Intrinsic value of Energen - EGN

Previous Close

$74.47

  Intrinsic Value

$8.86

stock screener

  Rating & Target

str. sell

-88%

Previous close

$74.47

 
Intrinsic value

$8.86

 
Up/down potential

-88%

 
Rating

str. sell

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 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 7.2

 

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
  1,538
  2,376
  3,553
  5,155
  7,273
  9,998
  13,421
  17,622
  22,675
  28,641
  35,565
  43,482
  52,410
  62,358
  73,322
  85,291
  98,248
  112,172
  127,041
  142,832
  159,524
  177,100
  195,548
  214,857
  235,026
  256,057
  277,959
  300,747
  324,441
  349,068
Variable operating expenses, $m
  429
  663
  991
  1,438
  2,029
  2,790
  3,744
  4,917
  6,326
  7,991
  9,923
  12,131
  14,622
  17,398
  20,457
  23,796
  27,411
  31,296
  35,444
  39,850
  44,507
  49,411
  54,558
  59,945
  65,572
  71,440
  77,551
  83,908
  90,519
  97,390
Fixed operating expenses, $m
  621
  635
  649
  663
  678
  693
  708
  724
  740
  756
  772
  789
  807
  825
  843
  861
  880
  900
  919
  940
  960
  981
  1,003
  1,025
  1,048
  1,071
  1,094
  1,118
  1,143
  1,168
Total operating expenses, $m
  1,050
  1,298
  1,640
  2,101
  2,707
  3,483
  4,452
  5,641
  7,066
  8,747
  10,695
  12,920
  15,429
  18,223
  21,300
  24,657
  28,291
  32,196
  36,363
  40,790
  45,467
  50,392
  55,561
  60,970
  66,620
  72,511
  78,645
  85,026
  91,662
  98,558
Operating income, $m
  487
  1,078
  1,912
  3,053
  4,566
  6,516
  8,968
  11,982
  15,609
  19,894
  24,870
  30,561
  36,981
  44,136
  52,022
  60,634
  69,957
  79,977
  90,677
  102,042
  114,057
  126,708
  139,987
  153,887
  168,406
  183,547
  199,315
  215,720
  232,779
  250,510
EBITDA, $m
  1,193
  2,168
  3,544
  5,420
  7,905
  11,106
  15,130
  20,072
  26,020
  33,043
  41,198
  50,524
  61,043
  72,764
  85,684
  99,791
  115,062
  131,475
  149,002
  167,616
  187,294
  208,015
  229,763
  252,528
  276,307
  301,103
  326,926
  353,793
  381,730
  410,767
Interest expense (income), $m
  36
  46
  98
  173
  278
  422
  612
  856
  1,163
  1,539
  1,992
  2,527
  3,147
  3,857
  4,657
  5,549
  6,531
  7,604
  8,765
  10,013
  11,346
  12,761
  14,257
  15,832
  17,486
  19,216
  21,024
  22,909
  24,872
  26,914
  29,037
Earnings before tax, $m
  441
  980
  1,740
  2,775
  4,144
  5,904
  8,112
  10,819
  14,070
  17,902
  22,343
  27,414
  33,124
  39,478
  46,474
  54,102
  62,353
  71,211
  80,664
  90,696
  101,296
  112,451
  124,155
  136,401
  149,190
  162,523
  176,406
  190,849
  205,865
  221,473
Tax expense, $m
  119
  265
  470
  749
  1,119
  1,594
  2,190
  2,921
  3,799
  4,834
  6,033
  7,402
  8,944
  10,659
  12,548
  14,608
  16,835
  19,227
  21,779
  24,488
  27,350
  30,362
  33,522
  36,828
  40,281
  43,881
  47,630
  51,529
  55,584
  59,798
Net income, $m
  322
  715
  1,270
  2,026
  3,025
  4,310
  5,922
  7,898
  10,271
  13,068
  16,311
  20,012
  24,181
  28,819
  33,926
  39,495
  45,517
  51,984
  58,885
  66,208
  73,946
  82,089
  90,633
  99,573
  108,909
  118,642
  128,776
  139,320
  150,282
  161,675

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
  8,050
  12,438
  18,601
  26,988
  38,077
  52,347
  70,265
  92,262
  118,719
  149,951
  186,206
  227,654
  274,400
  326,482
  383,884
  446,550
  514,388
  587,289
  665,135
  747,810
  835,204
  927,227
  1,023,809
  1,124,907
  1,230,503
  1,340,614
  1,455,285
  1,574,592
  1,698,645
  1,827,582
Adjusted assets (=assets-cash), $m
  8,050
  12,438
  18,601
  26,988
  38,077
  52,347
  70,265
  92,262
  118,719
  149,951
  186,206
  227,654
  274,400
  326,482
  383,884
  446,550
  514,388
  587,289
  665,135
  747,810
  835,204
  927,227
  1,023,809
  1,124,907
  1,230,503
  1,340,614
  1,455,285
  1,574,592
  1,698,645
  1,827,582
Revenue / Adjusted assets
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
  0.191
Average production assets, $m
  7,059
  10,906
  16,310
  23,666
  33,389
  45,902
  61,614
  80,903
  104,102
  131,489
  163,280
  199,626
  240,616
  286,285
  336,621
  391,571
  451,057
  514,983
  583,245
  655,740
  732,374
  813,068
  897,759
  986,409
  1,079,005
  1,175,559
  1,276,112
  1,380,730
  1,489,510
  1,602,572
Working capital, $m
  -186
  -287
  -430
  -624
  -880
  -1,210
  -1,624
  -2,132
  -2,744
  -3,466
  -4,303
  -5,261
  -6,342
  -7,545
  -8,872
  -10,320
  -11,888
  -13,573
  -15,372
  -17,283
  -19,302
  -21,429
  -23,661
  -25,998
  -28,438
  -30,983
  -33,633
  -36,390
  -39,257
  -42,237
Total debt, $m
  1,810
  3,201
  5,155
  7,814
  11,329
  15,852
  21,532
  28,505
  36,892
  46,793
  58,285
  71,425
  86,243
  102,753
  120,950
  140,815
  162,319
  185,429
  210,106
  236,314
  264,018
  293,189
  323,806
  355,854
  389,328
  424,233
  460,584
  498,404
  537,729
  578,602
Total liabilities, $m
  2,552
  3,943
  5,896
  8,555
  12,070
  16,594
  22,274
  29,247
  37,634
  47,535
  59,027
  72,166
  86,985
  103,495
  121,691
  141,556
  163,061
  186,171
  210,848
  237,056
  264,760
  293,931
  324,548
  356,595
  390,070
  424,975
  461,325
  499,146
  538,471
  579,344
Total equity, $m
  5,498
  8,495
  12,704
  18,433
  26,006
  35,753
  47,991
  63,015
  81,085
  102,417
  127,178
  155,488
  187,415
  222,987
  262,193
  304,993
  351,327
  401,118
  454,287
  510,754
  570,444
  633,296
  699,262
  768,311
  840,434
  915,639
  993,959
  1,075,447
  1,160,175
  1,248,239
Total liabilities and equity, $m
  8,050
  12,438
  18,600
  26,988
  38,076
  52,347
  70,265
  92,262
  118,719
  149,952
  186,205
  227,654
  274,400
  326,482
  383,884
  446,549
  514,388
  587,289
  665,135
  747,810
  835,204
  927,227
  1,023,810
  1,124,906
  1,230,504
  1,340,614
  1,455,284
  1,574,593
  1,698,646
  1,827,583
Debt-to-equity ratio
  0.330
  0.380
  0.410
  0.420
  0.440
  0.440
  0.450
  0.450
  0.450
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
Adjusted equity ratio
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683
  0.683

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  322
  715
  1,270
  2,026
  3,025
  4,310
  5,922
  7,898
  10,271
  13,068
  16,311
  20,012
  24,181
  28,819
  33,926
  39,495
  45,517
  51,984
  58,885
  66,208
  73,946
  82,089
  90,633
  99,573
  108,909
  118,642
  128,776
  139,320
  150,282
  161,675
Depreciation, amort., depletion, $m
  706
  1,091
  1,631
  2,367
  3,339
  4,590
  6,161
  8,090
  10,410
  13,149
  16,328
  19,963
  24,062
  28,629
  33,662
  39,157
  45,106
  51,498
  58,324
  65,574
  73,237
  81,307
  89,776
  98,641
  107,900
  117,556
  127,611
  138,073
  148,951
  160,257
Funds from operations, $m
  1,028
  1,806
  2,901
  4,392
  6,364
  8,900
  12,083
  15,988
  20,681
  26,217
  32,639
  39,975
  48,242
  57,448
  67,588
  78,652
  90,623
  103,483
  117,209
  131,782
  147,183
  163,396
  180,409
  198,214
  216,809
  236,198
  256,388
  277,393
  299,233
  321,932
Change in working capital, $m
  -70
  -101
  -142
  -194
  -256
  -330
  -414
  -508
  -611
  -722
  -838
  -958
  -1,080
  -1,204
  -1,327
  -1,448
  -1,568
  -1,685
  -1,799
  -1,911
  -2,020
  -2,127
  -2,232
  -2,336
  -2,440
  -2,545
  -2,650
  -2,757
  -2,867
  -2,980
Cash from operations, $m
  1,098
  1,907
  3,043
  4,586
  6,620
  9,230
  12,497
  16,497
  21,293
  26,939
  33,476
  40,932
  49,323
  58,651
  68,915
  80,100
  92,191
  105,167
  119,008
  133,693
  149,203
  165,523
  182,641
  200,550
  219,250
  238,742
  259,038
  280,150
  302,100
  324,912
Maintenance CAPEX, $m
  -441
  -706
  -1,091
  -1,631
  -2,367
  -3,339
  -4,590
  -6,161
  -8,090
  -10,410
  -13,149
  -16,328
  -19,963
  -24,062
  -28,629
  -33,662
  -39,157
  -45,106
  -51,498
  -58,324
  -65,574
  -73,237
  -81,307
  -89,776
  -98,641
  -107,900
  -117,556
  -127,611
  -138,073
  -148,951
New CAPEX, $m
  -2,647
  -3,847
  -5,404
  -7,355
  -9,723
  -12,513
  -15,712
  -19,289
  -23,199
  -27,387
  -31,791
  -36,345
  -40,990
  -45,670
  -50,335
  -54,950
  -59,486
  -63,926
  -68,262
  -72,495
  -76,634
  -80,693
  -84,691
  -88,650
  -92,596
  -96,554
  -100,553
  -104,619
  -108,780
  -113,062
Cash from investing activities, $m
  -3,088
  -4,553
  -6,495
  -8,986
  -12,090
  -15,852
  -20,302
  -25,450
  -31,289
  -37,797
  -44,940
  -52,673
  -60,953
  -69,732
  -78,964
  -88,612
  -98,643
  -109,032
  -119,760
  -130,819
  -142,208
  -153,930
  -165,998
  -178,426
  -191,237
  -204,454
  -218,109
  -232,230
  -246,853
  -262,013
Free cash flow, $m
  -1,990
  -2,646
  -3,451
  -4,400
  -5,470
  -6,622
  -7,805
  -8,954
  -9,997
  -10,858
  -11,463
  -11,741
  -11,630
  -11,080
  -10,049
  -8,512
  -6,452
  -3,864
  -752
  2,873
  6,995
  11,592
  16,643
  22,124
  28,013
  34,288
  40,929
  47,920
  55,247
  62,899
Issuance/(repayment) of debt, $m
  956
  1,391
  1,954
  2,659
  3,515
  4,524
  5,680
  6,973
  8,387
  9,901
  11,493
  13,139
  14,818
  16,510
  18,197
  19,865
  21,505
  23,110
  24,677
  26,208
  27,704
  29,171
  30,617
  32,048
  33,474
  34,905
  36,351
  37,821
  39,325
  40,873
Issuance/(repurchase) of shares, $m
  1,738
  2,281
  2,939
  3,703
  4,548
  5,436
  6,316
  7,126
  7,799
  8,263
  8,451
  8,297
  7,747
  6,753
  5,280
  3,306
  816
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,694
  3,672
  4,893
  6,362
  8,063
  9,960
  11,996
  14,099
  16,186
  18,164
  19,944
  21,436
  22,565
  23,263
  23,477
  23,171
  22,321
  23,110
  24,677
  26,208
  27,704
  29,171
  30,617
  32,048
  33,474
  34,905
  36,351
  37,821
  39,325
  40,873
Total cash flow (excl. dividends), $m
  704
  1,026
  1,442
  1,962
  2,594
  3,338
  4,191
  5,146
  6,189
  7,306
  8,481
  9,696
  10,935
  12,183
  13,428
  14,659
  15,869
  19,246
  23,925
  29,081
  34,699
  40,763
  47,260
  54,172
  61,487
  69,193
  77,280
  85,741
  94,572
  103,772
Retained Cash Flow (-), $m
  -2,060
  -2,997
  -4,209
  -5,729
  -7,573
  -9,746
  -12,238
  -15,024
  -18,070
  -21,332
  -24,762
  -28,309
  -31,927
  -35,572
  -39,206
  -42,800
  -46,333
  -49,792
  -53,169
  -56,466
  -59,690
  -62,852
  -65,966
  -69,049
  -72,123
  -75,206
  -78,320
  -81,487
  -84,728
  -88,064
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
  15
  25
  38
  57
  82
  116
  160
  215
  282
  363
  458
  569
  696
  839
  998
  1,173
  1,365
  1,572
  1,795
  2,033
  2,285
  2,552
  2,834
  3,129
  3,438
  3,760
  4,097
  4,447
  4,812
  5,191
Cash available for distribution, $m
  -1,356
  -1,970
  -2,768
  -3,767
  -4,980
  -6,408
  -8,047
  -9,879
  -11,881
  -14,026
  -16,281
  -18,614
  -20,993
  -23,389
  -25,779
  -28,142
  -30,465
  -30,546
  -29,244
  -27,386
  -24,992
  -22,088
  -18,706
  -14,877
  -10,635
  -6,013
  -1,040
  4,254
  9,844
  15,708
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
  -1,300
  -1,804
  -2,409
  -3,102
  -3,860
  -4,651
  -5,436
  -6,174
  -6,825
  -7,353
  -7,732
  -7,943
  -7,982
  -7,852
  -7,568
  -7,151
  -6,629
  -5,625
  -4,503
  -3,480
  -2,585
  -1,833
  -1,226
  -758
  -414
  -175
  -22
  66
  107
  118
Current shareholders' claim on cash, %
  80.6
  67.3
  57.8
  50.8
  45.4
  41.3
  38.1
  35.6
  33.6
  32.1
  30.8
  29.9
  29.2
  28.7
  28.4
  28.2
  28.2
  28.2
  28.2
  28.2
  28.2
  28.2
  28.2
  28.2
  28.2
  28.2
  28.2
  28.2
  28.2
  28.2

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 -43
Price to Sales 13.6
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 24.7
Price to Free Cash Flow -46.6
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 $961 million for the last fiscal year's total revenue generated by Energen. The default revenue input number comes from 2017 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 27.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $608 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 1.6%.

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 459.1%.

Life of production assets of 10 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 -12.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $3438 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 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 $7.2 billion.

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COMPANY NEWS

▶ [$$] Icahn, Corvex Push for Sale of EnergenPotentially to Themselves   [May-22-18 12:26AM  The Wall Street Journal]
▶ Billionaire Icahn may make a play for Birmingham's Energen   [May-21-18 03:54PM  American City Business Journals]
▶ Carl Icahn on his latest investments   [12:58PM  CNBC Videos]
▶ Carl Icahn: Energen is undervalued   [12:24PM  CNBC Videos]
▶ Top Growth Stocks This Week   [May-11-18 12:02PM  Simply Wall St.]
▶ Energen: 1Q Earnings Snapshot   [06:34AM  Associated Press]
▶ Energen Profit More Than Triples On Higher Oil Prices   [May-07-18 08:00PM  Rigzone.com]
▶ Energen adding two to board as it strikes deal with Corvex   [Mar-07-18 04:29PM  American City Business Journals]
▶ Energen tops 4Q profit forecasts   [Feb-20-18 06:24AM  Associated Press]
▶ These 2 Energy Stocks Are Ridiculously Cheap   [Feb-11-18 02:50PM  Motley Fool]
▶ Is Energen Corporation (NYSE:EGN) Undervalued?   [Feb-02-18 02:59PM  Simply Wall St.]
▶ Corvex nominates four directors to Energen's board   [Jan-31-18 08:33PM  Reuters]
▶ 3 Stocks That Could Double Your Money   [02:07PM  Motley Fool]
▶ US Gasoline Inventories: More Pain for Crude Oil Prices?   [Jan-19-18 09:01AM  Market Realist]
▶ What $70 Oil Means to M&A Market   [Jan-13-18 09:24AM  TheStreet.com]
▶ ETFs with exposure to Energen Corp. : December 7, 2017   [Dec-07-17 01:35PM  Capital Cube]
▶ Analyzing US Gasoline Inventories and Demand   [Dec-06-17 08:43AM  Market Realist]
▶ US Gasoline Inventories Weighed on Crude Oil Futures   [Nov-30-17 12:25PM  Market Realist]
▶ 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]
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