Intrinsic value of SRC Energy - SRCI

Previous Close

$6.76

  Intrinsic Value

$1.31

stock screener

  Rating & Target

str. sell

-81%

Previous close

$6.76

 
Intrinsic value

$1.31

 
Up/down potential

-81%

 
Rating

str. sell

We calculate the intrinsic value of SRCI 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 1.6

 

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
  580
  896
  1,340
  1,945
  2,743
  3,772
  5,063
  6,648
  8,554
  10,804
  13,416
  16,403
  19,771
  23,523
  27,659
  32,174
  37,062
  42,314
  47,923
  53,880
  60,177
  66,807
  73,766
  81,050
  88,658
  96,592
  104,854
  113,450
  122,388
  131,678
Variable operating expenses, $m
  1,723
  2,660
  3,976
  5,767
  8,135
  11,182
  15,008
  19,706
  25,355
  32,025
  39,763
  48,614
  58,596
  69,717
  81,975
  95,357
  109,843
  125,410
  142,034
  159,688
  178,350
  198,001
  218,625
  240,214
  262,763
  286,276
  310,763
  336,240
  362,731
  390,264
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,723
  2,660
  3,976
  5,767
  8,135
  11,182
  15,008
  19,706
  25,355
  32,025
  39,763
  48,614
  58,596
  69,717
  81,975
  95,357
  109,843
  125,410
  142,034
  159,688
  178,350
  198,001
  218,625
  240,214
  262,763
  286,276
  310,763
  336,240
  362,731
  390,264
Operating income, $m
  -1,143
  -1,764
  -2,636
  -3,823
  -5,392
  -7,411
  -9,946
  -13,058
  -16,802
  -21,221
  -26,346
  -32,211
  -38,825
  -46,194
  -54,316
  -63,183
  -72,781
  -83,096
  -94,110
  -105,808
  -118,174
  -131,194
  -144,859
  -159,164
  -174,105
  -189,684
  -205,909
  -222,790
  -240,342
  -258,586
EBITDA, $m
  -963
  -1,487
  -2,224
  -3,227
  -4,553
  -6,259
  -8,402
  -11,032
  -14,196
  -17,931
  -22,266
  -27,222
  -32,812
  -39,040
  -45,904
  -53,397
  -61,509
  -70,226
  -79,535
  -89,421
  -99,871
  -110,875
  -122,424
  -134,513
  -147,140
  -160,307
  -174,019
  -188,285
  -203,119
  -218,537
Interest expense (income), $m
  4
  29
  54
  90
  141
  210
  301
  419
  567
  748
  967
  1,224
  1,523
  1,865
  2,251
  2,680
  3,154
  3,671
  4,230
  4,832
  5,474
  6,156
  6,876
  7,636
  8,432
  9,266
  10,137
  11,045
  11,991
  12,975
  13,998
Earnings before tax, $m
  -1,172
  -1,818
  -2,726
  -3,964
  -5,602
  -7,712
  -10,365
  -13,625
  -17,550
  -22,187
  -27,571
  -33,734
  -40,690
  -48,445
  -56,996
  -66,336
  -76,452
  -87,326
  -98,942
  -111,282
  -124,329
  -138,070
  -152,495
  -167,596
  -183,371
  -199,821
  -216,954
  -234,781
  -253,318
  -272,584
Tax expense, $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
Net income, $m
  -1,172
  -1,818
  -2,726
  -3,964
  -5,602
  -7,712
  -10,365
  -13,625
  -17,550
  -22,187
  -27,571
  -33,734
  -40,690
  -48,445
  -56,996
  -66,336
  -76,452
  -87,326
  -98,942
  -111,282
  -124,329
  -138,070
  -152,495
  -167,596
  -183,371
  -199,821
  -216,954
  -234,781
  -253,318
  -272,584

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
  3,314
  5,121
  7,658
  11,112
  15,677
  21,552
  28,929
  37,986
  48,879
  61,738
  76,664
  93,729
  112,975
  134,418
  158,052
  183,852
  211,782
  241,797
  273,848
  307,886
  343,868
  381,755
  421,520
  463,143
  506,619
  551,954
  599,166
  648,287
  699,362
  752,447
Adjusted assets (=assets-cash), $m
  3,314
  5,121
  7,658
  11,112
  15,677
  21,552
  28,929
  37,986
  48,879
  61,738
  76,664
  93,729
  112,975
  134,418
  158,052
  183,852
  211,782
  241,797
  273,848
  307,886
  343,868
  381,755
  421,520
  463,143
  506,619
  551,954
  599,166
  648,287
  699,362
  752,447
Revenue / Adjusted assets
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
Average production assets, $m
  2,258
  3,489
  5,217
  7,570
  10,680
  14,683
  19,709
  25,879
  33,300
  42,060
  52,229
  63,855
  76,967
  91,576
  107,677
  125,254
  144,282
  164,730
  186,566
  209,755
  234,269
  260,080
  287,171
  315,528
  345,147
  376,032
  408,197
  441,662
  476,458
  512,623
Working capital, $m
  -146
  -225
  -336
  -488
  -689
  -947
  -1,271
  -1,669
  -2,147
  -2,712
  -3,367
  -4,117
  -4,962
  -5,904
  -6,942
  -8,076
  -9,303
  -10,621
  -12,029
  -13,524
  -15,104
  -16,769
  -18,515
  -20,344
  -22,253
  -24,245
  -26,318
  -28,476
  -30,719
  -33,051
Total debt, $m
  997
  1,667
  2,608
  3,889
  5,583
  7,763
  10,500
  13,860
  17,901
  22,672
  28,209
  34,541
  41,681
  49,636
  58,404
  67,976
  78,338
  89,474
  101,365
  113,993
  127,342
  141,398
  156,151
  171,593
  187,723
  204,542
  222,058
  240,282
  259,230
  278,925
Total liabilities, $m
  1,230
  1,900
  2,841
  4,122
  5,816
  7,996
  10,733
  14,093
  18,134
  22,905
  28,442
  34,774
  41,914
  49,869
  58,637
  68,209
  78,571
  89,707
  101,598
  114,226
  127,575
  141,631
  156,384
  171,826
  187,956
  204,775
  222,291
  240,514
  259,463
  279,158
Total equity, $m
  2,085
  3,221
  4,817
  6,989
  9,861
  13,556
  18,196
  23,893
  30,745
  38,833
  48,222
  58,956
  71,061
  84,549
  99,415
  115,643
  133,211
  152,090
  172,250
  193,660
  216,293
  240,124
  265,136
  291,317
  318,664
  347,179
  376,875
  407,772
  439,898
  473,289
Total liabilities and equity, $m
  3,315
  5,121
  7,658
  11,111
  15,677
  21,552
  28,929
  37,986
  48,879
  61,738
  76,664
  93,730
  112,975
  134,418
  158,052
  183,852
  211,782
  241,797
  273,848
  307,886
  343,868
  381,755
  421,520
  463,143
  506,620
  551,954
  599,166
  648,286
  699,361
  752,447
Debt-to-equity ratio
  0.480
  0.520
  0.540
  0.560
  0.570
  0.570
  0.580
  0.580
  0.580
  0.580
  0.580
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
Adjusted equity ratio
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,172
  -1,818
  -2,726
  -3,964
  -5,602
  -7,712
  -10,365
  -13,625
  -17,550
  -22,187
  -27,571
  -33,734
  -40,690
  -48,445
  -56,996
  -66,336
  -76,452
  -87,326
  -98,942
  -111,282
  -124,329
  -138,070
  -152,495
  -167,596
  -183,371
  -199,821
  -216,954
  -234,781
  -253,318
  -272,584
Depreciation, amort., depletion, $m
  180
  277
  412
  595
  838
  1,151
  1,544
  2,026
  2,606
  3,290
  4,080
  4,989
  6,013
  7,154
  8,412
  9,785
  11,272
  12,870
  14,575
  16,387
  18,302
  20,319
  22,435
  24,651
  26,965
  29,378
  31,890
  34,505
  37,223
  40,049
Funds from operations, $m
  -992
  -1,541
  -2,314
  -3,368
  -4,763
  -6,561
  -8,821
  -11,599
  -14,944
  -18,897
  -23,490
  -28,746
  -34,677
  -41,290
  -48,584
  -56,551
  -65,180
  -74,457
  -84,367
  -94,895
  -106,027
  -117,752
  -130,060
  -142,945
  -156,406
  -170,444
  -185,064
  -200,276
  -216,094
  -232,536
Change in working capital, $m
  -55
  -79
  -111
  -152
  -201
  -258
  -324
  -398
  -478
  -565
  -656
  -750
  -845
  -942
  -1,038
  -1,133
  -1,227
  -1,318
  -1,408
  -1,495
  -1,580
  -1,664
  -1,747
  -1,828
  -1,910
  -1,991
  -2,074
  -2,158
  -2,243
  -2,332
Cash from operations, $m
  -937
  -1,462
  -2,203
  -3,216
  -4,563
  -6,303
  -8,497
  -11,202
  -14,466
  -18,333
  -22,835
  -27,996
  -33,832
  -40,349
  -47,546
  -55,418
  -63,953
  -73,138
  -82,959
  -93,399
  -104,446
  -116,087
  -128,313
  -141,117
  -154,496
  -168,453
  -182,990
  -198,119
  -213,851
  -230,204
Maintenance CAPEX, $m
  -110
  -176
  -273
  -408
  -591
  -834
  -1,147
  -1,540
  -2,022
  -2,602
  -3,286
  -4,080
  -4,989
  -6,013
  -7,154
  -8,412
  -9,785
  -11,272
  -12,870
  -14,575
  -16,387
  -18,302
  -20,319
  -22,435
  -24,651
  -26,965
  -29,378
  -31,890
  -34,505
  -37,223
New CAPEX, $m
  -845
  -1,231
  -1,729
  -2,353
  -3,110
  -4,003
  -5,026
  -6,170
  -7,421
  -8,761
  -10,169
  -11,626
  -13,112
  -14,609
  -16,101
  -17,577
  -19,028
  -20,448
  -21,835
  -23,190
  -24,513
  -25,812
  -27,091
  -28,357
  -29,619
  -30,885
  -32,164
  -33,465
  -34,796
  -36,166
Cash from investing activities, $m
  -955
  -1,407
  -2,002
  -2,761
  -3,701
  -4,837
  -6,173
  -7,710
  -9,443
  -11,363
  -13,455
  -15,706
  -18,101
  -20,622
  -23,255
  -25,989
  -28,813
  -31,720
  -34,705
  -37,765
  -40,900
  -44,114
  -47,410
  -50,792
  -54,270
  -57,850
  -61,542
  -65,355
  -69,301
  -73,389
Free cash flow, $m
  -1,893
  -2,869
  -4,204
  -5,977
  -8,264
  -11,140
  -14,670
  -18,911
  -23,909
  -29,695
  -36,290
  -43,702
  -51,932
  -60,970
  -70,801
  -81,407
  -92,766
  -104,859
  -117,664
  -131,164
  -145,347
  -160,201
  -175,722
  -191,909
  -208,766
  -226,302
  -244,532
  -263,474
  -283,152
  -303,593
Issuance/(repayment) of debt, $m
  459
  670
  941
  1,281
  1,694
  2,180
  2,737
  3,360
  4,041
  4,771
  5,538
  6,331
  7,140
  7,955
  8,768
  9,572
  10,362
  11,135
  11,891
  12,628
  13,349
  14,056
  14,753
  15,442
  16,130
  16,819
  17,516
  18,224
  18,949
  19,695
Issuance/(repurchase) of shares, $m
  1,949
  2,954
  4,322
  6,136
  8,473
  11,408
  15,005
  19,322
  24,402
  30,276
  36,959
  44,468
  52,796
  61,932
  71,862
  82,565
  94,020
  106,205
  119,102
  132,692
  146,962
  161,902
  177,507
  193,777
  210,717
  228,337
  246,651
  265,678
  285,444
  305,975
Cash from financing (excl. dividends), $m  
  2,408
  3,624
  5,263
  7,417
  10,167
  13,588
  17,742
  22,682
  28,443
  35,047
  42,497
  50,799
  59,936
  69,887
  80,630
  92,137
  104,382
  117,340
  130,993
  145,320
  160,311
  175,958
  192,260
  209,219
  226,847
  245,156
  264,167
  283,902
  304,393
  325,670
Total cash flow (excl. dividends), $m
  515
  755
  1,059
  1,440
  1,903
  2,447
  3,072
  3,771
  4,534
  5,352
  6,208
  7,097
  8,004
  8,918
  9,829
  10,730
  11,615
  12,482
  13,329
  14,156
  14,964
  15,756
  16,537
  17,310
  18,081
  18,853
  19,634
  20,428
  21,241
  22,077
Retained Cash Flow (-), $m
  -1,949
  -2,954
  -4,322
  -6,136
  -8,473
  -11,408
  -15,005
  -19,322
  -24,402
  -30,276
  -36,959
  -44,468
  -52,796
  -61,932
  -71,862
  -82,565
  -94,020
  -106,205
  -119,102
  -132,692
  -146,962
  -161,902
  -177,507
  -193,777
  -210,717
  -228,337
  -246,651
  -265,678
  -285,444
  -305,975
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
  -1,434
  -2,199
  -3,263
  -4,695
  -6,571
  -8,960
  -11,933
  -15,551
  -19,868
  -24,924
  -30,752
  -37,371
  -44,792
  -53,015
  -62,033
  -71,835
  -82,404
  -93,723
  -105,773
  -118,536
  -131,998
  -146,145
  -160,970
  -176,467
  -192,637
  -209,483
  -227,017
  -245,250
  -264,203
  -283,898
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
  -1,375
  -2,013
  -2,839
  -3,866
  -5,093
  -6,503
  -8,062
  -9,720
  -11,413
  -13,067
  -14,604
  -15,948
  -17,031
  -17,798
  -18,212
  -18,255
  -17,930
  -17,260
  -16,286
  -15,062
  -13,653
  -12,126
  -10,550
  -8,988
  -7,494
  -6,112
  -4,872
  -3,794
  -2,884
  -2,138
Current shareholders' claim on cash, %
  45.7
  21.4
  10.4
  5.1
  2.6
  1.4
  0.7
  0.4
  0.2
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

SRC Energy Inc., formerly Synergy Resources Corporation, is an independent oil and natural gas company. The Company is engaged in the acquisition, development and production of crude oil and natural gas in and around the Denver-Julesburg Basin (D-J Basin) of Colorado. The D-J Basin generally extends from the Denver metropolitan area throughout northeast Colorado into Wyoming, Nebraska, and Kansas. The D-J Basin contains hydrocarbon-bearing deposits in various formations, including the Niobrara, Codell, Greenhorn, Shannon, Sussex, J-Sand and D-Sand. The Company's drilling and completion activities are focused in the Wattenberg Field, an area that covers the western flank of the D-J Basin, predominantly in Weld County, Colorado. The Company is focused on the horizontal development of the Codell and Niobrara formations. As of December 31, 2016, the Company was the operator of 324 gross (288 net) producing wells and participated as non-operators in 307 gross (65 net) producing wells.

FINANCIAL RATIOS  of  SRC Energy (SRCI)

Valuation Ratios
P/E Ratio -6.2
Price to Sales 12.7
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 27.7
Price to Free Cash Flow -16.3
Growth Rates
Sales Growth Rate 214.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 164%
Cap. Spend. - 3 Yr. Gr. Rate -3.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage -54
Management Effectiveness
Return On Assets -25.3%
Ret/ On Assets - 3 Yr. Avg. -13.1%
Return On Total Capital -30.7%
Ret/ On T. Cap. - 3 Yr. Avg. -15.6%
Return On Equity -32.5%
Return On Equity - 3 Yr. Avg. -17%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 75.7%
Gross Margin - 3 Yr. Avg. 75.9%
EBITDA Margin -157%
EBITDA Margin - 3 Yr. Avg. -136.7%
Operating Margin -198.1%
Oper. Margin - 3 Yr. Avg. -203.8%
Pre-Tax Margin -204.7%
Pre-Tax Margin - 3 Yr. Avg. -190.6%
Net Profit Margin -204.7%
Net Profit Margin - 3 Yr. Avg. -184%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 15.8%
Payout Ratio 0%

SRCI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SRCI stock intrinsic value calculation we used $362.516 million for the last fiscal year's total revenue generated by SRC Energy. The default revenue input number comes from 0001 income statement of SRC Energy. 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 SRCI 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 SRCI is calculated based on our internal credit rating of SRC Energy, 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 SRC Energy.
    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 SRCI stock the variable cost ratio is equal to 297.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for SRCI 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 SRC Energy.

Corporate tax rate of 27% is the nominal tax rate for SRC Energy. 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 SRCI 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 SRCI are equal to 389.3%.

Life of production assets of 12.8 years is the average useful life of capital assets used in SRC Energy 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 SRCI is equal to -25.1%. 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 - $1308.434 million for SRC Energy - 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 242.519 million for SRC Energy 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 SRC Energy at the current share price and the inputted number of shares is $1.6 billion.

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COMPANY NEWS

▶ SRC Energy: 3Q Earnings Snapshot   [05:10PM  Associated Press]
▶ Does SRC Energy Inc (NYSEMKT:SRCI) Have A Good P/E Ratio?   [Oct-25-18 02:40PM  Simply Wall St.]
▶ 10 Oil Stocks That Are Worth a Second Look   [Sep-04-18 02:45PM  InvestorPlace]
▶ Colorado oil and gas stocks hit hard by anti-fracking ballot initiative news   [Aug-10-18 04:48PM  American City Business Journals]
▶ SRC Energy: 2Q Earnings Snapshot   [06:16PM  Associated Press]
▶ Is SRC Energy Incs (NYSEMKT:SRCI) Liquidity Good Enough?   [Jun-26-18 11:33AM  Simply Wall St.]
▶ SRC Energy: 1Q Earnings Snapshot   [May-02-18 05:57PM  Associated Press]
▶ SRC Energy Inc to Host Earnings Call   [Feb-22-18 09:55AM  ACCESSWIRE]
▶ SRC Energy misses 4Q profit forecasts   [Feb-21-18 06:27PM  Associated Press]
▶ SRC Energy Closes Greeley Crescent II Acquisition   [Dec-18-17 08:00AM  GlobeNewswire]
▶ High Growth NasdaqGM Stocks For The Day   [Dec-13-17 11:02AM  Simply Wall St.]
▶ SRC Energy Inc. Announces Pricing of Private Debt Offering   [Nov-14-17 12:16PM  GlobeNewswire]
▶ Noble Energy, SRC Energy make a $608M deal for 30,200 DJ Basin acres   [Nov-08-17 07:15PM  American City Business Journals]
▶ SYNERGY RESOURCES CORP to Host Earnings Call   [Nov-02-17 09:25AM  ACCESSWIRE]
▶ SRC Energy beats Street 3Q forecasts   [Nov-01-17 05:19PM  Associated Press]
▶ ETFs with exposure to SRC Energy, Inc. : August 21, 2017   [Aug-21-17 05:09PM  Capital Cube]
▶ Here's Why Shares of SRC Energy Are Up 13% Today   [Jul-25-17 12:28PM  Motley Fool]
▶ ETFs with exposure to SRC Energy, Inc. : June 12, 2017   [Jun-12-17 02:29PM  Capital Cube]
▶ ETFs with exposure to SRC Energy, Inc. : May 31, 2017   [May-31-17 12:48PM  Capital Cube]
▶ SRC Energy beats Street 1Q forecasts   [May-04-17 05:02PM  Associated Press]
▶ Questions remain over fatal Firestone blaze and Anadarko Petroleum's well shutdown   [Apr-27-17 07:05PM  American City Business Journals]
▶ ETFs with exposure to SRC Energy, Inc. : March 30, 2017   [Mar-29-17 08:36PM  Capital Cube]

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