Intrinsic value of EOG Resources - EOG

Previous Close

$105.81

  Intrinsic Value

$6.02

stock screener

  Rating & Target

str. sell

-94%

Previous close

$105.81

 
Intrinsic value

$6.02

 
Up/down potential

-94%

 
Rating

str. sell

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

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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of EOG Resources (EOG) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -15.07
  32.00
  29.30
  26.87
  24.68
  22.71
  20.94
  19.35
  17.91
  16.62
  15.46
  14.41
  13.47
  12.63
  11.86
  11.18
  10.56
  10.00
  9.50
  9.05
  8.65
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
Revenue, $m
  7,445
  9,827
  12,707
  16,121
  20,100
  24,666
  29,832
  35,604
  41,982
  48,961
  56,530
  64,679
  73,393
  82,659
  92,465
  102,800
  113,654
  125,023
  136,904
  149,297
  162,207
  175,642
  189,614
  204,136
  219,228
  234,910
  251,209
  268,152
  285,770
  304,096
  323,168
Variable operating expenses, $m
 
  17,326
  22,402
  28,422
  35,437
  43,486
  52,594
  62,770
  74,015
  86,318
  99,663
  114,029
  129,392
  145,728
  163,016
  181,236
  200,372
  220,416
  241,362
  263,211
  285,972
  309,658
  334,289
  359,891
  386,498
  414,147
  442,882
  472,752
  503,812
  536,122
  569,746
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
  8,670
  17,326
  22,402
  28,422
  35,437
  43,486
  52,594
  62,770
  74,015
  86,318
  99,663
  114,029
  129,392
  145,728
  163,016
  181,236
  200,372
  220,416
  241,362
  263,211
  285,972
  309,658
  334,289
  359,891
  386,498
  414,147
  442,882
  472,752
  503,812
  536,122
  569,746
Operating income, $m
  -1,225
  -7,498
  -9,695
  -12,300
  -15,337
  -18,820
  -22,762
  -27,166
  -32,032
  -37,357
  -43,133
  -49,350
  -55,999
  -63,069
  -70,551
  -78,436
  -86,718
  -95,393
  -104,458
  -113,914
  -123,764
  -134,015
  -144,675
  -155,756
  -167,271
  -179,237
  -191,673
  -204,600
  -218,042
  -232,025
  -246,577
EBITDA, $m
  2,328
  -2,792
  -3,611
  -4,581
  -5,711
  -7,009
  -8,477
  -10,117
  -11,929
  -13,912
  -16,063
  -18,378
  -20,854
  -23,487
  -26,273
  -29,210
  -32,294
  -35,524
  -38,900
  -42,422
  -46,090
  -49,908
  -53,877
  -58,004
  -62,292
  -66,748
  -71,379
  -76,193
  -81,199
  -86,407
  -91,826
Interest expense (income), $m
  252
  258
  439
  658
  918
  1,221
  1,568
  1,961
  2,400
  2,885
  3,416
  3,992
  4,611
  5,274
  5,979
  6,725
  7,511
  8,337
  9,201
  10,105
  11,048
  12,030
  13,052
  14,114
  15,219
  16,367
  17,560
  18,800
  20,088
  21,428
  22,822
Earnings before tax, $m
  -1,558
  -7,757
  -10,135
  -12,959
  -16,255
  -20,041
  -24,330
  -29,127
  -34,432
  -40,242
  -46,548
  -53,341
  -60,610
  -68,343
  -76,530
  -85,161
  -94,229
  -103,729
  -113,659
  -124,019
  -134,812
  -146,045
  -157,727
  -169,870
  -182,490
  -195,604
  -209,232
  -223,400
  -238,131
  -253,454
  -269,400
Tax expense, $m
  -461
  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
  -1,097
  -7,757
  -10,135
  -12,959
  -16,255
  -20,041
  -24,330
  -29,127
  -34,432
  -40,242
  -46,548
  -53,341
  -60,610
  -68,343
  -76,530
  -85,161
  -94,229
  -103,729
  -113,659
  -124,019
  -134,812
  -146,045
  -157,727
  -169,870
  -182,490
  -195,604
  -209,232
  -223,400
  -238,131
  -253,454
  -269,400

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,600
  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
  29,299
  36,533
  47,237
  59,930
  74,722
  91,695
  110,899
  132,357
  156,068
  182,010
  210,150
  240,441
  272,836
  307,283
  343,736
  382,154
  422,506
  464,770
  508,937
  555,008
  603,002
  652,946
  704,883
  758,869
  814,972
  873,273
  933,863
  996,848
  1,062,341
  1,130,469
  1,201,370
Adjusted assets (=assets-cash), $m
  27,699
  36,533
  47,237
  59,930
  74,722
  91,695
  110,899
  132,357
  156,068
  182,010
  210,150
  240,441
  272,836
  307,283
  343,736
  382,154
  422,506
  464,770
  508,937
  555,008
  603,002
  652,946
  704,883
  758,869
  814,972
  873,273
  933,863
  996,848
  1,062,341
  1,130,469
  1,201,370
Revenue / Adjusted assets
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
  0.269
Average production assets, $m
  24,959
  32,941
  42,593
  54,038
  67,376
  82,681
  99,997
  119,345
  140,724
  164,116
  189,489
  216,803
  246,013
  277,073
  309,943
  344,584
  380,969
  419,078
  458,902
  500,444
  543,719
  588,753
  635,585
  684,263
  734,851
  787,420
  842,053
  898,846
  957,900
  1,019,331
  1,083,260
Working capital, $m
  1,358
  -314
  -407
  -516
  -643
  -789
  -955
  -1,139
  -1,343
  -1,567
  -1,809
  -2,070
  -2,349
  -2,645
  -2,959
  -3,290
  -3,637
  -4,001
  -4,381
  -4,778
  -5,191
  -5,621
  -6,068
  -6,532
  -7,015
  -7,517
  -8,039
  -8,581
  -9,145
  -9,731
  -10,341
Total debt, $m
  6,986
  11,872
  17,791
  24,810
  32,991
  42,377
  52,996
  64,863
  77,974
  92,321
  107,882
  124,633
  142,547
  161,596
  181,755
  203,000
  225,315
  248,687
  273,111
  298,589
  325,129
  352,748
  381,469
  411,324
  442,349
  474,589
  508,095
  542,926
  579,144
  616,819
  656,026
Total liabilities, $m
  15,318
  20,203
  26,122
  33,141
  41,322
  50,708
  61,327
  73,194
  86,305
  100,652
  116,213
  132,964
  150,878
  169,927
  190,086
  211,331
  233,646
  257,018
  281,442
  306,920
  333,460
  361,079
  389,800
  419,655
  450,680
  482,920
  516,426
  551,257
  587,475
  625,150
  664,357
Total equity, $m
  13,982
  16,330
  21,115
  26,789
  33,401
  40,988
  49,572
  59,164
  69,762
  81,359
  93,937
  107,477
  121,958
  137,355
  153,650
  170,823
  188,860
  207,752
  227,495
  248,089
  269,542
  291,867
  315,083
  339,215
  364,293
  390,353
  417,437
  445,591
  474,866
  505,320
  537,012
Total liabilities and equity, $m
  29,300
  36,533
  47,237
  59,930
  74,723
  91,696
  110,899
  132,358
  156,067
  182,011
  210,150
  240,441
  272,836
  307,282
  343,736
  382,154
  422,506
  464,770
  508,937
  555,009
  603,002
  652,946
  704,883
  758,870
  814,973
  873,273
  933,863
  996,848
  1,062,341
  1,130,470
  1,201,369
Debt-to-equity ratio
  0.500
  0.730
  0.840
  0.930
  0.990
  1.030
  1.070
  1.100
  1.120
  1.130
  1.150
  1.160
  1.170
  1.180
  1.180
  1.190
  1.190
  1.200
  1.200
  1.200
  1.210
  1.210
  1.210
  1.210
  1.210
  1.220
  1.220
  1.220
  1.220
  1.220
  1.220
Adjusted equity ratio
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,097
  -7,757
  -10,135
  -12,959
  -16,255
  -20,041
  -24,330
  -29,127
  -34,432
  -40,242
  -46,548
  -53,341
  -60,610
  -68,343
  -76,530
  -85,161
  -94,229
  -103,729
  -113,659
  -124,019
  -134,812
  -146,045
  -157,727
  -169,870
  -182,490
  -195,604
  -209,232
  -223,400
  -238,131
  -253,454
  -269,400
Depreciation, amort., depletion, $m
  3,553
  4,706
  6,085
  7,720
  9,625
  11,812
  14,285
  17,049
  20,103
  23,445
  27,070
  30,972
  35,145
  39,582
  44,278
  49,226
  54,424
  59,868
  65,557
  71,492
  77,674
  84,108
  90,798
  97,752
  104,979
  112,489
  120,293
  128,407
  136,843
  145,619
  154,751
Funds from operations, $m
  2,103
  -3,051
  -4,050
  -5,239
  -6,629
  -8,229
  -10,044
  -12,078
  -14,329
  -16,797
  -19,479
  -22,370
  -25,465
  -28,761
  -32,252
  -35,935
  -39,805
  -43,861
  -48,102
  -52,527
  -57,138
  -61,937
  -66,929
  -72,118
  -77,511
  -83,115
  -88,939
  -94,993
  -101,288
  -107,835
  -114,648
Change in working capital, $m
  -256
  -76
  -92
  -109
  -127
  -146
  -165
  -185
  -204
  -223
  -242
  -261
  -279
  -297
  -314
  -331
  -347
  -364
  -380
  -397
  -413
  -430
  -447
  -465
  -483
  -502
  -522
  -542
  -564
  -586
  -610
Cash from operations, $m
  2,359
  -2,974
  -3,958
  -5,130
  -6,502
  -8,083
  -9,879
  -11,893
  -14,125
  -16,574
  -19,236
  -22,109
  -25,187
  -28,465
  -31,939
  -35,604
  -39,458
  -43,497
  -47,722
  -52,130
  -56,725
  -61,507
  -66,482
  -71,653
  -77,028
  -82,613
  -88,418
  -94,451
  -100,724
  -107,249
  -114,038
Maintenance CAPEX, $m
  0
  -3,566
  -4,706
  -6,085
  -7,720
  -9,625
  -11,812
  -14,285
  -17,049
  -20,103
  -23,445
  -27,070
  -30,972
  -35,145
  -39,582
  -44,278
  -49,226
  -54,424
  -59,868
  -65,557
  -71,492
  -77,674
  -84,108
  -90,798
  -97,752
  -104,979
  -112,489
  -120,293
  -128,407
  -136,843
  -145,619
New CAPEX, $m
  -2,583
  -7,982
  -9,652
  -11,445
  -13,338
  -15,304
  -17,316
  -19,348
  -21,379
  -23,392
  -25,373
  -27,314
  -29,210
  -31,061
  -32,869
  -34,641
  -36,385
  -38,109
  -39,824
  -41,542
  -43,275
  -45,034
  -46,831
  -48,679
  -50,588
  -52,569
  -54,634
  -56,792
  -59,055
  -61,431
  -63,930
Cash from investing activities, $m
  -1,253
  -11,548
  -14,358
  -17,530
  -21,058
  -24,929
  -29,128
  -33,633
  -38,428
  -43,495
  -48,818
  -54,384
  -60,182
  -66,206
  -72,451
  -78,919
  -85,611
  -92,533
  -99,692
  -107,099
  -114,767
  -122,708
  -130,939
  -139,477
  -148,340
  -157,548
  -167,123
  -177,085
  -187,462
  -198,274
  -209,549
Free cash flow, $m
  1,106
  -14,522
  -18,315
  -22,659
  -27,560
  -33,013
  -39,007
  -45,526
  -52,554
  -60,069
  -68,055
  -76,492
  -85,368
  -94,670
  -104,390
  -114,523
  -125,069
  -136,030
  -147,414
  -159,230
  -171,492
  -184,216
  -197,421
  -211,130
  -225,367
  -240,161
  -255,540
  -271,536
  -288,185
  -305,522
  -323,586
Issuance/(repayment) of debt, $m
  161
  4,893
  5,919
  7,019
  8,180
  9,386
  10,620
  11,866
  13,112
  14,346
  15,561
  16,751
  17,914
  19,049
  20,159
  21,245
  22,315
  23,372
  24,424
  25,478
  26,540
  27,619
  28,721
  29,854
  31,025
  32,240
  33,507
  34,830
  36,218
  37,675
  39,208
Issuance/(repurchase) of shares, $m
  -59
  11,698
  14,919
  18,632
  22,867
  27,628
  32,914
  38,718
  45,031
  51,838
  59,127
  66,882
  75,090
  83,741
  92,824
  102,334
  112,266
  122,621
  133,402
  144,613
  156,265
  168,370
  180,943
  194,002
  207,568
  221,664
  236,316
  251,554
  267,406
  283,907
  301,092
Cash from financing (excl. dividends), $m  
  130
  16,591
  20,838
  25,651
  31,047
  37,014
  43,534
  50,584
  58,143
  66,184
  74,688
  83,633
  93,004
  102,790
  112,983
  123,579
  134,581
  145,993
  157,826
  170,091
  182,805
  195,989
  209,664
  223,856
  238,593
  253,904
  269,823
  286,384
  303,624
  321,582
  340,300
Total cash flow (excl. dividends), $m
  1,254
  2,068
  2,523
  2,992
  3,487
  4,001
  4,527
  5,058
  5,589
  6,116
  6,633
  7,141
  7,636
  8,120
  8,593
  9,056
  9,512
  9,963
  10,411
  10,861
  11,314
  11,773
  12,243
  12,726
  13,225
  13,743
  14,283
  14,847
  15,439
  16,060
  16,713
Retained Cash Flow (-), $m
  -1,039
  -11,698
  -14,919
  -18,632
  -22,867
  -27,628
  -32,914
  -38,718
  -45,031
  -51,838
  -59,127
  -66,882
  -75,090
  -83,741
  -92,824
  -102,334
  -112,266
  -122,621
  -133,402
  -144,613
  -156,265
  -168,370
  -180,943
  -194,002
  -207,568
  -221,664
  -236,316
  -251,554
  -267,406
  -283,907
  -301,092
Prev. year cash balance distribution, $m
 
  1,593
  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
 
  -8,037
  -12,396
  -15,640
  -19,380
  -23,627
  -28,387
  -33,660
  -39,442
  -45,723
  -52,493
  -59,741
  -67,454
  -75,621
  -84,231
  -93,278
  -102,754
  -112,658
  -122,990
  -133,752
  -144,951
  -156,596
  -168,699
  -181,276
  -194,342
  -207,921
  -222,033
  -236,706
  -251,967
  -267,847
  -284,379
Discount rate, %
 
  4.80
  5.04
  5.29
  5.56
  5.83
  6.13
  6.43
  6.75
  7.09
  7.45
  7.82
  8.21
  8.62
  9.05
  9.50
  9.98
  10.48
  11.00
  11.55
  12.13
  12.74
  13.37
  14.04
  14.74
  15.48
  16.25
  17.07
  17.92
  18.82
  19.76
PV of cash for distribution, $m
 
  -7,669
  -11,235
  -13,399
  -15,610
  -17,794
  -19,869
  -21,757
  -23,382
  -24,679
  -25,597
  -26,100
  -26,171
  -25,811
  -25,041
  -23,897
  -22,431
  -20,706
  -18,790
  -16,759
  -14,684
  -12,632
  -10,664
  -8,829
  -7,163
  -5,691
  -4,423
  -3,361
  -2,494
  -1,805
  -1,273
Current shareholders' claim on cash, %
  100
  82.3
  68.2
  56.8
  47.5
  40.0
  33.8
  28.7
  24.5
  21.0
  18.0
  15.5
  13.4
  11.6
  10.0
  8.7
  7.6
  6.6
  5.8
  5.0
  4.4
  3.8
  3.4
  3.0
  2.6
  2.3
  2.0
  1.8
  1.6
  1.4
  1.2

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 (EOG)

Valuation Ratios
P/E Ratio -55.6
Price to Sales 8.2
Price to Book 4.4
Price to Tangible Book
Price to Cash Flow 25.9
Price to Free Cash Flow -272.4
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 $7445 million for the last fiscal year's total revenue generated by EOG Resources. The default revenue input number comes from 2016 income statement of EOG Resources. 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 32% 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 4.8%, whose default value for EOG is calculated based on our internal credit rating of EOG Resources, 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.
    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 176.3%.

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 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 3.7% for EOG Resources.

Corporate tax rate of 27% is the nominal tax rate for EOG Resources. 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 335.2%.

Life of production assets of 7 years is the average useful life of capital assets used in EOG Resources 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 -3.2%. 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 - $13982 million for EOG Resources - 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 581.132 million for EOG Resources 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 at the current share price and the inputted number of shares is $61.5 billion.

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Financial statements of EOG
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