Intrinsic value of EOG Resources, Inc. - EOG

Previous Close

$90.90

  Intrinsic Value

$458.28

stock screener

  Rating & Target

str. buy

+404%

Previous close

$90.90

 
Intrinsic value

$458.28

 
Up/down potential

+404%

 
Rating

str. buy

We calculate the intrinsic value of EOG stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 52.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  36.90
  33.71
  30.84
  28.26
  25.93
  23.84
  21.95
  20.26
  18.73
  17.36
  16.12
  15.01
  14.01
  13.11
  12.30
  11.57
  10.91
  10.32
  9.79
  9.31
  8.88
  8.49
  8.14
  7.83
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
Revenue, $m
  23,649
  31,622
  41,374
  53,064
  66,823
  82,751
  100,918
  121,361
  144,094
  169,107
  196,372
  225,849
  257,489
  291,242
  327,058
  364,892
  404,706
  446,471
  490,172
  535,803
  583,374
  632,905
  684,432
  738,004
  793,684
  851,544
  911,672
  974,167
  1,039,139
  1,106,709
Variable operating expenses, $m
  9,838
  13,155
  17,211
  22,074
  27,798
  34,424
  41,982
  50,486
  59,943
  70,349
  81,691
  93,953
  107,115
  121,157
  136,056
  151,795
  168,358
  185,732
  203,912
  222,894
  242,683
  263,288
  284,724
  307,010
  330,172
  354,242
  379,256
  405,253
  432,282
  460,391
Fixed operating expenses, $m
  5,869
  5,998
  6,130
  6,265
  6,403
  6,544
  6,688
  6,835
  6,985
  7,139
  7,296
  7,457
  7,621
  7,788
  7,960
  8,135
  8,314
  8,497
  8,684
  8,875
  9,070
  9,270
  9,473
  9,682
  9,895
  10,113
  10,335
  10,562
  10,795
  11,032
Total operating expenses, $m
  15,707
  19,153
  23,341
  28,339
  34,201
  40,968
  48,670
  57,321
  66,928
  77,488
  88,987
  101,410
  114,736
  128,945
  144,016
  159,930
  176,672
  194,229
  212,596
  231,769
  251,753
  272,558
  294,197
  316,692
  340,067
  364,355
  389,591
  415,815
  443,077
  471,423
Operating income, $m
  7,942
  12,469
  18,032
  24,724
  32,621
  41,783
  52,248
  64,040
  77,166
  91,619
  107,385
  124,439
  142,753
  162,297
  183,042
  204,962
  228,034
  252,243
  277,577
  304,034
  331,620
  360,347
  390,235
  421,313
  453,616
  487,189
  522,081
  558,351
  596,062
  635,286
EBITDA, $m
  12,657
  18,773
  26,280
  35,303
  45,943
  58,280
  72,367
  88,234
  105,892
  125,332
  146,534
  169,464
  194,085
  220,359
  248,244
  277,706
  308,716
  341,251
  375,297
  410,852
  447,921
  486,522
  526,683
  568,441
  611,844
  656,952
  703,831
  752,560
  803,224
  855,918
Interest expense (income), $m
  252
  328
  618
  981
  1,425
  1,957
  2,583
  3,308
  4,135
  5,065
  6,100
  7,238
  8,479
  9,821
  11,261
  12,797
  14,427
  16,149
  17,961
  19,862
  21,851
  23,928
  26,093
  28,347
  30,692
  33,130
  35,664
  38,298
  41,034
  43,879
  46,836
Earnings before tax, $m
  7,613
  11,851
  17,051
  23,299
  30,665
  39,200
  48,940
  59,905
  72,100
  85,520
  100,147
  115,960
  132,932
  151,036
  170,245
  190,535
  211,885
  234,282
  257,715
  282,184
  307,693
  334,254
  361,888
  390,621
  420,486
  451,525
  483,784
  517,317
  552,184
  588,450
Tax expense, $m
  2,056
  3,200
  4,604
  6,291
  8,279
  10,584
  13,214
  16,174
  19,467
  23,090
  27,040
  31,309
  35,892
  40,780
  45,966
  51,444
  57,209
  63,256
  69,583
  76,190
  83,077
  90,249
  97,710
  105,468
  113,531
  121,912
  130,622
  139,676
  149,090
  158,882
Net income, $m
  5,558
  8,651
  12,447
  17,008
  22,385
  28,616
  35,726
  43,731
  52,633
  62,429
  73,107
  84,651
  97,040
  110,256
  124,279
  139,090
  154,676
  171,026
  188,132
  205,994
  224,616
  244,006
  264,178
  285,153
  306,955
  329,613
  353,162
  377,641
  403,094
  429,569

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
  46,463
  62,125
  81,284
  104,251
  131,283
  162,576
  198,266
  238,430
  283,093
  332,234
  385,800
  443,710
  505,872
  572,185
  642,550
  716,880
  795,100
  877,154
  963,010
  1,052,659
  1,146,117
  1,243,428
  1,344,660
  1,449,911
  1,559,300
  1,672,974
  1,791,104
  1,913,884
  2,041,530
  2,174,281
Adjusted assets (=assets-cash), $m
  46,463
  62,125
  81,284
  104,251
  131,283
  162,576
  198,266
  238,430
  283,093
  332,234
  385,800
  443,710
  505,872
  572,185
  642,550
  716,880
  795,100
  877,154
  963,010
  1,052,659
  1,146,117
  1,243,428
  1,344,660
  1,449,911
  1,559,300
  1,672,974
  1,791,104
  1,913,884
  2,041,530
  2,174,281
Revenue / Adjusted assets
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
Average production assets, $m
  36,775
  49,172
  64,336
  82,514
  103,910
  128,678
  156,927
  188,716
  224,067
  262,962
  305,359
  351,195
  400,395
  452,881
  508,575
  567,407
  629,317
  694,263
  762,218
  833,174
  907,146
  984,167
  1,064,292
  1,147,597
  1,234,178
  1,324,151
  1,417,650
  1,514,830
  1,615,861
  1,720,933
Working capital, $m
  946
  1,265
  1,655
  2,123
  2,673
  3,310
  4,037
  4,854
  5,764
  6,764
  7,855
  9,034
  10,300
  11,650
  13,082
  14,596
  16,188
  17,859
  19,607
  21,432
  23,335
  25,316
  27,377
  29,520
  31,747
  34,062
  36,467
  38,967
  41,566
  44,268
Total debt, $m
  11,445
  18,165
  26,384
  36,237
  47,833
  61,258
  76,569
  93,800
  112,960
  134,041
  157,021
  181,865
  208,532
  236,980
  267,167
  299,054
  332,611
  367,812
  404,644
  443,104
  483,197
  524,943
  568,372
  613,525
  660,453
  709,219
  759,897
  812,569
  867,329
  924,280
Total liabilities, $m
  19,932
  26,652
  34,871
  44,724
  56,320
  69,745
  85,056
  102,287
  121,447
  142,528
  165,508
  190,352
  217,019
  245,467
  275,654
  307,541
  341,098
  376,299
  413,131
  451,591
  491,684
  533,430
  576,859
  622,012
  668,940
  717,706
  768,384
  821,056
  875,816
  932,767
Total equity, $m
  26,530
  35,473
  46,413
  59,527
  74,962
  92,831
  113,210
  136,144
  161,646
  189,706
  220,292
  253,359
  288,853
  326,717
  366,896
  409,338
  454,002
  500,855
  549,879
  601,068
  654,433
  709,997
  767,801
  827,899
  890,360
  955,268
  1,022,721
  1,092,828
  1,165,714
  1,241,515
Total liabilities and equity, $m
  46,462
  62,125
  81,284
  104,251
  131,282
  162,576
  198,266
  238,431
  283,093
  332,234
  385,800
  443,711
  505,872
  572,184
  642,550
  716,879
  795,100
  877,154
  963,010
  1,052,659
  1,146,117
  1,243,427
  1,344,660
  1,449,911
  1,559,300
  1,672,974
  1,791,105
  1,913,884
  2,041,530
  2,174,282
Debt-to-equity ratio
  0.430
  0.510
  0.570
  0.610
  0.640
  0.660
  0.680
  0.690
  0.700
  0.710
  0.710
  0.720
  0.720
  0.730
  0.730
  0.730
  0.730
  0.730
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
Adjusted equity ratio
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5,558
  8,651
  12,447
  17,008
  22,385
  28,616
  35,726
  43,731
  52,633
  62,429
  73,107
  84,651
  97,040
  110,256
  124,279
  139,090
  154,676
  171,026
  188,132
  205,994
  224,616
  244,006
  264,178
  285,153
  306,955
  329,613
  353,162
  377,641
  403,094
  429,569
Depreciation, amort., depletion, $m
  4,715
  6,304
  8,248
  10,579
  13,322
  16,497
  20,119
  24,194
  28,726
  33,713
  39,149
  45,025
  51,333
  58,062
  65,202
  72,744
  80,682
  89,008
  97,720
  106,817
  116,301
  126,175
  136,448
  147,128
  158,228
  169,763
  181,750
  194,209
  207,162
  220,632
Funds from operations, $m
  10,273
  14,955
  20,695
  27,587
  35,707
  45,113
  55,845
  67,925
  81,360
  96,142
  112,256
  129,676
  148,373
  168,318
  189,481
  211,835
  235,358
  260,034
  285,852
  312,811
  340,916
  370,181
  400,626
  432,281
  465,183
  499,376
  534,912
  571,850
  610,256
  650,201
Change in working capital, $m
  255
  319
  390
  468
  550
  637
  727
  818
  909
  1,001
  1,091
  1,179
  1,266
  1,350
  1,433
  1,513
  1,593
  1,671
  1,748
  1,825
  1,903
  1,981
  2,061
  2,143
  2,227
  2,314
  2,405
  2,500
  2,599
  2,703
Cash from operations, $m
  10,018
  14,636
  20,305
  27,119
  35,157
  44,476
  55,118
  67,107
  80,450
  95,142
  111,165
  128,496
  147,107
  166,968
  188,048
  210,322
  233,765
  258,363
  284,104
  310,986
  339,013
  368,199
  398,565
  430,138
  462,956
  497,061
  532,507
  569,350
  607,657
  647,498
Maintenance CAPEX, $m
  -3,445
  -4,715
  -6,304
  -8,248
  -10,579
  -13,322
  -16,497
  -20,119
  -24,194
  -28,726
  -33,713
  -39,149
  -45,025
  -51,333
  -58,062
  -65,202
  -72,744
  -80,682
  -89,008
  -97,720
  -106,817
  -116,301
  -126,175
  -136,448
  -147,128
  -158,228
  -169,763
  -181,750
  -194,209
  -207,162
New CAPEX, $m
  -9,905
  -12,397
  -15,164
  -18,178
  -21,396
  -24,769
  -28,249
  -31,790
  -35,350
  -38,895
  -42,397
  -45,836
  -49,201
  -52,486
  -55,694
  -58,832
  -61,911
  -64,946
  -67,955
  -70,956
  -73,972
  -77,021
  -80,125
  -83,305
  -86,581
  -89,973
  -93,499
  -97,180
  -101,031
  -105,072
Cash from investing activities, $m
  -13,350
  -17,112
  -21,468
  -26,426
  -31,975
  -38,091
  -44,746
  -51,909
  -59,544
  -67,621
  -76,110
  -84,985
  -94,226
  -103,819
  -113,756
  -124,034
  -134,655
  -145,628
  -156,963
  -168,676
  -180,789
  -193,322
  -206,300
  -219,753
  -233,709
  -248,201
  -263,262
  -278,930
  -295,240
  -312,234
Free cash flow, $m
  -3,332
  -2,475
  -1,163
  693
  3,182
  6,386
  10,372
  15,199
  20,906
  27,520
  35,055
  43,512
  52,882
  63,149
  74,293
  86,288
  99,110
  112,736
  127,141
  142,309
  158,225
  174,878
  192,264
  210,385
  229,247
  248,861
  269,245
  290,421
  312,417
  335,265
Issuance/(repayment) of debt, $m
  5,362
  6,719
  8,219
  9,853
  11,597
  13,425
  15,311
  17,230
  19,160
  21,082
  22,980
  24,844
  26,667
  28,448
  30,187
  31,887
  33,556
  35,201
  36,832
  38,459
  40,094
  41,746
  43,429
  45,152
  46,928
  48,766
  50,678
  52,673
  54,760
  56,950
Issuance/(repurchase) of shares, $m
  1,608
  292
  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 from financing (excl. dividends), $m  
  6,970
  7,011
  8,219
  9,853
  11,597
  13,425
  15,311
  17,230
  19,160
  21,082
  22,980
  24,844
  26,667
  28,448
  30,187
  31,887
  33,556
  35,201
  36,832
  38,459
  40,094
  41,746
  43,429
  45,152
  46,928
  48,766
  50,678
  52,673
  54,760
  56,950
Total cash flow (excl. dividends), $m
  3,638
  4,536
  7,056
  10,546
  14,779
  19,810
  25,684
  32,429
  40,066
  48,602
  58,035
  68,356
  79,549
  91,597
  104,479
  118,175
  132,667
  147,937
  163,974
  180,769
  198,318
  216,624
  235,693
  255,538
  276,175
  297,627
  319,922
  343,093
  367,177
  392,215
Retained Cash Flow (-), $m
  -7,166
  -8,943
  -10,940
  -13,114
  -15,435
  -17,869
  -20,379
  -22,934
  -25,502
  -28,060
  -30,586
  -33,067
  -35,494
  -37,864
  -40,179
  -42,442
  -44,663
  -46,853
  -49,024
  -51,189
  -53,365
  -55,564
  -57,804
  -60,098
  -62,461
  -64,908
  -67,452
  -70,107
  -72,886
  -75,801
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -3,528
  -4,407
  -3,883
  -2,568
  -656
  1,942
  5,304
  9,496
  14,564
  20,542
  27,449
  35,289
  44,055
  53,733
  64,301
  75,733
  88,003
  101,084
  114,950
  129,579
  144,954
  161,060
  177,889
  195,440
  213,713
  232,719
  252,470
  272,986
  294,291
  316,414
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
  -3,382
  -4,035
  -3,380
  -2,115
  -509
  1,409
  3,584
  5,935
  8,366
  10,769
  13,035
  15,059
  16,751
  18,039
  18,878
  19,245
  19,148
  18,616
  17,699
  16,466
  14,993
  13,364
  11,659
  9,954
  8,314
  6,790
  5,419
  4,223
  3,212
  2,382
Current shareholders' claim on cash, %
  97.0
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6

EOG Resources, Inc. explores for, develops, produces and markets crude oil and natural gas in major producing basins in the United States, The Republic of Trinidad and Tobago, the United Kingdom, The People's Republic of China, Canada and, from time to time, select other international areas. Its operations are all crude oil and natural gas exploration and production related. As of December 31, 2016, its total estimated net proved reserves were over 2,147 million barrels of oil equivalent (MMBoe), of which over 1178 million barrels (MMBbl) were crude oil and condensate reserves, over 416 MMBbl were natural gas liquids reserves and over 3318 billion cubic feet, or 553 MMBoe, were natural gas reserves. Its operations are focused in the productive basins in the United States with a focus on crude oil and, to a lesser extent, liquids-rich natural gas plays. It has operations offshore Trinidad, in the United Kingdom East Irish Sea, in the China Sichuan Basin and in Canada.

FINANCIAL RATIOS  of  EOG Resources, Inc. (EOG)

Valuation Ratios
P/E Ratio -47.8
Price to Sales 7
Price to Book 3.7
Price to Tangible Book
Price to Cash Flow 22.2
Price to Free Cash Flow -234
Growth Rates
Sales Growth Rate -15.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -48.5%
Cap. Spend. - 3 Yr. Gr. Rate -18.2%
Financial Strength
Quick Ratio 229
Current Ratio 0.1
LT Debt to Equity 49.9%
Total Debt to Equity 50%
Interest Coverage -5
Management Effectiveness
Return On Assets -3.3%
Ret/ On Assets - 3 Yr. Avg. -2.7%
Return On Total Capital -5.4%
Ret/ On T. Cap. - 3 Yr. Avg. -4.5%
Return On Equity -8.1%
Return On Equity - 3 Yr. Avg. -6.7%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 48.4%
Gross Margin - 3 Yr. Avg. 52.6%
EBITDA Margin 30.2%
EBITDA Margin - 3 Yr. Avg. 14.7%
Operating Margin -16.5%
Oper. Margin - 3 Yr. Avg. -20.9%
Pre-Tax Margin -20.9%
Pre-Tax Margin - 3 Yr. Avg. -23.8%
Net Profit Margin -14.7%
Net Profit Margin - 3 Yr. Avg. -16.6%
Effective Tax Rate 29.6%
Eff/ Tax Rate - 3 Yr. Avg. 35.3%
Payout Ratio -34%

EOG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EOG stock intrinsic value calculation we used $17275 million for the last fiscal year's total revenue generated by EOG Resources, Inc.. The default revenue input number comes from 0001 income statement of EOG Resources, Inc.. 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 EOG stock valuation model: a) initial revenue growth rate of 36.9% 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 EOG is calculated based on our internal credit rating of EOG Resources, Inc., 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 EOG Resources, Inc..
    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 EOG stock the variable cost ratio is equal to 41.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $5743 million in the base year in the intrinsic value calculation for EOG 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 EOG Resources, Inc..

Corporate tax rate of 27% is the nominal tax rate for EOG Resources, Inc.. 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 EOG 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 EOG are equal to 155.5%.

Life of production assets of 7.8 years is the average useful life of capital assets used in EOG Resources, Inc. 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 EOG is equal to 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 - $19364.188 million for EOG Resources, Inc. - 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 580.079 million for EOG Resources, Inc. 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 EOG Resources, Inc. at the current share price and the inputted number of shares is $52.7 billion.

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