Intrinsic value of Whiting Petroleum - WLL

Previous Close

$4.73

  Intrinsic Value

$3.49

stock screener

  Rating & Target

sell

-26%

Previous close

$4.73

 
Intrinsic value

$3.49

 
Up/down potential

-26%

 
Rating

sell

We calculate the intrinsic value of WLL 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 1.7

 

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, %
  -38.58
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  1,285
  1,311
  1,341
  1,375
  1,414
  1,457
  1,504
  1,555
  1,611
  1,670
  1,734
  1,803
  1,876
  1,954
  2,037
  2,125
  2,218
  2,316
  2,421
  2,531
  2,647
  2,770
  2,899
  3,036
  3,179
  3,331
  3,490
  3,658
  3,834
  4,020
  4,215
Variable operating expenses, $m
 
  3,088
  3,159
  3,240
  3,331
  3,432
  3,543
  3,664
  3,794
  3,935
  4,086
  4,248
  4,420
  4,604
  4,799
  5,006
  5,225
  5,457
  5,703
  5,962
  6,236
  6,525
  6,830
  7,152
  7,490
  7,847
  8,222
  8,617
  9,033
  9,471
  9,931
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
  2,155
  3,088
  3,159
  3,240
  3,331
  3,432
  3,543
  3,664
  3,794
  3,935
  4,086
  4,248
  4,420
  4,604
  4,799
  5,006
  5,225
  5,457
  5,703
  5,962
  6,236
  6,525
  6,830
  7,152
  7,490
  7,847
  8,222
  8,617
  9,033
  9,471
  9,931
Operating income, $m
  -870
  -1,777
  -1,818
  -1,865
  -1,917
  -1,976
  -2,039
  -2,109
  -2,184
  -2,265
  -2,352
  -2,445
  -2,544
  -2,650
  -2,762
  -2,881
  -3,007
  -3,141
  -3,282
  -3,432
  -3,589
  -3,756
  -3,931
  -4,116
  -4,311
  -4,516
  -4,732
  -4,960
  -5,199
  -5,451
  -5,716
EBITDA, $m
  302
  -584
  -597
  -613
  -630
  -649
  -670
  -693
  -717
  -744
  -773
  -803
  -836
  -870
  -907
  -946
  -988
  -1,032
  -1,078
  -1,127
  -1,179
  -1,234
  -1,291
  -1,352
  -1,416
  -1,483
  -1,554
  -1,629
  -1,708
  -1,790
  -1,877
Interest expense (income), $m
  240
  194
  199
  205
  212
  220
  229
  238
  249
  260
  272
  285
  299
  314
  329
  346
  364
  383
  403
  424
  446
  470
  494
  521
  548
  577
  608
  640
  674
  710
  747
Earnings before tax, $m
  -1,427
  -1,972
  -2,017
  -2,070
  -2,130
  -2,196
  -2,268
  -2,347
  -2,433
  -2,525
  -2,624
  -2,730
  -2,843
  -2,963
  -3,091
  -3,227
  -3,371
  -3,524
  -3,685
  -3,856
  -4,036
  -4,225
  -4,426
  -4,637
  -4,859
  -5,094
  -5,340
  -5,600
  -5,873
  -6,161
  -6,463
Tax expense, $m
  -88
  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
  -1,339
  -1,972
  -2,017
  -2,070
  -2,130
  -2,196
  -2,268
  -2,347
  -2,433
  -2,525
  -2,624
  -2,730
  -2,843
  -2,963
  -3,091
  -3,227
  -3,371
  -3,524
  -3,685
  -3,856
  -4,036
  -4,225
  -4,426
  -4,637
  -4,859
  -5,094
  -5,340
  -5,600
  -5,873
  -6,161
  -6,463

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  56
  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
  9,876
  10,005
  10,235
  10,499
  10,794
  11,121
  11,480
  11,871
  12,294
  12,750
  13,240
  13,763
  14,322
  14,916
  15,548
  16,219
  16,930
  17,682
  18,478
  19,319
  20,206
  21,143
  22,131
  23,172
  24,269
  25,424
  26,641
  27,921
  29,268
  30,686
  32,177
Adjusted assets (=assets-cash), $m
  9,820
  10,005
  10,235
  10,499
  10,794
  11,121
  11,480
  11,871
  12,294
  12,750
  13,240
  13,763
  14,322
  14,916
  15,548
  16,219
  16,930
  17,682
  18,478
  19,319
  20,206
  21,143
  22,131
  23,172
  24,269
  25,424
  26,641
  27,921
  29,268
  30,686
  32,177
Revenue / Adjusted assets
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
Average production assets, $m
  9,947
  10,145
  10,378
  10,645
  10,944
  11,276
  11,640
  12,037
  12,466
  12,928
  13,424
  13,955
  14,521
  15,124
  15,765
  16,445
  17,166
  17,929
  18,736
  19,588
  20,488
  21,438
  22,439
  23,495
  24,607
  25,779
  27,012
  28,310
  29,676
  31,114
  32,625
Working capital, $m
  145
  90
  93
  95
  98
  101
  104
  107
  111
  115
  120
  124
  129
  135
  141
  147
  153
  160
  167
  175
  183
  191
  200
  209
  219
  230
  241
  252
  265
  277
  291
Total debt, $m
  3,535
  3,623
  3,733
  3,860
  4,003
  4,160
  4,333
  4,522
  4,726
  4,946
  5,181
  5,434
  5,703
  5,990
  6,294
  6,618
  6,960
  7,323
  7,706
  8,112
  8,539
  8,991
  9,467
  9,969
  10,498
  11,054
  11,641
  12,258
  12,907
  13,591
  14,309
Total liabilities, $m
  4,735
  4,823
  4,933
  5,060
  5,203
  5,360
  5,533
  5,722
  5,926
  6,146
  6,381
  6,634
  6,903
  7,190
  7,494
  7,818
  8,160
  8,523
  8,906
  9,312
  9,739
  10,191
  10,667
  11,169
  11,698
  12,254
  12,841
  13,458
  14,107
  14,791
  15,509
Total equity, $m
  5,141
  5,183
  5,302
  5,438
  5,591
  5,761
  5,947
  6,149
  6,368
  6,605
  6,858
  7,129
  7,419
  7,727
  8,054
  8,402
  8,770
  9,159
  9,572
  10,007
  10,467
  10,952
  11,464
  12,003
  12,571
  13,170
  13,800
  14,463
  15,161
  15,895
  16,668
Total liabilities and equity, $m
  9,876
  10,006
  10,235
  10,498
  10,794
  11,121
  11,480
  11,871
  12,294
  12,751
  13,239
  13,763
  14,322
  14,917
  15,548
  16,220
  16,930
  17,682
  18,478
  19,319
  20,206
  21,143
  22,131
  23,172
  24,269
  25,424
  26,641
  27,921
  29,268
  30,686
  32,177
Debt-to-equity ratio
  0.688
  0.700
  0.700
  0.710
  0.720
  0.720
  0.730
  0.740
  0.740
  0.750
  0.760
  0.760
  0.770
  0.780
  0.780
  0.790
  0.790
  0.800
  0.810
  0.810
  0.820
  0.820
  0.830
  0.830
  0.840
  0.840
  0.840
  0.850
  0.850
  0.860
  0.860
Adjusted equity ratio
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,339
  -1,972
  -2,017
  -2,070
  -2,130
  -2,196
  -2,268
  -2,347
  -2,433
  -2,525
  -2,624
  -2,730
  -2,843
  -2,963
  -3,091
  -3,227
  -3,371
  -3,524
  -3,685
  -3,856
  -4,036
  -4,225
  -4,426
  -4,637
  -4,859
  -5,094
  -5,340
  -5,600
  -5,873
  -6,161
  -6,463
Depreciation, amort., depletion, $m
  1,172
  1,194
  1,221
  1,252
  1,288
  1,327
  1,369
  1,416
  1,467
  1,521
  1,579
  1,642
  1,708
  1,779
  1,855
  1,935
  2,020
  2,109
  2,204
  2,304
  2,410
  2,522
  2,640
  2,764
  2,895
  3,033
  3,178
  3,331
  3,491
  3,660
  3,838
Funds from operations, $m
  648
  -778
  -796
  -818
  -842
  -869
  -899
  -931
  -966
  -1,004
  -1,045
  -1,088
  -1,135
  -1,184
  -1,237
  -1,293
  -1,352
  -1,415
  -1,481
  -1,551
  -1,625
  -1,703
  -1,786
  -1,873
  -1,964
  -2,061
  -2,162
  -2,269
  -2,382
  -2,500
  -2,625
Change in working capital, $m
  53
  2
  2
  2
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  13
Cash from operations, $m
  595
  -780
  -799
  -820
  -845
  -872
  -902
  -935
  -970
  -1,008
  -1,049
  -1,093
  -1,140
  -1,189
  -1,242
  -1,299
  -1,358
  -1,421
  -1,488
  -1,559
  -1,633
  -1,712
  -1,795
  -1,882
  -1,974
  -2,071
  -2,173
  -2,281
  -2,394
  -2,513
  -2,638
Maintenance CAPEX, $m
  0
  -1,170
  -1,194
  -1,221
  -1,252
  -1,288
  -1,327
  -1,369
  -1,416
  -1,467
  -1,521
  -1,579
  -1,642
  -1,708
  -1,779
  -1,855
  -1,935
  -2,020
  -2,109
  -2,204
  -2,304
  -2,410
  -2,522
  -2,640
  -2,764
  -2,895
  -3,033
  -3,178
  -3,331
  -3,491
  -3,660
New CAPEX, $m
  -553
  -198
  -233
  -267
  -299
  -332
  -364
  -396
  -429
  -462
  -496
  -531
  -566
  -603
  -641
  -680
  -721
  -763
  -807
  -852
  -900
  -950
  -1,002
  -1,056
  -1,112
  -1,171
  -1,233
  -1,298
  -1,366
  -1,437
  -1,512
Cash from investing activities, $m
  -223
  -1,368
  -1,427
  -1,488
  -1,551
  -1,620
  -1,691
  -1,765
  -1,845
  -1,929
  -2,017
  -2,110
  -2,208
  -2,311
  -2,420
  -2,535
  -2,656
  -2,783
  -2,916
  -3,056
  -3,204
  -3,360
  -3,524
  -3,696
  -3,876
  -4,066
  -4,266
  -4,476
  -4,697
  -4,928
  -5,172
Free cash flow, $m
  372
  -2,148
  -2,225
  -2,308
  -2,397
  -2,491
  -2,593
  -2,700
  -2,815
  -2,937
  -3,066
  -3,203
  -3,348
  -3,501
  -3,663
  -3,833
  -4,014
  -4,204
  -4,404
  -4,615
  -4,838
  -5,072
  -5,318
  -5,578
  -5,851
  -6,138
  -6,440
  -6,757
  -7,091
  -7,442
  -7,811
Issuance/(repayment) of debt, $m
  -292
  88
  111
  127
  142
  158
  173
  188
  204
  220
  236
  252
  269
  287
  305
  323
  343
  363
  384
  405
  428
  451
  476
  502
  529
  557
  586
  617
  649
  683
  719
Issuance/(repurchase) of shares, $m
  0
  2,070
  2,137
  2,207
  2,283
  2,365
  2,454
  2,550
  2,652
  2,761
  2,877
  3,001
  3,132
  3,271
  3,419
  3,575
  3,740
  3,914
  4,097
  4,291
  4,495
  4,711
  4,937
  5,176
  5,428
  5,692
  5,970
  6,263
  6,571
  6,895
  7,236
Cash from financing (excl. dividends), $m  
  -315
  2,158
  2,248
  2,334
  2,425
  2,523
  2,627
  2,738
  2,856
  2,981
  3,113
  3,253
  3,401
  3,558
  3,724
  3,898
  4,083
  4,277
  4,481
  4,696
  4,923
  5,162
  5,413
  5,678
  5,957
  6,249
  6,556
  6,880
  7,220
  7,578
  7,955
Total cash flow (excl. dividends), $m
  57
  9
  22
  25
  28
  32
  35
  38
  41
  44
  47
  50
  54
  57
  61
  65
  68
  72
  77
  81
  85
  90
  95
  100
  106
  111
  117
  123
  130
  137
  144
Retained Cash Flow (-), $m
  -390
  -2,070
  -2,137
  -2,207
  -2,283
  -2,365
  -2,454
  -2,550
  -2,652
  -2,761
  -2,877
  -3,001
  -3,132
  -3,271
  -3,419
  -3,575
  -3,740
  -3,914
  -4,097
  -4,291
  -4,495
  -4,711
  -4,937
  -5,176
  -5,428
  -5,692
  -5,970
  -6,263
  -6,571
  -6,895
  -7,236
Prev. year cash balance distribution, $m
 
  56
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -2,005
  -2,114
  -2,181
  -2,254
  -2,334
  -2,420
  -2,512
  -2,611
  -2,717
  -2,830
  -2,951
  -3,078
  -3,214
  -3,358
  -3,510
  -3,671
  -3,841
  -4,021
  -4,210
  -4,410
  -4,620
  -4,842
  -5,076
  -5,322
  -5,581
  -5,853
  -6,140
  -6,441
  -6,759
  -7,092
Discount rate, %
 
  7.50
  7.88
  8.27
  8.68
  9.12
  9.57
  10.05
  10.55
  11.08
  11.63
  12.22
  12.83
  13.47
  14.14
  14.85
  15.59
  16.37
  17.19
  18.05
  18.95
  19.90
  20.89
  21.94
  23.04
  24.19
  25.40
  26.67
  28.00
  29.40
  30.87
PV of cash for distribution, $m
 
  -1,865
  -1,817
  -1,719
  -1,616
  -1,509
  -1,398
  -1,285
  -1,170
  -1,055
  -941
  -830
  -723
  -622
  -527
  -440
  -361
  -292
  -231
  -180
  -137
  -102
  -74
  -53
  -37
  -25
  -16
  -10
  -6
  -4
  -2
Current shareholders' claim on cash, %
  100
  63.2
  39.8
  25.0
  15.6
  9.7
  6.0
  3.7
  2.3
  1.4
  0.9
  0.5
  0.3
  0.2
  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

Whiting Petroleum Corporation is an independent oil and gas company. The Company is engaged in development, production, acquisition and exploration activities primarily in the Rocky Mountains region of the United States. It is engaged in the exploration and production of crude oil, natural gas liquid (NGLs) and natural gas. Its Northern Rocky Mountains operations included properties in the Williston Basin of North Dakota and Montana targeting the Bakken and Three Forks formations and encompassing approximately 736,000 gross developed and undeveloped acres, as of December 31, 2016. Its Central Rocky Mountains operations included properties at its Redtail field in the Denver Julesburg Basin in Weld County, Colorado targeting the Niobrara and Codell/Fort Hays formations and encompassing approximately 157,200 gross developed and undeveloped acres, as of December 31, 2016. Its other operations primarily relate to non-core assets in Colorado, Mississippi, North Dakota, Texas and Wyoming.

FINANCIAL RATIOS  of  Whiting Petroleum (WLL)

Valuation Ratios
P/E Ratio -1.3
Price to Sales 1.3
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow 2.9
Price to Free Cash Flow 40.8
Growth Rates
Sales Growth Rate -38.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -77.9%
Cap. Spend. - 3 Yr. Gr. Rate -25.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0.8
LT Debt to Equity 68.8%
Total Debt to Equity 68.8%
Interest Coverage -5
Management Effectiveness
Return On Assets -10.5%
Ret/ On Assets - 3 Yr. Avg. -8.4%
Return On Total Capital -14.4%
Ret/ On T. Cap. - 3 Yr. Avg. -11.5%
Return On Equity -27.1%
Return On Equity - 3 Yr. Avg. -22.7%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 65.7%
Gross Margin - 3 Yr. Avg. 71%
EBITDA Margin -1.2%
EBITDA Margin - 3 Yr. Avg. -8.5%
Operating Margin -67.7%
Oper. Margin - 3 Yr. Avg. -66.1%
Pre-Tax Margin -111.1%
Pre-Tax Margin - 3 Yr. Avg. -83.1%
Net Profit Margin -104.2%
Net Profit Margin - 3 Yr. Avg. -69.4%
Effective Tax Rate 6.2%
Eff/ Tax Rate - 3 Yr. Avg. 29%
Payout Ratio 0%

WLL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WLL stock intrinsic value calculation we used $1285 million for the last fiscal year's total revenue generated by Whiting Petroleum. The default revenue input number comes from 2016 income statement of Whiting 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 WLL stock valuation model: a) initial revenue growth rate of 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 7.5%, whose default value for WLL is calculated based on our internal credit rating of Whiting 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 Whiting 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 WLL stock the variable cost ratio is equal to 235.6%.

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 WLL stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.5% for Whiting Petroleum.

Corporate tax rate of 27% is the nominal tax rate for Whiting 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 WLL 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 WLL are equal to 774%.

Life of production assets of 8.5 years is the average useful life of capital assets used in Whiting 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 WLL is equal to 6.9%. 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 - $5141 million for Whiting 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 368.627 million for Whiting 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 Whiting Petroleum at the current share price and the inputted number of shares is $1.7 billion.

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COMPANY NEWS

▶ How Long Supply Outages in Kurdistan Could Help Oil Prices   [Oct-19-17 12:07PM  Market Realist]
▶ Analysts Recommendations for Whiting Petroleum   [Oct-17-17 04:06PM  Market Realist]
▶ Are Shorts Losing Interest in Energy?   [Oct-12-17 12:24PM  Barrons.com]
▶ Oil-Weighted Stocks That Could Outperform Oil   [09:12AM  Market Realist]
▶ How Analysts Feel about Whiting Petroleum Today   [Oct-03-17 06:06PM  Market Realist]
▶ Short Interest Trends in Whiting Petroleum Stock   [Oct-02-17 12:36PM  Market Realist]
▶ Oil Prices: Next Stop $85 a Barrel?   [Sep-30-17 10:47AM  Motley Fool]
▶ What Whiting Petroleums Implied Volatility Tells Us   [Sep-27-17 10:39AM  Market Realist]
▶ How Most Analysts Rate Whiting Petroleum   [09:12AM  Market Realist]
▶ Does Whiting Stock Have More Room to Rise?   [07:42AM  Market Realist]
▶ US Crude Oil: Oil-Weighted Stocks Could Rise   [Sep-26-17 01:21PM  Market Realist]
▶ Wall Street Recommendations for Energy Stocks Last Week   [Sep-25-17 03:45PM  Market Realist]
▶ Understanding the Short Interest in Whiting Petroleum Stock   [Sep-21-17 10:38AM  Market Realist]
▶ Whiting Petroleums Stock: Will The Uptrend Sustain?   [Sep-20-17 05:33PM  Market Realist]
▶ Upstream Gainers This Week: W&T Offshore Leads   [Sep-15-17 03:34PM  Market Realist]
▶ Is Whiting Petroleum Corporation (WLL) Undervalued?   [Sep-13-17 08:25PM  Simply Wall St.]
▶ Analysts Recommendations for Whiting Petroleum Stock   [Sep-12-17 04:36PM  Market Realist]
▶ Is Oil Outperforming Oil-Weighted Stocks?   [03:41PM  Market Realist]
▶ Energy Stocks: Biggest Losers on September 48   [Sep-11-17 01:30PM  Market Realist]
▶ Recent Short Interest Trends in Whiting Petroleum Stock   [Sep-06-17 07:37AM  Market Realist]
▶ Analysts Recommendations for Whiting Petroleum Stock   [Sep-05-17 04:36PM  Market Realist]
▶ Analyzing Short Interest Trends in Whiting Petroleum Stock   [Aug-31-17 09:07AM  Market Realist]
▶ Oil-Weighted Stocks Outperformed US Crude Oil   [09:47AM  Market Realist]
▶ North Dakota tribe levies higher tax on oil drillers   [Aug-29-17 04:44PM  Associated Press]
▶ Important Energy Sector Updates: August 2125, 2017   [Aug-28-17 04:36PM  Market Realist]
▶ How US Gasoline Inventories Support Crude Oil Futures   [Aug-24-17 02:36PM  Market Realist]
▶ Short Interest Trends: Whiting Petroleum Stock   [Aug-23-17 11:53AM  Market Realist]
▶ How Do Analysts Feel about Whiting Petroleum?   [09:07AM  Market Realist]
▶ Whats Going on with Whiting Petroleum Stock   [05:00PM  Market Realist]
Financial statements of WLL
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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