Intrinsic value of Mid-Con Energy Partners, LP - MCEP

Previous Close

$0.41

  Intrinsic Value

$4.16

stock screener

  Rating & Target

str. buy

+915%

Previous close

$0.41

 
Intrinsic value

$4.16

 
Up/down potential

+915%

 
Rating

str. buy

We calculate the intrinsic value of MCEP 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 0.0

 

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, %
  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
  117
  180
  270
  392
  552
  759
  1,019
  1,339
  1,722
  2,176
  2,702
  3,303
  3,981
  4,737
  5,570
  6,479
  7,463
  8,521
  9,650
  10,850
  12,118
  13,453
  14,854
  16,321
  17,853
  19,451
  21,115
  22,846
  24,645
  26,516
Variable operating expenses, $m
  53
  82
  122
  177
  250
  343
  461
  605
  779
  983
  1,221
  1,493
  1,800
  2,141
  2,518
  2,928
  3,373
  3,851
  4,362
  4,904
  5,477
  6,081
  6,714
  7,377
  8,070
  8,792
  9,544
  10,326
  11,140
  11,985
Fixed operating expenses, $m
  55
  56
  58
  59
  60
  62
  63
  64
  66
  67
  69
  70
  72
  73
  75
  76
  78
  80
  82
  83
  85
  87
  89
  91
  93
  95
  97
  99
  102
  104
Total operating expenses, $m
  108
  138
  180
  236
  310
  405
  524
  669
  845
  1,050
  1,290
  1,563
  1,872
  2,214
  2,593
  3,004
  3,451
  3,931
  4,444
  4,987
  5,562
  6,168
  6,803
  7,468
  8,163
  8,887
  9,641
  10,425
  11,242
  12,089
Operating income, $m
  9
  42
  90
  156
  243
  355
  496
  669
  878
  1,125
  1,412
  1,740
  2,110
  2,523
  2,977
  3,474
  4,012
  4,590
  5,207
  5,862
  6,555
  7,285
  8,051
  8,853
  9,691
  10,564
  11,474
  12,420
  13,404
  14,427
EBITDA, $m
  36
  84
  152
  245
  369
  528
  729
  976
  1,272
  1,623
  2,030
  2,496
  3,021
  3,607
  4,252
  4,957
  5,720
  6,540
  7,415
  8,345
  9,329
  10,364
  11,451
  12,588
  13,777
  15,016
  16,306
  17,649
  19,045
  20,496
Interest expense (income), $m
  6
  6
  12
  21
  33
  50
  73
  102
  138
  182
  236
  299
  372
  456
  551
  656
  772
  899
  1,036
  1,184
  1,341
  1,508
  1,685
  1,871
  2,066
  2,271
  2,485
  2,707
  2,939
  3,180
  3,431
Earnings before tax, $m
  3
  31
  69
  122
  192
  282
  394
  531
  696
  889
  1,113
  1,368
  1,654
  1,972
  2,321
  2,702
  3,113
  3,553
  4,023
  4,521
  5,047
  5,600
  6,180
  6,786
  7,420
  8,079
  8,766
  9,481
  10,224
  10,996
Tax expense, $m
  1
  8
  19
  33
  52
  76
  106
  143
  188
  240
  300
  369
  447
  532
  627
  729
  840
  959
  1,086
  1,221
  1,363
  1,512
  1,669
  1,832
  2,003
  2,181
  2,367
  2,560
  2,760
  2,969
Net income, $m
  2
  22
  51
  89
  140
  206
  288
  388
  508
  649
  812
  998
  1,207
  1,439
  1,695
  1,972
  2,272
  2,594
  2,937
  3,301
  3,684
  4,088
  4,511
  4,954
  5,416
  5,898
  6,399
  6,921
  7,463
  8,027

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
  355
  548
  820
  1,190
  1,679
  2,308
  3,099
  4,069
  5,235
  6,613
  8,212
  10,040
  12,101
  14,398
  16,929
  19,693
  22,684
  25,899
  29,332
  32,978
  36,832
  40,891
  45,150
  49,608
  54,265
  59,121
  64,178
  69,439
  74,910
  80,596
Adjusted assets (=assets-cash), $m
  355
  548
  820
  1,190
  1,679
  2,308
  3,099
  4,069
  5,235
  6,613
  8,212
  10,040
  12,101
  14,398
  16,929
  19,693
  22,684
  25,899
  29,332
  32,978
  36,832
  40,891
  45,150
  49,608
  54,265
  59,121
  64,178
  69,439
  74,910
  80,596
Revenue / Adjusted assets
  0.330
  0.328
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
Average production assets, $m
  331
  512
  766
  1,111
  1,568
  2,155
  2,893
  3,799
  4,888
  6,174
  7,667
  9,374
  11,299
  13,443
  15,807
  18,387
  21,180
  24,182
  27,388
  30,792
  34,390
  38,180
  42,156
  46,319
  50,667
  55,201
  59,923
  64,836
  69,944
  75,253
Working capital, $m
  7
  11
  17
  24
  34
  47
  63
  83
  107
  135
  168
  205
  247
  294
  345
  402
  463
  528
  598
  673
  751
  834
  921
  1,012
  1,107
  1,206
  1,309
  1,416
  1,528
  1,644
Total debt, $m
  190
  331
  529
  798
  1,154
  1,612
  2,188
  2,894
  3,743
  4,746
  5,910
  7,240
  8,741
  10,413
  12,256
  14,268
  16,446
  18,786
  21,286
  23,940
  26,746
  29,700
  32,801
  36,046
  39,437
  42,972
  46,653
  50,483
  54,466
  58,606
Total liabilities, $m
  258
  399
  597
  866
  1,222
  1,681
  2,256
  2,962
  3,811
  4,814
  5,978
  7,309
  8,810
  10,482
  12,324
  14,336
  16,514
  18,855
  21,354
  24,008
  26,814
  29,768
  32,869
  36,115
  39,505
  43,040
  46,721
  50,552
  54,534
  58,674
Total equity, $m
  97
  149
  223
  324
  457
  628
  843
  1,107
  1,424
  1,799
  2,234
  2,731
  3,291
  3,916
  4,605
  5,356
  6,170
  7,045
  7,978
  8,970
  10,018
  11,122
  12,281
  13,493
  14,760
  16,081
  17,456
  18,887
  20,376
  21,922
Total liabilities and equity, $m
  355
  548
  820
  1,190
  1,679
  2,309
  3,099
  4,069
  5,235
  6,613
  8,212
  10,040
  12,101
  14,398
  16,929
  19,692
  22,684
  25,900
  29,332
  32,978
  36,832
  40,890
  45,150
  49,608
  54,265
  59,121
  64,177
  69,439
  74,910
  80,596
Debt-to-equity ratio
  1.970
  2.220
  2.370
  2.470
  2.530
  2.570
  2.600
  2.610
  2.630
  2.640
  2.650
  2.650
  2.660
  2.660
  2.660
  2.660
  2.670
  2.670
  2.670
  2.670
  2.670
  2.670
  2.670
  2.670
  2.670
  2.670
  2.670
  2.670
  2.670
  2.670
Adjusted equity ratio
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2
  22
  51
  89
  140
  206
  288
  388
  508
  649
  812
  998
  1,207
  1,439
  1,695
  1,972
  2,272
  2,594
  2,937
  3,301
  3,684
  4,088
  4,511
  4,954
  5,416
  5,898
  6,399
  6,921
  7,463
  8,027
Depreciation, amort., depletion, $m
  27
  41
  62
  90
  126
  174
  233
  306
  394
  498
  618
  756
  911
  1,084
  1,275
  1,483
  1,708
  1,950
  2,209
  2,483
  2,773
  3,079
  3,400
  3,735
  4,086
  4,452
  4,832
  5,229
  5,641
  6,069
Funds from operations, $m
  29
  64
  112
  179
  267
  380
  521
  694
  902
  1,147
  1,431
  1,754
  2,119
  2,524
  2,969
  3,455
  3,980
  4,544
  5,146
  5,784
  6,458
  7,167
  7,911
  8,690
  9,502
  10,350
  11,232
  12,150
  13,104
  14,096
Change in working capital, $m
  3
  4
  6
  8
  10
  13
  16
  20
  24
  28
  33
  37
  42
  47
  52
  56
  61
  66
  70
  74
  79
  83
  87
  91
  95
  99
  103
  107
  112
  116
Cash from operations, $m
  26
  60
  107
  171
  257
  367
  505
  675
  878
  1,119
  1,398
  1,717
  2,076
  2,477
  2,918
  3,399
  3,919
  4,479
  5,076
  5,709
  6,379
  7,084
  7,824
  8,599
  9,407
  10,251
  11,129
  12,042
  12,992
  13,980
Maintenance CAPEX, $m
  -17
  -27
  -41
  -62
  -90
  -126
  -174
  -233
  -306
  -394
  -498
  -618
  -756
  -911
  -1,084
  -1,275
  -1,483
  -1,708
  -1,950
  -2,209
  -2,483
  -2,773
  -3,079
  -3,400
  -3,735
  -4,086
  -4,452
  -4,832
  -5,229
  -5,641
New CAPEX, $m
  -124
  -181
  -254
  -345
  -457
  -588
  -738
  -906
  -1,089
  -1,286
  -1,493
  -1,707
  -1,925
  -2,145
  -2,364
  -2,580
  -2,793
  -3,002
  -3,205
  -3,404
  -3,599
  -3,789
  -3,977
  -4,163
  -4,348
  -4,534
  -4,722
  -4,913
  -5,108
  -5,309
Cash from investing activities, $m
  -141
  -208
  -295
  -407
  -547
  -714
  -912
  -1,139
  -1,395
  -1,680
  -1,991
  -2,325
  -2,681
  -3,056
  -3,448
  -3,855
  -4,276
  -4,710
  -5,155
  -5,613
  -6,082
  -6,562
  -7,056
  -7,563
  -8,083
  -8,620
  -9,174
  -9,745
  -10,337
  -10,950
Free cash flow, $m
  -115
  -148
  -188
  -236
  -289
  -347
  -407
  -465
  -517
  -561
  -593
  -608
  -604
  -579
  -530
  -456
  -357
  -231
  -80
  96
  297
  522
  768
  1,036
  1,324
  1,631
  1,955
  2,297
  2,656
  3,030
Issuance/(repayment) of debt, $m
  97
  141
  198
  269
  356
  458
  575
  706
  849
  1,003
  1,164
  1,331
  1,501
  1,672
  1,843
  2,012
  2,178
  2,340
  2,499
  2,654
  2,806
  2,954
  3,101
  3,246
  3,390
  3,535
  3,681
  3,830
  3,983
  4,139
Issuance/(repurchase) of shares, $m
  34
  30
  23
  11
  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  
  131
  171
  221
  280
  356
  458
  575
  706
  849
  1,003
  1,164
  1,331
  1,501
  1,672
  1,843
  2,012
  2,178
  2,340
  2,499
  2,654
  2,806
  2,954
  3,101
  3,246
  3,390
  3,535
  3,681
  3,830
  3,983
  4,139
Total cash flow (excl. dividends), $m
  16
  23
  33
  45
  67
  111
  169
  242
  332
  441
  571
  723
  896
  1,093
  1,313
  1,556
  1,821
  2,109
  2,419
  2,751
  3,103
  3,476
  3,869
  4,282
  4,714
  5,166
  5,637
  6,128
  6,638
  7,169
Retained Cash Flow (-), $m
  -36
  -53
  -74
  -101
  -133
  -171
  -215
  -264
  -317
  -375
  -435
  -497
  -561
  -625
  -689
  -752
  -814
  -874
  -934
  -992
  -1,048
  -1,104
  -1,159
  -1,213
  -1,267
  -1,321
  -1,375
  -1,431
  -1,488
  -1,547
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
  -20
  -29
  -41
  -56
  -66
  -60
  -46
  -22
  15
  67
  136
  226
  336
  468
  624
  804
  1,007
  1,235
  1,485
  1,759
  2,055
  2,372
  2,711
  3,069
  3,447
  3,845
  4,261
  4,696
  5,150
  5,623
Discount rate, %
  8.20
  8.61
  9.04
  9.49
  9.97
  10.47
  10.99
  11.54
  12.12
  12.72
  13.36
  14.02
  14.73
  15.46
  16.24
  17.05
  17.90
  18.79
  19.73
  20.72
  21.76
  22.84
  23.99
  25.19
  26.45
  27.77
  29.16
  30.61
  32.15
  33.75
PV of cash for distribution, $m
  -18
  -25
  -32
  -39
  -41
  -33
  -22
  -9
  5
  20
  34
  47
  56
  63
  65
  65
  61
  56
  48
  41
  33
  26
  19
  14
  10
  7
  4
  3
  2
  1
Current shareholders' claim on cash, %
  55.4
  38.3
  31.3
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2
  29.2

Mid-Con Energy Partners, LP is engaged in the ownership, acquisition, exploitation and development of producing oil and natural gas properties in North America, with a focus on enhanced oil recovery (EOR). The Company's properties are located in the Mid-Continent and Permian Basin regions of the United States in over four areas: Northeastern Oklahoma; parts of Oklahoma, Colorado and Texas within the Hugoton; Texas Gulf Coast, and Texas within the Eastern Shelf of the Permian. The Company operates approximately 100% of its properties, as calculated on a barrel of oil equivalent (Boe) basis, through its affiliate, Mid-Con Energy Operating, LLC (Mid-Con Energy Operating). The Company designs and manages the development, recompletion or work-over for all of the wells it operates and supervises operation and maintenance activities. Mid-Con Energy Operating provides the Company with management, administrative and operational services under a services agreement.

FINANCIAL RATIOS  of  Mid-Con Energy Partners, LP (MCEP)

Valuation Ratios
P/E Ratio -0.5
Price to Sales 0.3
Price to Book 0.1
Price to Tangible Book
Price to Cash Flow 0.3
Price to Free Cash Flow 0.3
Growth Rates
Sales Growth Rate -54.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -50%
Cap. Spend. - 3 Yr. Gr. Rate -20.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 126.8%
Total Debt to Equity 126.8%
Interest Coverage -3
Management Effectiveness
Return On Assets -6.3%
Ret/ On Assets - 3 Yr. Avg. -7%
Return On Total Capital -8.8%
Ret/ On T. Cap. - 3 Yr. Avg. -9.1%
Return On Equity -20.6%
Return On Equity - 3 Yr. Avg. -19.5%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 40.9%
Gross Margin - 3 Yr. Avg. 59%
EBITDA Margin 9.1%
EBITDA Margin - 3 Yr. Avg. -3.5%
Operating Margin -38.6%
Oper. Margin - 3 Yr. Avg. -36.6%
Pre-Tax Margin -56.8%
Pre-Tax Margin - 3 Yr. Avg. -46.5%
Net Profit Margin -56.8%
Net Profit Margin - 3 Yr. Avg. -46.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

MCEP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MCEP stock intrinsic value calculation we used $73 million for the last fiscal year's total revenue generated by Mid-Con Energy Partners, LP. The default revenue input number comes from 0001 income statement of Mid-Con Energy Partners, LP. 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 MCEP 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 8.2%, whose default value for MCEP is calculated based on our internal credit rating of Mid-Con Energy Partners, LP, 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 Mid-Con Energy Partners, LP.
    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 MCEP stock the variable cost ratio is equal to 45.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $54 million in the base year in the intrinsic value calculation for MCEP 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 6.3% for Mid-Con Energy Partners, LP.

Corporate tax rate of 27% is the nominal tax rate for Mid-Con Energy Partners, LP. 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 MCEP 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 MCEP are equal to 283.8%.

Life of production assets of 12.4 years is the average useful life of capital assets used in Mid-Con Energy Partners, LP 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 MCEP is equal to 6.2%. 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 - $60.409 million for Mid-Con Energy Partners, LP - 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 30.431 million for Mid-Con Energy Partners, LP 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 Mid-Con Energy Partners, LP at the current share price and the inputted number of shares is $0.0 billion.

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