Intrinsic value of PDC Energy, Inc. - PDCE

Previous Close

$32.09

  Intrinsic Value

$9.55

stock screener

  Rating & Target

str. sell

-70%

Previous close

$32.09

 
Intrinsic value

$9.55

 
Up/down potential

-70%

 
Rating

str. sell

We calculate the intrinsic value of PDCE 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 2.1

 

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
  2,478
  3,829
  5,726
  8,309
  11,723
  16,116
  21,632
  28,404
  36,549
  46,165
  57,326
  70,087
  84,478
  100,512
  118,185
  137,477
  158,362
  180,806
  204,772
  230,225
  257,131
  285,461
  315,196
  346,320
  378,830
  412,729
  448,032
  484,763
  522,955
  562,650
Variable operating expenses, $m
  1,071
  1,654
  2,474
  3,589
  5,064
  6,962
  9,345
  12,271
  15,789
  19,943
  24,765
  30,278
  36,495
  43,421
  51,056
  59,390
  68,413
  78,108
  88,462
  99,457
  111,080
  123,319
  136,165
  149,610
  163,654
  178,299
  193,550
  209,418
  225,916
  243,065
Fixed operating expenses, $m
  838
  856
  875
  895
  914
  934
  955
  976
  997
  1,019
  1,042
  1,065
  1,088
  1,112
  1,137
  1,162
  1,187
  1,213
  1,240
  1,267
  1,295
  1,324
  1,353
  1,382
  1,413
  1,444
  1,476
  1,508
  1,541
  1,575
Total operating expenses, $m
  1,909
  2,510
  3,349
  4,484
  5,978
  7,896
  10,300
  13,247
  16,786
  20,962
  25,807
  31,343
  37,583
  44,533
  52,193
  60,552
  69,600
  79,321
  89,702
  100,724
  112,375
  124,643
  137,518
  150,992
  165,067
  179,743
  195,026
  210,926
  227,457
  244,640
Operating income, $m
  570
  1,318
  2,377
  3,825
  5,744
  8,219
  11,332
  15,158
  19,763
  25,202
  31,520
  38,745
  46,896
  55,979
  65,992
  76,926
  88,763
  101,485
  115,071
  129,501
  144,755
  160,819
  177,679
  195,327
  213,763
  232,986
  253,007
  273,837
  295,497
  318,010
EBITDA, $m
  1,464
  2,700
  4,444
  6,823
  9,974
  14,035
  19,138
  25,407
  32,951
  41,861
  52,205
  64,035
  77,379
  92,248
  108,639
  126,534
  145,907
  166,728
  188,962
  212,576
  237,540
  263,826
  291,415
  320,295
  350,461
  381,918
  414,677
  448,762
  484,203
  521,039
Interest expense (income), $m
  43
  72
  144
  250
  398
  600
  866
  1,210
  1,641
  2,170
  2,806
  3,557
  4,429
  5,426
  6,550
  7,803
  9,184
  10,691
  12,322
  14,076
  15,948
  17,937
  20,039
  22,252
  24,575
  27,006
  29,546
  32,194
  34,952
  37,822
  40,806
Earnings before tax, $m
  498
  1,174
  2,128
  3,427
  5,144
  7,353
  10,122
  13,517
  17,593
  22,396
  27,962
  34,316
  41,469
  49,429
  58,189
  67,742
  78,072
  89,162
  100,995
  113,553
  126,819
  140,780
  155,427
  170,753
  186,756
  203,440
  220,812
  238,885
  257,675
  277,204
Tax expense, $m
  134
  317
  574
  925
  1,389
  1,985
  2,733
  3,650
  4,750
  6,047
  7,550
  9,265
  11,197
  13,346
  15,711
  18,290
  21,079
  24,074
  27,269
  30,659
  34,241
  38,011
  41,965
  46,103
  50,424
  54,929
  59,619
  64,499
  69,572
  74,845
Net income, $m
  364
  857
  1,553
  2,502
  3,755
  5,368
  7,389
  9,867
  12,843
  16,349
  20,413
  25,050
  30,273
  36,083
  42,478
  49,452
  56,993
  65,088
  73,726
  82,893
  92,578
  102,769
  113,462
  124,649
  136,332
  148,511
  161,193
  174,386
  188,103
  202,359

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
  7,268
  11,229
  16,793
  24,366
  34,377
  47,260
  63,437
  83,297
  107,183
  135,381
  168,112
  205,533
  247,737
  294,758
  346,583
  403,159
  464,406
  530,223
  600,506
  675,147
  754,049
  837,130
  924,328
  1,015,602
  1,110,938
  1,210,349
  1,313,878
  1,421,593
  1,533,592
  1,650,000
Adjusted assets (=assets-cash), $m
  7,268
  11,229
  16,793
  24,366
  34,377
  47,260
  63,437
  83,297
  107,183
  135,381
  168,112
  205,533
  247,737
  294,758
  346,583
  403,159
  464,406
  530,223
  600,506
  675,147
  754,049
  837,130
  924,328
  1,015,602
  1,110,938
  1,210,349
  1,313,878
  1,421,593
  1,533,592
  1,650,000
Revenue / Adjusted assets
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
Average production assets, $m
  6,350
  9,810
  14,671
  21,287
  30,033
  41,289
  55,421
  72,772
  93,640
  118,274
  146,870
  179,563
  216,433
  257,513
  302,790
  352,217
  405,724
  463,225
  524,627
  589,836
  658,769
  731,352
  807,532
  887,272
  970,562
  1,057,412
  1,147,859
  1,241,963
  1,339,810
  1,441,509
Working capital, $m
  -268
  -414
  -618
  -897
  -1,266
  -1,741
  -2,336
  -3,068
  -3,947
  -4,986
  -6,191
  -7,569
  -9,124
  -10,855
  -12,764
  -14,848
  -17,103
  -19,527
  -22,115
  -24,864
  -27,770
  -30,830
  -34,041
  -37,403
  -40,914
  -44,575
  -48,387
  -52,354
  -56,479
  -60,766
Total debt, $m
  2,404
  4,163
  6,634
  9,996
  14,441
  20,161
  27,344
  36,161
  46,767
  59,287
  73,819
  90,434
  109,173
  130,050
  153,060
  178,180
  205,374
  234,597
  265,802
  298,942
  333,975
  370,863
  409,579
  450,105
  492,434
  536,573
  582,539
  630,365
  680,092
  731,777
Total liabilities, $m
  3,227
  4,986
  7,456
  10,819
  15,263
  20,984
  28,166
  36,984
  47,589
  60,109
  74,642
  91,257
  109,995
  130,873
  153,883
  179,003
  206,196
  235,419
  266,624
  299,765
  334,798
  371,686
  410,402
  450,927
  493,256
  537,395
  583,362
  631,187
  680,915
  732,600
Total equity, $m
  4,041
  6,243
  9,337
  13,548
  19,114
  26,277
  35,271
  46,313
  59,594
  75,272
  93,470
  114,277
  137,742
  163,885
  192,700
  224,157
  258,210
  294,804
  333,881
  375,381
  419,251
  465,445
  513,926
  564,675
  617,681
  672,954
  730,516
  790,406
  852,677
  917,400
Total liabilities and equity, $m
  7,268
  11,229
  16,793
  24,367
  34,377
  47,261
  63,437
  83,297
  107,183
  135,381
  168,112
  205,534
  247,737
  294,758
  346,583
  403,160
  464,406
  530,223
  600,505
  675,146
  754,049
  837,131
  924,328
  1,015,602
  1,110,937
  1,210,349
  1,313,878
  1,421,593
  1,533,592
  1,650,000
Debt-to-equity ratio
  0.600
  0.670
  0.710
  0.740
  0.760
  0.770
  0.780
  0.780
  0.780
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
Adjusted equity ratio
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556
  0.556

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  364
  857
  1,553
  2,502
  3,755
  5,368
  7,389
  9,867
  12,843
  16,349
  20,413
  25,050
  30,273
  36,083
  42,478
  49,452
  56,993
  65,088
  73,726
  82,893
  92,578
  102,769
  113,462
  124,649
  136,332
  148,511
  161,193
  174,386
  188,103
  202,359
Depreciation, amort., depletion, $m
  894
  1,382
  2,066
  2,998
  4,230
  5,815
  7,806
  10,250
  13,189
  16,658
  20,686
  25,291
  30,484
  36,269
  42,646
  49,608
  57,144
  65,243
  73,891
  83,076
  92,784
  103,007
  113,737
  124,968
  136,699
  148,931
  161,670
  174,924
  188,706
  203,029
Funds from operations, $m
  1,258
  2,239
  3,619
  5,500
  7,985
  11,183
  15,195
  20,117
  26,032
  33,008
  41,098
  50,341
  60,756
  72,352
  85,125
  99,060
  114,137
  130,331
  147,617
  165,969
  185,362
  205,777
  227,198
  249,617
  273,031
  297,443
  322,863
  349,310
  376,808
  405,389
Change in working capital, $m
  -100
  -146
  -205
  -279
  -369
  -474
  -596
  -731
  -880
  -1,038
  -1,205
  -1,378
  -1,554
  -1,732
  -1,909
  -2,084
  -2,256
  -2,424
  -2,588
  -2,749
  -2,906
  -3,060
  -3,211
  -3,361
  -3,511
  -3,661
  -3,813
  -3,967
  -4,125
  -4,287
Cash from operations, $m
  1,358
  2,385
  3,824
  5,779
  8,354
  11,657
  15,791
  20,848
  26,911
  34,046
  42,304
  51,719
  62,311
  74,084
  87,033
  101,143
  116,392
  132,755
  150,206
  168,718
  188,268
  208,837
  230,410
  252,979
  276,542
  301,104
  326,676
  353,277
  380,933
  409,676
Maintenance CAPEX, $m
  -559
  -894
  -1,382
  -2,066
  -2,998
  -4,230
  -5,815
  -7,806
  -10,250
  -13,189
  -16,658
  -20,686
  -25,291
  -30,484
  -36,269
  -42,646
  -49,608
  -57,144
  -65,243
  -73,891
  -83,076
  -92,784
  -103,007
  -113,737
  -124,968
  -136,699
  -148,931
  -161,670
  -174,924
  -188,706
New CAPEX, $m
  -2,381
  -3,461
  -4,861
  -6,616
  -8,746
  -11,255
  -14,133
  -17,350
  -20,868
  -24,635
  -28,596
  -32,693
  -36,871
  -41,080
  -45,277
  -49,427
  -53,507
  -57,501
  -61,401
  -65,209
  -68,932
  -72,583
  -76,179
  -79,741
  -83,290
  -86,850
  -90,447
  -94,104
  -97,847
  -101,699
Cash from investing activities, $m
  -2,940
  -4,355
  -6,243
  -8,682
  -11,744
  -15,485
  -19,948
  -25,156
  -31,118
  -37,824
  -45,254
  -53,379
  -62,162
  -71,564
  -81,546
  -92,073
  -103,115
  -114,645
  -126,644
  -139,100
  -152,008
  -165,367
  -179,186
  -193,478
  -208,258
  -223,549
  -239,378
  -255,774
  -272,771
  -290,405
Free cash flow, $m
  -1,582
  -1,970
  -2,418
  -2,904
  -3,390
  -3,828
  -4,157
  -4,308
  -4,206
  -3,777
  -2,950
  -1,660
  149
  2,521
  5,487
  9,069
  13,277
  18,110
  23,561
  29,617
  36,260
  43,469
  51,223
  59,501
  68,284
  77,555
  87,298
  97,503
  108,162
  119,271
Issuance/(repayment) of debt, $m
  1,210
  1,759
  2,470
  3,362
  4,445
  5,720
  7,183
  8,818
  10,605
  12,520
  14,533
  16,615
  18,738
  20,877
  23,010
  25,120
  27,193
  29,223
  31,205
  33,141
  35,033
  36,888
  38,716
  40,526
  42,329
  44,139
  45,967
  47,825
  49,728
  51,685
Issuance/(repurchase) of shares, $m
  1,151
  1,345
  1,541
  1,709
  1,811
  1,796
  1,605
  1,175
  438
  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  
  2,361
  3,104
  4,011
  5,071
  6,256
  7,516
  8,788
  9,993
  11,043
  12,520
  14,533
  16,615
  18,738
  20,877
  23,010
  25,120
  27,193
  29,223
  31,205
  33,141
  35,033
  36,888
  38,716
  40,526
  42,329
  44,139
  45,967
  47,825
  49,728
  51,685
Total cash flow (excl. dividends), $m
  778
  1,134
  1,593
  2,168
  2,865
  3,688
  4,630
  5,685
  6,837
  8,742
  11,583
  14,955
  18,888
  23,398
  28,498
  34,189
  40,470
  47,333
  54,767
  62,758
  71,292
  80,357
  89,939
  100,027
  110,614
  121,694
  133,265
  145,328
  157,889
  170,956
Retained Cash Flow (-), $m
  -1,514
  -2,202
  -3,094
  -4,211
  -5,566
  -7,163
  -8,994
  -11,042
  -13,281
  -15,678
  -18,199
  -20,806
  -23,465
  -26,144
  -28,815
  -31,456
  -34,053
  -36,595
  -39,077
  -41,500
  -43,870
  -46,193
  -48,482
  -50,748
  -53,007
  -55,273
  -57,562
  -59,889
  -62,271
  -64,723
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
  -736
  -1,069
  -1,501
  -2,043
  -2,701
  -3,476
  -4,364
  -5,358
  -6,444
  -6,936
  -6,616
  -5,851
  -4,577
  -2,745
  -317
  2,733
  6,417
  10,738
  15,690
  21,257
  27,423
  34,164
  41,457
  49,279
  57,607
  66,421
  75,703
  85,439
  95,618
  106,233
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
  -706
  -978
  -1,306
  -1,682
  -2,093
  -2,522
  -2,948
  -3,349
  -3,702
  -3,636
  -3,142
  -2,497
  -1,740
  -922
  -93
  694
  1,396
  1,978
  2,416
  2,701
  2,836
  2,835
  2,717
  2,510
  2,241
  1,938
  1,625
  1,322
  1,044
  800
Current shareholders' claim on cash, %
  64.8
  46.4
  35.9
  29.5
  25.4
  22.9
  21.3
  20.5
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3

PDC Energy, Inc. is an independent exploration and production company. The Company produces, develops, acquires and explores for crude oil, natural gas and natural gas liquids (NGLs) with operations in the Wattenberg Field in Colorado and the Utica Shale in southeastern Ohio. The Company operates through two segments: Oil and Gas Exploration and Production, and Gas Marketing. The Company's Oil and Gas Exploration and Production segment includes all of its crude oil and natural gas properties. The Company's Gas Marketing segment purchases, aggregates and resells natural gas. The Company's operations in the Wattenberg Field are focused on the horizontal Niobrara and Codell plays. Its Delaware Basin operations are focused in the Wolfcamp zones and its Ohio operations are focused in the Utica Shale play. As of December 31, 2016, the Company owned an interest in approximately 2,900 productive gross wells.

FINANCIAL RATIOS  of  PDC Energy, Inc. (PDCE)

Valuation Ratios
P/E Ratio -8.6
Price to Sales 5.5
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 4.3
Price to Free Cash Flow -2.1
Growth Rates
Sales Growth Rate -35.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 150.2%
Cap. Spend. - 3 Yr. Gr. Rate 30.8%
Financial Strength
Quick Ratio 244
Current Ratio 0
LT Debt to Equity 39.8%
Total Debt to Equity 39.9%
Interest Coverage -8
Management Effectiveness
Return On Assets -6.4%
Ret/ On Assets - 3 Yr. Avg. 0.1%
Return On Total Capital -8.8%
Ret/ On T. Cap. - 3 Yr. Avg. -1.1%
Return On Equity -12.6%
Return On Equity - 3 Yr. Avg. -1.2%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 89.3%
Gross Margin - 3 Yr. Avg. 88.7%
EBITDA Margin 17.5%
EBITDA Margin - 3 Yr. Avg. 36%
Operating Margin -86.7%
Oper. Margin - 3 Yr. Avg. -23.8%
Pre-Tax Margin -102.6%
Pre-Tax Margin - 3 Yr. Avg. -33.3%
Net Profit Margin -64.2%
Net Profit Margin - 3 Yr. Avg. -19.2%
Effective Tax Rate 37.4%
Eff/ Tax Rate - 3 Yr. Avg. 37.8%
Payout Ratio 0%

PDCE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PDCE stock intrinsic value calculation we used $1549 million for the last fiscal year's total revenue generated by PDC Energy, Inc.. The default revenue input number comes from 0001 income statement of PDC Energy, Inc.. 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 PDCE 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 4.3%, whose default value for PDCE is calculated based on our internal credit rating of PDC Energy, Inc., 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 PDC Energy, Inc..
    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 PDCE stock the variable cost ratio is equal to 43.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $820 million in the base year in the intrinsic value calculation for PDCE 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% for PDC Energy, Inc..

Corporate tax rate of 27% is the nominal tax rate for PDC Energy, Inc.. 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 PDCE 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 PDCE are equal to 256.2%.

Life of production assets of 7.1 years is the average useful life of capital assets used in PDC Energy, Inc. 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 PDCE is equal to -10.8%. 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 - $2526.708 million for PDC Energy, Inc. - 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 66.122 million for PDC Energy, Inc. 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 PDC Energy, Inc. at the current share price and the inputted number of shares is $2.1 billion.

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