Intrinsic value of Oasis Petroleum - OAS

Previous Close

$8.10

  Intrinsic Value

$3.08

stock screener

  Rating & Target

str. sell

-62%

Previous close

$8.10

 
Intrinsic value

$3.08

 
Up/down potential

-62%

 
Rating

str. sell

We calculate the intrinsic value of OAS 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 1.9

 

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, %
  -10.76
  41.90
  38.21
  34.89
  31.90
  29.21
  26.79
  24.61
  22.65
  20.88
  19.30
  17.87
  16.58
  15.42
  14.38
  13.44
  12.60
  11.84
  11.15
  10.54
  9.98
  9.49
  9.04
  8.63
  8.27
  7.94
  7.65
  7.38
  7.15
  6.93
  6.74
Revenue, $m
  705
  1,000
  1,383
  1,865
  2,460
  3,179
  4,030
  5,022
  6,159
  7,446
  8,882
  10,469
  12,205
  14,087
  16,113
  18,279
  20,581
  23,018
  25,585
  28,281
  31,105
  34,056
  37,133
  40,339
  43,676
  47,145
  50,751
  54,499
  58,393
  62,440
  66,648
Variable operating expenses, $m
 
  858
  1,186
  1,600
  2,111
  2,727
  3,458
  4,309
  5,285
  6,388
  7,621
  8,983
  10,472
  12,087
  13,825
  15,683
  17,659
  19,749
  21,952
  24,265
  26,688
  29,220
  31,861
  34,611
  37,474
  40,450
  43,545
  46,760
  50,101
  53,574
  57,184
Fixed operating expenses, $m
 
  238
  244
  250
  256
  262
  269
  276
  283
  290
  297
  304
  312
  320
  328
  336
  344
  353
  362
  371
  380
  390
  399
  409
  420
  430
  441
  452
  463
  475
  487
Total operating expenses, $m
  831
  1,096
  1,430
  1,850
  2,367
  2,989
  3,727
  4,585
  5,568
  6,678
  7,918
  9,287
  10,784
  12,407
  14,153
  16,019
  18,003
  20,102
  22,314
  24,636
  27,068
  29,610
  32,260
  35,020
  37,894
  40,880
  43,986
  47,212
  50,564
  54,049
  57,671
Operating income, $m
  -126
  -96
  -47
  15
  93
  189
  303
  437
  592
  768
  964
  1,182
  1,421
  1,681
  1,960
  2,260
  2,578
  2,915
  3,271
  3,645
  4,037
  4,446
  4,874
  5,319
  5,782
  6,264
  6,766
  7,287
  7,829
  8,392
  8,977
EBITDA, $m
  350
  578
  884
  1,272
  1,751
  2,330
  3,018
  3,821
  4,742
  5,784
  6,949
  8,236
  9,644
  11,171
  12,816
  14,574
  16,444
  18,423
  20,508
  22,699
  24,993
  27,390
  29,891
  32,497
  35,208
  38,027
  40,958
  44,004
  47,170
  50,459
  53,880
Interest expense (income), $m
  138
  138
  220
  327
  461
  626
  826
  1,062
  1,338
  1,654
  2,012
  2,411
  2,852
  3,334
  3,857
  4,420
  5,022
  5,662
  6,339
  7,052
  7,802
  8,586
  9,406
  10,262
  11,153
  12,080
  13,044
  14,046
  15,087
  16,170
  17,294
Earnings before tax, $m
  -372
  -234
  -268
  -312
  -368
  -437
  -523
  -625
  -746
  -887
  -1,047
  -1,229
  -1,431
  -1,654
  -1,897
  -2,161
  -2,444
  -2,746
  -3,068
  -3,407
  -3,765
  -4,140
  -4,533
  -4,943
  -5,370
  -5,815
  -6,278
  -6,759
  -7,259
  -7,778
  -8,317
Tax expense, $m
  -129
  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
  -234
  -268
  -312
  -368
  -437
  -523
  -625
  -746
  -887
  -1,047
  -1,229
  -1,431
  -1,654
  -1,897
  -2,161
  -2,444
  -2,746
  -3,068
  -3,407
  -3,765
  -4,140
  -4,533
  -4,943
  -5,370
  -5,815
  -6,278
  -6,759
  -7,259
  -7,778
  -8,317

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  11
  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
  6,179
  8,775
  12,128
  16,360
  21,579
  27,882
  35,351
  44,051
  54,029
  65,312
  77,915
  91,835
  107,061
  123,571
  141,340
  160,339
  180,537
  201,909
  224,429
  248,081
  272,851
  298,734
  325,732
  353,855
  383,120
  413,553
  445,186
  478,059
  512,220
  547,723
  584,628
Adjusted assets (=assets-cash), $m
  6,168
  8,775
  12,128
  16,360
  21,579
  27,882
  35,351
  44,051
  54,029
  65,312
  77,915
  91,835
  107,061
  123,571
  141,340
  160,339
  180,537
  201,909
  224,429
  248,081
  272,851
  298,734
  325,732
  353,855
  383,120
  413,553
  445,186
  478,059
  512,220
  547,723
  584,628
Revenue / Adjusted assets
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
Average production assets, $m
  4,845
  6,875
  9,502
  12,817
  16,905
  21,843
  27,695
  34,510
  42,326
  51,166
  61,039
  71,944
  83,872
  96,807
  110,727
  125,611
  141,434
  158,177
  175,820
  194,348
  213,753
  234,030
  255,181
  277,213
  300,140
  323,981
  348,762
  374,515
  401,277
  429,090
  458,003
Working capital, $m
  -142
  -217
  -300
  -405
  -534
  -690
  -875
  -1,090
  -1,337
  -1,616
  -1,927
  -2,272
  -2,648
  -3,057
  -3,496
  -3,966
  -4,466
  -4,995
  -5,552
  -6,137
  -6,750
  -7,390
  -8,058
  -8,754
  -9,478
  -10,230
  -11,013
  -11,826
  -12,671
  -13,550
  -14,463
Total debt, $m
  2,297
  3,674
  5,445
  7,679
  10,435
  13,763
  17,707
  22,300
  27,568
  33,526
  40,180
  47,530
  55,569
  64,287
  73,669
  83,700
  94,365
  105,649
  117,540
  130,028
  143,106
  156,772
  171,028
  185,877
  201,329
  217,397
  234,099
  251,456
  269,493
  288,239
  307,725
Total liabilities, $m
  3,255
  4,633
  6,404
  8,638
  11,394
  14,722
  18,666
  23,259
  28,527
  34,485
  41,139
  48,489
  56,528
  65,246
  74,628
  84,659
  95,324
  106,608
  118,499
  130,987
  144,065
  157,731
  171,987
  186,836
  202,288
  218,356
  235,058
  252,415
  270,452
  289,198
  308,684
Total equity, $m
  2,923
  4,142
  5,725
  7,722
  10,185
  13,160
  16,686
  20,792
  25,502
  30,827
  36,776
  43,346
  50,533
  58,326
  66,713
  75,680
  85,214
  95,301
  105,931
  117,094
  128,786
  141,002
  153,746
  167,020
  180,833
  195,197
  210,128
  225,644
  241,768
  258,525
  275,945
Total liabilities and equity, $m
  6,178
  8,775
  12,129
  16,360
  21,579
  27,882
  35,352
  44,051
  54,029
  65,312
  77,915
  91,835
  107,061
  123,572
  141,341
  160,339
  180,538
  201,909
  224,430
  248,081
  272,851
  298,733
  325,733
  353,856
  383,121
  413,553
  445,186
  478,059
  512,220
  547,723
  584,629
Debt-to-equity ratio
  0.786
  0.890
  0.950
  0.990
  1.020
  1.050
  1.060
  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
  1.110
  1.110
  1.110
  1.110
  1.110
  1.110
  1.110
  1.110
  1.120
Adjusted equity ratio
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -243
  -234
  -268
  -312
  -368
  -437
  -523
  -625
  -746
  -887
  -1,047
  -1,229
  -1,431
  -1,654
  -1,897
  -2,161
  -2,444
  -2,746
  -3,068
  -3,407
  -3,765
  -4,140
  -4,533
  -4,943
  -5,370
  -5,815
  -6,278
  -6,759
  -7,259
  -7,778
  -8,317
Depreciation, amort., depletion, $m
  476
  674
  932
  1,257
  1,657
  2,141
  2,715
  3,383
  4,150
  5,016
  5,984
  7,053
  8,223
  9,491
  10,856
  12,315
  13,866
  15,508
  17,237
  19,054
  20,956
  22,944
  25,018
  27,178
  29,425
  31,763
  34,192
  36,717
  39,341
  42,068
  44,902
Funds from operations, $m
  206
  440
  664
  945
  1,290
  1,704
  2,193
  2,758
  3,404
  4,130
  4,937
  5,825
  6,792
  7,837
  8,959
  10,154
  11,422
  12,761
  14,170
  15,646
  17,191
  18,804
  20,485
  22,235
  24,055
  25,948
  27,914
  29,958
  32,082
  34,290
  36,585
Change in working capital, $m
  -22
  -64
  -83
  -105
  -129
  -156
  -185
  -215
  -247
  -279
  -312
  -344
  -377
  -408
  -440
  -470
  -500
  -529
  -557
  -585
  -613
  -640
  -668
  -696
  -724
  -753
  -783
  -813
  -845
  -878
  -913
Cash from operations, $m
  228
  505
  747
  1,050
  1,419
  1,860
  2,377
  2,974
  3,650
  4,409
  5,249
  6,169
  7,169
  8,246
  9,398
  10,624
  11,922
  13,290
  14,727
  16,232
  17,804
  19,444
  21,153
  22,931
  24,779
  26,700
  28,697
  30,771
  32,927
  35,168
  37,498
Maintenance CAPEX, $m
  0
  -475
  -674
  -932
  -1,257
  -1,657
  -2,141
  -2,715
  -3,383
  -4,150
  -5,016
  -5,984
  -7,053
  -8,223
  -9,491
  -10,856
  -12,315
  -13,866
  -15,508
  -17,237
  -19,054
  -20,956
  -22,944
  -25,018
  -27,178
  -29,425
  -31,763
  -34,192
  -36,717
  -39,341
  -42,068
New CAPEX, $m
  -1,208
  -2,030
  -2,627
  -3,315
  -4,088
  -4,938
  -5,852
  -6,816
  -7,816
  -8,840
  -9,873
  -10,905
  -11,928
  -12,935
  -13,920
  -14,883
  -15,824
  -16,742
  -17,643
  -18,529
  -19,405
  -20,277
  -21,151
  -22,032
  -22,927
  -23,841
  -24,781
  -25,753
  -26,762
  -27,813
  -28,912
Cash from investing activities, $m
  -1,071
  -2,505
  -3,301
  -4,247
  -5,345
  -6,595
  -7,993
  -9,531
  -11,199
  -12,990
  -14,889
  -16,889
  -18,981
  -21,158
  -23,411
  -25,739
  -28,139
  -30,608
  -33,151
  -35,766
  -38,459
  -41,233
  -44,095
  -47,050
  -50,105
  -53,266
  -56,544
  -59,945
  -63,479
  -67,154
  -70,980
Free cash flow, $m
  -843
  -2,000
  -2,554
  -3,197
  -3,926
  -4,735
  -5,616
  -6,557
  -7,549
  -8,580
  -9,640
  -10,720
  -11,813
  -12,912
  -14,013
  -15,115
  -16,217
  -17,319
  -18,424
  -19,534
  -20,655
  -21,789
  -22,942
  -24,119
  -25,325
  -26,566
  -27,847
  -29,174
  -30,552
  -31,986
  -33,482
Issuance/(repayment) of debt, $m
  89
  1,377
  1,770
  2,234
  2,756
  3,328
  3,944
  4,594
  5,268
  5,958
  6,654
  7,350
  8,039
  8,718
  9,382
  10,031
  10,665
  11,284
  11,891
  12,488
  13,079
  13,666
  14,255
  14,849
  15,452
  16,068
  16,702
  17,357
  18,037
  18,745
  19,486
Issuance/(repurchase) of shares, $m
  764
  1,464
  1,851
  2,309
  2,831
  3,412
  4,048
  4,731
  5,455
  6,212
  6,996
  7,799
  8,617
  9,447
  10,284
  11,128
  11,978
  12,834
  13,697
  14,571
  15,456
  16,357
  17,276
  18,217
  19,183
  20,179
  21,209
  22,275
  23,383
  24,535
  25,737
Cash from financing (excl. dividends), $m  
  844
  2,841
  3,621
  4,543
  5,587
  6,740
  7,992
  9,325
  10,723
  12,170
  13,650
  15,149
  16,656
  18,165
  19,666
  21,159
  22,643
  24,118
  25,588
  27,059
  28,535
  30,023
  31,531
  33,066
  34,635
  36,247
  37,911
  39,632
  41,420
  43,280
  45,223
Total cash flow (excl. dividends), $m
  2
  841
  1,067
  1,346
  1,660
  2,005
  2,376
  2,768
  3,174
  3,590
  4,009
  4,429
  4,844
  5,253
  5,653
  6,044
  6,426
  6,799
  7,165
  7,524
  7,880
  8,234
  8,589
  8,947
  9,310
  9,682
  10,064
  10,458
  10,868
  11,295
  11,741
Retained Cash Flow (-), $m
  -604
  -1,464
  -1,851
  -2,309
  -2,831
  -3,412
  -4,048
  -4,731
  -5,455
  -6,212
  -6,996
  -7,799
  -8,617
  -9,447
  -10,284
  -11,128
  -11,978
  -12,834
  -13,697
  -14,571
  -15,456
  -16,357
  -17,276
  -18,217
  -19,183
  -20,179
  -21,209
  -22,275
  -23,383
  -24,535
  -25,737
Prev. year cash balance distribution, $m
 
  11
  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
 
  -612
  -784
  -963
  -1,171
  -1,407
  -1,672
  -1,964
  -2,281
  -2,623
  -2,986
  -3,370
  -3,773
  -4,194
  -4,631
  -5,084
  -5,552
  -6,035
  -6,533
  -7,046
  -7,576
  -8,123
  -8,687
  -9,270
  -9,873
  -10,498
  -11,145
  -11,817
  -12,515
  -13,240
  -13,996
Discount rate, %
 
  8.20
  8.61
  9.04
  9.49
  9.97
  10.47
  10.99
  11.54
  12.12
  12.72
  13.36
  14.02
  14.73
  15.46
  16.24
  17.05
  17.90
  18.79
  19.73
  20.72
  21.76
  22.84
  23.99
  25.19
  26.45
  27.77
  29.16
  30.61
  32.15
  33.75
PV of cash for distribution, $m
 
  -565
  -664
  -743
  -814
  -875
  -920
  -946
  -952
  -937
  -902
  -849
  -781
  -703
  -619
  -532
  -447
  -367
  -294
  -230
  -175
  -130
  -94
  -66
  -45
  -30
  -19
  -12
  -7
  -4
  -2
Current shareholders' claim on cash, %
  100
  58.2
  35.5
  22.5
  14.8
  10.0
  7.0
  4.9
  3.6
  2.7
  2.0
  1.5
  1.2
  1.0
  0.8
  0.6
  0.5
  0.4
  0.3
  0.3
  0.2
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1

Oasis Petroleum Inc. is an independent exploration and production company. The Company is focused on the acquisition and development of unconventional oil and natural gas resources in the North Dakota and Montana regions of the Williston Basin. Its segments include Exploration and Production, Well Services, and Midstream Services. The exploration and production segment is engaged in the acquisition and development of oil and natural gas properties. The well services business segment (OWS) performs completion services for the Company's oil and natural gas wells operated by Oasis Petroleum North America LLC (OPNA). The midstream services business segment (OMS) performs salt water gathering and disposal services, fresh water services, natural gas gathering and processing and crude oil gathering and transportation and other midstream services for the Company's oil and natural gas wells operated by OPNA. The Company also operates a well services business and a midstream services business.

FINANCIAL RATIOS  of  Oasis Petroleum (OAS)

Valuation Ratios
P/E Ratio -7.9
Price to Sales 2.7
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 8.4
Price to Free Cash Flow -2
Growth Rates
Sales Growth Rate -10.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 42.3%
Cap. Spend. - 3 Yr. Gr. Rate -13.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 78.6%
Total Debt to Equity 78.6%
Interest Coverage -2
Management Effectiveness
Return On Assets -2.6%
Ret/ On Assets - 3 Yr. Avg. 3.3%
Return On Total Capital -4.9%
Ret/ On T. Cap. - 3 Yr. Avg. 2.1%
Return On Equity -9.3%
Return On Equity - 3 Yr. Avg. 6.8%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 69.1%
Gross Margin - 3 Yr. Avg. 71.2%
EBITDA Margin 34.3%
EBITDA Margin - 3 Yr. Avg. 68.7%
Operating Margin -17.9%
Oper. Margin - 3 Yr. Avg. 4.7%
Pre-Tax Margin -52.8%
Pre-Tax Margin - 3 Yr. Avg. -0.4%
Net Profit Margin -34.5%
Net Profit Margin - 3 Yr. Avg. -1%
Effective Tax Rate 34.7%
Eff/ Tax Rate - 3 Yr. Avg. 33.7%
Payout Ratio 0%

OAS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OAS stock intrinsic value calculation we used $705 million for the last fiscal year's total revenue generated by Oasis Petroleum. The default revenue input number comes from 2016 income statement of Oasis Petroleum. 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 OAS stock valuation model: a) initial revenue growth rate of 41.9% 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 8.2%, whose default value for OAS is calculated based on our internal credit rating of Oasis Petroleum, 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 Oasis Petroleum.
    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 OAS stock the variable cost ratio is equal to 85.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $232 million in the base year in the intrinsic value calculation for OAS 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% for Oasis Petroleum.

Corporate tax rate of 27% is the nominal tax rate for Oasis Petroleum. 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 OAS 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 OAS are equal to 687.2%.

Life of production assets of 10.2 years is the average useful life of capital assets used in Oasis Petroleum 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 OAS is equal to -21.7%. 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 - $2923 million for Oasis Petroleum - 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 237.658 million for Oasis Petroleum 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 Oasis Petroleum at the current share price and the inputted number of shares is $1.9 billion.

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COMPANY NEWS

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▶ How Have Whiting Petroleums Earnings and Revenues Trended?   [Sep-15-17 09:06AM  Market Realist]
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▶ Important Energy Sector Updates: August 2125, 2017   [Aug-28-17 04:36PM  Market Realist]
▶ Short Interest Trends in Oasis Petroleum Stock   [Aug-24-17 07:36AM  Market Realist]
▶ Oasis Petroleum: Analysts Recommendations and Rating Changes   [Aug-23-17 11:53AM  Market Realist]
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▶ Analysts Sentiments on Oasis Petroleum Stock   [Aug-07-17 09:08AM  Market Realist]
▶ Oasis Petroleum Stock Reacted to Its 2Q17 Earnings   [Aug-04-17 03:05PM  Market Realist]
▶ Oasis tops 2Q profit forecasts   [Aug-02-17 10:50PM  Associated Press]
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Financial statements of OAS
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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