Intrinsic value of Anadarko Petroleum - APC

Previous Close

$51.64

  Intrinsic Value

$67.29

stock screener

  Rating & Target

buy

+30%

Previous close

$51.64

 
Intrinsic value

$67.29

 
Up/down potential

+30%

 
Rating

buy

We calculate the intrinsic value of APC 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 0001), $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 26.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  21.20
  19.58
  18.12
  16.81
  15.63
  14.57
  13.61
  12.75
  11.97
  11.28
  10.65
  10.08
  9.58
  9.12
  8.71
  8.34
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.60
  6.44
  6.29
  6.16
  6.05
  5.94
  5.85
  5.76
Revenue, $m
  14,432
  17,258
  20,386
  23,813
  27,534
  31,545
  35,838
  40,407
  45,245
  50,347
  55,708
  61,326
  67,198
  73,325
  79,709
  86,353
  93,263
  100,445
  107,910
  115,667
  123,728
  132,108
  140,821
  149,884
  159,315
  169,134
  179,361
  190,018
  201,130
  212,721
Variable operating expenses, $m
  7,428
  8,772
  10,259
  11,888
  13,658
  15,564
  17,606
  19,778
  22,078
  24,504
  26,487
  29,157
  31,949
  34,862
  37,898
  41,057
  44,342
  47,757
  51,306
  54,994
  58,827
  62,811
  66,954
  71,263
  75,747
  80,415
  85,277
  90,345
  95,628
  101,139
Fixed operating expenses, $m
  6,636
  6,782
  6,931
  7,084
  7,239
  7,399
  7,561
  7,728
  7,898
  8,072
  8,249
  8,431
  8,616
  8,806
  8,999
  9,197
  9,400
  9,606
  9,818
  10,034
  10,254
  10,480
  10,711
  10,946
  11,187
  11,433
  11,685
  11,942
  12,205
  12,473
Total operating expenses, $m
  14,064
  15,554
  17,190
  18,972
  20,897
  22,963
  25,167
  27,506
  29,976
  32,576
  34,736
  37,588
  40,565
  43,668
  46,897
  50,254
  53,742
  57,363
  61,124
  65,028
  69,081
  73,291
  77,665
  82,209
  86,934
  91,848
  96,962
  102,287
  107,833
  113,612
Operating income, $m
  368
  1,705
  3,196
  4,841
  6,638
  8,582
  10,671
  12,901
  15,269
  17,772
  20,973
  23,738
  26,633
  29,657
  32,812
  36,099
  39,521
  43,082
  46,786
  50,639
  54,647
  58,817
  63,157
  67,675
  72,381
  77,285
  82,398
  87,732
  93,298
  99,109
EBITDA, $m
  5,710
  7,981
  10,507
  13,286
  16,313
  19,585
  23,094
  26,836
  30,805
  34,995
  39,403
  44,027
  48,864
  53,916
  59,183
  64,668
  70,376
  76,314
  82,487
  88,907
  95,582
  102,524
  109,746
  117,263
  125,089
  133,242
  141,739
  150,598
  159,840
  169,487
Interest expense (income), $m
  856
  941
  1,343
  1,788
  2,281
  2,822
  3,409
  4,041
  4,718
  5,439
  6,202
  7,007
  7,852
  8,738
  9,664
  10,630
  11,637
  12,685
  13,775
  14,908
  16,085
  17,308
  18,579
  19,901
  21,275
  22,704
  24,192
  25,740
  27,353
  29,034
  30,786
Earnings before tax, $m
  -573
  362
  1,408
  2,560
  3,816
  5,173
  6,630
  8,183
  9,830
  11,570
  13,966
  15,886
  17,894
  19,993
  22,181
  24,462
  26,836
  29,307
  31,879
  34,554
  37,339
  40,237
  43,256
  46,400
  49,677
  53,094
  56,658
  60,379
  64,264
  68,323
Tax expense, $m
  0
  98
  380
  691
  1,030
  1,397
  1,790
  2,209
  2,654
  3,124
  3,771
  4,289
  4,832
  5,398
  5,989
  6,605
  7,246
  7,913
  8,607
  9,330
  10,081
  10,864
  11,679
  12,528
  13,413
  14,335
  15,298
  16,302
  17,351
  18,447
Net income, $m
  -573
  264
  1,028
  1,869
  2,785
  3,776
  4,840
  5,974
  7,176
  8,446
  10,195
  11,597
  13,063
  14,595
  16,192
  17,857
  19,590
  21,394
  23,271
  25,225
  27,257
  29,373
  31,577
  33,872
  36,264
  38,758
  41,360
  44,076
  46,913
  49,876

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  50,113
  59,925
  70,785
  82,683
  95,606
  109,532
  124,438
  140,302
  157,101
  174,816
  193,432
  212,937
  233,326
  254,600
  276,766
  299,836
  323,828
  348,769
  374,687
  401,621
  429,612
  458,708
  488,962
  520,430
  553,177
  587,269
  622,780
  659,785
  698,368
  738,616
Adjusted assets (=assets-cash), $m
  50,113
  59,925
  70,785
  82,683
  95,606
  109,532
  124,438
  140,302
  157,101
  174,816
  193,432
  212,937
  233,326
  254,600
  276,766
  299,836
  323,828
  348,769
  374,687
  401,621
  429,612
  458,708
  488,962
  520,430
  553,177
  587,269
  622,780
  659,785
  698,368
  738,616
Revenue / Adjusted assets
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
  0.288
Average production assets, $m
  39,632
  47,392
  55,980
  65,390
  75,610
  86,623
  98,412
  110,958
  124,243
  138,253
  152,975
  168,401
  184,526
  201,350
  218,880
  237,124
  256,099
  275,823
  296,321
  317,621
  339,758
  362,769
  386,694
  411,581
  437,479
  464,441
  492,524
  521,790
  552,303
  584,133
Working capital, $m
  -1,891
  -2,261
  -2,671
  -3,119
  -3,607
  -4,132
  -4,695
  -5,293
  -5,927
  -6,595
  -7,298
  -8,034
  -8,803
  -9,606
  -10,442
  -11,312
  -12,217
  -13,158
  -14,136
  -15,152
  -16,208
  -17,306
  -18,448
  -19,635
  -20,870
  -22,156
  -23,496
  -24,892
  -26,348
  -27,866
Total debt, $m
  22,376
  29,804
  38,025
  47,032
  56,814
  67,356
  78,641
  90,650
  103,367
  116,777
  130,869
  145,634
  161,069
  177,174
  193,953
  211,417
  229,579
  248,459
  268,079
  288,468
  309,658
  331,683
  354,585
  378,407
  403,196
  429,004
  455,885
  483,898
  513,106
  543,573
Total liabilities, $m
  37,935
  45,363
  53,584
  62,591
  72,373
  82,915
  94,200
  106,209
  118,926
  132,336
  146,428
  161,193
  176,628
  192,733
  209,512
  226,976
  245,138
  264,018
  283,638
  304,027
  325,217
  347,242
  370,144
  393,966
  418,755
  444,563
  471,444
  499,457
  528,665
  559,132
Total equity, $m
  12,177
  14,562
  17,201
  20,092
  23,232
  26,616
  30,238
  34,093
  38,176
  42,480
  47,004
  51,744
  56,698
  61,868
  67,254
  72,860
  78,690
  84,751
  91,049
  97,594
  104,396
  111,466
  118,818
  126,465
  134,422
  142,706
  151,335
  160,328
  169,704
  179,484
Total liabilities and equity, $m
  50,112
  59,925
  70,785
  82,683
  95,605
  109,531
  124,438
  140,302
  157,102
  174,816
  193,432
  212,937
  233,326
  254,601
  276,766
  299,836
  323,828
  348,769
  374,687
  401,621
  429,613
  458,708
  488,962
  520,431
  553,177
  587,269
  622,779
  659,785
  698,369
  738,616
Debt-to-equity ratio
  1.840
  2.050
  2.210
  2.340
  2.450
  2.530
  2.600
  2.660
  2.710
  2.750
  2.780
  2.810
  2.840
  2.860
  2.880
  2.900
  2.920
  2.930
  2.940
  2.960
  2.970
  2.980
  2.980
  2.990
  3.000
  3.010
  3.010
  3.020
  3.020
  3.030
Adjusted equity ratio
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -573
  264
  1,028
  1,869
  2,785
  3,776
  4,840
  5,974
  7,176
  8,446
  10,195
  11,597
  13,063
  14,595
  16,192
  17,857
  19,590
  21,394
  23,271
  25,225
  27,257
  29,373
  31,577
  33,872
  36,264
  38,758
  41,360
  44,076
  46,913
  49,876
Depreciation, amort., depletion, $m
  5,341
  6,276
  7,311
  8,444
  9,676
  11,003
  12,423
  13,935
  15,535
  17,223
  18,431
  20,289
  22,232
  24,259
  26,371
  28,569
  30,855
  33,232
  35,701
  38,268
  40,935
  43,707
  46,590
  49,588
  52,708
  55,957
  59,340
  62,866
  66,543
  70,377
Funds from operations, $m
  4,768
  6,540
  8,339
  10,313
  12,461
  14,779
  17,263
  19,908
  22,711
  25,669
  28,626
  31,886
  35,295
  38,854
  42,563
  46,426
  50,446
  54,626
  58,973
  63,492
  68,192
  73,080
  78,166
  83,460
  88,972
  94,715
  100,701
  106,943
  113,455
  120,253
Change in working capital, $m
  -331
  -370
  -410
  -449
  -488
  -525
  -562
  -599
  -634
  -668
  -702
  -736
  -769
  -803
  -836
  -870
  -905
  -941
  -978
  -1,016
  -1,056
  -1,098
  -1,141
  -1,187
  -1,235
  -1,286
  -1,340
  -1,396
  -1,456
  -1,518
Cash from operations, $m
  5,099
  6,911
  8,748
  10,762
  12,949
  15,305
  17,825
  20,507
  23,345
  26,337
  29,328
  32,622
  36,064
  39,656
  43,400
  47,297
  51,351
  55,567
  59,951
  64,508
  69,248
  74,178
  79,308
  84,647
  90,208
  96,001
  102,040
  108,339
  114,911
  121,772
Maintenance CAPEX, $m
  -3,940
  -4,775
  -5,710
  -6,745
  -7,878
  -9,110
  -10,436
  -11,857
  -13,368
  -14,969
  -16,657
  -18,431
  -20,289
  -22,232
  -24,259
  -26,371
  -28,569
  -30,855
  -33,232
  -35,701
  -38,268
  -40,935
  -43,707
  -46,590
  -49,588
  -52,708
  -55,957
  -59,340
  -62,866
  -66,543
New CAPEX, $m
  -6,931
  -7,760
  -8,588
  -9,410
  -10,220
  -11,013
  -11,789
  -12,546
  -13,286
  -14,010
  -14,722
  -15,426
  -16,125
  -16,825
  -17,530
  -18,245
  -18,974
  -19,724
  -20,498
  -21,301
  -22,137
  -23,010
  -23,926
  -24,887
  -25,898
  -26,962
  -28,083
  -29,266
  -30,513
  -31,829
Cash from investing activities, $m
  -10,871
  -12,535
  -14,298
  -16,155
  -18,098
  -20,123
  -22,225
  -24,403
  -26,654
  -28,979
  -31,379
  -33,857
  -36,414
  -39,057
  -41,789
  -44,616
  -47,543
  -50,579
  -53,730
  -57,002
  -60,405
  -63,945
  -67,633
  -71,477
  -75,486
  -79,670
  -84,040
  -88,606
  -93,379
  -98,372
Free cash flow, $m
  -5,772
  -5,624
  -5,550
  -5,393
  -5,149
  -4,818
  -4,400
  -3,896
  -3,309
  -2,642
  -2,051
  -1,235
  -350
  600
  1,611
  2,681
  3,807
  4,988
  6,221
  7,507
  8,844
  10,233
  11,675
  13,171
  14,722
  16,331
  18,000
  19,733
  21,531
  23,400
Issuance/(repayment) of debt, $m
  6,687
  7,428
  8,221
  9,007
  9,782
  10,542
  11,284
  12,009
  12,717
  13,410
  14,092
  14,765
  15,435
  16,105
  16,779
  17,464
  18,162
  18,880
  19,621
  20,389
  21,189
  22,026
  22,902
  23,822
  24,789
  25,808
  26,881
  28,013
  29,207
  30,467
Issuance/(repurchase) of shares, $m
  2,701
  2,120
  1,611
  1,023
  355
  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 from financing (excl. dividends), $m  
  9,388
  9,548
  9,832
  10,030
  10,137
  10,542
  11,284
  12,009
  12,717
  13,410
  14,092
  14,765
  15,435
  16,105
  16,779
  17,464
  18,162
  18,880
  19,621
  20,389
  21,189
  22,026
  22,902
  23,822
  24,789
  25,808
  26,881
  28,013
  29,207
  30,467
Total cash flow (excl. dividends), $m
  3,617
  3,924
  4,282
  4,638
  4,988
  5,724
  6,884
  8,113
  9,408
  10,769
  12,041
  13,531
  15,085
  16,704
  18,390
  20,145
  21,969
  23,867
  25,842
  27,896
  30,033
  32,259
  34,577
  36,992
  39,511
  42,139
  44,882
  47,746
  50,739
  53,867
Retained Cash Flow (-), $m
  -2,701
  -2,384
  -2,639
  -2,891
  -3,140
  -3,384
  -3,622
  -3,855
  -4,082
  -4,305
  -4,524
  -4,740
  -4,955
  -5,170
  -5,386
  -5,606
  -5,830
  -6,060
  -6,298
  -6,545
  -6,802
  -7,070
  -7,352
  -7,647
  -7,957
  -8,284
  -8,629
  -8,992
  -9,376
  -9,780
Prev. year cash balance distribution, $m
  647
  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
  1,563
  1,539
  1,643
  1,746
  1,848
  2,340
  3,262
  4,258
  5,326
  6,464
  7,518
  8,791
  10,130
  11,535
  13,004
  14,539
  16,139
  17,807
  19,543
  21,351
  23,231
  25,188
  27,225
  29,346
  31,554
  33,855
  36,253
  38,754
  41,363
  44,087
Discount rate, %
  6.00
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
PV of cash for distribution, $m
  1,474
  1,362
  1,356
  1,335
  1,299
  1,503
  1,898
  2,226
  2,480
  2,655
  2,695
  2,722
  2,678
  2,572
  2,414
  2,217
  1,992
  1,751
  1,507
  1,268
  1,044
  840
  660
  506
  379
  276
  196
  135
  90
  59
Current shareholders' claim on cash, %
  90.2
  84.3
  80.7
  78.8
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2
  78.2

Anadarko Petroleum Corporation (Anadarko) is an independent exploration and production company. The Company is engaged in developing, acquiring, and exploring for oil and natural-gas resources. The Company's segments include Oil and Gas Exploration and Production; Midstream, and Marketing. The Company's geographical segments include the United States and International. The Oil and Gas Exploration and Production segment explores for and produces oil, condensate, natural gas and natural gas liquids (NGLs), and focuses on the development and operation of the Company's liquefied natural gas (LNG) project in Mozambique. The Midstream segment engages in gathering, processing, treating and transporting Anadarko and third-party oil, natural-gas and NGLs production. The Marketing segment sells Anadarko's oil, natural-gas and NGLs production, as well as third-party purchased volumes. As of December 31, 2016, the Company had approximately 1.7 billion barrels of oil equivalent (BOE).

FINANCIAL RATIOS  of  Anadarko Petroleum (APC)

Valuation Ratios
P/E Ratio -9.3
Price to Sales 3.4
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 9.5
Price to Free Cash Flow -56.4
Growth Rates
Sales Growth Rate -11%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -42.2%
Cap. Spend. - 3 Yr. Gr. Rate -14.6%
Financial Strength
Quick Ratio 76
Current Ratio 0
LT Debt to Equity 125.1%
Total Debt to Equity 125.5%
Interest Coverage -3
Management Effectiveness
Return On Assets -5.3%
Ret/ On Assets - 3 Yr. Avg. -17.4%
Return On Total Capital -11%
Ret/ On T. Cap. - 3 Yr. Avg. -12.4%
Return On Equity -24.5%
Return On Equity - 3 Yr. Avg. -24.7%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 78.5%
Gross Margin - 3 Yr. Avg. 80.6%
EBITDA Margin 15.7%
EBITDA Margin - 3 Yr. Avg. 5.2%
Operating Margin -32.6%
Oper. Margin - 3 Yr. Avg. -30.8%
Pre-Tax Margin -45.3%
Pre-Tax Margin - 3 Yr. Avg. -49%
Net Profit Margin -36.4%
Net Profit Margin - 3 Yr. Avg. -39.2%
Effective Tax Rate 26.7%
Eff/ Tax Rate - 3 Yr. Avg. 1016.9%
Payout Ratio -3.4%

APC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the APC stock intrinsic value calculation we used $11908 million for the last fiscal year's total revenue generated by Anadarko Petroleum. The default revenue input number comes from 0001 income statement of Anadarko 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 APC stock valuation model: a) initial revenue growth rate of 21.2% 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 6%, whose default value for APC is calculated based on our internal credit rating of Anadarko 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 Anadarko 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 APC stock the variable cost ratio is equal to 52.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $6493 million in the base year in the intrinsic value calculation for APC 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 Anadarko Petroleum.

Corporate tax rate of 27% is the nominal tax rate for Anadarko 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 APC 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 APC are equal to 274.6%.

Life of production assets of 8.3 years is the average useful life of capital assets used in Anadarko 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 APC is equal to -13.1%. 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 - $10696 million for Anadarko 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 512.075 million for Anadarko 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 Anadarko Petroleum at the current share price and the inputted number of shares is $26.4 billion.

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COMPANY NEWS

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▶ Shale Drillers May Cut Capex As Oil Falls To $50   [Dec-02-18 11:00AM  Oilprice.com]
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▶ These Are the Biggest Oil Producers in the United States   [Nov-24-18 08:15AM  Motley Fool]
▶ Heres what Anadarko is paying its newly promoted executives   [Nov-21-18 12:58PM  American City Business Journals]
▶ 5 things to know in Texas energy this week   [Nov-19-18 10:26AM  American City Business Journals]
▶ Anadarko and its MLPs announce new presidents, other executive appointments   [Nov-15-18 05:19PM  American City Business Journals]
▶ Anadarko Announces Leadership Changes   [04:15PM  PR Newswire]
▶ Noble Energy executive jumps ship to Denver's Whiting Petroleum   [01:06PM  American City Business Journals]
▶ [$$] Shell and Anadarko in dispute over Mozambique gas   [Nov-13-18 12:01AM  Financial Times]
▶ OPEC to the Oil Market: We Told You So   [Nov-12-18 05:35PM  Motley Fool]
▶ [$$] Partnership to Buy Anadarko Petroleums Midstream Assets   [Nov-08-18 08:01PM  The Wall Street Journal]
▶ Anadarko to sell all midstream assets to consolidated MLP for $4B   [08:40AM  American City Business Journals]
▶ Anadarko Wins Big in Colorado; M&A Wave Continues -- ICYMI   [Nov-07-18 07:30PM  TheStreet.com]
▶ Oil and gas ready to talk after ballot victory in Colorado   [03:20PM  American City Business Journals]
▶ Anadarko Petroleum Watching Colorado Midterm   [Nov-05-18 02:10PM  TheStreet.com]
▶ Dividends Are Making a Comeback in the Oil Patch   [Nov-04-18 09:30AM  Motley Fool]
▶ [$$] Stocks to Watch   [06:39AM  The Wall Street Journal]
▶ Anadarko Petroleum Earnings miss, Revenue beats In Q3   [Oct-30-18 07:32PM  Investing.com]
▶ Anadarko Petroleum: 3Q Earnings Snapshot   [04:30PM  Associated Press]
▶ Anadarko Is Killing It, but Exxon Is a Better Buy   [Oct-27-18 11:48AM  Motley Fool]

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