Intrinsic value of Pioneer Natural Resources - PXD

Previous Close

$166.78

  Intrinsic Value

$16.14

stock screener

  Rating & Target

str. sell

-90%

Previous close

$166.78

 
Intrinsic value

$16.14

 
Up/down potential

-90%

 
Rating

str. sell

We calculate the intrinsic value of PXD 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 28.4

 

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, %
  44.40
  40.46
  36.91
  33.72
  30.85
  28.27
  25.94
  23.84
  21.96
  20.26
  18.74
  17.36
  16.13
  15.01
  14.01
  13.11
  12.30
  11.57
  10.91
  10.32
  9.79
  9.31
  8.88
  8.49
  8.14
  7.83
  7.55
  7.29
  7.06
  6.86
Revenue, $m
  7,877
  11,064
  15,148
  20,257
  26,506
  33,998
  42,816
  53,026
  64,671
  77,776
  92,349
  108,385
  125,865
  144,764
  165,050
  186,692
  209,656
  233,915
  259,444
  286,225
  314,247
  343,507
  374,010
  405,771
  438,812
  473,165
  508,868
  545,970
  584,527
  624,600
Variable operating expenses, $m
  3,249
  4,553
  6,223
  8,313
  10,869
  13,934
  17,541
  21,717
  26,481
  31,841
  37,776
  44,335
  51,485
  59,216
  67,514
  76,366
  85,760
  95,683
  106,126
  117,081
  128,543
  140,512
  152,989
  165,981
  179,496
  193,548
  208,153
  223,329
  239,101
  255,493
Fixed operating expenses, $m
  2,854
  2,917
  2,981
  3,047
  3,114
  3,183
  3,253
  3,324
  3,397
  3,472
  3,548
  3,626
  3,706
  3,788
  3,871
  3,956
  4,043
  4,132
  4,223
  4,316
  4,411
  4,508
  4,607
  4,709
  4,812
  4,918
  5,026
  5,137
  5,250
  5,365
Total operating expenses, $m
  6,103
  7,470
  9,204
  11,360
  13,983
  17,117
  20,794
  25,041
  29,878
  35,313
  41,324
  47,961
  55,191
  63,004
  71,385
  80,322
  89,803
  99,815
  110,349
  121,397
  132,954
  145,020
  157,596
  170,690
  184,308
  198,466
  213,179
  228,466
  244,351
  260,858
Operating income, $m
  1,773
  3,594
  5,943
  8,897
  12,523
  16,881
  22,023
  27,985
  34,793
  42,463
  51,025
  60,424
  70,674
  81,760
  93,665
  106,369
  119,853
  134,100
  149,095
  164,829
  181,293
  198,487
  216,414
  235,082
  254,504
  274,698
  295,689
  317,504
  340,176
  363,742
EBITDA, $m
  3,811
  6,445
  9,836
  14,093
  19,314
  25,585
  32,977
  41,544
  51,325
  62,339
  74,594
  88,085
  102,796
  118,706
  135,788
  154,015
  173,360
  193,798
  215,309
  237,877
  261,493
  286,154
  311,866
  338,640
  366,494
  395,456
  425,559
  456,843
  489,355
  523,148
Interest expense (income), $m
  196
  148
  275
  442
  657
  925
  1,254
  1,647
  2,110
  2,646
  3,258
  3,946
  4,712
  5,554
  6,472
  7,465
  8,530
  9,667
  10,873
  12,147
  13,488
  14,895
  16,367
  17,903
  19,505
  21,174
  22,909
  24,713
  26,589
  28,537
  30,562
Earnings before tax, $m
  1,626
  3,319
  5,501
  8,240
  11,597
  15,628
  20,376
  25,874
  32,146
  39,205
  47,079
  55,712
  65,120
  75,288
  86,200
  97,839
  110,186
  123,227
  136,948
  151,340
  166,398
  182,121
  198,511
  215,576
  233,330
  251,789
  270,976
  290,915
  311,639
  333,180
Tax expense, $m
  439
  896
  1,485
  2,225
  3,131
  4,220
  5,501
  6,986
  8,680
  10,585
  12,711
  15,042
  17,582
  20,328
  23,274
  26,416
  29,750
  33,271
  36,976
  40,862
  44,928
  49,173
  53,598
  58,206
  62,999
  67,983
  73,163
  78,547
  84,142
  89,959
Net income, $m
  1,187
  2,423
  4,016
  6,015
  8,466
  11,408
  14,874
  18,888
  23,467
  28,619
  34,368
  40,670
  47,537
  54,960
  62,926
  71,422
  80,436
  89,956
  99,972
  110,479
  121,471
  132,948
  144,913
  157,371
  170,331
  183,806
  197,812
  212,368
  227,496
  243,221

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
  23,942
  33,629
  46,043
  61,570
  80,565
  103,337
  130,141
  161,173
  196,568
  236,401
  280,697
  329,438
  382,569
  440,011
  501,672
  567,452
  637,254
  710,989
  788,585
  869,985
  955,158
  1,044,094
  1,136,809
  1,233,347
  1,333,776
  1,438,191
  1,546,712
  1,659,484
  1,776,677
  1,898,482
Adjusted assets (=assets-cash), $m
  23,942
  33,629
  46,043
  61,570
  80,565
  103,337
  130,141
  161,173
  196,568
  236,401
  280,697
  329,438
  382,569
  440,011
  501,672
  567,452
  637,254
  710,989
  788,585
  869,985
  955,158
  1,044,094
  1,136,809
  1,233,347
  1,333,776
  1,438,191
  1,546,712
  1,659,484
  1,776,677
  1,898,482
Revenue / Adjusted assets
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
Average production assets, $m
  18,897
  26,543
  36,341
  48,596
  63,588
  81,561
  102,717
  127,209
  155,145
  186,584
  221,546
  260,016
  301,951
  347,288
  395,955
  447,873
  502,966
  561,163
  622,407
  686,654
  753,878
  824,073
  897,250
  973,445
  1,052,710
  1,135,122
  1,220,775
  1,309,783
  1,402,279
  1,498,417
Working capital, $m
  -1,126
  -1,582
  -2,166
  -2,897
  -3,790
  -4,862
  -6,123
  -7,583
  -9,248
  -11,122
  -13,206
  -15,499
  -17,999
  -20,701
  -23,602
  -26,697
  -29,981
  -33,450
  -37,101
  -40,930
  -44,937
  -49,121
  -53,483
  -58,025
  -62,750
  -67,663
  -72,768
  -78,074
  -83,587
  -89,318
Total debt, $m
  5,095
  8,194
  12,167
  17,136
  23,214
  30,501
  39,078
  49,008
  60,335
  73,081
  87,256
  102,853
  119,855
  138,237
  157,968
  179,018
  201,354
  224,950
  249,780
  275,828
  303,083
  331,543
  361,212
  392,104
  424,241
  457,654
  492,381
  528,468
  565,969
  604,947
Total liabilities, $m
  7,662
  10,761
  14,734
  19,703
  25,781
  33,068
  41,645
  51,575
  62,902
  75,648
  89,823
  105,420
  122,422
  140,804
  160,535
  181,585
  203,921
  227,517
  252,347
  278,395
  305,650
  334,110
  363,779
  394,671
  426,808
  460,221
  494,948
  531,035
  568,536
  607,514
Total equity, $m
  16,281
  22,868
  31,309
  41,868
  54,784
  70,269
  88,496
  109,598
  133,666
  160,753
  190,874
  224,018
  260,147
  299,208
  341,137
  385,867
  433,333
  483,473
  536,238
  591,590
  649,507
  709,984
  773,030
  838,676
  906,967
  977,970
  1,051,764
  1,128,449
  1,208,140
  1,290,968
Total liabilities and equity, $m
  23,943
  33,629
  46,043
  61,571
  80,565
  103,337
  130,141
  161,173
  196,568
  236,401
  280,697
  329,438
  382,569
  440,012
  501,672
  567,452
  637,254
  710,990
  788,585
  869,985
  955,157
  1,044,094
  1,136,809
  1,233,347
  1,333,775
  1,438,191
  1,546,712
  1,659,484
  1,776,676
  1,898,482
Debt-to-equity ratio
  0.310
  0.360
  0.390
  0.410
  0.420
  0.430
  0.440
  0.450
  0.450
  0.450
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.460
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
Adjusted equity ratio
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,187
  2,423
  4,016
  6,015
  8,466
  11,408
  14,874
  18,888
  23,467
  28,619
  34,368
  40,670
  47,537
  54,960
  62,926
  71,422
  80,436
  89,956
  99,972
  110,479
  121,471
  132,948
  144,913
  157,371
  170,331
  183,806
  197,812
  212,368
  227,496
  243,221
Depreciation, amort., depletion, $m
  2,037
  2,851
  3,893
  5,197
  6,792
  8,704
  10,954
  13,560
  16,532
  19,876
  23,569
  27,661
  32,122
  36,946
  42,123
  47,646
  53,507
  59,698
  66,214
  73,048
  80,200
  87,667
  95,452
  103,558
  111,990
  120,758
  129,870
  139,339
  149,179
  159,406
Funds from operations, $m
  3,224
  5,274
  7,909
  11,212
  15,258
  20,112
  25,829
  32,448
  39,999
  48,496
  57,936
  68,331
  79,660
  91,906
  105,049
  119,068
  133,943
  149,654
  166,186
  183,527
  201,671
  220,615
  240,365
  260,929
  282,321
  304,564
  327,682
  351,707
  376,675
  402,627
Change in working capital, $m
  -346
  -456
  -584
  -730
  -894
  -1,071
  -1,261
  -1,460
  -1,665
  -1,874
  -2,084
  -2,293
  -2,500
  -2,702
  -2,901
  -3,095
  -3,284
  -3,469
  -3,651
  -3,830
  -4,007
  -4,184
  -4,362
  -4,542
  -4,725
  -4,912
  -5,106
  -5,306
  -5,514
  -5,731
Cash from operations, $m
  3,571
  5,729
  8,493
  11,942
  16,151
  21,183
  27,090
  33,908
  41,664
  50,370
  60,021
  70,624
  82,159
  94,608
  107,950
  122,163
  137,227
  153,123
  169,836
  187,356
  205,678
  224,800
  244,727
  265,470
  287,046
  309,476
  332,788
  357,012
  382,188
  408,358
Maintenance CAPEX, $m
  -1,392
  -2,010
  -2,824
  -3,866
  -5,170
  -6,765
  -8,677
  -10,927
  -13,533
  -16,505
  -19,849
  -23,569
  -27,661
  -32,122
  -36,946
  -42,123
  -47,646
  -53,507
  -59,698
  -66,214
  -73,048
  -80,200
  -87,667
  -95,452
  -103,558
  -111,990
  -120,758
  -129,870
  -139,339
  -149,179
New CAPEX, $m
  -5,812
  -7,646
  -9,798
  -12,255
  -14,992
  -17,973
  -21,156
  -24,493
  -27,936
  -31,439
  -34,962
  -38,470
  -41,935
  -45,338
  -48,667
  -51,918
  -55,092
  -58,197
  -61,244
  -64,247
  -67,224
  -70,194
  -73,178
  -76,194
  -79,266
  -82,412
  -85,653
  -89,008
  -92,497
  -96,137
Cash from investing activities, $m
  -7,204
  -9,656
  -12,622
  -16,121
  -20,162
  -24,738
  -29,833
  -35,420
  -41,469
  -47,944
  -54,811
  -62,039
  -69,596
  -77,460
  -85,613
  -94,041
  -102,738
  -111,704
  -120,942
  -130,461
  -140,272
  -150,394
  -160,845
  -171,646
  -182,824
  -194,402
  -206,411
  -218,878
  -231,836
  -245,316
Free cash flow, $m
  -3,634
  -3,927
  -4,129
  -4,179
  -4,010
  -3,554
  -2,743
  -1,512
  195
  2,426
  5,209
  8,586
  12,563
  17,148
  22,338
  28,122
  34,488
  41,419
  48,894
  56,896
  65,405
  74,405
  83,882
  93,824
  104,223
  115,074
  126,377
  138,135
  150,353
  163,042
Issuance/(repayment) of debt, $m
  2,363
  3,100
  3,972
  4,969
  6,078
  7,287
  8,577
  9,930
  11,326
  12,747
  14,175
  15,597
  17,002
  18,382
  19,731
  21,050
  22,337
  23,595
  24,831
  26,048
  27,255
  28,459
  29,669
  30,892
  32,137
  33,413
  34,727
  36,087
  37,502
  38,978
Issuance/(repurchase) of shares, $m
  3,820
  4,164
  4,426
  4,543
  4,450
  4,077
  3,353
  2,214
  601
  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  
  6,183
  7,264
  8,398
  9,512
  10,528
  11,364
  11,930
  12,144
  11,927
  12,747
  14,175
  15,597
  17,002
  18,382
  19,731
  21,050
  22,337
  23,595
  24,831
  26,048
  27,255
  28,459
  29,669
  30,892
  32,137
  33,413
  34,727
  36,087
  37,502
  38,978
Total cash flow (excl. dividends), $m
  2,549
  3,337
  4,269
  5,333
  6,518
  7,809
  9,187
  10,632
  12,123
  15,172
  19,384
  24,183
  29,565
  35,530
  42,069
  49,172
  56,825
  65,014
  73,725
  82,944
  92,660
  102,865
  113,551
  124,716
  136,360
  148,487
  161,104
  174,222
  187,855
  202,019
Retained Cash Flow (-), $m
  -5,007
  -6,587
  -8,441
  -10,558
  -12,916
  -15,485
  -18,227
  -21,102
  -24,068
  -27,087
  -30,122
  -33,144
  -36,129
  -39,061
  -41,929
  -44,730
  -47,465
  -50,140
  -52,765
  -55,352
  -57,917
  -60,476
  -63,047
  -65,646
  -68,292
  -71,002
  -73,794
  -76,685
  -79,691
  -82,828
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
  -2,458
  -3,250
  -4,172
  -5,225
  -6,398
  -7,676
  -9,040
  -10,470
  -11,945
  -11,914
  -10,738
  -8,961
  -6,564
  -3,531
  140
  4,441
  9,360
  14,874
  20,960
  27,592
  34,743
  42,388
  50,504
  59,070
  68,068
  77,485
  87,310
  97,537
  108,164
  119,192
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
  -2,357
  -2,975
  -3,631
  -4,302
  -4,959
  -5,571
  -6,107
  -6,544
  -6,862
  -6,246
  -5,099
  -3,824
  -2,496
  -1,185
  41
  1,129
  2,037
  2,739
  3,227
  3,506
  3,594
  3,517
  3,310
  3,009
  2,648
  2,261
  1,874
  1,509
  1,181
  897
Current shareholders' claim on cash, %
  88.2
  80.0
  74.3
  70.3
  67.4
  65.5
  64.3
  63.7
  63.5
  63.5
  63.5
  63.5
  63.5
  63.5
  63.5
  63.5
  63.5
  63.5
  63.5
  63.5
  63.5
  63.5
  63.5
  63.5
  63.5
  63.5
  63.5
  63.5
  63.5
  63.5

Pioneer Natural Resources Company is an oil and gas exploration and production company. The Company explores for, develops and produces oil, natural gas liquids (NGLs) and gas within the United States, with operations primarily in the Permian Basin in West Texas, the Eagle Ford Shale play in South Texas, the Raton field in southeast Colorado and the West Panhandle field in the Texas Panhandle. As of December 31, 2016, the Company owned interests in eight gas processing plants and nine treating facilities. As of December 31, 2016, its Spraberry/Wolfcamp field covered approximately 800,000 gross acres (690,000 net acres). The Company completed 12 Eagle Ford Shale wells during the fiscal year ended December 31, 2016. As of December 31, 2016, the Company owned approximately 185,000 gross acres (165,000 net acres) in the center of the Raton Basin. As of December 31, 2016, the Company's gas had an average energy content of 1,400 British thermal unit (Btu).

FINANCIAL RATIOS  of  Pioneer Natural Resources (PXD)

Valuation Ratios
P/E Ratio -50.9
Price to Sales 7.2
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 18.9
Price to Free Cash Flow -50.4
Growth Rates
Sales Growth Rate 25.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -13.9%
Cap. Spend. - 3 Yr. Gr. Rate -6.5%
Financial Strength
Quick Ratio 5
Current Ratio 0
LT Debt to Equity 26.2%
Total Debt to Equity 30.9%
Interest Coverage -4
Management Effectiveness
Return On Assets -2.8%
Ret/ On Assets - 3 Yr. Avg. 1.3%
Return On Total Capital -4.3%
Ret/ On T. Cap. - 3 Yr. Avg. 0.8%
Return On Equity -5.9%
Return On Equity - 3 Yr. Avg. 1%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 41.4%
Gross Margin - 3 Yr. Avg. 48.2%
EBITDA Margin 18.1%
EBITDA Margin - 3 Yr. Avg. 39.7%
Operating Margin -15.8%
Oper. Margin - 3 Yr. Avg. -17.6%
Pre-Tax Margin -24.3%
Pre-Tax Margin - 3 Yr. Avg. -0.2%
Net Profit Margin -14.1%
Net Profit Margin - 3 Yr. Avg. -0.4%
Effective Tax Rate 42%
Eff/ Tax Rate - 3 Yr. Avg. 37.9%
Payout Ratio -2.3%

PXD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PXD stock intrinsic value calculation we used $5455 million for the last fiscal year's total revenue generated by Pioneer Natural Resources. The default revenue input number comes from 0001 income statement of Pioneer Natural Resources. 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 PXD stock valuation model: a) initial revenue growth rate of 44.4% 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 PXD is calculated based on our internal credit rating of Pioneer Natural Resources, 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 Pioneer Natural Resources.
    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 PXD stock the variable cost ratio is equal to 41.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2793 million in the base year in the intrinsic value calculation for PXD 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 Pioneer Natural Resources.

Corporate tax rate of 27% is the nominal tax rate for Pioneer Natural Resources. 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 PXD 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 PXD are equal to 239.9%.

Life of production assets of 9.4 years is the average useful life of capital assets used in Pioneer Natural Resources 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 PXD is equal to -14.3%. 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 - $11274 million for Pioneer Natural Resources - 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 170.401 million for Pioneer Natural Resources 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 Pioneer Natural Resources at the current share price and the inputted number of shares is $28.4 billion.

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▶ Pioneer Natural Resources: 2Q Earnings Snapshot   [04:12PM  Associated Press]
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▶ Energy Stocks Decline as Production Concerns Deepen   [Jul-02-18 06:01PM  TheStreet.com]
▶ Pioneer CEO Says 'Permian 3.0' Arrives With New Well Designs   [Jun-28-18 08:45PM  Bloomberg Video]
▶ Goldman Touts Oil Stocks to Buy After OPEC Agreement   [Jun-25-18 10:00PM  TheStreet.com]
▶ [$$] U.S. Shale Companies Motor Ahead Despite OPEC   [Jun-24-18 07:50PM  The Wall Street Journal]
▶ 5 U.S. Oil Stocks To Own Post-OPEC Overhang   [Jun-22-18 04:10PM  Forbes]
▶ OPECs Agreement Sends Oil Prices Soaring   [03:30PM  Oilprice.com]
▶ Shale CEO: U.S. To Be The Worlds Top Oil Producer By Fall   [Jun-21-18 10:30AM  Oilprice.com]
▶ 3 Energy Stocks to Play the Permian Bottleneck   [Jun-15-18 12:25PM  Barrons.com]

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