Intrinsic value of Continental Resources - CLR

Previous Close

$48.00

  Intrinsic Value

$3.41

stock screener

  Rating & Target

str. sell

-93%

Previous close

$48.00

 
Intrinsic value

$3.41

 
Up/down potential

-93%

 
Rating

str. sell

We calculate the intrinsic value of CLR 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 18.0

 

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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  4,993
  7,715
  11,537
  16,740
  23,618
  32,469
  43,583
  57,227
  73,637
  93,010
  115,497
  141,207
  170,202
  202,506
  238,111
  276,981
  319,059
  364,277
  412,563
  463,843
  518,051
  575,130
  635,037
  697,744
  763,243
  831,541
  902,667
  976,670
  1,053,616
  1,133,592
Variable operating expenses, $m
  1,768
  2,731
  4,084
  5,926
  8,361
  11,494
  15,428
  20,258
  26,068
  32,926
  40,886
  49,987
  60,251
  71,687
  84,291
  98,051
  112,947
  128,954
  146,047
  164,200
  183,390
  203,596
  224,803
  247,001
  270,188
  294,365
  319,544
  345,741
  372,980
  401,292
Fixed operating expenses, $m
  1,636
  1,672
  1,709
  1,747
  1,785
  1,824
  1,864
  1,905
  1,947
  1,990
  2,034
  2,079
  2,124
  2,171
  2,219
  2,268
  2,318
  2,369
  2,421
  2,474
  2,528
  2,584
  2,641
  2,699
  2,758
  2,819
  2,881
  2,945
  3,009
  3,076
Total operating expenses, $m
  3,404
  4,403
  5,793
  7,673
  10,146
  13,318
  17,292
  22,163
  28,015
  34,916
  42,920
  52,066
  62,375
  73,858
  86,510
  100,319
  115,265
  131,323
  148,468
  166,674
  185,918
  206,180
  227,444
  249,700
  272,946
  297,184
  322,425
  348,686
  375,989
  404,368
Operating income, $m
  1,589
  3,311
  5,744
  9,067
  13,472
  19,151
  26,290
  35,063
  45,622
  58,094
  72,577
  89,141
  107,826
  128,648
  151,601
  176,662
  203,794
  232,954
  264,095
  297,168
  332,132
  368,950
  407,593
  448,044
  490,296
  534,356
  580,242
  627,984
  677,627
  729,225
EBITDA, $m
  4,272
  7,455
  11,941
  18,059
  26,158
  36,591
  49,700
  65,802
  85,176
  108,054
  134,616
  164,989
  199,248
  237,423
  279,501
  325,440
  375,174
  428,623
  485,700
  546,318
  610,400
  677,877
  748,698
  822,832
  900,267
  981,012
  1,065,103
  1,152,596
  1,243,569
  1,338,126
Interest expense (income), $m
  316
  343
  637
  1,063
  1,663
  2,479
  3,558
  4,946
  6,689
  8,829
  11,403
  14,442
  17,969
  22,001
  26,549
  31,616
  37,200
  43,297
  49,896
  56,989
  64,562
  72,605
  81,107
  90,060
  99,456
  109,291
  119,565
  130,277
  141,433
  153,040
  165,108
Earnings before tax, $m
  1,246
  2,675
  4,681
  7,404
  10,993
  15,593
  21,344
  28,374
  36,793
  46,691
  58,136
  71,172
  85,825
  102,099
  119,985
  139,462
  160,498
  183,058
  207,106
  232,606
  259,527
  287,842
  317,533
  348,588
  381,005
  414,792
  449,965
  486,552
  524,587
  564,116
Tax expense, $m
  337
  722
  1,264
  1,999
  2,968
  4,210
  5,763
  7,661
  9,934
  12,607
  15,697
  19,216
  23,173
  27,567
  32,396
  37,655
  43,334
  49,426
  55,919
  62,804
  70,072
  77,717
  85,734
  94,119
  102,871
  111,994
  121,491
  131,369
  141,639
  152,311
Net income, $m
  910
  1,953
  3,417
  5,405
  8,025
  11,383
  15,581
  20,713
  26,859
  34,085
  42,439
  51,956
  62,652
  74,532
  87,589
  101,807
  117,163
  133,632
  151,187
  169,803
  189,455
  210,125
  231,799
  254,469
  278,134
  302,798
  328,475
  355,183
  382,949
  411,805

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
  22,697
  35,067
  52,442
  76,091
  107,354
  147,587
  198,104
  260,124
  334,716
  422,773
  524,988
  641,849
  773,643
  920,483
  1,082,324
  1,259,003
  1,450,266
  1,655,804
  1,875,284
  2,108,376
  2,354,776
  2,614,227
  2,886,531
  3,171,565
  3,469,284
  3,779,731
  4,103,034
  4,439,410
  4,789,165
  5,152,690
Adjusted assets (=assets-cash), $m
  22,697
  35,067
  52,442
  76,091
  107,354
  147,587
  198,104
  260,124
  334,716
  422,773
  524,988
  641,849
  773,643
  920,483
  1,082,324
  1,259,003
  1,450,266
  1,655,804
  1,875,284
  2,108,376
  2,354,776
  2,614,227
  2,886,531
  3,171,565
  3,469,284
  3,779,731
  4,103,034
  4,439,410
  4,789,165
  5,152,690
Revenue / Adjusted assets
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
  0.220
Average production assets, $m
  20,652
  31,908
  47,718
  69,237
  97,683
  134,292
  180,259
  236,692
  304,565
  384,690
  477,697
  584,031
  703,954
  837,566
  984,829
  1,145,592
  1,319,626
  1,506,649
  1,706,359
  1,918,454
  2,142,658
  2,378,737
  2,626,512
  2,885,870
  3,156,771
  3,439,253
  3,733,433
  4,039,508
  4,357,757
  4,688,536
Working capital, $m
  -195
  -301
  -450
  -653
  -921
  -1,266
  -1,700
  -2,232
  -2,872
  -3,627
  -4,504
  -5,507
  -6,638
  -7,898
  -9,286
  -10,802
  -12,443
  -14,207
  -16,090
  -18,090
  -20,204
  -22,430
  -24,766
  -27,212
  -29,766
  -32,430
  -35,204
  -38,090
  -41,091
  -44,210
Total debt, $m
  11,789
  19,693
  30,796
  45,908
  65,884
  91,593
  123,874
  163,504
  211,169
  267,437
  332,753
  407,426
  491,643
  585,474
  688,891
  801,788
  924,005
  1,055,344
  1,195,592
  1,344,538
  1,501,987
  1,667,776
  1,841,778
  2,023,915
  2,214,158
  2,412,533
  2,619,124
  2,834,068
  3,057,562
  3,289,854
Total liabilities, $m
  14,503
  22,408
  33,511
  48,622
  68,599
  94,308
  126,589
  166,219
  213,883
  270,152
  335,468
  410,141
  494,358
  588,189
  691,605
  804,503
  926,720
  1,058,059
  1,198,307
  1,347,253
  1,504,702
  1,670,491
  1,844,493
  2,026,630
  2,216,873
  2,415,248
  2,621,839
  2,836,783
  3,060,277
  3,292,569
Total equity, $m
  8,194
  12,659
  18,932
  27,469
  38,755
  53,279
  71,516
  93,905
  120,832
  152,621
  189,521
  231,707
  279,285
  332,294
  390,719
  454,500
  523,546
  597,745
  676,978
  761,124
  850,074
  943,736
  1,042,038
  1,144,935
  1,252,412
  1,364,483
  1,481,195
  1,602,627
  1,728,889
  1,860,121
Total liabilities and equity, $m
  22,697
  35,067
  52,443
  76,091
  107,354
  147,587
  198,105
  260,124
  334,715
  422,773
  524,989
  641,848
  773,643
  920,483
  1,082,324
  1,259,003
  1,450,266
  1,655,804
  1,875,285
  2,108,377
  2,354,776
  2,614,227
  2,886,531
  3,171,565
  3,469,285
  3,779,731
  4,103,034
  4,439,410
  4,789,166
  5,152,690
Debt-to-equity ratio
  1.440
  1.560
  1.630
  1.670
  1.700
  1.720
  1.730
  1.740
  1.750
  1.750
  1.760
  1.760
  1.760
  1.760
  1.760
  1.760
  1.760
  1.770
  1.770
  1.770
  1.770
  1.770
  1.770
  1.770
  1.770
  1.770
  1.770
  1.770
  1.770
  1.770
Adjusted equity ratio
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  910
  1,953
  3,417
  5,405
  8,025
  11,383
  15,581
  20,713
  26,859
  34,085
  42,439
  51,956
  62,652
  74,532
  87,589
  101,807
  117,163
  133,632
  151,187
  169,803
  189,455
  210,125
  231,799
  254,469
  278,134
  302,798
  328,475
  355,183
  382,949
  411,805
Depreciation, amort., depletion, $m
  2,682
  4,144
  6,197
  8,992
  12,686
  17,441
  23,410
  30,739
  39,554
  49,960
  62,039
  75,848
  91,423
  108,775
  127,900
  148,778
  171,380
  195,669
  221,605
  249,150
  278,267
  308,927
  341,105
  374,788
  409,970
  446,656
  484,861
  524,611
  565,943
  608,901
Funds from operations, $m
  3,592
  6,097
  9,614
  14,397
  20,711
  28,823
  38,991
  51,452
  66,413
  84,044
  104,478
  127,804
  154,075
  183,307
  215,489
  250,585
  288,543
  329,301
  372,792
  418,953
  467,722
  519,052
  572,904
  629,257
  688,104
  749,454
  813,336
  879,794
  948,891
  1,020,706
Change in working capital, $m
  -73
  -106
  -149
  -203
  -268
  -345
  -433
  -532
  -640
  -756
  -877
  -1,003
  -1,131
  -1,260
  -1,389
  -1,516
  -1,641
  -1,764
  -1,883
  -2,000
  -2,114
  -2,226
  -2,336
  -2,446
  -2,554
  -2,664
  -2,774
  -2,886
  -3,001
  -3,119
Cash from operations, $m
  3,665
  6,203
  9,763
  14,600
  20,979
  29,169
  39,425
  51,984
  67,053
  84,800
  105,355
  128,806
  155,205
  184,567
  216,878
  252,101
  290,184
  331,065
  374,676
  420,952
  469,836
  521,278
  575,241
  631,703
  690,658
  752,118
  816,110
  882,680
  951,892
  1,023,825
Maintenance CAPEX, $m
  -1,676
  -2,682
  -4,144
  -6,197
  -8,992
  -12,686
  -17,441
  -23,410
  -30,739
  -39,554
  -49,960
  -62,039
  -75,848
  -91,423
  -108,775
  -127,900
  -148,778
  -171,380
  -195,669
  -221,605
  -249,150
  -278,267
  -308,927
  -341,105
  -374,788
  -409,970
  -446,656
  -484,861
  -524,611
  -565,943
New CAPEX, $m
  -7,745
  -11,256
  -15,810
  -21,519
  -28,446
  -36,609
  -45,967
  -56,433
  -67,873
  -80,125
  -93,008
  -106,333
  -119,923
  -133,612
  -147,263
  -160,764
  -174,034
  -187,023
  -199,709
  -212,095
  -224,204
  -236,079
  -247,775
  -259,358
  -270,901
  -282,482
  -294,180
  -306,076
  -318,249
  -330,779
Cash from investing activities, $m
  -9,421
  -13,938
  -19,954
  -27,716
  -37,438
  -49,295
  -63,408
  -79,843
  -98,612
  -119,679
  -142,968
  -168,372
  -195,771
  -225,035
  -256,038
  -288,664
  -322,812
  -358,403
  -395,378
  -433,700
  -473,354
  -514,346
  -556,702
  -600,463
  -645,689
  -692,452
  -740,836
  -790,937
  -842,860
  -896,722
Free cash flow, $m
  -5,756
  -7,735
  -10,191
  -13,116
  -16,459
  -20,126
  -23,983
  -27,858
  -31,559
  -34,879
  -37,613
  -39,566
  -40,566
  -40,468
  -39,160
  -36,562
  -32,628
  -27,339
  -20,703
  -12,748
  -3,518
  6,932
  18,539
  31,239
  44,969
  59,666
  75,274
  91,743
  109,031
  127,104
Issuance/(repayment) of debt, $m
  5,435
  7,904
  11,103
  15,112
  19,977
  25,709
  32,281
  39,630
  47,664
  56,269
  65,316
  74,674
  84,217
  93,830
  103,417
  112,898
  122,217
  131,339
  140,248
  148,946
  157,450
  165,789
  174,002
  182,137
  190,243
  198,375
  206,591
  214,945
  223,493
  232,292
Issuance/(repurchase) of shares, $m
  2,153
  2,513
  2,856
  3,132
  3,261
  3,141
  2,656
  1,676
  69
  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  
  7,588
  10,417
  13,959
  18,244
  23,238
  28,850
  34,937
  41,306
  47,733
  56,269
  65,316
  74,674
  84,217
  93,830
  103,417
  112,898
  122,217
  131,339
  140,248
  148,946
  157,450
  165,789
  174,002
  182,137
  190,243
  198,375
  206,591
  214,945
  223,493
  232,292
Total cash flow (excl. dividends), $m
  1,831
  2,682
  3,768
  5,128
  6,779
  8,724
  10,954
  13,448
  16,174
  21,389
  27,703
  35,108
  43,651
  53,363
  64,257
  76,335
  89,589
  104,000
  119,545
  136,198
  153,932
  172,720
  192,541
  213,376
  235,212
  258,041
  281,865
  306,688
  332,525
  359,396
Retained Cash Flow (-), $m
  -3,062
  -4,466
  -6,273
  -8,537
  -11,286
  -14,524
  -18,237
  -22,389
  -26,928
  -31,789
  -36,900
  -42,187
  -47,578
  -53,009
  -58,425
  -63,781
  -69,046
  -74,199
  -79,232
  -84,146
  -88,950
  -93,662
  -98,302
  -102,897
  -107,477
  -112,071
  -116,712
  -121,432
  -126,262
  -131,233
Prev. year cash balance distribution, $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 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
  -1,231
  -1,783
  -2,505
  -3,409
  -4,507
  -5,800
  -7,283
  -8,941
  -10,754
  -10,399
  -9,197
  -7,078
  -3,927
  354
  5,832
  12,554
  20,543
  29,801
  40,313
  52,052
  64,981
  79,059
  94,240
  110,479
  127,735
  145,970
  165,152
  185,256
  206,263
  228,164
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
  -1,151
  -1,547
  -2,004
  -2,496
  -2,996
  -3,471
  -3,888
  -4,217
  -4,435
  -3,709
  -2,804
  -1,822
  -842
  62
  832
  1,428
  1,832
  2,046
  2,093
  2,003
  1,816
  1,569
  1,299
  1,031
  787
  578
  409
  278
  182
  115
Current shareholders' claim on cash, %
  89.3
  82.2
  77.2
  73.8
  71.4
  69.7
  68.8
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3
  68.3

Continental Resources, Inc. is a crude oil and natural gas company with properties in the North, South and East regions of the United States. The North region consists of properties north of Kansas and west of the Mississippi River and includes North Dakota Bakken, Montana Bakken and the Red River units. The South region includes properties south of Nebraska and west of the Mississippi River including various plays in the South Central Oklahoma Oil Province (SCOOP), Sooner Trend Anadarko Canadian Kingfisher (STACK), and Arkoma Woodford areas of Oklahoma. The East region is consists of undeveloped leasehold acreage east of the Mississippi River with no drilling or production operations. As of December 31, 2016, its estimated proved reserves were 1,275 million barrels of oil equivalent (MMBoe), with estimated proved developed reserves of 519 MMBoe. As of December 31, 2016, its average daily production from South region properties was 91,088 barrels of oil equivalent (Boe) per day.

FINANCIAL RATIOS  of  Continental Resources (CLR)

Valuation Ratios
P/E Ratio -44.9
Price to Sales 9.1
Price to Book 4.2
Price to Tangible Book
Price to Cash Flow 16
Price to Free Cash Flow -460.9
Growth Rates
Sales Growth Rate -26.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -62.2%
Cap. Spend. - 3 Yr. Gr. Rate -20.8%
Financial Strength
Quick Ratio 9
Current Ratio 0
LT Debt to Equity 152.9%
Total Debt to Equity 153%
Interest Coverage -1
Management Effectiveness
Return On Assets -1.4%
Ret/ On Assets - 3 Yr. Avg. 2%
Return On Total Capital -3.5%
Ret/ On T. Cap. - 3 Yr. Avg. 1.1%
Return On Equity -8.9%
Return On Equity - 3 Yr. Avg. 1.9%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 70.4%
EBITDA Margin - 3 Yr. Avg. 64.5%
Operating Margin -15.9%
Oper. Margin - 3 Yr. Avg. 4.7%
Pre-Tax Margin -31.9%
Pre-Tax Margin - 3 Yr. Avg. -6.5%
Net Profit Margin -20.2%
Net Profit Margin - 3 Yr. Avg. -4.4%
Effective Tax Rate 36.7%
Eff/ Tax Rate - 3 Yr. Avg. 36%
Payout Ratio 0%

CLR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CLR stock intrinsic value calculation we used $3120.828 million for the last fiscal year's total revenue generated by Continental Resources. The default revenue input number comes from 0001 income statement of Continental Resources. 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 CLR stock valuation model: a) initial revenue growth rate of 60% 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 CLR is calculated based on our internal credit rating of Continental Resources, 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 Continental Resources.
    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 CLR stock the variable cost ratio is equal to 35.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1601 million in the base year in the intrinsic value calculation for CLR 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 5.4% for Continental Resources.

Corporate tax rate of 27% is the nominal tax rate for Continental Resources. 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 CLR 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 CLR are equal to 413.6%.

Life of production assets of 7.7 years is the average useful life of capital assets used in Continental Resources 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 CLR is equal to -3.9%. 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 - $5131.203 million for Continental Resources - 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 376.037 million for Continental Resources 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 Continental Resources at the current share price and the inputted number of shares is $18.0 billion.

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COMPANY NEWS

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▶ Continental Resources: 3Q Earnings Snapshot   [04:23PM  Associated Press]
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▶ Continental Resources: 2Q Earnings Snapshot   [04:45PM  Associated Press]
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