,490
  -29,541
  -31,673
  -33,888
  -36,190
Total debt, $m
  7,074
  12,041
  18,598
  26,935
  37,287
  49,866
  64,857
  82,406
  102,623
  125,579
  151,314
  179,831
  211,112
  245,117
  281,793
  321,082
  362,920
  407,249
  454,016
  503,179
  554,707
  608,584
  664,811
  723,402
  784,389
  847,821
  913,761
  982,290
  1,053,502
  1,127,509
  1,204,434
Total liabilities, $m
  11,723
  16,690
  23,247
  31,584
  41,936
  54,515
  69,506
  87,055
  107,272
  130,228
  155,963
  184,480
  215,761
  249,766
  286,442
  325,731
  367,569
  411,898
  458,665
  507,828
  559,356
  613,233
  669,460
  728,051
  789,038
  852,470
  918,410
  986,939
  1,058,151
  1,132,158
  1,209,083
Total equity, $m
  9,288
  11,694
  16,289
  22,130
  29,384
  38,198
  48,701
  60,998
  75,163
  91,249
  109,280
  129,261
  151,179
  175,006
  200,705
  228,233
  257,549
  288,609
  321,378
  355,825
  391,930
  429,681
  469,077
  510,131
  552,863
  597,309
  643,512
  691,528
  741,426
  793,281
  847,180
Total liabilities and equity, $m
  21,011
  28,384
  39,536
  53,714
  71,320
  92,713
  118,207
  148,053
  182,435
  221,477
  265,243
  313,741
  366,940
  424,772
  487,147
  553,964
  625,118
  700,507
  780,043
  863,653
  951,286
  1,042,914
  1,138,537
  1,238,182
  1,341,901
  1,449,779
  1,561,922
  1,678,467
  1,799,577
  1,925,439
  2,056,263
Debt-to-equity ratio
  0.762
  1.030
  1.140
  1.220
  1.270
  1.310
  1.330
  1.350
  1.370
  1.380
  1.380
  1.390
  1.400
  1.400
  1.400
  1.410
  1.410
  1.410
  1.410
  1.410
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
Adjusted equity ratio
  0.409
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -998
  -4,183
  -5,924
  -8,145
  -10,911
  -14,282
  -18,309
  -23,035
  -28,492
  -34,700
  -41,672
  -49,411
  -57,912
  -67,166
  -77,158
  -87,873
  -99,293
  -111,401
  -124,184
  -137,629
  -151,727
  -166,473
  -181,866
  -197,911
  -214,614
  -231,989
  -250,052
  -268,825
  -288,334
  -308,608
  -329,681
Depreciation, amort., depletion, $m
  2,454
  2,851
  3,971
  5,395
  7,164
  9,312
  11,873
  14,871
  18,324
  22,246
  26,642
  31,513
  36,857
  42,665
  48,931
  55,642
  62,789
  70,361
  78,350
  86,748
  95,550
  104,754
  114,358
  124,367
  134,785
  145,620
  156,884
  168,591
  180,755
  193,397
  206,538
Funds from operations, $m
  891
  -1,332
  -1,953
  -2,750
  -3,748
  -4,970
  -6,436
  -8,164
  -10,167
  -12,454
  -15,031
  -17,898
  -21,056
  -24,501
  -28,228
  -32,231
  -36,504
  -41,040
  -45,834
  -50,881
  -56,177
  -61,719
  -67,508
  -73,544
  -79,829
  -86,368
  -93,168
  -100,235
  -107,579
  -115,211
  -123,143
Change in working capital, $m
  -460
  -150
  -196
  -250
  -310
  -377
  -449
  -525
  -605
  -687
  -770
  -854
  -936
  -1,018
  -1,098
  -1,176
  -1,252
  -1,327
  -1,400
  -1,472
  -1,542
  -1,613
  -1,683
  -1,754
  -1,825
  -1,899
  -1,974
  -2,051
  -2,132
  -2,215
  -2,303
Cash from operations, $m
  1,351
  -1,182
  -1,757
  -2,501
  -3,438
  -4,593
  -5,988
  -7,639
  -9,562
  -11,767
  -14,260
  -17,044
  -20,120
  -23,483
  -27,130
  -31,055
  -35,252
  -39,713
  -44,434
  -49,409
  -54,634
  -60,107
  -65,825
  -71,790
  -78,004
  -84,470
  -91,194
  -98,184
  -105,447
  -112,996
  -120,841
Maintenance CAPEX, $m
  0
  -1,992
  -2,851
  -3,971
  -5,395
  -7,164
  -9,312
  -11,873
  -14,871
  -18,324
  -22,246
  -26,642
  -31,513
  -36,857
  -42,665
  -48,931
  -55,642
  -62,789
  -70,361
  -78,350
  -86,748
  -95,550
  -104,754
  -114,358
  -124,367
  -134,785
  -145,620
  -156,884
  -168,591
  -180,755
  -193,397
New CAPEX, $m
  -1,541
  -8,586
  -11,202
  -14,241
  -17,683
  -21,489
  -25,607
  -29,977
  -34,535
  -39,215
  -43,959
  -48,714
  -53,434
  -58,088
  -62,652
  -67,114
  -71,469
  -75,723
  -79,888
  -83,980
  -88,021
  -92,035
  -96,047
  -100,086
  -104,179
  -108,355
  -112,640
  -117,062
  -121,647
  -126,419
  -131,405
Cash from investing activities, $m
  -431
  -10,578
  -14,053
  -18,212
  -23,078
  -28,653
  -34,919
  -41,850
  -49,406
  -57,539
  -66,205
  -75,356
  -84,947
  -94,945
  -105,317
  -116,045
  -127,111
  -138,512
  -150,249
  -162,330
  -174,769
  -187,585
  -200,801
  -214,444
  -228,546
  -243,140
  -258,260
  -273,946
  -290,238
  -307,174
  -324,802
Free cash flow, $m
  920
  -11,760
  -15,810
  -20,713
  -26,516
  -33,245
  -40,907
  -49,489
  -58,968
  -69,307
  -80,466
  -92,400
  -105,067
  -118,428
  -132,447
  -147,099
  -162,363
  -178,226
  -194,684
  -211,740
  -229,403
  -247,691
  -266,626
  -286,234
  -306,550
  -327,610
  -349,455
  -372,130
  -395,685
  -420,170
  -445,643
Issuance/(repayment) of debt, $m
  -587
  5,030
  6,557
  8,337
  10,352
  12,580
  14,990
  17,549
  20,217
  22,957
  25,734
  28,517
  31,281
  34,005
  36,677
  39,289
  41,838
  44,329
  46,767
  49,163
  51,528
  53,878
  56,227
  58,591
  60,987
  63,432
  65,940
  68,529
  71,213
  74,007
  76,925
Issuance/(repurchase) of shares, $m
  0
  7,706
  10,519
  13,987
  18,164
  23,096
  28,813
  35,331
  42,657
  50,786
  59,704
  69,393
  79,830
  90,993
  102,857
  115,402
  128,608
  142,462
  156,953
  172,076
  187,832
  204,224
  221,263
  238,964
  257,347
  276,434
  296,255
  316,842
  338,231
  360,463
  383,581
Cash from financing (excl. dividends), $m  
  -596
  12,736
  17,076
  22,324
  28,516
  35,676
  43,803
  52,880
  62,874
  73,743
  85,438
  97,910
  111,111
  124,998
  139,534
  154,691
  170,446
  186,791
  203,720
  221,239
  239,360
  258,102
  277,490
  297,555
  318,334
  339,866
  362,195
  385,371
  409,444
  434,470
  460,506
Total cash flow (excl. dividends), $m
  324
  976
  1,267
  1,611
  2,000
  2,431
  2,896
  3,391
  3,906
  4,436
  4,972
  5,510
  6,044
  6,570
  7,087
  7,591
  8,084
  8,565
  9,036
  9,499
  9,956
  10,410
  10,864
  11,321
  11,784
  12,256
  12,741
  13,241
  13,759
  14,299
  14,863
Retained Cash Flow (-), $m
  1,082
  -7,706
  -10,519
  -13,987
  -18,164
  -23,096
  -28,813
  -35,331
  -42,657
  -50,786
  -59,704
  -69,393
  -79,830
  -90,993
  -102,857
  -115,402
  -128,608
  -142,462
  -156,953
  -172,076
  -187,832
  -204,224
  -221,263
  -238,964
  -257,347
  -276,434
  -296,255
  -316,842
  -338,231
  -360,463
  -383,581
Prev. year cash balance distribution, $m
 
  1,117
  0
  0
  0
  0
  0
  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
 
  -5,613
  -9,252
  -12,376
  -16,164
  -20,666
  -25,916
  -31,941
  -38,751
  -46,350
  -54,731
  -63,883
  -73,786
  -84,422
  -95,771
  -107,810
  -120,524
  -133,897
  -147,917
  -162,577
  -177,875
  -193,814
  -210,399
  -227,643
  -245,563
  -264,178
  -283,514
  -303,601
  -324,472
  -346,164
  -368,718
Discount rate, %
 
  6.20
  6.51
  6.84
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.04
  20.00
  21.00
  22.05
  23.15
  24.30
  25.52
PV of cash for distribution, $m
 
  -5,285
  -8,156
  -10,149
  -12,250
  -14,371
  -16,411
  -18,269
  -19,846
  -21,061
  -21,848
  -22,170
  -22,015
  -21,401
  -20,369
  -18,984
  -17,323
  -15,475
  -13,530
  -11,574
  -9,681
  -7,914
  -6,320
  -4,925
  -3,743
  -2,772
  -1,998
  -1,400
  -953
  -630
  -403
Current shareholders' claim on cash, %
  100
  53.6
  29.4
  16.5
  9.4
  5.5
  3.2
  1.9
  1.2
  0.7
  0.5
  0.3
  0.2
  0.1
  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

Noble Energy, Inc., an independent energy company, engages in the acquisition, exploration, and production of crude oil, natural gas, and natural gas liquids worldwide. Its principal projects are located in DJ Basin, Eagle Ford Shale, Permian Basin, and Marcellus Shale, the United States; deepwater Gulf of Mexico; offshore Eastern Mediterranean; and offshore West Africa. As of December 31, 2016, the company had approximately 1,437 million barrels oil equivalent of total proved reserves. Noble Energy, Inc. was founded in 1932 and is based in Houston, Texas.

FINANCIAL RATIOS  of  Noble Energy (NBL)

Valuation Ratios
P/E Ratio -10.2
Price to Sales 2.9
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 7.6
Price to Free Cash Flow -53.8
Growth Rates
Sales Growth Rate 9.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -48.3%
Cap. Spend. - 3 Yr. Gr. Rate -17.1%
Financial Strength
Quick Ratio 19
Current Ratio 0
LT Debt to Equity 75.5%
Total Debt to Equity 76.2%
Interest Coverage -4
Management Effectiveness
Return On Assets -3.6%
Ret/ On Assets - 3 Yr. Avg. -2.1%
Return On Total Capital -5.7%
Ret/ On T. Cap. - 3 Yr. Avg. -3.9%
Return On Equity -10.2%
Return On Equity - 3 Yr. Avg. -7.1%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 86.7%
Gross Margin - 3 Yr. Avg. 91.5%
EBITDA Margin 28.9%
EBITDA Margin - 3 Yr. Avg. 35.3%
Operating Margin -37.1%
Oper. Margin - 3 Yr. Avg. -32.3%
Pre-Tax Margin -50.8%
Pre-Tax Margin - 3 Yr. Avg. -29%
Net Profit Margin -28.6%
Net Profit Margin - 3 Yr. Avg. -27.2%
Effective Tax Rate 44.4%
Eff/ Tax Rate - 3 Yr. Avg. 21.1%
Payout Ratio -17.2%

NBL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NBL stock intrinsic value calculation we used $3491 million for the last fiscal year's total revenue generated by Noble Energy. The default revenue input number comes from 2016 income statement of Noble 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 NBL stock valuation model: a) initial revenue growth rate of 43.1% 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 6.2%, whose default value for NBL is calculated based on our internal credit rating of Noble 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 Noble 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 NBL stock the variable cost ratio is equal to 177.7%.

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 NBL 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 4.3% for Noble Energy.

Corporate tax rate of 27% is the nominal tax rate for Noble 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 NBL 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 NBL are equal to 570.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Noble 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 NBL is equal to -10%. 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 - $9288 million for Noble 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 426.617 million for Noble 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 Noble Energy at the current share price and the inputted number of shares is $10.1 billion.

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COMPANY NEWS

▶ Forecasting CHKs Stock Price Range Using Implied Volatility   [Aug-15-17 03:36PM  Market Realist]
▶ Know This Natural Gas ETF   [02:10PM  Benzinga]
▶ Noble Delivers 2Q Beat on Higher Prices and Lower Costs   [Aug-07-17 09:28AM  Morningstar]
▶ Noble Energy reports quarterly loss, updates Colorado operations   [Aug-04-17 06:05PM  American City Business Journals]
▶ Noble reports 2Q loss   [05:40PM  Associated Press]
▶ Carson Block Says 'Wheels Falling Off' Noble Group   [Jul-27-17 01:27PM  Bloomberg Video]
▶ What Does Chesapeakes Implied Volatility Tell Us?   [Jul-25-17 02:37PM  Market Realist]
▶ Noble Energy Declares Quarterly Dividend   [09:42AM  GlobeNewswire]
▶ Noble Energy: Short Interest Trends in Its Stock   [Jul-24-17 07:38AM  Market Realist]
▶ Noble Energy: Recent Trends in Analysts Recommendations   [Jul-21-17 03:35PM  Market Realist]
▶ Noble Energys 2Q17 Earnings: Are You Ready?   [12:17PM  Market Realist]
▶ Cabot Oil & Gass Production Expectations for 2017   [Jul-19-17 10:35AM  Market Realist]
▶ Colorado's 2 biggest oil and gas companies report progress on safety inspections   [Jul-17-17 02:10PM  American City Business Journals]
▶ Anadarko Petroleums Production Expectations for 2017   [Jul-13-17 09:08AM  Market Realist]
▶ Forecast for Chesapeake Energy Stock   [Jul-10-17 04:35PM  Market Realist]
▶ Last Weeks Key Energy Industry Updates   [Jul-03-17 03:17PM  Market Realist]
▶ How Is Noble Energys Implied Volatility Trending?   [Jun-29-17 06:05PM  Market Realist]
▶ Noble Energy Closes Upstream Appalachia Sale   [Jun-28-17 04:15PM  GlobeNewswire]
▶ Analyzing the Forecast for Chesapeake Stock Next Week   [Jun-27-17 01:36PM  Market Realist]
▶ ExxonMobil's XTO Energy to shutter Denver-area regional office; move 110 jobs   [Jun-22-17 07:48PM  American City Business Journals]
▶ Noble Energy drops down interests in infrastructure assets to MLP for $270M   [Jun-21-17 03:40PM  American City Business Journals]
▶ Oil: Bear-ish? We'll Show You Bearish   [10:51AM  Barrons.com]
▶ Whats the Forecast for Chesapeake Stock?   [Jun-20-17 06:05PM  Market Realist]
▶ Noble Energy to slash Denver office staff by one-third   [Jun-17-17 08:42PM  American City Business Journals]
▶ Artisan Partners: Hand-Crafted Approach, Bespoke Returns   [Jun-07-17 02:53PM  Motley Fool]
▶ 11 Best Oil Company Stocks To Buy Now   [Jun-05-17 01:18PM  Insider Monkey]
▶ Colorado oil and gas companies file inspection reports on 16,514 wells   [Jun-02-17 03:06PM  American City Business Journals]
▶ Deadline day for oil and gas inspections in Colorado following fatal explosion   [May-30-17 08:35PM  American City Business Journals]
▶ [$$] Quantum Buys Noble's Stake in Midstream Business for $765 Million   [May-18-17 06:53PM  The Wall Street Journal]
▶ Noble Energy sells stake in Marcellus midstream MLP for $765M   [09:13AM  American City Business Journals]
▶ Noble Energy To Sell 50% Stake In Cone Gathering   [May-17-17 08:00PM  Rigzone.com]
▶ Anadarko, Noble, developer and builders named in suit over fatal Firestone explosion   [May-16-17 01:41PM  American City Business Journals]
▶ Whats the Forecast for Chesapeake Stock Next Week?   [May-11-17 10:05AM  Market Realist]
▶ Noble Energy: Cramer's Top Takeaways   [06:33AM  TheStreet.com]
▶ ETFs with exposure to Noble Energy, Inc. : May 5, 2017   [May-05-17 04:22PM  Capital Cube]
▶ CONE Midstream Reports First Quarter Results   [06:45AM  GlobeNewswire]
▶ Two calls and a winning update   [May-03-17 02:02PM  CNBC Videos]
▶ Houston energy co. sells Marcellus assets for more than $1B   [May-02-17 04:14PM  American City Business Journals]
▶ Noble selling Marcellus Shale assets for $1.12B   [11:31AM  American City Business Journals]
▶ Noble Energy Trades Ex-Dividend Thursday   [09:25AM  Investopedia]
Stock chart of NBL Financial statements of NBL
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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