Intrinsic value of Occidental Petroleum - OXY

Previous Close

$65.41

  Intrinsic Value

$48.49

stock screener

  Rating & Target

sell

-26%

Previous close

$65.41

 
Intrinsic value

$48.49

 
Up/down potential

-26%

 
Rating

sell

We calculate the intrinsic value of OXY 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 58.5

 

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, %
  14.70
  13.73
  12.86
  12.07
  11.36
  10.73
  10.15
  9.64
  9.18
  8.76
  8.38
  8.04
  7.74
  7.47
  7.22
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
  5.63
  5.56
  5.51
  5.46
Revenue, $m
  15,225
  17,316
  19,542
  21,901
  24,390
  27,006
  29,749
  32,616
  35,609
  38,728
  41,974
  45,350
  48,860
  52,508
  56,299
  60,238
  64,333
  68,590
  73,018
  77,626
  82,422
  87,418
  92,624
  98,052
  103,713
  109,621
  115,789
  122,231
  128,964
  136,001
Variable operating expenses, $m
  3,502
  3,983
  4,495
  5,037
  5,610
  6,211
  6,842
  7,502
  8,190
  8,907
  9,654
  10,431
  11,238
  12,077
  12,949
  13,855
  14,796
  15,776
  16,794
  17,854
  18,957
  20,106
  21,304
  22,552
  23,854
  25,213
  26,631
  28,113
  29,662
  31,280
Fixed operating expenses, $m
  9,986
  10,206
  10,430
  10,660
  10,894
  11,134
  11,379
  11,629
  11,885
  12,146
  12,414
  12,687
  12,966
  13,251
  13,543
  13,841
  14,145
  14,456
  14,774
  15,099
  15,431
  15,771
  16,118
  16,473
  16,835
  17,205
  17,584
  17,971
  18,366
  18,770
Total operating expenses, $m
  13,488
  14,189
  14,925
  15,697
  16,504
  17,345
  18,221
  19,131
  20,075
  21,053
  22,068
  23,118
  24,204
  25,328
  26,492
  27,696
  28,941
  30,232
  31,568
  32,953
  34,388
  35,877
  37,422
  39,025
  40,689
  42,418
  44,215
  46,084
  48,028
  50,050
Operating income, $m
  1,738
  3,127
  4,617
  6,204
  7,886
  9,661
  11,528
  13,486
  15,534
  17,674
  19,906
  22,233
  24,657
  27,180
  29,807
  32,543
  35,391
  38,358
  41,450
  44,672
  48,034
  51,541
  55,203
  59,027
  63,024
  67,203
  71,574
  76,148
  80,936
  85,951
EBITDA, $m
  6,347
  8,370
  10,534
  12,835
  15,271
  17,838
  20,535
  23,361
  26,316
  29,400
  32,615
  35,964
  39,451
  43,079
  46,854
  50,782
  54,870
  59,126
  63,558
  68,176
  72,990
  78,010
  83,248
  88,716
  94,427
  100,394
  106,633
  113,157
  119,984
  127,130
Interest expense (income), $m
  312
  531
  699
  881
  1,075
  1,281
  1,498
  1,726
  1,965
  2,215
  2,476
  2,747
  3,030
  3,325
  3,630
  3,948
  4,279
  4,622
  4,979
  5,350
  5,736
  6,137
  6,555
  6,991
  7,445
  7,918
  8,411
  8,926
  9,463
  10,025
  10,612
Earnings before tax, $m
  1,207
  2,428
  3,736
  5,129
  6,605
  8,163
  9,802
  11,521
  13,319
  15,198
  17,159
  19,203
  21,332
  23,550
  25,859
  28,264
  30,769
  33,379
  36,100
  38,937
  41,896
  44,986
  48,212
  51,583
  55,106
  58,792
  62,648
  66,684
  70,911
  75,339
Tax expense, $m
  326
  656
  1,009
  1,385
  1,783
  2,204
  2,647
  3,111
  3,596
  4,104
  4,633
  5,185
  5,760
  6,358
  6,982
  7,631
  8,308
  9,012
  9,747
  10,513
  11,312
  12,146
  13,017
  13,927
  14,879
  15,874
  16,915
  18,005
  19,146
  20,342
Net income, $m
  881
  1,773
  2,727
  3,744
  4,822
  5,959
  7,155
  8,410
  9,723
  11,095
  12,526
  14,018
  15,572
  17,191
  18,877
  20,633
  22,461
  24,367
  26,353
  28,424
  30,584
  32,840
  35,195
  37,655
  40,228
  42,918
  45,733
  48,679
  51,765
  54,998

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
  48,181
  54,797
  61,842
  69,307
  77,183
  85,463
  94,142
  103,217
  112,687
  122,556
  132,829
  143,514
  154,621
  166,165
  178,160
  190,626
  203,584
  217,057
  231,070
  245,651
  260,830
  276,640
  293,115
  310,290
  328,206
  346,901
  366,421
  386,809
  408,113
  430,383
Adjusted assets (=assets-cash), $m
  48,181
  54,797
  61,842
  69,307
  77,183
  85,463
  94,142
  103,217
  112,687
  122,556
  132,829
  143,514
  154,621
  166,165
  178,160
  190,626
  203,584
  217,057
  231,070
  245,651
  260,830
  276,640
  293,115
  310,290
  328,206
  346,901
  366,421
  386,809
  408,113
  430,383
Revenue / Adjusted assets
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
Average production assets, $m
  36,419
  41,419
  46,744
  52,387
  58,340
  64,599
  71,159
  78,018
  85,177
  92,637
  100,402
  108,478
  116,874
  125,599
  134,666
  144,089
  153,883
  164,067
  174,659
  185,681
  197,154
  209,105
  221,557
  234,540
  248,082
  262,213
  276,967
  292,378
  308,481
  325,314
Working capital, $m
  -350
  -398
  -449
  -504
  -561
  -621
  -684
  -750
  -819
  -891
  -965
  -1,043
  -1,124
  -1,208
  -1,295
  -1,385
  -1,480
  -1,578
  -1,679
  -1,785
  -1,896
  -2,011
  -2,130
  -2,255
  -2,385
  -2,521
  -2,663
  -2,811
  -2,966
  -3,128
Total debt, $m
  12,946
  16,320
  19,913
  23,720
  27,737
  31,960
  36,386
  41,014
  45,844
  50,878
  56,117
  61,566
  67,231
  73,118
  79,236
  85,593
  92,202
  99,073
  106,219
  113,656
  121,397
  129,460
  137,863
  146,622
  155,759
  165,294
  175,249
  185,646
  196,511
  207,869
Total liabilities, $m
  24,572
  27,946
  31,539
  35,346
  39,363
  43,586
  48,012
  52,640
  57,470
  62,504
  67,743
  73,192
  78,857
  84,744
  90,862
  97,219
  103,828
  110,699
  117,845
  125,282
  133,023
  141,086
  149,489
  158,248
  167,385
  176,920
  186,875
  197,272
  208,137
  219,495
Total equity, $m
  23,609
  26,850
  30,302
  33,960
  37,820
  41,877
  46,129
  50,576
  55,217
  60,053
  65,086
  70,322
  75,764
  81,421
  87,298
  93,407
  99,756
  106,358
  113,224
  120,369
  127,807
  135,554
  143,626
  152,042
  160,821
  169,982
  179,546
  189,536
  199,975
  210,888
Total liabilities and equity, $m
  48,181
  54,796
  61,841
  69,306
  77,183
  85,463
  94,141
  103,216
  112,687
  122,557
  132,829
  143,514
  154,621
  166,165
  178,160
  190,626
  203,584
  217,057
  231,069
  245,651
  260,830
  276,640
  293,115
  310,290
  328,206
  346,902
  366,421
  386,808
  408,112
  430,383
Debt-to-equity ratio
  0.550
  0.610
  0.660
  0.700
  0.730
  0.760
  0.790
  0.810
  0.830
  0.850
  0.860
  0.880
  0.890
  0.900
  0.910
  0.920
  0.920
  0.930
  0.940
  0.940
  0.950
  0.960
  0.960
  0.960
  0.970
  0.970
  0.980
  0.980
  0.980
  0.990
Adjusted equity ratio
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  881
  1,773
  2,727
  3,744
  4,822
  5,959
  7,155
  8,410
  9,723
  11,095
  12,526
  14,018
  15,572
  17,191
  18,877
  20,633
  22,461
  24,367
  26,353
  28,424
  30,584
  32,840
  35,195
  37,655
  40,228
  42,918
  45,733
  48,679
  51,765
  54,998
Depreciation, amort., depletion, $m
  4,610
  5,243
  5,917
  6,631
  7,385
  8,177
  9,007
  9,876
  10,782
  11,726
  12,709
  13,731
  14,794
  15,899
  17,046
  18,239
  19,479
  20,768
  22,109
  23,504
  24,956
  26,469
  28,045
  29,689
  31,403
  33,192
  35,059
  37,010
  39,048
  41,179
Funds from operations, $m
  5,491
  7,016
  8,644
  10,375
  12,207
  14,136
  16,163
  18,286
  20,505
  22,821
  25,235
  27,749
  30,367
  33,090
  35,923
  38,872
  41,940
  45,135
  48,461
  51,928
  55,541
  59,308
  63,240
  67,344
  71,630
  76,110
  80,792
  85,689
  90,813
  96,177
Change in working capital, $m
  -45
  -48
  -51
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -75
  -78
  -81
  -84
  -87
  -91
  -94
  -98
  -102
  -106
  -110
  -115
  -120
  -125
  -130
  -136
  -142
  -148
  -155
  -162
Cash from operations, $m
  5,536
  7,064
  8,695
  10,430
  12,264
  14,196
  16,226
  18,352
  20,574
  22,893
  25,310
  27,827
  30,447
  33,174
  36,011
  38,962
  42,034
  45,233
  48,563
  52,034
  55,651
  59,423
  63,360
  67,469
  71,761
  76,245
  80,934
  85,837
  90,968
  96,338
Maintenance CAPEX, $m
  -4,020
  -4,610
  -5,243
  -5,917
  -6,631
  -7,385
  -8,177
  -9,007
  -9,876
  -10,782
  -11,726
  -12,709
  -13,731
  -14,794
  -15,899
  -17,046
  -18,239
  -19,479
  -20,768
  -22,109
  -23,504
  -24,956
  -26,469
  -28,045
  -29,689
  -31,403
  -33,192
  -35,059
  -37,010
  -39,048
New CAPEX, $m
  -4,663
  -5,000
  -5,325
  -5,643
  -5,953
  -6,259
  -6,560
  -6,859
  -7,159
  -7,460
  -7,765
  -8,076
  -8,396
  -8,725
  -9,067
  -9,423
  -9,794
  -10,184
  -10,592
  -11,022
  -11,474
  -11,950
  -12,453
  -12,983
  -13,542
  -14,132
  -14,754
  -15,411
  -16,103
  -16,833
Cash from investing activities, $m
  -8,683
  -9,610
  -10,568
  -11,560
  -12,584
  -13,644
  -14,737
  -15,866
  -17,035
  -18,242
  -19,491
  -20,785
  -22,127
  -23,519
  -24,966
  -26,469
  -28,033
  -29,663
  -31,360
  -33,131
  -34,978
  -36,906
  -38,922
  -41,028
  -43,231
  -45,535
  -47,946
  -50,470
  -53,113
  -55,881
Free cash flow, $m
  -3,147
  -2,547
  -1,873
  -1,130
  -321
  553
  1,489
  2,485
  3,539
  4,651
  5,819
  7,042
  8,320
  9,654
  11,045
  12,493
  14,001
  15,570
  17,203
  18,903
  20,673
  22,517
  24,438
  26,441
  28,530
  30,711
  32,988
  35,368
  37,855
  40,457
Issuance/(repayment) of debt, $m
  3,118
  3,374
  3,593
  3,807
  4,017
  4,223
  4,426
  4,628
  4,830
  5,033
  5,239
  5,449
  5,665
  5,887
  6,118
  6,358
  6,608
  6,871
  7,147
  7,436
  7,742
  8,063
  8,402
  8,760
  9,137
  9,535
  9,955
  10,398
  10,865
  11,358
Issuance/(repurchase) of shares, $m
  2,156
  1,469
  725
  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  
  5,274
  4,843
  4,318
  3,807
  4,017
  4,223
  4,426
  4,628
  4,830
  5,033
  5,239
  5,449
  5,665
  5,887
  6,118
  6,358
  6,608
  6,871
  7,147
  7,436
  7,742
  8,063
  8,402
  8,760
  9,137
  9,535
  9,955
  10,398
  10,865
  11,358
Total cash flow (excl. dividends), $m
  2,127
  2,296
  2,445
  2,677
  3,696
  4,776
  5,915
  7,113
  8,370
  9,684
  11,058
  12,491
  13,985
  15,541
  17,163
  18,851
  20,609
  22,441
  24,350
  26,340
  28,415
  30,580
  32,840
  35,201
  37,667
  40,246
  42,943
  45,766
  48,720
  51,815
Retained Cash Flow (-), $m
  -3,037
  -3,241
  -3,452
  -3,658
  -3,859
  -4,057
  -4,253
  -4,447
  -4,641
  -4,836
  -5,034
  -5,236
  -5,443
  -5,656
  -5,878
  -6,108
  -6,349
  -6,602
  -6,866
  -7,145
  -7,438
  -7,747
  -8,073
  -8,416
  -8,779
  -9,161
  -9,564
  -9,990
  -10,439
  -10,912
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
  -910
  -945
  -1,007
  -981
  -163
  719
  1,662
  2,666
  3,729
  4,848
  6,024
  7,255
  8,542
  9,885
  11,285
  12,743
  14,260
  15,840
  17,484
  19,195
  20,977
  22,833
  24,768
  26,785
  28,889
  31,085
  33,379
  35,775
  38,281
  40,902
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
  -872
  -866
  -876
  -808
  -127
  521
  1,123
  1,667
  2,142
  2,542
  2,861
  3,096
  3,248
  3,319
  3,313
  3,238
  3,103
  2,917
  2,692
  2,439
  2,170
  1,895
  1,623
  1,364
  1,124
  907
  716
  553
  418
  308
Current shareholders' claim on cash, %
  96.4
  94.4
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5

Occidental Petroleum Corporation (Occidental) is an oil and gas exploration and production company. The Company operates through three segments: oil and gas, chemical (OxyChem), and midstream and marketing. The oil and gas segment explores for, develops and produces oil and condensate, natural gas liquids (NGLs) and natural gas. The OxyChem segment manufactures and markets basic chemicals and vinyls. The midstream and marketing segment gathers, processes, transports, stores, purchases and markets oil, condensate, NGLs, natural gas, carbon dioxide (CO2) and power. The Company also trades around its assets, including transportation and storage capacity. Additionally, the midstream and marketing segment invests in entities that conduct similar activities. Occidental's domestic upstream oil and gas operations are located in New Mexico and Texas. Its international operations are located in Bolivia, Colombia, Oman, Qatar and the United Arab Emirates (UAE).

FINANCIAL RATIOS  of  Occidental Petroleum (OXY)

Valuation Ratios
P/E Ratio -87.1
Price to Sales 4.9
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 14.8
Price to Free Cash Flow -36.3
Growth Rates
Sales Growth Rate -19.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -11.5%
Cap. Spend. - 3 Yr. Gr. Rate -9.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 45.7%
Total Debt to Equity 45.7%
Interest Coverage -5
Management Effectiveness
Return On Assets -0.9%
Ret/ On Assets - 3 Yr. Avg. -5.1%
Return On Total Capital -1.8%
Ret/ On T. Cap. - 3 Yr. Avg. -7.2%
Return On Equity -2.5%
Return On Equity - 3 Yr. Avg. -9.1%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 49.1%
Gross Margin - 3 Yr. Avg. 56%
EBITDA Margin 26.8%
EBITDA Margin - 3 Yr. Avg. 5.8%
Operating Margin -17.2%
Oper. Margin - 3 Yr. Avg. -33.3%
Pre-Tax Margin -18.1%
Pre-Tax Margin - 3 Yr. Avg. -29.6%
Net Profit Margin -5.6%
Net Profit Margin - 3 Yr. Avg. -21.5%
Effective Tax Rate 35.9%
Eff/ Tax Rate - 3 Yr. Avg. 62.4%
Payout Ratio -402.3%

OXY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OXY stock intrinsic value calculation we used $13274 million for the last fiscal year's total revenue generated by Occidental Petroleum. The default revenue input number comes from 0001 income statement of Occidental Petroleum. 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 OXY stock valuation model: a) initial revenue growth rate of 14.7% 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 OXY is calculated based on our internal credit rating of Occidental Petroleum, 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 Occidental Petroleum.
    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 OXY stock the variable cost ratio is equal to 23%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $9771 million in the base year in the intrinsic value calculation for OXY 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 Occidental Petroleum.

Corporate tax rate of 27% is the nominal tax rate for Occidental Petroleum. 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 OXY 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 OXY are equal to 239.2%.

Life of production assets of 7.9 years is the average useful life of capital assets used in Occidental Petroleum 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 OXY is equal to -2.3%. 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 - $20572 million for Occidental Petroleum - 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 894.244 million for Occidental Petroleum 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 Occidental Petroleum at the current share price and the inputted number of shares is $58.5 billion.

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▶ Occidental Earnings, Revenue beat in Q3   [06:44PM  Investing.com]
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▶ Houston cos. among largest Q3 energy deals; More IPOs expected   [03:56PM  American City Business Journals]
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▶ With major tenant departures, Greenway Plaza to transform into 24/7 hub   [Oct-19-18 09:12AM  American City Business Journals]
▶ Occidental Petroleum Announces Dividend   [Oct-18-18 02:45PM  GlobeNewswire]
▶ Texas Supreme Court ends dual taxation at Ingleside terminal   [Oct-12-18 04:38PM  American City Business Journals]
▶ Oxy CEO: 'We believe climate change is real'   [09:20AM  American City Business Journals]
▶ 7 Oil Stocks to Buy as the Energy Market Heats Up   [Oct-08-18 02:45PM  InvestorPlace]
▶ 2 Houston CEOs make Fortunes 2018 Most Powerful Women list   [Sep-25-18 04:33PM  American City Business Journals]
▶ [$$] Exxon and Chevron join industry climate change group   [Sep-19-18 10:02PM  Financial Times]
▶ The 5 Biggest Oil Stocks in the U.S.   [Sep-06-18 02:25PM  Motley Fool]
▶ [$$] Garcia's Take: The Art of Waiting in the Midstream Oil-and-Gas Sector   [Sep-05-18 07:30AM  The Wall Street Journal]
▶ 5 Stocks With Low Price-Book Ratios   [Sep-04-18 03:06PM  GuruFocus.com]
▶ Houston midstream co. to continue Oxy's work at Ingleside   [09:22AM  American City Business Journals]
▶ How a Sugar Land midstream startup bought Oxy's Permian pipeline   [Aug-27-18 03:54PM  American City Business Journals]

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