Intrinsic value of Energen - EGN

Previous Close

$54.55

  Intrinsic Value

$8.03

stock screener

  Rating & Target

str. sell

-85%

Previous close

$54.55

 
Intrinsic value

$8.03

 
Up/down potential

-85%

 
Rating

str. sell

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

We calculate the intrinsic value of EGN 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 2016), $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 5.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -39.36
  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
  0
  853
  1,318
  1,970
  2,859
  4,034
  5,545
  7,443
  9,774
  12,576
  15,885
  19,726
  24,116
  29,068
  34,586
  40,667
  47,305
  54,491
  62,214
  70,461
  79,219
  88,477
  98,225
  108,457
  119,166
  130,353
  142,017
  154,165
  166,804
  179,945
  193,604
Variable operating expenses, $m
 
  2,246
  3,470
  5,190
  7,531
  10,625
  14,606
  19,606
  25,744
  33,126
  41,841
  51,957
  63,523
  76,566
  91,099
  107,116
  124,601
  143,530
  163,872
  185,594
  208,662
  233,048
  258,725
  285,675
  313,884
  343,349
  374,073
  406,070
  439,361
  473,975
  509,953
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
  744
  2,246
  3,470
  5,190
  7,531
  10,625
  14,606
  19,606
  25,744
  33,126
  41,841
  51,957
  63,523
  76,566
  91,099
  107,116
  124,601
  143,530
  163,872
  185,594
  208,662
  233,048
  258,725
  285,675
  313,884
  343,349
  374,073
  406,070
  439,361
  473,975
  509,953
Operating income, $m
  -211
  -1,393
  -2,153
  -3,220
  -4,672
  -6,591
  -9,061
  -12,163
  -15,970
  -20,550
  -25,956
  -32,232
  -39,406
  -47,498
  -56,513
  -66,449
  -77,296
  -89,039
  -101,658
  -115,133
  -129,444
  -144,571
  -160,500
  -177,218
  -194,718
  -212,996
  -232,056
  -251,905
  -272,557
  -294,030
  -316,349
EBITDA, $m
  237
  -678
  -1,047
  -1,566
  -2,273
  -3,207
  -4,408
  -5,917
  -7,770
  -9,998
  -12,628
  -15,681
  -19,172
  -23,108
  -27,494
  -32,329
  -37,606
  -43,319
  -49,458
  -56,014
  -62,976
  -70,336
  -78,086
  -86,220
  -94,733
  -103,626
  -112,899
  -122,556
  -132,603
  -143,051
  -153,909
Interest expense (income), $m
  36
  28
  75
  143
  238
  367
  538
  757
  1,033
  1,372
  1,780
  2,261
  2,819
  3,458
  4,178
  4,980
  5,865
  6,830
  7,875
  8,998
  10,197
  11,471
  12,817
  14,235
  15,722
  17,280
  18,907
  20,603
  22,369
  24,207
  26,118
Earnings before tax, $m
  -247
  -1,422
  -2,228
  -3,362
  -4,909
  -6,958
  -9,599
  -12,920
  -17,004
  -21,922
  -27,736
  -34,493
  -42,226
  -50,956
  -60,691
  -71,429
  -83,161
  -95,869
  -109,533
  -124,131
  -139,641
  -156,042
  -173,317
  -191,453
  -210,440
  -230,276
  -250,963
  -272,508
  -294,926
  -318,237
  -342,467
Tax expense, $m
  -79
  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
  -168
  -1,422
  -2,228
  -3,362
  -4,909
  -6,958
  -9,599
  -12,920
  -17,004
  -21,922
  -27,736
  -34,493
  -42,226
  -50,956
  -60,691
  -71,429
  -83,161
  -95,869
  -109,533
  -124,131
  -139,641
  -156,042
  -173,317
  -191,453
  -210,440
  -230,276
  -250,963
  -272,508
  -294,926
  -318,237
  -342,467

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  386
  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
  4,580
  6,715
  10,375
  15,515
  22,512
  31,761
  43,664
  58,610
  76,958
  99,027
  125,079
  155,320
  189,893
  228,885
  272,328
  320,209
  372,480
  429,066
  489,875
  554,809
  623,770
  696,668
  773,427
  853,990
  938,318
  1,026,399
  1,118,246
  1,213,896
  1,313,414
  1,416,890
  1,524,440
Adjusted assets (=assets-cash), $m
  4,194
  6,715
  10,375
  15,515
  22,512
  31,761
  43,664
  58,610
  76,958
  99,027
  125,079
  155,320
  189,893
  228,885
  272,328
  320,209
  372,480
  429,066
  489,875
  554,809
  623,770
  696,668
  773,427
  853,990
  938,318
  1,026,399
  1,118,246
  1,213,896
  1,313,414
  1,416,890
  1,524,440
Revenue / Adjusted assets
  0.000
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
  0.127
Average production assets, $m
  4,159
  6,654
  10,281
  15,375
  22,309
  31,474
  43,270
  58,081
  76,264
  98,134
  123,951
  153,919
  188,180
  226,821
  269,872
  317,321
  369,121
  425,196
  485,457
  549,805
  618,144
  690,385
  766,452
  846,287
  929,855
  1,017,142
  1,108,160
  1,202,948
  1,301,568
  1,404,111
  1,510,691
Working capital, $m
  168
  -310
  -480
  -717
  -1,041
  -1,468
  -2,018
  -2,709
  -3,558
  -4,578
  -5,782
  -7,180
  -8,778
  -10,581
  -12,589
  -14,803
  -17,219
  -19,835
  -22,646
  -25,648
  -28,836
  -32,206
  -35,754
  -39,478
  -43,377
  -47,448
  -51,694
  -56,116
  -60,717
  -65,500
  -70,472
Total debt, $m
  551
  1,389
  2,640
  4,398
  6,791
  9,954
  14,025
  19,137
  25,412
  32,959
  41,869
  52,211
  64,035
  77,371
  92,228
  108,604
  126,480
  145,833
  166,629
  188,837
  212,421
  237,353
  263,604
  291,156
  319,997
  350,120
  381,532
  414,244
  448,280
  483,668
  520,451
Total liabilities, $m
  1,459
  2,297
  3,548
  5,306
  7,699
  10,862
  14,933
  20,045
  26,320
  33,867
  42,777
  53,119
  64,943
  78,279
  93,136
  109,512
  127,388
  146,741
  167,537
  189,745
  213,329
  238,261
  264,512
  292,064
  320,905
  351,028
  382,440
  415,152
  449,188
  484,576
  521,359
Total equity, $m
  3,121
  4,418
  6,826
  10,209
  14,813
  20,899
  28,731
  38,565
  50,639
  65,160
  82,302
  102,200
  124,950
  150,606
  179,192
  210,698
  245,092
  282,325
  322,338
  365,064
  410,441
  458,408
  508,915
  561,925
  617,413
  675,371
  735,806
  798,744
  864,226
  932,314
  1,003,082
Total liabilities and equity, $m
  4,580
  6,715
  10,374
  15,515
  22,512
  31,761
  43,664
  58,610
  76,959
  99,027
  125,079
  155,319
  189,893
  228,885
  272,328
  320,210
  372,480
  429,066
  489,875
  554,809
  623,770
  696,669
  773,427
  853,989
  938,318
  1,026,399
  1,118,246
  1,213,896
  1,313,414
  1,416,890
  1,524,441
Debt-to-equity ratio
  0.177
  0.310
  0.390
  0.430
  0.460
  0.480
  0.490
  0.500
  0.500
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
Adjusted equity ratio
  0.652
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -168
  -1,422
  -2,228
  -3,362
  -4,909
  -6,958
  -9,599
  -12,920
  -17,004
  -21,922
  -27,736
  -34,493
  -42,226
  -50,956
  -60,691
  -71,429
  -83,161
  -95,869
  -109,533
  -124,131
  -139,641
  -156,042
  -173,317
  -191,453
  -210,440
  -230,276
  -250,963
  -272,508
  -294,926
  -318,237
  -342,467
Depreciation, amort., depletion, $m
  448
  716
  1,105
  1,653
  2,399
  3,384
  4,653
  6,245
  8,200
  10,552
  13,328
  16,550
  20,234
  24,389
  29,018
  34,121
  39,690
  45,720
  52,200
  59,119
  66,467
  74,235
  82,414
  90,999
  99,984
  109,370
  119,157
  129,349
  139,954
  150,980
  162,440
Funds from operations, $m
  278
  -706
  -1,122
  -1,709
  -2,510
  -3,573
  -4,946
  -6,675
  -8,803
  -11,370
  -14,408
  -17,942
  -21,991
  -26,566
  -31,672
  -37,309
  -43,471
  -50,149
  -57,333
  -65,012
  -73,174
  -81,807
  -90,903
  -100,454
  -110,456
  -120,906
  -131,806
  -143,159
  -154,973
  -167,258
  -180,027
Change in working capital, $m
  -14
  -116
  -169
  -238
  -323
  -428
  -550
  -691
  -848
  -1,020
  -1,204
  -1,398
  -1,598
  -1,803
  -2,008
  -2,213
  -2,416
  -2,616
  -2,811
  -3,002
  -3,188
  -3,370
  -3,548
  -3,724
  -3,898
  -4,072
  -4,246
  -4,422
  -4,601
  -4,783
  -4,972
Cash from operations, $m
  292
  -590
  -953
  -1,471
  -2,187
  -3,146
  -4,396
  -5,984
  -7,955
  -10,350
  -13,204
  -16,544
  -20,393
  -24,764
  -29,664
  -35,095
  -41,054
  -47,533
  -54,522
  -62,010
  -69,986
  -78,437
  -87,355
  -96,730
  -106,558
  -116,834
  -127,560
  -138,737
  -150,372
  -162,474
  -175,055
Maintenance CAPEX, $m
  0
  -447
  -716
  -1,105
  -1,653
  -2,399
  -3,384
  -4,653
  -6,245
  -8,200
  -10,552
  -13,328
  -16,550
  -20,234
  -24,389
  -29,018
  -34,121
  -39,690
  -45,720
  -52,200
  -59,119
  -66,467
  -74,235
  -82,414
  -90,999
  -99,984
  -109,370
  -119,157
  -129,349
  -139,954
  -150,980
New CAPEX, $m
  -447
  -2,495
  -3,627
  -5,094
  -6,933
  -9,166
  -11,796
  -14,811
  -18,183
  -21,869
  -25,817
  -29,968
  -34,262
  -38,640
  -43,051
  -47,449
  -51,800
  -56,075
  -60,261
  -64,348
  -68,339
  -72,241
  -76,067
  -79,835
  -83,568
  -87,287
  -91,018
  -94,788
  -98,620
  -102,543
  -106,580
Cash from investing activities, $m
  -66
  -2,942
  -4,343
  -6,199
  -8,586
  -11,565
  -15,180
  -19,464
  -24,428
  -30,069
  -36,369
  -43,296
  -50,812
  -58,874
  -67,440
  -76,467
  -85,921
  -95,765
  -105,981
  -116,548
  -127,458
  -138,708
  -150,302
  -162,249
  -174,567
  -187,271
  -200,388
  -213,945
  -227,969
  -242,497
  -257,560
Free cash flow, $m
  226
  -3,533
  -5,295
  -7,671
  -10,774
  -14,710
  -19,576
  -25,447
  -32,383
  -40,420
  -49,573
  -59,840
  -71,205
  -83,639
  -97,105
  -111,563
  -126,974
  -143,299
  -160,503
  -178,558
  -197,444
  -217,145
  -237,656
  -258,980
  -281,124
  -304,105
  -327,948
  -352,682
  -378,342
  -404,971
  -432,615
Issuance/(repayment) of debt, $m
  -223
  862
  1,252
  1,758
  2,393
  3,163
  4,071
  5,111
  6,275
  7,547
  8,910
  10,342
  11,824
  13,335
  14,857
  16,375
  17,877
  19,352
  20,797
  22,207
  23,585
  24,931
  26,252
  27,552
  28,840
  30,124
  31,412
  32,712
  34,035
  35,389
  36,782
Issuance/(repurchase) of shares, $m
  381
  3,081
  4,636
  6,745
  9,513
  13,044
  17,431
  22,754
  29,077
  36,443
  44,878
  54,391
  64,975
  76,612
  89,276
  102,935
  117,555
  133,102
  149,545
  166,857
  185,017
  204,009
  223,825
  244,463
  265,928
  288,234
  311,398
  335,446
  360,409
  386,325
  413,235
Cash from financing (excl. dividends), $m  
  159
  3,943
  5,888
  8,503
  11,906
  16,207
  21,502
  27,865
  35,352
  43,990
  53,788
  64,733
  76,799
  89,947
  104,133
  119,310
  135,432
  152,454
  170,342
  189,064
  208,602
  228,940
  250,077
  272,015
  294,768
  318,358
  342,810
  368,158
  394,444
  421,714
  450,017
Total cash flow (excl. dividends), $m
  385
  410
  592
  832
  1,132
  1,497
  1,926
  2,418
  2,969
  3,571
  4,215
  4,893
  5,594
  6,309
  7,029
  7,747
  8,458
  9,156
  9,839
  10,507
  11,158
  11,795
  12,420
  13,035
  13,645
  14,252
  14,861
  15,477
  16,102
  16,743
  17,402
Retained Cash Flow (-), $m
  -225
  -3,081
  -4,636
  -6,745
  -9,513
  -13,044
  -17,431
  -22,754
  -29,077
  -36,443
  -44,878
  -54,391
  -64,975
  -76,612
  -89,276
  -102,935
  -117,555
  -133,102
  -149,545
  -166,857
  -185,017
  -204,009
  -223,825
  -244,463
  -265,928
  -288,234
  -311,398
  -335,446
  -360,409
  -386,325
  -413,235
Prev. year cash balance distribution, $m
 
  362
  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
 
  -2,309
  -4,044
  -5,913
  -8,381
  -11,547
  -15,505
  -20,336
  -26,108
  -32,872
  -40,663
  -49,498
  -59,381
  -70,303
  -82,247
  -95,188
  -109,098
  -123,946
  -139,706
  -156,351
  -173,859
  -192,214
  -211,405
  -231,427
  -252,284
  -273,982
  -296,537
  -319,969
  -344,307
  -369,582
  -395,833
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
 
  -2,214
  -3,702
  -5,146
  -6,901
  -8,950
  -11,252
  -13,739
  -16,318
  -18,883
  -21,318
  -23,506
  -25,340
  -26,731
  -27,612
  -27,946
  -27,724
  -26,969
  -25,728
  -24,074
  -22,092
  -19,881
  -17,541
  -15,168
  -12,849
  -10,658
  -8,651
  -6,867
  -5,327
  -4,034
  -2,980
Current shareholders' claim on cash, %
  100
  60.3
  37.3
  23.6
  15.2
  10.0
  6.7
  4.6
  3.2
  2.2
  1.6
  1.1
  0.8
  0.6
  0.5
  0.3
  0.3
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Energen Corporation is an oil and natural gas exploration and production company. The Company is engaged in the exploration, development and production of oil and natural gas properties and natural gas. Its operations are conducted through subsidiary, Energen Resources Corporation and occur within the Midland Basin, the Delaware Basin and the Central Basin Platform areas of the Permian Basin in west Texas and New Mexico. The Company is focused on increasing its oil, natural gas liquids and natural gas production and proved reserves through active development and/or exploratory programs in the Permian Basin. As of December 31, 2016, oil, natural gas liquids and natural gas represented approximately 60%, 20% and 20% of its reserves. As of December 31, 2016, its development activities added approximately 327 million barrels of oil equivalent (MMBOE) of reserves from the drilling of 623 gross development, exploratory and service wells and 73 well recompletions and pay-adds.

FINANCIAL RATIOS  of  Energen (EGN)

Valuation Ratios
P/E Ratio -31.5
Price to Sales 9.9
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 18.1
Price to Free Cash Flow -34.1
Growth Rates
Sales Growth Rate -39.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -61.3%
Cap. Spend. - 3 Yr. Gr. Rate -16.6%
Financial Strength
Quick Ratio 16
Current Ratio 0
LT Debt to Equity 16.9%
Total Debt to Equity 17.7%
Interest Coverage -6
Management Effectiveness
Return On Assets -3.1%
Ret/ On Assets - 3 Yr. Avg. -3.7%
Return On Total Capital -4.6%
Ret/ On T. Cap. - 3 Yr. Avg. -5.1%
Return On Equity -5.6%
Return On Equity - 3 Yr. Avg. -5.8%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 44.5%
EBITDA Margin - 3 Yr. Avg. -2.9%
Operating Margin -39.6%
Oper. Margin - 3 Yr. Avg. -64.2%
Pre-Tax Margin -46.3%
Pre-Tax Margin - 3 Yr. Avg. -68.8%
Net Profit Margin -31.5%
Net Profit Margin - 3 Yr. Avg. -35.1%
Effective Tax Rate 32%
Eff/ Tax Rate - 3 Yr. Avg. 32.2%
Payout Ratio 0%

EGN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EGN stock intrinsic value calculation we used $533 million for the last fiscal year's total revenue generated by Energen. The default revenue input number comes from 2016 income statement of Energen. 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 EGN 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 4.3%, whose default value for EGN is calculated based on our internal credit rating of Energen, 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 Energen.
    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 EGN stock the variable cost ratio is equal to 263.4%.

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 EGN 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 Energen.

Corporate tax rate of 27% is the nominal tax rate for Energen. 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 EGN 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 EGN are equal to 780.3%.

Life of production assets of 9.3 years is the average useful life of capital assets used in Energen 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 EGN is equal to -36.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $3121 million for Energen - 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 97.209 million for Energen 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 Energen at the current share price and the inputted number of shares is $5.3 billion.

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COMPANY NEWS

▶ ETFs with exposure to Energen Corp. : December 7, 2017   [Dec-07-17 01:35PM  Capital Cube]
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▶ How Lower US Gasoline Inventories Help Crude Oil Futures   [Nov-23-17 01:45PM  Market Realist]
▶ Venezuelas Crude Oil Production Is Vital for Oil Bulls   [Nov-22-17 09:14AM  Market Realist]
▶ US Distillate Inventories Are near a 3-Year Low   [Nov-16-17 08:52AM  Market Realist]
▶ US Dollar Could Pressure Crude Oil Futures This Week   [Nov-14-17 12:15PM  Market Realist]
▶ Energen reports 3Q loss   [06:13AM  Associated Press]
▶ What Analysts Recommend for Occidental Petroleum   [Oct-30-17 10:33AM  Market Realist]
▶ US Crude Oil Production Rebounds from a 4-Year Low   [Oct-26-17 10:49AM  Market Realist]
▶ US Crude Oil Production Is near 4-Year Low   [Oct-19-17 12:07PM  Market Realist]
▶ Why Energen (EGN) Stock Might be a Great Pick   [Oct-18-17 08:33AM  Zacks]
▶ ETFs with exposure to Energen Corp. : October 6, 2017   [Oct-06-17 10:48AM  Capital Cube]
▶ Why Crude Oil Prices Drive Marathon Oil Stock   [Sep-29-17 10:41AM  Market Realist]
▶ Energy M&A Weekly: More Midstream IPOs Expected in 2017   [Sep-18-17 08:23AM  TheStreet.com]
▶ ETFs with exposure to Energen Corp. : September 15, 2017   [Sep-15-17 05:28PM  Capital Cube]
▶ Energen to Present at Barclays CEO Energy-Power Conference   [Sep-01-17 10:48AM  Business Wire]
▶ Energen faces potential proxy fight with hedge fund   [Aug-18-17 01:55PM  American City Business Journals]
▶ Energen meets 2Q profit forecasts   [Aug-08-17 11:56PM  Associated Press]
▶ Energen Corp. Value Analysis (NYSE:EGN) : August 7, 2017   [Aug-07-17 05:36PM  Capital Cube]
▶ Why Crude Oil Prices Drive Marathon Oils Stock Price   [Jul-04-17 07:38AM  Market Realist]
▶ Corvex to Energen: The '70s Are So Over   [01:26PM  TheStreet.com]
▶ Underperforming Energy Sector May Soon See M&A Wave   [Jun-22-17 07:00PM  Oilprice.com]
▶ A Corvex Director Battle At Energen Could Be Next   [Jun-20-17 04:52PM  TheStreet.com]
▶ Energen sticks to plan amid pressure from Corvex   [Jun-19-17 05:55PM  Reuters]
▶ Marathon Oil Stock and How It Performed Last Week   [Jun-13-17 01:06PM  Market Realist]
▶ [$$] Corvex Sees Untapped Value in Energen   [Jun-10-17 12:58AM  Barrons.com]
▶ ETFs with exposure to Energen Corp. : May 31, 2017   [May-31-17 12:30PM  Capital Cube]
▶ These Stocks Are Changing Direction   [May-22-17 01:00PM  TheStreet.com]
▶ Energen to Present at UBS Global Oil and Gas Conference   [May-19-17 11:46AM  Business Wire]
▶ Energen misses 1Q profit forecasts   [May-04-17 05:04PM  Associated Press]
▶ Energen Corp. Value Analysis (NYSE:EGN) : April 27, 2017   [Apr-27-17 04:46PM  Capital Cube]
▶ This Is Why Crude Oil Prices Are Driving MROs Stock Price   [Apr-18-17 10:37AM  Market Realist]
▶ How Crude Oil Prices Moved Marathon Oils Stock Price   [Apr-17-17 01:20PM  Market Realist]
▶ Energen Schedules 1Q17 Conference Call for May 5, 2017   [Apr-10-17 05:17PM  Business Wire]
▶ Why Crude Oil Prices Impact ConocoPhillipss Stock Price   [Apr-05-17 07:36AM  Market Realist]
▶ UBS Says Buy the Energy Sector Pullback Now: 6 Top Picks   [Mar-31-17 10:05AM  24/7 Wall St.]
Financial statements of EGN
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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