Intrinsic value of Cabot Oil&Gas - COG

Previous Close

$23.60

  Intrinsic Value

$130.79

stock screener

  Rating & Target

str. buy

+454%

Previous close

$23.60

 
Intrinsic value

$130.79

 
Up/down potential

+454%

 
Rating

str. buy

We calculate the intrinsic value of COG 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 2017), $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 11.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  52.70
  47.93
  43.64
  39.77
  36.30
  33.17
  30.35
  27.81
  25.53
  23.48
  21.63
  19.97
  18.47
  17.12
  15.91
  14.82
  13.84
  12.96
  12.16
  11.44
  10.80
  10.22
  9.70
  9.23
  8.80
  8.42
  8.08
  7.77
  7.50
  7.25
Revenue, $m
  2,694
  3,985
  5,723
  8,000
  10,904
  14,520
  18,927
  24,191
  30,368
  37,498
  45,610
  54,717
  64,825
  75,926
  88,007
  101,051
  115,035
  129,938
  145,737
  162,415
  179,955
  198,345
  217,579
  237,656
  258,581
  280,365
  303,024
  326,581
  351,062
  376,503
Variable operating expenses, $m
  803
  1,187
  1,706
  2,384
  3,249
  4,327
  5,640
  7,209
  9,050
  11,174
  13,592
  16,306
  19,318
  22,626
  26,226
  30,113
  34,280
  38,721
  43,430
  48,400
  53,626
  59,107
  64,838
  70,822
  77,057
  83,549
  90,301
  97,321
  104,617
  112,198
Fixed operating expenses, $m
  1,435
  1,466
  1,499
  1,532
  1,565
  1,600
  1,635
  1,671
  1,708
  1,745
  1,784
  1,823
  1,863
  1,904
  1,946
  1,989
  2,033
  2,077
  2,123
  2,170
  2,217
  2,266
  2,316
  2,367
  2,419
  2,472
  2,527
  2,582
  2,639
  2,697
Total operating expenses, $m
  2,238
  2,653
  3,205
  3,916
  4,814
  5,927
  7,275
  8,880
  10,758
  12,919
  15,376
  18,129
  21,181
  24,530
  28,172
  32,102
  36,313
  40,798
  45,553
  50,570
  55,843
  61,373
  67,154
  73,189
  79,476
  86,021
  92,828
  99,903
  107,256
  114,895
Operating income, $m
  456
  1,331
  2,519
  4,084
  6,089
  8,593
  11,651
  15,311
  19,610
  24,578
  30,234
  36,589
  43,644
  51,396
  59,835
  68,949
  78,722
  89,139
  100,185
  111,846
  124,111
  136,972
  150,424
  164,468
  179,105
  194,344
  210,196
  226,677
  243,807
  261,608
EBITDA, $m
  1,015
  2,158
  3,707
  5,744
  8,351
  11,606
  15,579
  20,331
  25,912
  32,359
  39,698
  47,942
  57,095
  67,150
  78,096
  89,917
  102,592
  116,101
  130,425
  145,547
  161,451
  178,128
  195,572
  213,781
  232,761
  252,520
  273,074
  294,443
  316,652
  339,732
Interest expense (income), $m
  87
  84
  147
  234
  351
  505
  700
  944
  1,242
  1,597
  2,014
  2,495
  3,042
  3,656
  4,338
  5,087
  5,902
  6,782
  7,726
  8,731
  9,797
  10,922
  12,105
  13,346
  14,644
  15,998
  17,410
  18,879
  20,408
  21,997
  23,649
Earnings before tax, $m
  372
  1,184
  2,285
  3,733
  5,584
  7,893
  10,707
  14,069
  18,014
  22,565
  27,740
  33,547
  39,988
  47,058
  54,748
  63,047
  71,940
  81,413
  91,454
  102,049
  113,189
  124,867
  137,078
  149,824
  163,107
  176,934
  191,317
  206,269
  221,809
  237,959
Tax expense, $m
  100
  320
  617
  1,008
  1,508
  2,131
  2,891
  3,799
  4,864
  6,092
  7,490
  9,058
  10,797
  12,706
  14,782
  17,023
  19,424
  21,982
  24,693
  27,553
  30,561
  33,714
  37,011
  40,453
  44,039
  47,772
  51,656
  55,693
  59,889
  64,249
Net income, $m
  272
  864
  1,668
  2,725
  4,077
  5,762
  7,816
  10,271
  13,150
  16,472
  20,250
  24,489
  29,191
  34,352
  39,966
  46,024
  52,516
  59,432
  66,761
  74,496
  82,628
  91,153
  100,067
  109,372
  119,068
  129,162
  139,661
  150,577
  161,921
  173,710

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
  7,222
  10,683
  15,344
  21,447
  29,232
  38,927
  50,742
  64,855
  81,415
  100,531
  122,278
  146,695
  173,792
  203,554
  235,944
  270,913
  308,405
  348,358
  390,717
  435,429
  482,452
  531,755
  583,321
  637,148
  693,248
  751,650
  812,398
  875,551
  941,186
  1,009,391
Adjusted assets (=assets-cash), $m
  7,222
  10,683
  15,344
  21,447
  29,232
  38,927
  50,742
  64,855
  81,415
  100,531
  122,278
  146,695
  173,792
  203,554
  235,944
  270,913
  308,405
  348,358
  390,717
  435,429
  482,452
  531,755
  583,321
  637,148
  693,248
  751,650
  812,398
  875,551
  941,186
  1,009,391
Revenue / Adjusted assets
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
Average production assets, $m
  5,589
  8,268
  11,876
  16,600
  22,625
  30,129
  39,273
  50,196
  63,013
  77,808
  94,640
  113,538
  134,511
  157,546
  182,615
  209,680
  238,697
  269,621
  302,405
  337,011
  373,406
  411,565
  451,476
  493,137
  536,557
  581,758
  628,775
  677,655
  728,454
  781,243
Working capital, $m
  -350
  -518
  -744
  -1,040
  -1,417
  -1,888
  -2,460
  -3,145
  -3,948
  -4,875
  -5,929
  -7,113
  -8,427
  -9,870
  -11,441
  -13,137
  -14,955
  -16,892
  -18,946
  -21,114
  -23,394
  -25,785
  -28,285
  -30,895
  -33,616
  -36,447
  -39,393
  -42,455
  -45,638
  -48,945
Total debt, $m
  2,714
  4,327
  6,500
  9,344
  12,971
  17,489
  22,995
  29,572
  37,288
  46,197
  56,331
  67,709
  80,336
  94,205
  109,299
  125,595
  143,066
  161,684
  181,423
  202,259
  224,172
  247,147
  271,177
  296,260
  322,403
  349,618
  377,926
  407,356
  437,942
  469,725
Total liabilities, $m
  3,365
  4,978
  7,151
  9,995
  13,622
  18,140
  23,646
  30,222
  37,939
  46,847
  56,981
  68,360
  80,987
  94,856
  109,950
  126,246
  143,717
  162,335
  182,074
  202,910
  224,823
  247,798
  271,828
  296,911
  323,054
  350,269
  378,577
  408,007
  438,593
  470,376
Total equity, $m
  3,856
  5,705
  8,194
  11,453
  15,610
  20,787
  27,096
  34,633
  43,475
  53,684
  65,296
  78,335
  92,805
  108,698
  125,994
  144,668
  164,688
  186,023
  208,643
  232,519
  257,629
  283,957
  311,494
  340,237
  370,194
  401,381
  433,820
  467,544
  502,593
  539,015
Total liabilities and equity, $m
  7,221
  10,683
  15,345
  21,448
  29,232
  38,927
  50,742
  64,855
  81,414
  100,531
  122,277
  146,695
  173,792
  203,554
  235,944
  270,914
  308,405
  348,358
  390,717
  435,429
  482,452
  531,755
  583,322
  637,148
  693,248
  751,650
  812,397
  875,551
  941,186
  1,009,391
Debt-to-equity ratio
  0.700
  0.760
  0.790
  0.820
  0.830
  0.840
  0.850
  0.850
  0.860
  0.860
  0.860
  0.860
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
Adjusted equity ratio
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  272
  864
  1,668
  2,725
  4,077
  5,762
  7,816
  10,271
  13,150
  16,472
  20,250
  24,489
  29,191
  34,352
  39,966
  46,024
  52,516
  59,432
  66,761
  74,496
  82,628
  91,153
  100,067
  109,372
  119,068
  129,162
  139,661
  150,577
  161,921
  173,710
Depreciation, amort., depletion, $m
  559
  827
  1,188
  1,660
  2,262
  3,013
  3,927
  5,020
  6,301
  7,781
  9,464
  11,354
  13,451
  15,755
  18,261
  20,968
  23,870
  26,962
  30,241
  33,701
  37,341
  41,157
  45,148
  49,314
  53,656
  58,176
  62,878
  67,765
  72,845
  78,124
Funds from operations, $m
  831
  1,691
  2,856
  4,385
  6,339
  8,775
  11,743
  15,290
  19,451
  24,253
  29,714
  35,843
  42,642
  50,107
  58,227
  66,992
  76,386
  86,394
  97,002
  108,197
  119,968
  132,309
  145,215
  158,685
  172,724
  187,338
  202,539
  218,342
  234,766
  251,834
Change in working capital, $m
  -121
  -168
  -226
  -296
  -377
  -470
  -573
  -684
  -803
  -927
  -1,055
  -1,184
  -1,314
  -1,443
  -1,571
  -1,696
  -1,818
  -1,937
  -2,054
  -2,168
  -2,280
  -2,391
  -2,500
  -2,610
  -2,720
  -2,832
  -2,946
  -3,062
  -3,183
  -3,307
Cash from operations, $m
  951
  1,859
  3,082
  4,681
  6,717
  9,245
  12,316
  15,975
  20,254
  25,180
  30,768
  37,027
  43,956
  51,550
  59,798
  68,688
  78,204
  88,331
  99,056
  110,365
  122,248
  134,700
  147,715
  161,295
  175,444
  190,170
  205,485
  221,404
  237,949
  255,142
Maintenance CAPEX, $m
  -366
  -559
  -827
  -1,188
  -1,660
  -2,262
  -3,013
  -3,927
  -5,020
  -6,301
  -7,781
  -9,464
  -11,354
  -13,451
  -15,755
  -18,261
  -20,968
  -23,870
  -26,962
  -30,241
  -33,701
  -37,341
  -41,157
  -45,148
  -49,314
  -53,656
  -58,176
  -62,878
  -67,765
  -72,845
New CAPEX, $m
  -1,928
  -2,679
  -3,608
  -4,724
  -6,025
  -7,504
  -9,144
  -10,924
  -12,817
  -14,795
  -16,831
  -18,898
  -20,973
  -23,035
  -25,069
  -27,065
  -29,017
  -30,923
  -32,785
  -34,606
  -36,395
  -38,159
  -39,911
  -41,661
  -43,420
  -45,202
  -47,017
  -48,879
  -50,799
  -52,789
Cash from investing activities, $m
  -2,294
  -3,238
  -4,435
  -5,912
  -7,685
  -9,766
  -12,157
  -14,851
  -17,837
  -21,096
  -24,612
  -28,362
  -32,327
  -36,486
  -40,824
  -45,326
  -49,985
  -54,793
  -59,747
  -64,847
  -70,096
  -75,500
  -81,068
  -86,809
  -92,734
  -98,858
  -105,193
  -111,757
  -118,564
  -125,634
Free cash flow, $m
  -1,343
  -1,379
  -1,353
  -1,230
  -969
  -522
  159
  1,124
  2,418
  4,083
  6,156
  8,665
  11,629
  15,064
  18,974
  23,361
  28,218
  33,538
  39,309
  45,518
  52,153
  59,200
  66,648
  74,487
  82,711
  91,313
  100,292
  109,648
  119,384
  129,507
Issuance/(repayment) of debt, $m
  1,162
  1,613
  2,172
  2,844
  3,628
  4,518
  5,505
  6,577
  7,717
  8,908
  10,134
  11,378
  12,627
  13,869
  15,094
  16,296
  17,471
  18,618
  19,739
  20,836
  21,913
  22,975
  24,030
  25,083
  26,143
  27,215
  28,308
  29,430
  30,586
  31,784
Issuance/(repurchase) of shares, $m
  1,061
  984
  821
  534
  80
  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  
  2,223
  2,597
  2,993
  3,378
  3,708
  4,518
  5,505
  6,577
  7,717
  8,908
  10,134
  11,378
  12,627
  13,869
  15,094
  16,296
  17,471
  18,618
  19,739
  20,836
  21,913
  22,975
  24,030
  25,083
  26,143
  27,215
  28,308
  29,430
  30,586
  31,784
Total cash flow (excl. dividends), $m
  880
  1,218
  1,640
  2,148
  2,739
  3,996
  5,665
  7,701
  10,135
  12,991
  16,290
  20,043
  24,257
  28,933
  34,068
  39,657
  45,689
  52,157
  59,048
  66,354
  74,066
  82,175
  90,678
  99,570
  108,853
  118,528
  128,600
  139,077
  149,970
  161,291
Retained Cash Flow (-), $m
  -1,332
  -1,848
  -2,489
  -3,259
  -4,157
  -5,177
  -6,309
  -7,537
  -8,843
  -10,208
  -11,613
  -13,039
  -14,470
  -15,893
  -17,296
  -18,674
  -20,020
  -21,335
  -22,620
  -23,876
  -25,110
  -26,328
  -27,536
  -28,743
  -29,957
  -31,187
  -32,439
  -33,724
  -35,049
  -36,422
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
  34
  51
  76
  109
  152
  207
  276
  360
  460
  577
  712
  867
  1,040
  1,232
  1,443
  1,672
  1,920
  2,186
  2,469
  2,769
  3,086
  3,419
  3,769
  4,134
  4,515
  4,913
  5,327
  5,757
  6,205
  6,670
Cash available for distribution, $m
  -453
  -630
  -849
  -1,111
  -1,417
  -1,181
  -644
  164
  1,292
  2,783
  4,677
  7,004
  9,787
  13,040
  16,772
  20,983
  25,669
  30,821
  36,429
  42,478
  48,955
  55,847
  63,141
  70,827
  78,896
  87,341
  96,161
  105,353
  114,921
  124,869
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  -434
  -577
  -739
  -915
  -1,099
  -857
  -435
  103
  742
  1,459
  2,221
  2,989
  3,721
  4,378
  4,924
  5,332
  5,585
  5,676
  5,609
  5,398
  5,064
  4,634
  4,138
  3,607
  3,069
  2,548
  2,064
  1,630
  1,254
  940
Current shareholders' claim on cash, %
  91.2
  86.1
  83.3
  82.1
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0

Cabot Oil & Gas Corporation is an independent oil and gas company engaged in the development, exploitation and exploration of oil and gas properties. The Company operates in the segment of natural gas and oil development, exploitation, exploration and production, in the continental United States. Its assets are concentrated in areas with known hydrocarbon resources, which are conducive to multi-well, repeatable drilling programs. As of December 31, 2016, its exploration, development and production operations were primarily concentrated in two unconventional plays: the Marcellus Shale in northeast Pennsylvania and the Eagle Ford Shale in south Texas. The Company also has operations in various other unconventional and conventional plays throughout the continental United States. Its Marcellus Shale properties are principally located in Susquehanna County, Pennsylvania. Its properties in the Eagle Ford Shale are principally located in Atascosa, Frio and La Salle Counties, Texas.

FINANCIAL RATIOS  of  Cabot Oil&Gas (COG)

Valuation Ratios
P/E Ratio -26.3
Price to Sales 9.5
Price to Book 4.3
Price to Tangible Book
Price to Cash Flow 28
Price to Free Cash Flow 645.7
Growth Rates
Sales Growth Rate -14.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -60.8%
Cap. Spend. - 3 Yr. Gr. Rate -20.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 59.2%
Total Debt to Equity 59.2%
Interest Coverage -7
Management Effectiveness
Return On Assets -7%
Ret/ On Assets - 3 Yr. Avg. -1.2%
Return On Total Capital -10.3%
Ret/ On T. Cap. - 3 Yr. Avg. -3.4%
Return On Equity -18.2%
Return On Equity - 3 Yr. Avg. -6.3%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 1.6%
Gross Margin - 3 Yr. Avg. 19.9%
EBITDA Margin 1.5%
EBITDA Margin - 3 Yr. Avg. 22.3%
Operating Margin -49.4%
Oper. Margin - 3 Yr. Avg. -17.1%
Pre-Tax Margin -57.1%
Pre-Tax Margin - 3 Yr. Avg. -23.1%
Net Profit Margin -36.1%
Net Profit Margin - 3 Yr. Avg. -13.2%
Effective Tax Rate 36.8%
Eff/ Tax Rate - 3 Yr. Avg. -49.7%
Payout Ratio -8.6%

COG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the COG stock intrinsic value calculation we used $1764 million for the last fiscal year's total revenue generated by Cabot Oil&Gas. The default revenue input number comes from 2017 income statement of Cabot Oil&Gas. 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 COG stock valuation model: a) initial revenue growth rate of 52.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for COG is calculated based on our internal credit rating of Cabot Oil&Gas, 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 Cabot Oil&Gas.
    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 COG stock the variable cost ratio is equal to 29.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1404 million in the base year in the intrinsic value calculation for COG 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 Cabot Oil&Gas.

Corporate tax rate of 27% is the nominal tax rate for Cabot Oil&Gas. 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 COG stock is equal to 1.9%.

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 COG are equal to 207.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Cabot Oil&Gas 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 COG is equal to -13%. 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 - $2524 million for Cabot Oil&Gas - 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 464 million for Cabot Oil&Gas 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 Cabot Oil&Gas at the current share price and the inputted number of shares is $11.0 billion.

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COMPANY NEWS

▶ Cabot Oil & Gas Corporation Declares Dividend   [Jul-26-18 11:35AM  PR Newswire]
▶ Top 4 Natural Gas Stocks as of July 2018   [Jul-22-18 10:15PM  Investopedia]
▶ The 3 Worst Energy Stocks of 2018 (So Far)   [Jul-09-18 10:19AM  Motley Fool]
▶ Venado Oil and Gas expands Eagle Ford presence   [Jul-06-18 02:28PM  American City Business Journals]
▶ Spotlight On Cognor Holding SAs (WSE:COG) Fundamentals   [Jun-26-18 04:47AM  Simply Wall St.]
▶ [$$] Side Effect of Rising Oil Drilling: Indigestion for Gas Frackers   [Jun-14-18 08:58PM  The Wall Street Journal]
▶ [$$] Side Effect of Rising Oil Drilling: Indigestion for Gas Frackers   [Jun-13-18 01:18PM  The Wall Street Journal]
▶ Top Growth Stocks To Buy   [Jun-01-18 12:02PM  Simply Wall St.]
▶ 9 Energy Stocks With 15% Upside: Goldman   [May-04-18 08:00AM  Investopedia]
▶ Cabot Oil & Gas Corporation Declares Dividend   [May-02-18 04:05PM  PR Newswire]
▶ Top 3 Growth Stocks For The Month   [May-01-18 12:02PM  Simply Wall St.]
▶ Cabot: 1Q Earnings Snapshot   [06:42AM  Associated Press]
▶ Four Earnings Due From Hot Energy Sector, Including These 2 Dow Jones Giants   [Apr-26-18 04:09PM  Investor's Business Daily]
▶ New Strong Sell Stocks for April 19th   [Apr-19-18 06:44AM  Zacks]
▶ Cognor Holding SA. (WSE:COG): What Does The Future Look Like?   [Apr-03-18 09:15AM  Simply Wall St.]
▶ KKR, Venado Oil & Gas Team Up for Eagle Ford Expansion   [Mar-20-18 08:35AM  Bloomberg Video]
▶ Oil company-investment firm partnership closes on $765M Eagle Ford deal   [04:57PM  American City Business Journals]
▶ Cabot reports 4Q loss   [06:57AM  Associated Press]
▶ What you need to know in markets on Friday   [Feb-22-18 06:13PM  Yahoo Finance]
▶ 2 Bargain Stocks You Can Buy Right Now   [Feb-20-18 11:04AM  Motley Fool]
▶ These 2 Energy Stocks Are Ridiculously Cheap   [Feb-11-18 02:50PM  Motley Fool]
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