Intrinsic value of Statoil ADR - STO

Previous Close

$23.36

  Intrinsic Value

$5.54

stock screener

  Rating & Target

str. sell

-76%

Previous close

$23.36

 
Intrinsic value

$5.54

 
Up/down potential

-76%

 
Rating

str. sell

We calculate the intrinsic value of STO 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -21.09
  11.90
  11.21
  10.59
  10.03
  9.53
  9.07
  8.67
  8.30
  7.97
  7.67
  7.41
  7.17
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.32
Revenue, $m
  45,688
  51,125
  56,856
  62,876
  69,183
  75,774
  82,650
  89,813
  97,268
  105,021
  113,079
  121,454
  130,156
  139,200
  148,602
  158,378
  168,546
  179,129
  190,146
  201,623
  213,584
  226,054
  239,064
  252,641
  266,818
  281,628
  297,104
  313,284
  330,205
  347,908
  366,434
Variable operating expenses, $m
 
  45,753
  50,878
  56,262
  61,902
  67,796
  73,945
  80,351
  87,018
  93,951
  101,157
  108,614
  116,396
  124,484
  132,892
  141,634
  150,728
  160,192
  170,045
  180,308
  191,004
  202,156
  213,790
  225,933
  238,611
  251,855
  265,695
  280,164
  295,297
  311,128
  327,695
Fixed operating expenses, $m
 
  4,970
  5,094
  5,222
  5,352
  5,486
  5,623
  5,764
  5,908
  6,056
  6,207
  6,362
  6,521
  6,684
  6,852
  7,023
  7,198
  7,378
  7,563
  7,752
  7,946
  8,144
  8,348
  8,557
  8,771
  8,990
  9,215
  9,445
  9,681
  9,923
  10,171
Total operating expenses, $m
  45,608
  50,723
  55,972
  61,484
  67,254
  73,282
  79,568
  86,115
  92,926
  100,007
  107,364
  114,976
  122,917
  131,168
  139,744
  148,657
  157,926
  167,570
  177,608
  188,060
  198,950
  210,300
  222,138
  234,490
  247,382
  260,845
  274,910
  289,609
  304,978
  321,051
  337,866
Operating income, $m
  80
  402
  883
  1,393
  1,929
  2,492
  3,081
  3,698
  4,342
  5,014
  5,715
  6,478
  7,238
  8,032
  8,858
  9,721
  10,620
  11,559
  12,539
  13,563
  14,634
  15,754
  16,925
  18,152
  19,437
  20,783
  22,195
  23,675
  25,228
  26,857
  28,568
EBITDA, $m
  11,630
  13,241
  15,158
  17,175
  19,291
  21,505
  23,817
  26,228
  28,740
  31,354
  34,073
  36,901
  39,842
  42,900
  46,082
  49,393
  52,840
  56,429
  60,169
  64,068
  68,135
  72,378
  76,809
  81,437
  86,273
  91,329
  96,617
  102,150
  107,941
  114,005
  120,356
Interest expense (income), $m
  548
  980
  1,254
  1,543
  1,846
  2,164
  2,496
  2,842
  3,203
  3,579
  3,970
  4,376
  4,798
  5,236
  5,692
  6,166
  6,658
  7,171
  7,704
  8,259
  8,838
  9,440
  10,069
  10,724
  11,409
  12,123
  12,869
  13,649
  14,464
  15,317
  16,209
Earnings before tax, $m
  -178
  -578
  -370
  -150
  83
  328
  586
  856
  1,139
  1,435
  1,745
  2,102
  2,441
  2,795
  3,166
  3,555
  3,962
  4,388
  4,835
  5,304
  5,796
  6,313
  6,857
  7,428
  8,028
  8,660
  9,326
  10,026
  10,763
  11,540
  12,358
Tax expense, $m
  2,724
  0
  0
  0
  22
  89
  158
  231
  307
  387
  471
  567
  659
  755
  855
  960
  1,070
  1,185
  1,305
  1,432
  1,565
  1,705
  1,851
  2,006
  2,168
  2,338
  2,518
  2,707
  2,906
  3,116
  3,337
Net income, $m
  -2,922
  -578
  -370
  -150
  60
  239
  427
  625
  831
  1,048
  1,274
  1,534
  1,782
  2,041
  2,311
  2,595
  2,892
  3,203
  3,530
  3,872
  4,231
  4,609
  5,005
  5,422
  5,861
  6,322
  6,808
  7,319
  7,857
  8,424
  9,022

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  12,766
  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
  104,530
  102,660
  114,169
  126,258
  138,922
  152,157
  165,964
  180,348
  195,318
  210,885
  227,066
  243,883
  261,358
  279,519
  298,397
  318,027
  338,447
  359,696
  381,820
  404,866
  428,883
  453,924
  480,048
  507,312
  535,780
  565,518
  596,595
  629,085
  663,063
  698,610
  735,811
Adjusted assets (=assets-cash), $m
  91,764
  102,660
  114,169
  126,258
  138,922
  152,157
  165,964
  180,348
  195,318
  210,885
  227,066
  243,883
  261,358
  279,519
  298,397
  318,027
  338,447
  359,696
  381,820
  404,866
  428,883
  453,924
  480,048
  507,312
  535,780
  565,518
  596,595
  629,085
  663,063
  698,610
  735,811
Revenue / Adjusted assets
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
  0.498
Average production assets, $m
  69,803
  78,119
  86,876
  96,075
  105,712
  115,783
  126,289
  137,235
  148,626
  160,472
  172,785
  185,581
  198,879
  212,698
  227,064
  242,001
  257,539
  273,709
  290,544
  308,080
  326,356
  345,411
  365,289
  386,036
  407,699
  430,328
  453,976
  478,698
  504,554
  531,603
  559,911
Working capital, $m
  8,115
  -1,074
  -1,194
  -1,320
  -1,453
  -1,591
  -1,736
  -1,886
  -2,043
  -2,205
  -2,375
  -2,551
  -2,733
  -2,923
  -3,121
  -3,326
  -3,539
  -3,762
  -3,993
  -4,234
  -4,485
  -4,747
  -5,020
  -5,305
  -5,603
  -5,914
  -6,239
  -6,579
  -6,934
  -7,306
  -7,695
Total debt, $m
  31,673
  35,822
  44,074
  52,742
  61,822
  71,312
  81,211
  91,525
  102,258
  113,419
  125,022
  137,079
  149,608
  162,630
  176,166
  190,241
  204,881
  220,117
  235,980
  252,504
  269,724
  287,679
  306,409
  325,958
  346,369
  367,691
  389,974
  413,269
  437,631
  463,119
  489,792
Total liabilities, $m
  69,458
  73,607
  81,859
  90,527
  99,607
  109,097
  118,996
  129,310
  140,043
  151,204
  162,807
  174,864
  187,393
  200,415
  213,951
  228,026
  242,666
  257,902
  273,765
  290,289
  307,509
  325,464
  344,194
  363,743
  384,154
  405,476
  427,759
  451,054
  475,416
  500,904
  527,577
Total equity, $m
  35,072
  29,053
  32,310
  35,731
  39,315
  43,060
  46,968
  51,039
  55,275
  59,680
  64,260
  69,019
  73,964
  79,104
  84,446
  90,002
  95,780
  101,794
  108,055
  114,577
  121,374
  128,461
  135,854
  143,569
  151,626
  160,042
  168,836
  178,031
  187,647
  197,707
  208,235
Total liabilities and equity, $m
  104,530
  102,660
  114,169
  126,258
  138,922
  152,157
  165,964
  180,349
  195,318
  210,884
  227,067
  243,883
  261,357
  279,519
  298,397
  318,028
  338,446
  359,696
  381,820
  404,866
  428,883
  453,925
  480,048
  507,312
  535,780
  565,518
  596,595
  629,085
  663,063
  698,611
  735,812
Debt-to-equity ratio
  0.903
  1.230
  1.360
  1.480
  1.570
  1.660
  1.730
  1.790
  1.850
  1.900
  1.950
  1.990
  2.020
  2.060
  2.090
  2.110
  2.140
  2.160
  2.180
  2.200
  2.220
  2.240
  2.260
  2.270
  2.280
  2.300
  2.310
  2.320
  2.330
  2.340
  2.350
Adjusted equity ratio
  0.255
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283
  0.283

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2,922
  -578
  -370
  -150
  60
  239
  427
  625
  831
  1,048
  1,274
  1,534
  1,782
  2,041
  2,311
  2,595
  2,892
  3,203
  3,530
  3,872
  4,231
  4,609
  5,005
  5,422
  5,861
  6,322
  6,808
  7,319
  7,857
  8,424
  9,022
Depreciation, amort., depletion, $m
  11,550
  12,839
  14,275
  15,783
  17,363
  19,014
  20,736
  22,530
  24,398
  26,340
  28,358
  30,423
  32,603
  34,869
  37,224
  39,672
  42,219
  44,870
  47,630
  50,505
  53,501
  56,625
  59,884
  63,285
  66,836
  70,545
  74,422
  78,475
  82,714
  87,148
  91,789
Funds from operations, $m
  2,760
  12,261
  13,904
  15,633
  17,423
  19,253
  21,163
  23,155
  25,229
  27,387
  29,632
  31,957
  34,385
  36,909
  39,535
  42,267
  45,111
  48,073
  51,160
  54,377
  57,732
  61,234
  64,889
  68,707
  72,697
  76,868
  81,230
  85,794
  90,571
  95,572
  100,810
Change in working capital, $m
  -6,274
  -114
  -120
  -126
  -132
  -138
  -144
  -150
  -157
  -163
  -169
  -176
  -183
  -190
  -197
  -205
  -214
  -222
  -231
  -241
  -251
  -262
  -273
  -285
  -298
  -311
  -325
  -340
  -355
  -372
  -389
Cash from operations, $m
  9,034
  12,375
  14,025
  15,759
  17,555
  19,391
  21,308
  23,305
  25,386
  27,550
  29,801
  32,133
  34,568
  37,099
  39,732
  42,473
  45,325
  48,296
  51,391
  54,618
  57,983
  61,495
  65,162
  68,992
  72,994
  77,179
  81,555
  86,134
  90,926
  95,944
  101,199
Maintenance CAPEX, $m
  0
  -11,443
  -12,806
  -14,242
  -15,750
  -17,330
  -18,981
  -20,703
  -22,498
  -24,365
  -26,307
  -28,325
  -30,423
  -32,603
  -34,869
  -37,224
  -39,672
  -42,219
  -44,870
  -47,630
  -50,505
  -53,501
  -56,625
  -59,884
  -63,285
  -66,836
  -70,545
  -74,422
  -78,475
  -82,714
  -87,148
New CAPEX, $m
  -12,191
  -8,316
  -8,757
  -9,199
  -9,636
  -10,071
  -10,507
  -10,945
  -11,391
  -11,846
  -12,313
  -12,796
  -13,297
  -13,820
  -14,365
  -14,937
  -15,538
  -16,170
  -16,835
  -17,536
  -18,276
  -19,056
  -19,878
  -20,747
  -21,663
  -22,629
  -23,648
  -24,723
  -25,856
  -27,050
  -28,308
Cash from investing activities, $m
  -10,446
  -19,759
  -21,563
  -23,441
  -25,386
  -27,401
  -29,488
  -31,648
  -33,889
  -36,211
  -38,620
  -41,121
  -43,720
  -46,423
  -49,234
  -52,161
  -55,210
  -58,389
  -61,705
  -65,166
  -68,781
  -72,557
  -76,503
  -80,631
  -84,948
  -89,465
  -94,193
  -99,145
  -104,331
  -109,764
  -115,456
Free cash flow, $m
  -1,412
  -7,384
  -7,539
  -7,682
  -7,831
  -8,010
  -8,180
  -8,343
  -8,503
  -8,661
  -8,819
  -8,988
  -9,153
  -9,324
  -9,502
  -9,688
  -9,885
  -10,094
  -10,314
  -10,548
  -10,797
  -11,061
  -11,341
  -11,638
  -11,953
  -12,286
  -12,639
  -13,011
  -13,404
  -13,819
  -14,257
Issuance/(repayment) of debt, $m
  -83
  7,823
  8,251
  8,668
  9,080
  9,490
  9,900
  10,313
  10,733
  11,162
  11,602
  12,057
  12,530
  13,022
  13,536
  14,075
  14,641
  15,236
  15,863
  16,524
  17,220
  17,955
  18,730
  19,548
  20,412
  21,322
  22,282
  23,295
  24,362
  25,488
  26,673
Issuance/(repurchase) of shares, $m
  0
  3,651
  3,627
  3,571
  3,523
  3,506
  3,480
  3,446
  3,405
  3,358
  3,306
  3,225
  3,164
  3,099
  3,031
  2,960
  2,887
  2,810
  2,732
  2,650
  2,565
  2,478
  2,388
  2,293
  2,196
  2,094
  1,987
  1,876
  1,759
  1,636
  1,506
Cash from financing (excl. dividends), $m  
  -83
  11,474
  11,878
  12,239
  12,603
  12,996
  13,380
  13,759
  14,138
  14,520
  14,908
  15,282
  15,694
  16,121
  16,567
  17,035
  17,528
  18,046
  18,595
  19,174
  19,785
  20,433
  21,118
  21,841
  22,608
  23,416
  24,269
  25,171
  26,121
  27,124
  28,179
Total cash flow (excl. dividends), $m
  -1,647
  4,091
  4,340
  4,557
  4,772
  4,986
  5,200
  5,416
  5,635
  5,859
  6,089
  6,294
  6,540
  6,797
  7,065
  7,347
  7,642
  7,953
  8,280
  8,625
  8,989
  9,372
  9,777
  10,204
  10,654
  11,130
  11,631
  12,159
  12,717
  13,304
  13,923
Retained Cash Flow (-), $m
  5,199
  -3,651
  -3,627
  -3,571
  -3,584
  -3,746
  -3,907
  -4,071
  -4,236
  -4,406
  -4,579
  -4,759
  -4,945
  -5,140
  -5,343
  -5,555
  -5,779
  -6,014
  -6,261
  -6,522
  -6,797
  -7,087
  -7,393
  -7,716
  -8,056
  -8,416
  -8,795
  -9,195
  -9,616
  -10,060
  -10,528
Prev. year cash balance distribution, $m
 
  9,092
  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
 
  9,532
  713
  986
  1,188
  1,241
  1,293
  1,345
  1,399
  1,453
  1,510
  1,535
  1,595
  1,657
  1,723
  1,791
  1,863
  1,939
  2,019
  2,103
  2,192
  2,285
  2,384
  2,488
  2,598
  2,714
  2,836
  2,965
  3,101
  3,244
  3,395
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  9,139
  652
  858
  979
  962
  938
  909
  874
  835
  791
  729
  681
  630
  578
  526
  474
  422
  372
  324
  279
  236
  198
  163
  132
  106
  83
  64
  48
  35
  26
Current shareholders' claim on cash, %
  100
  94.0
  88.9
  84.6
  81.0
  77.8
  75.1
  72.6
  70.5
  68.6
  66.9
  65.4
  64.1
  62.9
  61.8
  60.8
  59.9
  59.1
  58.4
  57.8
  57.2
  56.7
  56.2
  55.8
  55.4
  55.0
  54.7
  54.4
  54.2
  54.0
  53.8

Statoil ASA (Statoil) is an energy company. The Company is engaged in oil and gas exploration and production activities. The Company's segments include Development and Production Norway (DPN), Development and Production International (DPI), Marketing, Midstream and Processing (MMP) and Other. DPN segment manages the Company's upstream activities on the Norwegian continental shelf (NCS) and explores for and extracts crude oil, natural gas and natural gas liquids. DPI segment manages the Company's upstream activities that are not included in the DPN and Development and Production USA (DPUSA) business areas. MMP segment manages its marketing and trading activities related to oil products and natural gas, transportation, processing and manufacturing, and the development of oil and gas. Other segment includes activities in New Energy Solutions (NES), Technology, Projects and Drilling (TPD), Global Strategy and Business Development (GSB), and Corporate staffs and support functions.

FINANCIAL RATIOS  of  Statoil ADR (STO)

Valuation Ratios
P/E Ratio -25.9
Price to Sales 1.7
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 8.4
Price to Free Cash Flow -23.9
Growth Rates
Sales Growth Rate -21.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -21.4%
Cap. Spend. - 3 Yr. Gr. Rate -0.8%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 79.8%
Total Debt to Equity 90.3%
Interest Coverage 1
Management Effectiveness
Return On Assets 5.6%
Ret/ On Assets - 3 Yr. Avg. -10.1%
Return On Total Capital -4.2%
Ret/ On T. Cap. - 3 Yr. Avg. -2.1%
Return On Equity -7.8%
Return On Equity - 3 Yr. Avg. -4%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 52.9%
Gross Margin - 3 Yr. Avg. 52.7%
EBITDA Margin 26.1%
EBITDA Margin - 3 Yr. Avg. 30.5%
Operating Margin 0.2%
Oper. Margin - 3 Yr. Avg. 7%
Pre-Tax Margin -0.4%
Pre-Tax Margin - 3 Yr. Avg. 6.1%
Net Profit Margin -6.4%
Net Profit Margin - 3 Yr. Avg. -3.8%
Effective Tax Rate -1530.3%
Eff/ Tax Rate - 3 Yr. Avg. 2682.6%
Payout Ratio -64.2%

STO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the STO stock intrinsic value calculation we used $45688 million for the last fiscal year's total revenue generated by Statoil ADR. The default revenue input number comes from 2016 income statement of Statoil ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our STO stock valuation model: a) initial revenue growth rate of 11.9% 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 4.3%, whose default value for STO is calculated based on our internal credit rating of Statoil ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Statoil ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of STO stock the variable cost ratio is equal to 89.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $4849 million in the base year in the intrinsic value calculation for STO stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Statoil ADR.

Corporate tax rate of 27% is the nominal tax rate for Statoil ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the STO 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 STO are equal to 152.8%.

Life of production assets of 6.1 years is the average useful life of capital assets used in Statoil ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for STO is equal to -2.1%. 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 - $35072 million for Statoil ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 3290.38 million for Statoil ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Statoil ADR at the current share price and the inputted number of shares is $76.9 billion.

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COMPANY NEWS

▶ Has Shell Stock Risen before Its 4Q17 Earnings?   [Jan-18-18 01:20PM  Market Realist]
▶ Statoil's share saving plan allocates shares   [01:44AM  GlobeNewswire]
▶ Suncors Dividend Yield: Last Place in the Top 8   [Jan-16-18 01:55PM  Market Realist]
▶ Statoil ASA: Notifiable trading   [01:25AM  GlobeNewswire]
▶ Why Has Short Interest in ExxonMobil Fallen?   [Jan-10-18 07:37AM  Market Realist]
▶ What Do ExxonMobils Most Recent Valuations Reveal?   [Jan-09-18 11:55AM  Market Realist]
▶ This Is the Best Big Oil Stock to Buy in 2018   [Jan-07-18 08:05AM  Motley Fool]
▶ [$$] Norway's Statoil Expects to Benefit From U.S. Tax Overhaul   [Jan-05-18 11:15AM  The Wall Street Journal]
▶ Bull of the Day: Statoil (STO)   [07:00AM  Zacks]
▶ Statoil Comes Up Dry in Central North Sea Well   [Jan-03-18 07:00PM  Rigzone.com]
▶ The 4 Best Oil Stocks of 2017   [04:33PM  Motley Fool]
▶ The 10 Energy Stories That Defined 2017   [Jan-02-18 06:00PM  Oilprice.com]
▶ Norway Faces Up to Big Oils Snub   [Jan-01-18 11:00PM  Bloomberg]
▶ Why Has Short Interest in BP Plunged?   [10:30AM  Market Realist]
▶ Europes Largest Oil And Gas Producer Is Back On Its Feet   [Dec-27-17 06:00PM  Oilprice.com]
▶ Oil Holds Steady Through Holidays   [Dec-26-17 03:00PM  Oilprice.com]
▶ Statoil ASA: Notifiable trading   [07:16AM  GlobeNewswire]
▶ IBD Rating Upgrades: Statoil Shows Improved Technical Strength   [03:00AM  Investor's Business Daily]
▶ The World's Biggest Offshore Boom Is Accelerating   [Dec-19-17 07:00PM  Oilprice.com]
▶ Oil Market On Edge Following Outages   [03:00PM  Oilprice.com]
▶ The Beginning Of The End For Norwegian Oil   [Dec-18-17 05:00PM  Oilprice.com]
▶ Statoil to Acquire Roncador Field Interest in $2.9B Deal   [Dec-17-17 07:00PM  Rigzone.com]
▶ IBD Rating Upgrades: Statoil Shows Improved Price Strength   [Dec-13-17 03:00AM  Investor's Business Daily]
▶ Statoil ASA: Statoil's share saving plan allocates shares   [Dec-12-17 01:32AM  GlobeNewswire]
▶ How Financially Strong Is Statoil ASA (STO)?   [Dec-11-17 08:28AM  Simply Wall St.]
▶ Statoil ASA: Notifiable trading   [01:26AM  GlobeNewswire]
▶ Statoil awards Sembmarine $660.67m FPSO contract   [Dec-06-17 09:43PM  Singapore Business Review]
▶ The 'Mega' Oil Field That Will Never Boom   [Dec-05-17 07:00PM  Oilprice.com]
▶ Oil Producers Regain Their Sea Legs   [01:59PM  Bloomberg]
▶ Stocks Generating Improved Relative Strength: Statoil   [03:00AM  Investor's Business Daily]
Financial statements of STO
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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