Intrinsic value of Mid-Con Energy Partners - MCEP

Previous Close

$1.10

  Intrinsic Value

$0.67

stock screener

  Rating & Target

sell

-39%

Previous close

$1.10

 
Intrinsic value

$0.67

 
Up/down potential

-39%

 
Rating

sell

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  58
  59
  61
  63
  65
  67
  69
  71
  74
  77
  80
  83
  87
  90
  94
  98
  103
  107
  112
  117
  123
  129
  135
  141
  148
  155
  162
  170
  178
  187
Variable operating expenses, $m
  74
  76
  78
  80
  83
  85
  88
  91
  95
  99
  102
  107
  111
  116
  121
  126
  132
  138
  144
  150
  157
  165
  172
  181
  189
  198
  208
  218
  228
  239
Fixed operating expenses, $m
  5
  5
  5
  5
  6
  6
  6
  6
  6
  6
  6
  6
  7
  7
  7
  7
  7
  7
  8
  8
  8
  8
  8
  8
  9
  9
  9
  9
  9
  10
Total operating expenses, $m
  79
  81
  83
  85
  89
  91
  94
  97
  101
  105
  108
  113
  118
  123
  128
  133
  139
  145
  152
  158
  165
  173
  180
  189
  198
  207
  217
  227
  237
  249
Operating income, $m
  -21
  -22
  -22
  -23
  -24
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -59
  -62
EBITDA, $m
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
Interest expense (income), $m
  6
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
Earnings before tax, $m
  -27
  -28
  -29
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -37
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -81
  -85
Tax expense, $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
Net income, $m
  -27
  -28
  -29
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -37
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -81
  -85

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
  224
  229
  235
  241
  248
  257
  265
  275
  285
  296
  308
  320
  333
  347
  362
  378
  395
  413
  432
  451
  472
  494
  518
  542
  568
  595
  624
  654
  686
  719
Adjusted assets (=assets-cash), $m
  224
  229
  235
  241
  248
  257
  265
  275
  285
  296
  308
  320
  333
  347
  362
  378
  395
  413
  432
  451
  472
  494
  518
  542
  568
  595
  624
  654
  686
  719
Revenue / Adjusted assets
  0.259
  0.258
  0.260
  0.261
  0.262
  0.261
  0.260
  0.258
  0.260
  0.260
  0.260
  0.259
  0.261
  0.259
  0.260
  0.259
  0.261
  0.259
  0.259
  0.259
  0.261
  0.261
  0.261
  0.260
  0.261
  0.261
  0.260
  0.260
  0.259
  0.260
Average production assets, $m
  241
  247
  253
  260
  268
  277
  286
  296
  307
  319
  332
  345
  359
  375
  391
  408
  426
  445
  465
  487
  509
  533
  558
  585
  612
  642
  673
  705
  739
  775
Working capital, $m
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Total debt, $m
  102
  105
  109
  113
  117
  122
  128
  134
  140
  147
  154
  162
  171
  179
  189
  199
  209
  221
  232
  245
  258
  272
  286
  302
  318
  335
  353
  372
  392
  413
Total liabilities, $m
  140
  144
  147
  151
  156
  161
  167
  173
  179
  186
  193
  201
  209
  218
  228
  238
  248
  259
  271
  284
  297
  311
  325
  341
  357
  374
  392
  411
  431
  451
Total equity, $m
  83
  85
  87
  90
  92
  95
  99
  102
  106
  110
  114
  119
  124
  129
  135
  141
  147
  154
  161
  168
  176
  184
  193
  202
  211
  221
  232
  243
  255
  267
Total liabilities and equity, $m
  223
  229
  234
  241
  248
  256
  266
  275
  285
  296
  307
  320
  333
  347
  363
  379
  395
  413
  432
  452
  473
  495
  518
  543
  568
  595
  624
  654
  686
  718
Debt-to-equity ratio
  1.220
  1.230
  1.240
  1.260
  1.270
  1.280
  1.300
  1.310
  1.320
  1.340
  1.350
  1.360
  1.380
  1.390
  1.400
  1.410
  1.430
  1.440
  1.450
  1.460
  1.470
  1.480
  1.490
  1.500
  1.510
  1.510
  1.520
  1.530
  1.540
  1.540
Adjusted equity ratio
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -27
  -28
  -29
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -37
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -81
  -85
Depreciation, amort., depletion, $m
  18
  19
  19
  20
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  37
  38
  40
  42
  44
  46
  48
  51
  53
  56
  58
Funds from operations, $m
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
Change in working capital, $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 from operations, $m
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
Maintenance CAPEX, $m
  -18
  -18
  -19
  -19
  -20
  -20
  -21
  -22
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
New CAPEX, $m
  -5
  -6
  -6
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
Cash from investing activities, $m
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -53
  -56
  -60
  -62
  -65
  -68
  -72
  -75
  -79
  -83
  -87
  -92
Free cash flow, $m
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -81
  -85
  -89
  -94
  -98
  -103
  -108
  -113
  -119
Issuance/(repayment) of debt, $m
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
Issuance/(repurchase) of shares, $m
  29
  30
  31
  32
  33
  34
  36
  37
  39
  40
  42
  44
  46
  47
  50
  52
  54
  57
  59
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  98
Cash from financing (excl. dividends), $m  
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  52
  54
  56
  59
  62
  65
  68
  71
  74
  78
  82
  86
  89
  94
  98
  103
  108
  113
  119
Total cash flow (excl. dividends), $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
Retained Cash Flow (-), $m
  -29
  -30
  -31
  -32
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -46
  -47
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -81
  -85
  -89
  -93
  -98
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
  -29
  -30
  -31
  -32
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -45
  -47
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -81
  -85
  -89
  -93
  -98
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
  -27
  -25
  -24
  -22
  -21
  -19
  -17
  -15
  -14
  -12
  -11
  -9
  -8
  -6
  -5
  -4
  -3
  -3
  -2
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  66.5
  44.0
  29.0
  19.0
  12.5
  8.1
  5.3
  3.5
  2.2
  1.5
  0.9
  0.6
  0.4
  0.3
  0.2
  0.1
  0.1
  0.0
  0.0
  0.0
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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 (MCEP)

Valuation Ratios
P/E Ratio -1.3
Price to Sales 0.7
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow 0.7
Price to Free Cash Flow 0.9
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 $56.984 million for the last fiscal year's total revenue generated by Mid-Con Energy Partners. The default revenue input number comes from 0001 income statement of Mid-Con Energy Partners. 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 2% 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, 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.
    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 128.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $5 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 5.9% for Mid-Con Energy Partners.

Corporate tax rate of 27% is the nominal tax rate for Mid-Con Energy Partners. 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 414.7%.

Life of production assets of 13.3 years is the average useful life of capital assets used in Mid-Con Energy Partners 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 0.8%. 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 - $81.688 million for Mid-Con Energy Partners - 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 30.436 million for Mid-Con Energy Partners 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 at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Mid-Con: 3Q Earnings Snapshot   [Nov-05-18 07:02PM  Associated Press]
▶ 4 Hot Penny Stocks That Could See Outsized Gains   [Sep-28-18 03:20PM  InvestorPlace]
▶ Mid-Con: 2Q Earnings Snapshot   [Jul-31-18 07:34PM  Associated Press]
▶ Mid-Con: 1Q Earnings Snapshot   [May-02-18 06:25PM  Associated Press]
▶ Mid-Con Energy Partners, LP to Host Earnings Call   [Mar-01-18 07:05AM  ACCESSWIRE]
▶ Mid-Con reports 4Q loss   [06:09AM  Associated Press]
▶ Analyzing LGCYs Correlation with Natural Gas   [Dec-01-17 12:50PM  Market Realist]
▶ Top MLP Losers in the Week Ending November 24   [Nov-28-17 10:44AM  Market Realist]
▶ Last Weeks Worst-Performing MLPs   [Nov-21-17 02:24PM  Market Realist]
▶ Mid-Con reports 3Q loss   [Nov-16-17 05:14AM  Associated Press]
▶ EV Energy Partners Was the Top MLP Gainer Last Week   [Nov-07-17 11:40AM  Market Realist]
▶ Is Mid-Con Energy Partners LP (MCEP) Undervalued?   [Oct-30-17 06:41AM  Simply Wall St.]
▶ The 10 MLPs Most Correlated with Crude Oil   [Oct-11-17 05:48PM  Market Realist]
▶ These MLPs Lost the Most Last Week   [Oct-09-17 02:35PM  Market Realist]
▶ Alerian Index Series September 2017 Index Review   [Sep-08-17 08:30AM  PR Newswire]
▶ Mid-Con reports 2Q loss   [Aug-04-17 02:05AM  Associated Press]
▶ Mid-Con posts 1Q profit   [May-01-17 04:38PM  Associated Press]
▶ Mid-Con reports 4Q loss   [Feb-28-17 07:09PM  Associated Press]

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