Intrinsic value of Carrizo Oil&Gas - CRZO

Previous Close

$28.93

  Intrinsic Value

$1.27

stock screener

  Rating & Target

str. sell

-96%

Previous close

$28.93

 
Intrinsic value

$1.27

 
Up/down potential

-96%

 
Rating

str. sell

We calculate the intrinsic value of CRZO 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 2.1

 

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, %
  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
  1,194
  1,844
  2,758
  4,002
  5,646
  7,761
  10,418
  13,680
  17,602
  22,233
  27,608
  33,754
  40,685
  48,407
  56,918
  66,209
  76,267
  87,076
  98,619
  110,877
  123,834
  137,479
  151,799
  166,788
  182,445
  198,771
  215,773
  233,462
  251,856
  270,973
Variable operating expenses, $m
  2,798
  4,323
  6,464
  9,380
  13,233
  18,193
  24,420
  32,065
  41,260
  52,114
  64,714
  79,119
  95,365
  113,466
  133,416
  155,194
  178,771
  204,107
  231,162
  259,895
  290,268
  322,250
  355,816
  390,951
  427,651
  465,919
  505,772
  547,236
  590,349
  635,160
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  2,798
  4,323
  6,464
  9,380
  13,233
  18,193
  24,420
  32,065
  41,260
  52,114
  64,714
  79,119
  95,365
  113,466
  133,416
  155,194
  178,771
  204,107
  231,162
  259,895
  290,268
  322,250
  355,816
  390,951
  427,651
  465,919
  505,772
  547,236
  590,349
  635,160
Operating income, $m
  -1,604
  -2,478
  -3,707
  -5,378
  -7,588
  -10,431
  -14,002
  -18,385
  -23,657
  -29,881
  -37,106
  -45,365
  -54,680
  -65,059
  -76,498
  -88,985
  -102,503
  -117,031
  -132,543
  -149,018
  -166,433
  -184,771
  -204,017
  -224,163
  -245,206
  -267,148
  -289,999
  -313,773
  -338,494
  -364,187
EBITDA, $m
  -1,270
  -1,962
  -2,934
  -4,256
  -6,005
  -8,256
  -11,082
  -14,551
  -18,723
  -23,649
  -29,367
  -35,904
  -43,276
  -51,490
  -60,544
  -70,427
  -81,126
  -92,623
  -104,901
  -117,939
  -131,723
  -146,236
  -161,468
  -177,413
  -194,067
  -211,432
  -229,518
  -248,334
  -267,899
  -288,234
Interest expense (income), $m
  75
  90
  170
  285
  448
  669
  962
  1,338
  1,811
  2,391
  3,089
  3,913
  4,870
  5,963
  7,196
  8,570
  10,085
  11,738
  13,527
  15,451
  17,504
  19,685
  21,991
  24,419
  26,967
  29,634
  32,419
  35,324
  38,349
  41,497
  44,770
Earnings before tax, $m
  -1,694
  -2,648
  -3,992
  -5,826
  -8,257
  -11,393
  -15,340
  -20,196
  -26,049
  -32,970
  -41,019
  -50,235
  -60,643
  -72,255
  -85,068
  -99,070
  -114,241
  -130,558
  -147,994
  -166,522
  -186,119
  -206,762
  -228,436
  -251,130
  -274,840
  -299,567
  -325,323
  -352,123
  -379,991
  -408,957
Tax expense, $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
Net income, $m
  -1,694
  -2,648
  -3,992
  -5,826
  -8,257
  -11,393
  -15,340
  -20,196
  -26,049
  -32,970
  -41,019
  -50,235
  -60,643
  -72,255
  -85,068
  -99,070
  -114,241
  -130,558
  -147,994
  -166,522
  -186,119
  -206,762
  -228,436
  -251,130
  -274,840
  -299,567
  -325,323
  -352,123
  -379,991
  -408,957

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
  4,454
  6,881
  10,291
  14,931
  21,066
  28,960
  38,873
  51,043
  65,680
  82,959
  103,016
  125,947
  151,809
  180,623
  212,380
  247,049
  284,580
  324,912
  367,980
  413,719
  462,069
  512,980
  566,413
  622,344
  680,764
  741,682
  805,123
  871,128
  939,759
  1,011,093
Adjusted assets (=assets-cash), $m
  4,454
  6,881
  10,291
  14,931
  21,066
  28,960
  38,873
  51,043
  65,680
  82,959
  103,016
  125,947
  151,809
  180,623
  212,380
  247,049
  284,580
  324,912
  367,980
  413,719
  462,069
  512,980
  566,413
  622,344
  680,764
  741,682
  805,123
  871,128
  939,759
  1,011,093
Revenue / Adjusted assets
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
Average production assets, $m
  3,346
  5,169
  7,730
  11,216
  15,825
  21,755
  29,202
  38,344
  49,339
  62,319
  77,386
  94,612
  114,040
  135,685
  159,541
  185,584
  213,778
  244,075
  276,428
  310,787
  347,108
  385,352
  425,492
  467,507
  511,393
  557,155
  604,811
  654,395
  705,951
  759,537
Working capital, $m
  -203
  -313
  -469
  -680
  -960
  -1,319
  -1,771
  -2,326
  -2,992
  -3,780
  -4,693
  -5,738
  -6,916
  -8,229
  -9,676
  -11,256
  -12,965
  -14,803
  -16,765
  -18,849
  -21,052
  -23,371
  -25,806
  -28,354
  -31,016
  -33,791
  -36,681
  -39,689
  -42,815
  -46,065
Total debt, $m
  3,083
  5,188
  8,144
  12,167
  17,486
  24,331
  32,925
  43,476
  56,166
  71,147
  88,537
  108,418
  130,840
  155,822
  183,356
  213,414
  245,953
  280,921
  318,260
  357,916
  399,835
  443,975
  490,302
  538,794
  589,445
  642,260
  697,263
  754,490
  813,993
  875,839
Total liabilities, $m
  3,861
  5,966
  8,922
  12,945
  18,264
  25,109
  33,703
  44,254
  56,945
  71,926
  89,315
  109,196
  131,618
  156,600
  184,134
  214,192
  246,731
  281,699
  319,039
  358,694
  400,614
  444,753
  491,080
  539,572
  590,223
  643,038
  698,041
  755,268
  814,771
  876,617
Total equity, $m
  592
  915
  1,369
  1,986
  2,802
  3,852
  5,170
  6,789
  8,735
  11,034
  13,701
  16,751
  20,191
  24,023
  28,247
  32,858
  37,849
  43,213
  48,941
  55,025
  61,455
  68,226
  75,333
  82,772
  90,542
  98,644
  107,081
  115,860
  124,988
  134,475
Total liabilities and equity, $m
  4,453
  6,881
  10,291
  14,931
  21,066
  28,961
  38,873
  51,043
  65,680
  82,960
  103,016
  125,947
  151,809
  180,623
  212,381
  247,050
  284,580
  324,912
  367,980
  413,719
  462,069
  512,979
  566,413
  622,344
  680,765
  741,682
  805,122
  871,128
  939,759
  1,011,092
Debt-to-equity ratio
  5.210
  5.670
  5.950
  6.130
  6.240
  6.320
  6.370
  6.400
  6.430
  6.450
  6.460
  6.470
  6.480
  6.490
  6.490
  6.500
  6.500
  6.500
  6.500
  6.500
  6.510
  6.510
  6.510
  6.510
  6.510
  6.510
  6.510
  6.510
  6.510
  6.510
Adjusted equity ratio
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133
  0.133

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,694
  -2,648
  -3,992
  -5,826
  -8,257
  -11,393
  -15,340
  -20,196
  -26,049
  -32,970
  -41,019
  -50,235
  -60,643
  -72,255
  -85,068
  -99,070
  -114,241
  -130,558
  -147,994
  -166,522
  -186,119
  -206,762
  -228,436
  -251,130
  -274,840
  -299,567
  -325,323
  -352,123
  -379,991
  -408,957
Depreciation, amort., depletion, $m
  335
  517
  773
  1,122
  1,582
  2,176
  2,920
  3,834
  4,934
  6,232
  7,739
  9,461
  11,404
  13,568
  15,954
  18,558
  21,378
  24,408
  27,643
  31,079
  34,711
  38,535
  42,549
  46,751
  51,139
  55,715
  60,481
  65,440
  70,595
  75,954
Funds from operations, $m
  -1,359
  -2,131
  -3,219
  -4,704
  -6,674
  -9,217
  -12,420
  -16,362
  -21,115
  -26,738
  -33,280
  -40,774
  -49,239
  -58,687
  -69,114
  -80,511
  -92,863
  -106,151
  -120,351
  -135,444
  -151,408
  -168,227
  -185,887
  -204,379
  -223,700
  -243,852
  -264,842
  -286,683
  -309,396
  -333,003
Change in working capital, $m
  -76
  -111
  -155
  -211
  -279
  -360
  -452
  -554
  -667
  -787
  -914
  -1,045
  -1,178
  -1,313
  -1,447
  -1,580
  -1,710
  -1,838
  -1,962
  -2,084
  -2,203
  -2,320
  -2,434
  -2,548
  -2,662
  -2,775
  -2,890
  -3,007
  -3,127
  -3,250
Cash from operations, $m
  -1,283
  -2,021
  -3,064
  -4,493
  -6,395
  -8,858
  -11,968
  -15,807
  -20,448
  -25,951
  -32,366
  -39,729
  -48,061
  -57,374
  -67,667
  -78,932
  -91,154
  -104,313
  -118,389
  -133,360
  -149,205
  -165,907
  -183,452
  -201,831
  -221,039
  -241,077
  -261,952
  -283,676
  -306,269
  -329,753
Maintenance CAPEX, $m
  -209
  -335
  -517
  -773
  -1,122
  -1,582
  -2,176
  -2,920
  -3,834
  -4,934
  -6,232
  -7,739
  -9,461
  -11,404
  -13,568
  -15,954
  -18,558
  -21,378
  -24,408
  -27,643
  -31,079
  -34,711
  -38,535
  -42,549
  -46,751
  -51,139
  -55,715
  -60,481
  -65,440
  -70,595
New CAPEX, $m
  -1,255
  -1,823
  -2,561
  -3,486
  -4,608
  -5,931
  -7,447
  -9,142
  -10,995
  -12,980
  -15,067
  -17,226
  -19,427
  -21,645
  -23,856
  -26,043
  -28,193
  -30,298
  -32,353
  -34,359
  -36,321
  -38,244
  -40,139
  -42,016
  -43,886
  -45,762
  -47,657
  -49,584
  -51,556
  -53,586
Cash from investing activities, $m
  -1,464
  -2,158
  -3,078
  -4,259
  -5,730
  -7,513
  -9,623
  -12,062
  -14,829
  -17,914
  -21,299
  -24,965
  -28,888
  -33,049
  -37,424
  -41,997
  -46,751
  -51,676
  -56,761
  -62,002
  -67,400
  -72,955
  -78,674
  -84,565
  -90,637
  -96,901
  -103,372
  -110,065
  -116,996
  -124,181
Free cash flow, $m
  -2,747
  -4,179
  -6,142
  -8,752
  -12,125
  -16,371
  -21,590
  -27,870
  -35,278
  -43,865
  -53,665
  -64,693
  -76,950
  -90,423
  -105,092
  -120,929
  -137,905
  -155,988
  -175,149
  -195,362
  -216,605
  -238,863
  -262,127
  -286,396
  -311,675
  -337,977
  -365,324
  -393,741
  -423,264
  -453,934
Issuance/(repayment) of debt, $m
  1,454
  2,104
  2,956
  4,023
  5,319
  6,845
  8,594
  10,551
  12,690
  14,981
  17,390
  19,881
  22,422
  24,982
  27,534
  30,058
  32,539
  34,968
  37,340
  39,655
  41,920
  44,140
  46,327
  48,492
  50,650
  52,816
  55,003
  57,227
  59,503
  61,846
Issuance/(repurchase) of shares, $m
  1,915
  2,971
  4,445
  6,443
  9,073
  12,443
  16,658
  21,815
  27,995
  35,269
  43,686
  53,285
  64,083
  76,087
  89,292
  103,681
  119,233
  135,922
  153,722
  172,606
  192,549
  213,533
  235,543
  258,569
  282,609
  307,669
  333,761
  360,902
  389,119
  418,444
Cash from financing (excl. dividends), $m  
  3,369
  5,075
  7,401
  10,466
  14,392
  19,288
  25,252
  32,366
  40,685
  50,250
  61,076
  73,166
  86,505
  101,069
  116,826
  133,739
  151,772
  170,890
  191,062
  212,261
  234,469
  257,673
  281,870
  307,061
  333,259
  360,485
  388,764
  418,129
  448,622
  480,290
Total cash flow (excl. dividends), $m
  622
  897
  1,260
  1,715
  2,267
  2,917
  3,663
  4,496
  5,408
  6,384
  7,411
  8,472
  9,555
  10,646
  11,734
  12,809
  13,867
  14,902
  15,913
  16,899
  17,864
  18,810
  19,742
  20,665
  21,585
  22,508
  23,440
  24,388
  25,358
  26,356
Retained Cash Flow (-), $m
  -1,915
  -2,971
  -4,445
  -6,443
  -9,073
  -12,443
  -16,658
  -21,815
  -27,995
  -35,269
  -43,686
  -53,285
  -64,083
  -76,087
  -89,292
  -103,681
  -119,233
  -135,922
  -153,722
  -172,606
  -192,549
  -213,533
  -235,543
  -258,569
  -282,609
  -307,669
  -333,761
  -360,902
  -389,119
  -418,444
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
  14
  23
  35
  52
  76
  107
  147
  198
  260
  334
  422
  525
  641
  773
  920
  1,081
  1,258
  1,449
  1,654
  1,874
  2,107
  2,353
  2,612
  2,884
  3,169
  3,466
  3,777
  4,100
  4,436
  4,785
Cash available for distribution, $m
  -1,293
  -2,074
  -3,186
  -4,729
  -6,806
  -9,526
  -12,996
  -17,318
  -22,587
  -28,884
  -36,276
  -44,812
  -54,528
  -65,441
  -77,558
  -90,871
  -105,366
  -121,021
  -137,810
  -155,706
  -174,685
  -194,723
  -215,800
  -237,904
  -261,024
  -285,162
  -310,321
  -336,514
  -363,761
  -392,089
Discount rate, %
  9.80
  10.29
  10.80
  11.34
  11.91
  12.51
  13.13
  13.79
  14.48
  15.20
  15.96
  16.76
  17.60
  18.48
  19.40
  20.37
  21.39
  22.46
  23.58
  24.76
  26.00
  27.30
  28.67
  30.10
  31.61
  33.19
  34.85
  36.59
  38.42
  40.34
PV of cash for distribution, $m
  -1,178
  -1,705
  -2,342
  -3,076
  -3,877
  -4,697
  -5,479
  -6,161
  -6,689
  -7,015
  -7,114
  -6,979
  -6,628
  -6,093
  -5,425
  -4,677
  -3,904
  -3,154
  -2,466
  -1,864
  -1,362
  -962
  -655
  -430
  -272
  -166
  -97
  -54
  -29
  -15
Current shareholders' claim on cash, %
  52.4
  27.9
  15.0
  8.2
  4.6
  2.6
  1.5
  0.8
  0.5
  0.3
  0.2
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Carrizo Oil & Gas, Inc. is an energy company. The Company is engaged in the exploration, development and production of oil and gas from resource plays located in the United States. Its operations are focused in proven, producing oil and gas plays in the Eagle Ford Shale in South Texas, the Delaware Basin in West Texas, the Utica Shale in Ohio, the Niobrara Formation in Colorado, and the Marcellus Shale in Pennsylvania. As of December 31, 2016, the Company's proved reserves of 200 million barrels of oil equivalent (MMBoe) were 64% crude oil, 12% natural gas liquids (NGLs) and 24% natural gas. As of December 31, 2016, it operated approximately 94% of the wells in Eagle Ford in which it held an interest. As of December 31, 2016, it held an average interest of approximately 85% in these operated wells. As of December 31, 2016, it owned leases covering approximately 309,200 gross (179,179 net) acres in the Eagle Ford, Niobrara, Utica and the Delaware Basin areas.

FINANCIAL RATIOS  of  Carrizo Oil&Gas (CRZO)

Valuation Ratios
P/E Ratio -2.8
Price to Sales 4.2
Price to Book 81.9
Price to Tangible Book
Price to Cash Flow 6.9
Price to Free Cash Flow -9.1
Growth Rates
Sales Growth Rate 3.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -28.8%
Cap. Spend. - 3 Yr. Gr. Rate -9.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 5760.9%
Total Debt to Equity 5760.9%
Interest Coverage -8
Management Effectiveness
Return On Assets -33%
Ret/ On Assets - 3 Yr. Avg. -22.3%
Return On Total Capital -44.6%
Ret/ On T. Cap. - 3 Yr. Avg. -29.9%
Return On Equity -289.1%
Return On Equity - 3 Yr. Avg. -138.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 72.1%
Gross Margin - 3 Yr. Avg. 76.3%
EBITDA Margin -86.9%
EBITDA Margin - 3 Yr. Avg. -67.9%
Operating Margin -122.7%
Oper. Margin - 3 Yr. Avg. -133.8%
Pre-Tax Margin -152%
Pre-Tax Margin - 3 Yr. Avg. -135.2%
Net Profit Margin -152%
Net Profit Margin - 3 Yr. Avg. -129.8%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 15.8%
Payout Ratio 0%

CRZO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CRZO stock intrinsic value calculation we used $746 million for the last fiscal year's total revenue generated by Carrizo Oil&Gas. The default revenue input number comes from 2017 income statement of Carrizo 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 CRZO 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 9.8%, whose default value for CRZO is calculated based on our internal credit rating of Carrizo 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 Carrizo 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 CRZO stock the variable cost ratio is equal to 234.4%.

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

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.5% for Carrizo Oil&Gas.

Corporate tax rate of 27% is the nominal tax rate for Carrizo 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 CRZO 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 CRZO are equal to 280.3%.

Life of production assets of 10 years is the average useful life of capital assets used in Carrizo 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 CRZO is equal to -17%. 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 - $371 million for Carrizo 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 73 million for Carrizo 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 Carrizo Oil&Gas at the current share price and the inputted number of shares is $2.1 billion.

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COMPANY NEWS

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▶ Why Carrizo Oil & Gas Inc's Stock Is Soaring Today   [May-08-18 02:33PM  Motley Fool]
▶ Carrizo: 1Q Earnings Snapshot   [May-07-18 04:26PM  Associated Press]
▶ Why Oil Stocks Are Rocketing Today   [Apr-18-18 05:24PM  Motley Fool]
▶ Edited Transcript of CRZO presentation 7-Mar-17 4:35pm GMT   [01:26PM  Thomson Reuters StreetEvents]
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▶ What Drove Carrizo Oil & Gass Return on Equity Last Year?   [Jan-10-18 09:40AM  Market Realist]
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