Intrinsic value of Newfield Exploration - NFX

Previous Close

$29.78

  Intrinsic Value

$1.17

stock screener

  Rating & Target

str. sell

-96%

  Value-price divergence*

-2%

Previous close

$29.78

 
Intrinsic value

$1.17

 
Up/down potential

-96%

 
Rating

str. sell

 
Value-price divergence*

-2%

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

We calculate the intrinsic value of NFX 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 2016), $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 6.0

 

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, %
  -5.46
  5.50
  5.45
  5.40
  5.36
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.17
  5.16
  5.14
  5.13
  5.11
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
Revenue, $m
  1,472
  1,553
  1,638
  1,726
  1,819
  1,916
  2,017
  2,123
  2,234
  2,351
  2,473
  2,601
  2,735
  2,876
  3,023
  3,178
  3,340
  3,510
  3,689
  3,876
  4,072
  4,278
  4,495
  4,722
  4,960
  5,210
  5,472
  5,747
  6,036
  6,340
  6,658
Variable operating expenses, $m
 
  6,602
  6,961
  7,338
  7,731
  8,143
  8,574
  9,026
  9,499
  9,994
  10,513
  11,057
  11,628
  12,225
  12,852
  13,509
  14,199
  14,922
  15,680
  16,476
  17,311
  18,187
  19,107
  20,071
  21,084
  22,146
  23,262
  24,432
  25,661
  26,951
  28,305
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
  2,391
  6,602
  6,961
  7,338
  7,731
  8,143
  8,574
  9,026
  9,499
  9,994
  10,513
  11,057
  11,628
  12,225
  12,852
  13,509
  14,199
  14,922
  15,680
  16,476
  17,311
  18,187
  19,107
  20,071
  21,084
  22,146
  23,262
  24,432
  25,661
  26,951
  28,305
Operating income, $m
  -919
  -5,049
  -5,324
  -5,612
  -5,913
  -6,228
  -6,557
  -6,903
  -7,264
  -7,643
  -8,040
  -8,456
  -8,892
  -9,349
  -9,829
  -10,331
  -10,859
  -11,412
  -11,992
  -12,600
  -13,239
  -13,909
  -14,612
  -15,350
  -16,124
  -16,937
  -17,790
  -18,685
  -19,624
  -20,611
  -21,646
EBITDA, $m
  -347
  -4,447
  -4,690
  -4,943
  -5,208
  -5,486
  -5,776
  -6,080
  -6,399
  -6,733
  -7,082
  -7,449
  -7,833
  -8,235
  -8,658
  -9,101
  -9,565
  -10,052
  -10,563
  -11,099
  -11,662
  -12,252
  -12,871
  -13,521
  -14,203
  -14,919
  -15,670
  -16,459
  -17,286
  -18,155
  -19,067
Interest expense (income), $m
  97
  97
  104
  112
  120
  128
  137
  147
  156
  166
  177
  188
  200
  212
  225
  239
  253
  267
  283
  299
  316
  334
  353
  373
  394
  415
  438
  462
  487
  514
  542
Earnings before tax, $m
  -1,208
  -5,146
  -5,428
  -5,723
  -6,033
  -6,356
  -6,695
  -7,049
  -7,421
  -7,810
  -8,217
  -8,644
  -9,092
  -9,562
  -10,054
  -10,570
  -11,111
  -11,679
  -12,275
  -12,900
  -13,555
  -14,243
  -14,965
  -15,723
  -16,518
  -17,352
  -18,228
  -19,147
  -20,112
  -21,125
  -22,188
Tax expense, $m
  22
  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
  -1,230
  -5,146
  -5,428
  -5,723
  -6,033
  -6,356
  -6,695
  -7,049
  -7,421
  -7,810
  -8,217
  -8,644
  -9,092
  -9,562
  -10,054
  -10,570
  -11,111
  -11,679
  -12,275
  -12,900
  -13,555
  -14,243
  -14,965
  -15,723
  -16,518
  -17,352
  -18,228
  -19,147
  -20,112
  -21,125
  -22,188

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  580
  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
  4,312
  3,942
  4,156
  4,381
  4,616
  4,862
  5,119
  5,389
  5,671
  5,967
  6,277
  6,602
  6,942
  7,299
  7,673
  8,066
  8,477
  8,909
  9,362
  9,837
  10,336
  10,859
  11,408
  11,984
  12,588
  13,223
  13,888
  14,587
  15,321
  16,091
  16,899
Adjusted assets (=assets-cash), $m
  3,732
  3,942
  4,156
  4,381
  4,616
  4,862
  5,119
  5,389
  5,671
  5,967
  6,277
  6,602
  6,942
  7,299
  7,673
  8,066
  8,477
  8,909
  9,362
  9,837
  10,336
  10,859
  11,408
  11,984
  12,588
  13,223
  13,888
  14,587
  15,321
  16,091
  16,899
Revenue / Adjusted assets
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
Average production assets, $m
  3,649
  3,850
  4,060
  4,279
  4,509
  4,749
  5,000
  5,264
  5,539
  5,828
  6,131
  6,448
  6,781
  7,129
  7,495
  7,878
  8,280
  8,702
  9,144
  9,608
  10,095
  10,606
  11,142
  11,705
  12,295
  12,915
  13,565
  14,248
  14,964
  15,716
  16,506
Working capital, $m
  265
  -332
  -350
  -369
  -389
  -410
  -432
  -454
  -478
  -503
  -529
  -557
  -585
  -615
  -647
  -680
  -715
  -751
  -789
  -829
  -871
  -916
  -962
  -1,010
  -1,061
  -1,115
  -1,171
  -1,230
  -1,292
  -1,357
  -1,425
Total debt, $m
  2,431
  2,604
  2,798
  3,000
  3,211
  3,433
  3,664
  3,907
  4,161
  4,427
  4,706
  4,999
  5,305
  5,626
  5,963
  6,316
  6,687
  7,075
  7,483
  7,910
  8,359
  8,830
  9,324
  9,842
  10,386
  10,957
  11,557
  12,186
  12,846
  13,539
  14,266
Total liabilities, $m
  3,374
  3,547
  3,741
  3,943
  4,154
  4,376
  4,607
  4,850
  5,104
  5,370
  5,649
  5,942
  6,248
  6,569
  6,906
  7,259
  7,630
  8,018
  8,426
  8,853
  9,302
  9,773
  10,267
  10,785
  11,329
  11,900
  12,500
  13,129
  13,789
  14,482
  15,209
Total equity, $m
  938
  394
  416
  438
  462
  486
  512
  539
  567
  597
  628
  660
  694
  730
  767
  807
  848
  891
  936
  984
  1,034
  1,086
  1,141
  1,198
  1,259
  1,322
  1,389
  1,459
  1,532
  1,609
  1,690
Total liabilities and equity, $m
  4,312
  3,941
  4,157
  4,381
  4,616
  4,862
  5,119
  5,389
  5,671
  5,967
  6,277
  6,602
  6,942
  7,299
  7,673
  8,066
  8,478
  8,909
  9,362
  9,837
  10,336
  10,859
  11,408
  11,983
  12,588
  13,222
  13,889
  14,588
  15,321
  16,091
  16,899
Debt-to-equity ratio
  2.592
  6.610
  6.730
  6.850
  6.960
  7.060
  7.160
  7.250
  7.340
  7.420
  7.500
  7.570
  7.640
  7.710
  7.770
  7.830
  7.890
  7.940
  7.990
  8.040
  8.090
  8.130
  8.170
  8.210
  8.250
  8.290
  8.320
  8.350
  8.380
  8.410
  8.440
Adjusted equity ratio
  0.096
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,230
  -5,146
  -5,428
  -5,723
  -6,033
  -6,356
  -6,695
  -7,049
  -7,421
  -7,810
  -8,217
  -8,644
  -9,092
  -9,562
  -10,054
  -10,570
  -11,111
  -11,679
  -12,275
  -12,900
  -13,555
  -14,243
  -14,965
  -15,723
  -16,518
  -17,352
  -18,228
  -19,147
  -20,112
  -21,125
  -22,188
Depreciation, amort., depletion, $m
  572
  602
  634
  669
  704
  742
  781
  822
  866
  911
  958
  1,008
  1,059
  1,114
  1,171
  1,231
  1,294
  1,360
  1,429
  1,501
  1,577
  1,657
  1,741
  1,829
  1,921
  2,018
  2,120
  2,226
  2,338
  2,456
  2,579
Funds from operations, $m
  842
  -4,544
  -4,794
  -5,055
  -5,328
  -5,614
  -5,913
  -6,227
  -6,555
  -6,899
  -7,259
  -7,637
  -8,033
  -8,448
  -8,883
  -9,339
  -9,818
  -10,319
  -10,846
  -11,398
  -11,978
  -12,586
  -13,224
  -13,894
  -14,597
  -15,334
  -16,108
  -16,921
  -17,774
  -18,669
  -19,609
Change in working capital, $m
  16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -53
  -56
  -59
  -62
  -65
  -68
Cash from operations, $m
  826
  -4,527
  -4,776
  -5,036
  -5,308
  -5,593
  -5,892
  -6,204
  -6,531
  -6,874
  -7,233
  -7,610
  -8,004
  -8,418
  -8,851
  -9,306
  -9,783
  -10,283
  -10,808
  -11,358
  -11,936
  -12,542
  -13,178
  -13,845
  -14,546
  -15,281
  -16,052
  -16,862
  -17,712
  -18,604
  -19,541
Maintenance CAPEX, $m
  0
  -570
  -602
  -634
  -669
  -704
  -742
  -781
  -822
  -866
  -911
  -958
  -1,008
  -1,059
  -1,114
  -1,171
  -1,231
  -1,294
  -1,360
  -1,429
  -1,501
  -1,577
  -1,657
  -1,741
  -1,829
  -1,921
  -2,018
  -2,120
  -2,226
  -2,338
  -2,456
New CAPEX, $m
  -1,371
  -201
  -210
  -219
  -230
  -240
  -251
  -263
  -276
  -289
  -303
  -317
  -333
  -349
  -366
  -383
  -402
  -422
  -442
  -464
  -487
  -511
  -536
  -563
  -590
  -620
  -650
  -683
  -717
  -752
  -790
Cash from investing activities, $m
  -991
  -771
  -812
  -853
  -899
  -944
  -993
  -1,044
  -1,098
  -1,155
  -1,214
  -1,275
  -1,341
  -1,408
  -1,480
  -1,554
  -1,633
  -1,716
  -1,802
  -1,893
  -1,988
  -2,088
  -2,193
  -2,304
  -2,419
  -2,541
  -2,668
  -2,803
  -2,943
  -3,090
  -3,246
Free cash flow, $m
  -165
  -5,298
  -5,587
  -5,890
  -6,206
  -6,538
  -6,885
  -7,249
  -7,629
  -8,028
  -8,447
  -8,885
  -9,344
  -9,826
  -10,331
  -10,860
  -11,416
  -11,999
  -12,610
  -13,251
  -13,924
  -14,630
  -15,371
  -16,149
  -16,965
  -17,821
  -18,720
  -19,664
  -20,655
  -21,694
  -22,786
Issuance/(repayment) of debt, $m
  -39
  173
  193
  202
  212
  221
  232
  243
  254
  266
  279
  292
  306
  321
  337
  353
  370
  389
  408
  428
  449
  471
  494
  518
  544
  571
  599
  629
  660
  693
  728
Issuance/(repurchase) of shares, $m
  757
  5,182
  5,449
  5,746
  6,056
  6,381
  6,720
  7,076
  7,449
  7,839
  8,248
  8,677
  9,126
  9,597
  10,091
  10,609
  11,152
  11,722
  12,320
  12,947
  13,605
  14,296
  15,020
  15,780
  16,578
  17,416
  18,294
  19,217
  20,185
  21,202
  22,269
Cash from financing (excl. dividends), $m  
  715
  5,355
  5,642
  5,948
  6,268
  6,602
  6,952
  7,319
  7,703
  8,105
  8,527
  8,969
  9,432
  9,918
  10,428
  10,962
  11,522
  12,111
  12,728
  13,375
  14,054
  14,767
  15,514
  16,298
  17,122
  17,987
  18,893
  19,846
  20,845
  21,895
  22,997
Total cash flow (excl. dividends), $m
  550
  57
  56
  58
  61
  64
  67
  70
  73
  77
  81
  85
  89
  93
  97
  102
  107
  112
  118
  124
  130
  136
  143
  150
  157
  165
  173
  182
  191
  200
  210
Retained Cash Flow (-), $m
  441
  -5,182
  -5,449
  -5,746
  -6,056
  -6,381
  -6,720
  -7,076
  -7,449
  -7,839
  -8,248
  -8,677
  -9,126
  -9,597
  -10,091
  -10,609
  -11,152
  -11,722
  -12,320
  -12,947
  -13,605
  -14,296
  -15,020
  -15,780
  -16,578
  -17,416
  -18,294
  -19,217
  -20,185
  -21,202
  -22,269
Prev. year cash balance distribution, $m
 
  580
  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
 
  -4,545
  -5,394
  -5,687
  -5,995
  -6,317
  -6,653
  -7,006
  -7,375
  -7,762
  -8,168
  -8,592
  -9,038
  -9,504
  -9,994
  -10,507
  -11,045
  -11,610
  -12,202
  -12,824
  -13,475
  -14,159
  -14,877
  -15,630
  -16,421
  -17,250
  -18,121
  -19,035
  -19,994
  -21,001
  -22,058
Discount rate, %
 
  6.60
  6.93
  7.28
  7.64
  8.02
  8.42
  8.84
  9.29
  9.75
  10.24
  10.75
  11.29
  11.85
  12.45
  13.07
  13.72
  14.41
  15.13
  15.88
  16.68
  17.51
  18.39
  19.31
  20.27
  21.29
  22.35
  23.47
  24.64
  25.87
  27.17
PV of cash for distribution, $m
 
  -4,263
  -4,717
  -4,607
  -4,466
  -4,295
  -4,096
  -3,871
  -3,624
  -3,360
  -3,081
  -2,794
  -2,504
  -2,216
  -1,934
  -1,665
  -1,412
  -1,178
  -967
  -779
  -616
  -478
  -363
  -270
  -196
  -139
  -96
  -64
  -42
  -27
  -16
Current shareholders' claim on cash, %
  100
  30.6
  9.7
  3.1
  1.0
  0.3
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Newfield Exploration Company is an independent exploration and production company. It is engaged in the exploration, development and production of crude oil, natural gas and natural gas liquids. Its operating segments are the United States and China. Its the United States operations are onshore and focus primarily on large scale, liquids resource plays. Its principal areas of operation are the Anadarko and Arkoma basins of Oklahoma, the Williston Basin of North Dakota and the Uinta Basin of Utah. It has oil producing assets offshore China. As of December 31, 2016, its proved reserves of 513 million barrels of oil equivalents (MMBOE) consisted of 304 MMBOE proved developed producing, 10 MMBOE proved developed non-producing and 199 MMBOE proved undeveloped reserves. As of December 31, 2016, its proved liquids reserves were 285 million barrels of crude oil or other liquid hydrocarbons. As of December 31, 2016, 67% of its proved liquids reserves were crude oil or condensate.

FINANCIAL RATIOS  of  Newfield Exploration (NFX)

Valuation Ratios
P/E Ratio -4.8
Price to Sales 4
Price to Book 6.3
Price to Tangible Book
Price to Cash Flow 7.2
Price to Free Cash Flow -10.9
Growth Rates
Sales Growth Rate -5.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -21.4%
Cap. Spend. - 3 Yr. Gr. Rate -8.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 259.2%
Total Debt to Equity 259.2%
Interest Coverage -11
Management Effectiveness
Return On Assets -24.9%
Ret/ On Assets - 3 Yr. Avg. -20.1%
Return On Total Capital -34.1%
Ret/ On T. Cap. - 3 Yr. Avg. -28%
Return On Equity -106.2%
Return On Equity - 3 Yr. Avg. -69.1%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 80.6%
Gross Margin - 3 Yr. Avg. 80.1%
EBITDA Margin -36.6%
EBITDA Margin - 3 Yr. Avg. -65.6%
Operating Margin -62.4%
Oper. Margin - 3 Yr. Avg. -120.8%
Pre-Tax Margin -82.1%
Pre-Tax Margin - 3 Yr. Avg. -118.2%
Net Profit Margin -83.6%
Net Profit Margin - 3 Yr. Avg. -86.7%
Effective Tax Rate -1.8%
Eff/ Tax Rate - 3 Yr. Avg. 22.4%
Payout Ratio 0%

NFX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NFX stock intrinsic value calculation we used $1472 million for the last fiscal year's total revenue generated by Newfield Exploration. The default revenue input number comes from 2016 income statement of Newfield Exploration. 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 NFX stock valuation model: a) initial revenue growth rate of 5.5% 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 6.6%, whose default value for NFX is calculated based on our internal credit rating of Newfield Exploration, 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 Newfield Exploration.
    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 NFX stock the variable cost ratio is equal to 425.1%.

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 NFX 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 4% for Newfield Exploration.

Corporate tax rate of 27% is the nominal tax rate for Newfield Exploration. 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 NFX 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 NFX are equal to 247.9%.

Life of production assets of 6.4 years is the average useful life of capital assets used in Newfield Exploration 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 NFX is equal to -21.4%. 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 - $938 million for Newfield Exploration - 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 201.106 million for Newfield Exploration 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 Newfield Exploration at the current share price and the inputted number of shares is $6.0 billion.

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COMPANY NEWS

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▶ Will US Natural Gas Production Surpass Consumption?   [Aug-18-17 10:53AM  Market Realist]
▶ The Biggest Loser: Newfield Exploration Drops 5%   [Aug-07-17 05:23PM  Barrons.com]
▶ The Hot Stock: Newfield Exploration Jumps 5.5%   [Aug-04-17 05:57PM  Barrons.com]
▶ U.S. Shale Heavyweights To Boost Production This Year   [Aug-02-17 04:00PM  Oilprice.com]
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▶ Newfield misses Street 2Q forecasts   [Aug-01-17 09:40PM  Associated Press]
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▶ Analyzing the US Crude Oil and Natural Gas Rig Count   [Jul-17-17 07:38AM  Market Realist]
▶ Slowing Natural Gas Inventories Could Drive Prices   [Jul-14-17 02:05PM  Market Realist]
▶ The options market says buy this oil player   [Jun-29-17 02:22PM  CNBC Videos]
▶ Weather Could Rescue Natural Gas Bulls Next Week   [Jun-23-17 01:05PM  Market Realist]
▶ Underperforming Energy Sector May Soon See M&A Wave   [Jun-22-17 07:00PM  Oilprice.com]
▶ [$$] Frackers Collide With Traditional Oil Drillers   [Jun-21-17 01:02AM  The Wall Street Journal]
▶ Newfield Exploration to Present at Upcoming Event   [Jun-20-17 04:39PM  PR Newswire]
▶ Lower US Natural Gas Inventories, Prices Reach a 2-Week High   [Jun-16-17 02:35PM  Market Realist]
▶ The Biggest Loser: Newfield Exploration Tumbles 5%   [Jun-02-17 05:59PM  Barrons.com]
▶ Natural Gas Traders Are Tracking Weather Forecasts This Week   [May-26-17 10:38AM  Market Realist]
▶ Newfield Exploration to Present at Upcoming Event   [May-16-17 10:40AM  PR Newswire]
▶ US Natural Gas Inventories by Region: Week Ending May 5   [May-15-17 07:36AM  Market Realist]
Financial statements of NFX
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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