Intrinsic value of Apache - APA

Previous Close

$46.70

  Intrinsic Value

$4.03

stock screener

  Rating & Target

str. sell

-91%

Previous close

$46.70

 
Intrinsic value

$4.03

 
Up/down potential

-91%

 
Rating

str. sell

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

We calculate the intrinsic value of APA 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, %
  -19.29
  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
  5,333
  5,440
  5,565
  5,708
  5,868
  6,046
  6,241
  6,454
  6,684
  6,932
  7,198
  7,483
  7,786
  8,110
  8,453
  8,818
  9,204
  9,613
  10,046
  10,503
  10,986
  11,495
  12,032
  12,598
  13,194
  13,823
  14,484
  15,180
  15,913
  16,683
  17,494
Variable operating expenses, $m
 
  15,460
  15,815
  16,222
  16,678
  17,183
  17,738
  18,342
  18,996
  19,701
  20,457
  21,266
  22,129
  23,048
  24,024
  25,061
  26,159
  27,321
  28,551
  29,850
  31,221
  32,669
  34,195
  35,803
  37,498
  39,284
  41,163
  43,142
  45,223
  47,414
  49,717
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
  7,015
  15,460
  15,815
  16,222
  16,678
  17,183
  17,738
  18,342
  18,996
  19,701
  20,457
  21,266
  22,129
  23,048
  24,024
  25,061
  26,159
  27,321
  28,551
  29,850
  31,221
  32,669
  34,195
  35,803
  37,498
  39,284
  41,163
  43,142
  45,223
  47,414
  49,717
Operating income, $m
  -1,682
  -10,020
  -10,250
  -10,514
  -10,809
  -11,137
  -11,497
  -11,888
  -12,312
  -12,769
  -13,259
  -13,783
  -14,342
  -14,938
  -15,571
  -16,243
  -16,955
  -17,708
  -18,505
  -19,347
  -20,236
  -21,174
  -22,163
  -23,205
  -24,304
  -25,461
  -26,679
  -27,962
  -29,311
  -30,730
  -32,223
EBITDA, $m
  936
  -7,355
  -7,524
  -7,718
  -7,935
  -8,175
  -8,439
  -8,727
  -9,038
  -9,373
  -9,733
  -10,118
  -10,528
  -10,965
  -11,430
  -11,923
  -12,446
  -12,999
  -13,584
  -14,202
  -14,854
  -15,543
  -16,269
  -17,034
  -17,841
  -18,690
  -19,584
  -20,525
  -21,516
  -22,558
  -23,654
Interest expense (income), $m
  413
  410
  426
  445
  466
  489
  515
  544
  575
  609
  645
  684
  726
  771
  818
  868
  922
  979
  1,039
  1,102
  1,169
  1,240
  1,315
  1,393
  1,476
  1,564
  1,656
  1,753
  1,855
  1,962
  2,075
Earnings before tax, $m
  -1,682
  -10,430
  -10,677
  -10,959
  -11,275
  -11,627
  -12,012
  -12,432
  -12,887
  -13,378
  -13,904
  -14,467
  -15,069
  -15,709
  -16,389
  -17,111
  -17,876
  -18,687
  -19,543
  -20,449
  -21,405
  -22,413
  -23,477
  -24,599
  -25,780
  -27,025
  -28,335
  -29,714
  -31,166
  -32,693
  -34,299
Tax expense, $m
  -442
  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
  -1,405
  -10,430
  -10,677
  -10,959
  -11,275
  -11,627
  -12,012
  -12,432
  -12,887
  -13,378
  -13,904
  -14,467
  -15,069
  -15,709
  -16,389
  -17,111
  -17,876
  -18,687
  -19,543
  -20,449
  -21,405
  -22,413
  -23,477
  -24,599
  -25,780
  -27,025
  -28,335
  -29,714
  -31,166
  -32,693
  -34,299

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,377
  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
  22,519
  21,586
  22,082
  22,650
  23,287
  23,993
  24,768
  25,611
  26,524
  27,508
  28,564
  29,693
  30,898
  32,181
  33,545
  34,992
  36,525
  38,149
  39,865
  41,679
  43,594
  45,615
  47,746
  49,992
  52,359
  54,851
  57,476
  60,238
  63,145
  66,203
  69,420
Adjusted assets (=assets-cash), $m
  21,142
  21,586
  22,082
  22,650
  23,287
  23,993
  24,768
  25,611
  26,524
  27,508
  28,564
  29,693
  30,898
  32,181
  33,545
  34,992
  36,525
  38,149
  39,865
  41,679
  43,594
  45,615
  47,746
  49,992
  52,359
  54,851
  57,476
  60,238
  63,145
  66,203
  69,420
Revenue / Adjusted assets
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
Average production assets, $m
  19,853
  20,252
  20,718
  21,250
  21,848
  22,510
  23,237
  24,028
  24,885
  25,808
  26,798
  27,858
  28,989
  30,192
  31,472
  32,829
  34,268
  35,791
  37,401
  39,103
  40,900
  42,796
  44,795
  46,902
  49,123
  51,461
  53,923
  56,515
  59,242
  62,111
  65,129
Working capital, $m
  1,398
  22
  22
  23
  23
  24
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  53
  55
  58
  61
  64
  67
  70
Total debt, $m
  8,544
  8,884
  9,266
  9,703
  10,194
  10,738
  11,334
  11,984
  12,687
  13,444
  14,257
  15,127
  16,055
  17,043
  18,093
  19,207
  20,388
  21,637
  22,959
  24,356
  25,830
  27,386
  29,027
  30,757
  32,579
  34,498
  36,519
  38,646
  40,885
  43,239
  45,716
Total liabilities, $m
  16,281
  16,621
  17,003
  17,440
  17,931
  18,475
  19,071
  19,721
  20,424
  21,181
  21,994
  22,864
  23,792
  24,780
  25,830
  26,944
  28,125
  29,374
  30,696
  32,093
  33,567
  35,123
  36,764
  38,494
  40,316
  42,235
  44,256
  46,383
  48,622
  50,976
  53,453
Total equity, $m
  6,238
  4,965
  5,079
  5,209
  5,356
  5,518
  5,697
  5,891
  6,101
  6,327
  6,570
  6,829
  7,107
  7,402
  7,715
  8,048
  8,401
  8,774
  9,169
  9,586
  10,027
  10,491
  10,982
  11,498
  12,042
  12,616
  13,219
  13,855
  14,523
  15,227
  15,967
Total liabilities and equity, $m
  22,519
  21,586
  22,082
  22,649
  23,287
  23,993
  24,768
  25,612
  26,525
  27,508
  28,564
  29,693
  30,899
  32,182
  33,545
  34,992
  36,526
  38,148
  39,865
  41,679
  43,594
  45,614
  47,746
  49,992
  52,358
  54,851
  57,475
  60,238
  63,145
  66,203
  69,420
Debt-to-equity ratio
  1.370
  1.790
  1.820
  1.860
  1.900
  1.950
  1.990
  2.030
  2.080
  2.120
  2.170
  2.210
  2.260
  2.300
  2.350
  2.390
  2.430
  2.470
  2.500
  2.540
  2.580
  2.610
  2.640
  2.670
  2.710
  2.730
  2.760
  2.790
  2.820
  2.840
  2.860
Adjusted equity ratio
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,405
  -10,430
  -10,677
  -10,959
  -11,275
  -11,627
  -12,012
  -12,432
  -12,887
  -13,378
  -13,904
  -14,467
  -15,069
  -15,709
  -16,389
  -17,111
  -17,876
  -18,687
  -19,543
  -20,449
  -21,405
  -22,413
  -23,477
  -24,599
  -25,780
  -27,025
  -28,335
  -29,714
  -31,166
  -32,693
  -34,299
Depreciation, amort., depletion, $m
  2,618
  2,665
  2,726
  2,796
  2,875
  2,962
  3,057
  3,162
  3,274
  3,396
  3,526
  3,666
  3,814
  3,973
  4,141
  4,320
  4,509
  4,709
  4,921
  5,145
  5,382
  5,631
  5,894
  6,171
  6,464
  6,771
  7,095
  7,436
  7,795
  8,173
  8,570
Funds from operations, $m
  2,583
  -7,765
  -7,951
  -8,162
  -8,401
  -8,665
  -8,955
  -9,271
  -9,613
  -9,982
  -10,378
  -10,802
  -11,254
  -11,736
  -12,248
  -12,792
  -13,367
  -13,977
  -14,622
  -15,304
  -16,023
  -16,782
  -17,583
  -18,427
  -19,317
  -20,254
  -21,240
  -22,278
  -23,371
  -24,520
  -25,729
Change in working capital, $m
  153
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
Cash from operations, $m
  2,430
  -7,766
  -7,951
  -8,163
  -8,401
  -8,665
  -8,955
  -9,272
  -9,614
  -9,983
  -10,379
  -10,803
  -11,255
  -11,737
  -12,249
  -12,793
  -13,369
  -13,979
  -14,624
  -15,305
  -16,025
  -16,785
  -17,585
  -18,430
  -19,319
  -20,256
  -21,243
  -22,281
  -23,374
  -24,523
  -25,733
Maintenance CAPEX, $m
  0
  -2,612
  -2,665
  -2,726
  -2,796
  -2,875
  -2,962
  -3,057
  -3,162
  -3,274
  -3,396
  -3,526
  -3,666
  -3,814
  -3,973
  -4,141
  -4,320
  -4,509
  -4,709
  -4,921
  -5,145
  -5,382
  -5,631
  -5,894
  -6,171
  -6,464
  -6,771
  -7,095
  -7,436
  -7,795
  -8,173
New CAPEX, $m
  -1,768
  -399
  -466
  -532
  -598
  -662
  -727
  -791
  -857
  -923
  -990
  -1,060
  -1,131
  -1,204
  -1,279
  -1,358
  -1,439
  -1,523
  -1,610
  -1,702
  -1,797
  -1,896
  -1,999
  -2,107
  -2,220
  -2,339
  -2,462
  -2,592
  -2,727
  -2,869
  -3,018
Cash from investing activities, $m
  -1,660
  -3,011
  -3,131
  -3,258
  -3,394
  -3,537
  -3,689
  -3,848
  -4,019
  -4,197
  -4,386
  -4,586
  -4,797
  -5,018
  -5,252
  -5,499
  -5,759
  -6,032
  -6,319
  -6,623
  -6,942
  -7,278
  -7,630
  -8,001
  -8,391
  -8,803
  -9,233
  -9,687
  -10,163
  -10,664
  -11,191
Free cash flow, $m
  770
  -10,777
  -11,082
  -11,421
  -11,795
  -12,202
  -12,644
  -13,120
  -13,632
  -14,180
  -14,765
  -15,389
  -16,052
  -16,755
  -17,501
  -18,292
  -19,127
  -20,011
  -20,944
  -21,928
  -22,967
  -24,062
  -25,216
  -26,431
  -27,711
  -29,058
  -30,476
  -31,968
  -33,537
  -35,187
  -36,923
Issuance/(repayment) of debt, $m
  -181
  340
  382
  437
  491
  544
  596
  650
  703
  757
  813
  870
  928
  988
  1,050
  1,114
  1,181
  1,250
  1,322
  1,397
  1,475
  1,556
  1,641
  1,730
  1,822
  1,919
  2,021
  2,127
  2,238
  2,355
  2,477
Issuance/(repurchase) of shares, $m
  0
  10,534
  10,791
  11,089
  11,422
  11,789
  12,190
  12,626
  13,097
  13,604
  14,147
  14,727
  15,346
  16,004
  16,703
  17,444
  18,229
  19,060
  19,938
  20,866
  21,845
  22,878
  23,967
  25,115
  26,325
  27,598
  28,939
  30,350
  31,834
  33,396
  35,039
Cash from financing (excl. dividends), $m  
  -481
  10,874
  11,173
  11,526
  11,913
  12,333
  12,786
  13,276
  13,800
  14,361
  14,960
  15,597
  16,274
  16,992
  17,753
  18,558
  19,410
  20,310
  21,260
  22,263
  23,320
  24,434
  25,608
  26,845
  28,147
  29,517
  30,960
  32,477
  34,072
  35,751
  37,516
Total cash flow (excl. dividends), $m
  289
  97
  91
  105
  117
  130
  143
  155
  168
  181
  195
  208
  222
  236
  251
  267
  283
  299
  316
  334
  353
  372
  393
  414
  436
  459
  484
  509
  536
  563
  593
Retained Cash Flow (-), $m
  1,650
  -10,534
  -10,791
  -11,089
  -11,422
  -11,789
  -12,190
  -12,626
  -13,097
  -13,604
  -14,147
  -14,727
  -15,346
  -16,004
  -16,703
  -17,444
  -18,229
  -19,060
  -19,938
  -20,866
  -21,845
  -22,878
  -23,967
  -25,115
  -26,325
  -27,598
  -28,939
  -30,350
  -31,834
  -33,396
  -35,039
Prev. year cash balance distribution, $m
 
  1,377
  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
 
  -9,060
  -10,699
  -10,985
  -11,304
  -11,659
  -12,048
  -12,471
  -12,929
  -13,423
  -13,952
  -14,519
  -15,124
  -15,767
  -16,451
  -17,177
  -17,947
  -18,761
  -19,622
  -20,532
  -21,492
  -22,506
  -23,575
  -24,702
  -25,889
  -27,139
  -28,455
  -29,841
  -31,299
  -32,833
  -34,446
Discount rate, %
 
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
 
  -8,467
  -9,284
  -8,789
  -8,277
  -7,751
  -7,210
  -6,658
  -6,098
  -5,536
  -4,977
  -4,427
  -3,893
  -3,382
  -2,900
  -2,451
  -2,041
  -1,673
  -1,347
  -1,066
  -827
  -629
  -468
  -340
  -242
  -167
  -113
  -74
  -47
  -29
  -17
Current shareholders' claim on cash, %
  100
  57.2
  32.7
  18.6
  10.6
  6.0
  3.4
  1.9
  1.1
  0.6
  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
  0.0
  0.0

Apache Corporation is an independent energy company. The Company explores for, develops, and produces natural gas, crude oil and natural gas liquids. The Company’s production segments include: the United States, Egypt and the United Kingdom North Sea. It also pursues exploration interests in Suriname. In North America, the Company has three onshore regions: The Permian region, The Midcontinent/Gulf Coast region. The Permian region located in West Texas and New Mexico includes the Permian sub-basins, the Midland Basin, Central Basin Platform/Northwest Shelf and Delaware Basin. The Midcontinent/Gulf Coast region includes the Granite Wash, Tonkawa, Canyon Lime, Marmaton, and Cleveland formations of the West Anadarko Basin, the Woodford-SCOOP and Stack plays located in Central Oklahoma, and the Eagle Ford shale in South East Texas.

FINANCIAL RATIOS  of  Apache (APA)

Valuation Ratios
P/E Ratio -12.6
Price to Sales 3.3
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 7.3
Price to Free Cash Flow 26.8
Growth Rates
Sales Growth Rate -19.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -60.2%
Cap. Spend. - 3 Yr. Gr. Rate -28%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 137%
Total Debt to Equity 137%
Interest Coverage -3
Management Effectiveness
Return On Assets -4.6%
Ret/ On Assets - 3 Yr. Avg. -12.6%
Return On Total Capital -9%
Ret/ On T. Cap. - 3 Yr. Avg. -20.3%
Return On Equity -19.9%
Return On Equity - 3 Yr. Avg. -33.1%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 72%
Gross Margin - 3 Yr. Avg. 75.5%
EBITDA Margin 25.3%
EBITDA Margin - 3 Yr. Avg. -15.6%
Operating Margin -31.5%
Oper. Margin - 3 Yr. Avg. -79.2%
Pre-Tax Margin -31.5%
Pre-Tax Margin - 3 Yr. Avg. -79.2%
Net Profit Margin -26.3%
Net Profit Margin - 3 Yr. Avg. -75.1%
Effective Tax Rate 26.3%
Eff/ Tax Rate - 3 Yr. Avg. 3.7%
Payout Ratio -27%

APA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the APA stock intrinsic value calculation we used $5333 million for the last fiscal year's total revenue generated by Apache. The default revenue input number comes from 2016 income statement of Apache. 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 APA 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%, whose default value for APA is calculated based on our internal credit rating of Apache, 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 Apache.
    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 APA stock the variable cost ratio is equal to 284.2%.

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 APA 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 4.8% for Apache.

Corporate tax rate of 27% is the nominal tax rate for Apache. 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 APA 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 APA are equal to 372.3%.

Life of production assets of 7.6 years is the average useful life of capital assets used in Apache 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 APA is equal to 0.4%. 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 - $6238 million for Apache - 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 386.784 million for Apache 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 Apache at the current share price and the inputted number of shares is $18.1 billion.

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Financial statements of APA
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