Intrinsic value of Occidental Petroleum - OXY

Previous Close

$78.55

  Intrinsic Value

$184.52

stock screener

  Rating & Target

str. buy

+135%

Previous close

$78.55

 
Intrinsic value

$184.52

 
Up/down potential

+135%

 
Rating

str. buy

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 2017), $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 60.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  27.70
  25.43
  23.39
  21.55
  19.89
  18.40
  17.06
  15.86
  14.77
  13.79
  12.92
  12.12
  11.41
  10.77
  10.19
  9.67
  9.21
  8.79
  8.41
  8.07
  7.76
  7.48
  7.24
  7.01
  6.81
  6.63
  6.47
  6.32
  6.19
  6.07
Revenue, $m
  16,951
  21,262
  26,234
  31,887
  38,230
  45,266
  52,990
  61,393
  70,462
  80,182
  90,537
  101,514
  113,098
  125,278
  138,048
  151,402
  165,341
  179,867
  194,989
  210,718
  227,069
  244,062
  261,721
  280,073
  299,148
  318,980
  339,607
  361,071
  383,414
  406,684
Variable operating expenses, $m
  3,899
  4,890
  6,034
  7,334
  8,793
  10,411
  12,188
  14,120
  16,206
  18,442
  20,824
  23,348
  26,012
  28,814
  31,751
  34,823
  38,028
  41,369
  44,847
  48,465
  52,226
  56,134
  60,196
  64,417
  68,804
  73,365
  78,110
  83,046
  88,185
  93,537
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
  13,885
  15,096
  16,464
  17,994
  19,687
  21,545
  23,567
  25,749
  28,091
  30,588
  33,238
  36,035
  38,978
  42,065
  45,294
  48,664
  52,173
  55,825
  59,621
  63,564
  67,657
  71,905
  76,314
  80,890
  85,639
  90,570
  95,694
  101,017
  106,551
  112,307
Operating income, $m
  3,066
  6,166
  9,770
  13,893
  18,543
  23,721
  29,424
  35,644
  42,371
  49,594
  57,300
  65,479
  74,119
  83,213
  92,754
  102,739
  113,167
  124,041
  135,367
  147,153
  159,411
  172,157
  185,407
  199,183
  213,509
  228,409
  243,914
  260,054
  276,862
  294,376
EBITDA, $m
  7,121
  11,251
  16,045
  21,521
  27,688
  34,549
  42,099
  50,329
  59,225
  68,773
  78,957
  89,761
  101,172
  113,180
  125,775
  138,955
  152,717
  167,066
  182,009
  197,557
  213,726
  230,537
  248,011
  266,177
  285,065
  304,709
  325,148
  346,422
  368,575
  391,655
Interest expense (income), $m
  312
  531
  849
  1,225
  1,659
  2,151
  2,704
  3,317
  3,990
  4,723
  5,513
  6,360
  7,263
  8,219
  9,229
  10,290
  11,403
  12,567
  13,782
  15,048
  16,366
  17,737
  19,162
  20,643
  22,182
  23,781
  25,443
  27,172
  28,970
  30,840
  32,787
Earnings before tax, $m
  2,536
  5,316
  8,545
  12,235
  16,392
  21,017
  26,107
  31,653
  37,648
  44,081
  50,940
  58,216
  65,900
  73,984
  82,464
  91,336
  100,600
  110,260
  120,319
  130,787
  141,675
  152,995
  164,765
  177,002
  189,728
  202,966
  216,742
  231,084
  246,022
  261,589
Tax expense, $m
  685
  1,435
  2,307
  3,303
  4,426
  5,675
  7,049
  8,546
  10,165
  11,902
  13,754
  15,718
  17,793
  19,976
  22,265
  24,661
  27,162
  29,770
  32,486
  35,313
  38,252
  41,309
  44,486
  47,790
  51,226
  54,801
  58,520
  62,393
  66,426
  70,629
Net income, $m
  1,851
  3,881
  6,238
  8,931
  11,966
  15,343
  19,058
  23,107
  27,483
  32,179
  37,186
  42,498
  48,107
  54,008
  60,199
  66,675
  73,438
  80,489
  87,833
  95,475
  103,423
  111,687
  120,278
  129,211
  138,501
  148,165
  158,222
  168,691
  179,596
  190,960

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
  53,642
  67,283
  83,019
  100,908
  120,982
  143,248
  167,691
  194,282
  222,981
  253,740
  286,511
  321,246
  357,904
  396,450
  436,860
  479,121
  523,230
  569,200
  617,053
  666,828
  718,572
  772,349
  828,231
  886,306
  946,670
  1,009,430
  1,074,707
  1,142,628
  1,213,334
  1,286,974
Adjusted assets (=assets-cash), $m
  53,642
  67,283
  83,019
  100,908
  120,982
  143,248
  167,691
  194,282
  222,981
  253,740
  286,511
  321,246
  357,904
  396,450
  436,860
  479,121
  523,230
  569,200
  617,053
  666,828
  718,572
  772,349
  828,231
  886,306
  946,670
  1,009,430
  1,074,707
  1,142,628
  1,213,334
  1,286,974
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
  40,547
  50,858
  62,752
  76,273
  91,447
  108,277
  126,753
  146,853
  168,545
  191,795
  216,565
  242,821
  270,529
  299,665
  330,210
  362,154
  395,495
  430,242
  466,413
  504,036
  543,148
  583,797
  626,037
  669,934
  715,561
  763,000
  812,341
  863,681
  917,125
  972,787
Working capital, $m
  -4,034
  -5,060
  -6,244
  -7,589
  -9,099
  -10,773
  -12,612
  -14,612
  -16,770
  -19,083
  -21,548
  -24,160
  -26,917
  -29,816
  -32,855
  -36,034
  -39,351
  -42,808
  -46,407
  -50,151
  -54,042
  -58,087
  -62,290
  -66,657
  -71,197
  -75,917
  -80,827
  -85,935
  -91,252
  -96,791
Total debt, $m
  15,731
  22,688
  30,714
  39,837
  50,075
  61,430
  73,896
  87,458
  102,094
  117,781
  134,494
  152,209
  170,905
  190,563
  211,173
  232,726
  255,221
  278,666
  303,071
  328,456
  354,846
  382,272
  410,772
  440,390
  471,176
  503,183
  536,474
  571,114
  607,174
  644,731
Total liabilities, $m
  27,357
  34,314
  42,340
  51,463
  61,701
  73,056
  85,522
  99,084
  113,720
  129,407
  146,120
  163,835
  182,531
  202,189
  222,799
  244,352
  266,847
  290,292
  314,697
  340,082
  366,472
  393,898
  422,398
  452,016
  482,802
  514,809
  548,100
  582,740
  618,800
  656,357
Total equity, $m
  26,285
  32,969
  40,679
  49,445
  59,281
  70,191
  82,169
  95,198
  109,261
  124,333
  140,390
  157,410
  175,373
  194,260
  214,061
  234,769
  256,383
  278,908
  302,356
  326,746
  352,100
  378,451
  405,833
  434,290
  463,868
  494,621
  526,606
  559,888
  594,534
  630,617
Total liabilities and equity, $m
  53,642
  67,283
  83,019
  100,908
  120,982
  143,247
  167,691
  194,282
  222,981
  253,740
  286,510
  321,245
  357,904
  396,449
  436,860
  479,121
  523,230
  569,200
  617,053
  666,828
  718,572
  772,349
  828,231
  886,306
  946,670
  1,009,430
  1,074,706
  1,142,628
  1,213,334
  1,286,974
Debt-to-equity ratio
  0.600
  0.690
  0.760
  0.810
  0.840
  0.880
  0.900
  0.920
  0.930
  0.950
  0.960
  0.970
  0.970
  0.980
  0.990
  0.990
  1.000
  1.000
  1.000
  1.010
  1.010
  1.010
  1.010
  1.010
  1.020
  1.020
  1.020
  1.020
  1.020
  1.020
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
  1,851
  3,881
  6,238
  8,931
  11,966
  15,343
  19,058
  23,107
  27,483
  32,179
  37,186
  42,498
  48,107
  54,008
  60,199
  66,675
  73,438
  80,489
  87,833
  95,475
  103,423
  111,687
  120,278
  129,211
  138,501
  148,165
  158,222
  168,691
  179,596
  190,960
Depreciation, amort., depletion, $m
  4,055
  5,086
  6,275
  7,627
  9,145
  10,828
  12,675
  14,685
  16,855
  19,180
  21,657
  24,282
  27,053
  29,967
  33,021
  36,215
  39,550
  43,024
  46,641
  50,404
  54,315
  58,380
  62,604
  66,993
  71,556
  76,300
  81,234
  86,368
  91,713
  97,279
Funds from operations, $m
  5,906
  8,967
  12,513
  16,559
  21,111
  26,170
  31,733
  37,792
  44,338
  51,358
  58,843
  66,780
  75,160
  83,975
  93,220
  102,891
  112,988
  123,514
  134,474
  145,878
  157,737
  170,066
  182,882
  196,205
  210,057
  224,465
  239,456
  255,059
  271,309
  288,239
Change in working capital, $m
  -875
  -1,026
  -1,183
  -1,345
  -1,510
  -1,675
  -1,838
  -2,000
  -2,158
  -2,313
  -2,465
  -2,612
  -2,757
  -2,899
  -3,039
  -3,178
  -3,317
  -3,457
  -3,599
  -3,743
  -3,892
  -4,044
  -4,203
  -4,368
  -4,540
  -4,720
  -4,909
  -5,108
  -5,318
  -5,538
Cash from operations, $m
  6,781
  9,993
  13,696
  17,904
  22,621
  27,845
  33,571
  39,792
  46,496
  53,672
  61,307
  69,392
  77,917
  86,874
  96,259
  106,069
  116,305
  126,971
  138,073
  149,622
  161,629
  174,111
  187,085
  200,572
  214,597
  229,185
  244,365
  260,168
  276,626
  293,777
Maintenance CAPEX, $m
  -3,176
  -4,055
  -5,086
  -6,275
  -7,627
  -9,145
  -10,828
  -12,675
  -14,685
  -16,855
  -19,180
  -21,657
  -24,282
  -27,053
  -29,967
  -33,021
  -36,215
  -39,550
  -43,024
  -46,641
  -50,404
  -54,315
  -58,380
  -62,604
  -66,993
  -71,556
  -76,300
  -81,234
  -86,368
  -91,713
New CAPEX, $m
  -8,791
  -10,311
  -11,894
  -13,522
  -15,173
  -16,830
  -18,476
  -20,100
  -21,692
  -23,250
  -24,770
  -26,255
  -27,709
  -29,136
  -30,545
  -31,944
  -33,341
  -34,747
  -36,171
  -37,623
  -39,112
  -40,648
  -42,240
  -43,897
  -45,627
  -47,439
  -49,341
  -51,340
  -53,445
  -55,662
Cash from investing activities, $m
  -11,967
  -14,366
  -16,980
  -19,797
  -22,800
  -25,975
  -29,304
  -32,775
  -36,377
  -40,105
  -43,950
  -47,912
  -51,991
  -56,189
  -60,512
  -64,965
  -69,556
  -74,297
  -79,195
  -84,264
  -89,516
  -94,963
  -100,620
  -106,501
  -112,620
  -118,995
  -125,641
  -132,574
  -139,813
  -147,375
Free cash flow, $m
  -5,186
  -4,373
  -3,284
  -1,893
  -180
  1,870
  4,268
  7,017
  10,118
  13,567
  17,357
  21,480
  25,926
  30,685
  35,747
  41,104
  46,748
  52,674
  58,878
  65,358
  72,113
  79,148
  86,465
  94,072
  101,977
  110,190
  118,724
  127,594
  136,814
  146,402
Issuance/(repayment) of debt, $m
  5,903
  6,957
  8,025
  9,123
  10,238
  11,355
  12,466
  13,562
  14,636
  15,687
  16,713
  17,715
  18,695
  19,659
  20,609
  21,553
  22,496
  23,444
  24,405
  25,385
  26,390
  27,426
  28,500
  29,618
  30,785
  32,008
  33,291
  34,640
  36,060
  37,556
Issuance/(repurchase) of shares, $m
  3,862
  2,803
  1,473
  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  
  9,765
  9,760
  9,498
  9,123
  10,238
  11,355
  12,466
  13,562
  14,636
  15,687
  16,713
  17,715
  18,695
  19,659
  20,609
  21,553
  22,496
  23,444
  24,405
  25,385
  26,390
  27,426
  28,500
  29,618
  30,785
  32,008
  33,291
  34,640
  36,060
  37,556
Total cash flow (excl. dividends), $m
  4,579
  5,387
  6,214
  7,231
  10,058
  13,226
  16,734
  20,579
  24,755
  29,254
  34,070
  39,195
  44,622
  50,344
  56,356
  62,657
  69,244
  76,119
  83,283
  90,742
  98,503
  106,574
  114,965
  123,690
  132,762
  142,198
  152,015
  162,234
  172,874
  183,959
Retained Cash Flow (-), $m
  -5,713
  -6,684
  -7,710
  -8,766
  -9,836
  -10,910
  -11,977
  -13,030
  -14,062
  -15,072
  -16,058
  -17,020
  -17,962
  -18,888
  -19,801
  -20,708
  -21,614
  -22,525
  -23,448
  -24,389
  -25,355
  -26,351
  -27,383
  -28,457
  -29,578
  -30,753
  -31,985
  -33,282
  -34,646
  -36,083
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
  -1,133
  -1,297
  -1,496
  -1,535
  221
  2,315
  4,757
  7,549
  10,692
  14,182
  18,013
  22,175
  26,659
  31,456
  36,555
  41,949
  47,631
  53,594
  59,835
  66,353
  73,148
  80,223
  87,582
  95,233
  103,184
  111,445
  120,030
  128,952
  138,228
  147,875
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
  -1,087
  -1,187
  -1,302
  -1,264
  172
  1,680
  3,213
  4,718
  6,142
  7,435
  8,554
  9,463
  10,136
  10,560
  10,732
  10,660
  10,364
  9,870
  9,213
  8,431
  7,566
  6,656
  5,740
  4,850
  4,014
  3,251
  2,576
  1,995
  1,509
  1,113
Current shareholders' claim on cash, %
  94.0
  90.7
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3

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 -104.6
Price to Sales 5.9
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 17.7
Price to Free Cash Flow -43.6
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 2017 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 27.7% 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 10 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 -23.8%. 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 - $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 765 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 $60.1 billion.

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