Intrinsic value of Whiting Petroleum - WLL

Previous Close

$31.70

  Intrinsic Value

$10.77

stock screener

  Rating & Target

str. sell

-66%

Previous close

$31.70

 
Intrinsic value

$10.77

 
Up/down potential

-66%

 
Rating

str. sell

We calculate the intrinsic value of WLL 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 2.9

 

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
  2,370
  3,662
  5,477
  7,946
  11,211
  15,413
  20,689
  27,165
  34,955
  44,151
  54,826
  67,030
  80,793
  96,128
  113,030
  131,481
  151,455
  172,920
  195,841
  220,183
  245,915
  273,010
  301,447
  331,214
  362,306
  394,727
  428,490
  463,618
  500,144
  538,108
Variable operating expenses, $m
  3,925
  6,064
  9,069
  13,159
  18,566
  25,524
  34,260
  44,986
  57,886
  73,114
  90,792
  111,001
  133,794
  159,188
  187,177
  217,732
  250,809
  286,355
  324,312
  364,623
  407,235
  452,105
  499,197
  548,491
  599,978
  653,667
  709,579
  767,752
  828,239
  891,107
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
  3,925
  6,064
  9,069
  13,159
  18,566
  25,524
  34,260
  44,986
  57,886
  73,114
  90,792
  111,001
  133,794
  159,188
  187,177
  217,732
  250,809
  286,355
  324,312
  364,623
  407,235
  452,105
  499,197
  548,491
  599,978
  653,667
  709,579
  767,752
  828,239
  891,107
Operating income, $m
  -1,555
  -2,402
  -3,593
  -5,213
  -7,355
  -10,111
  -13,572
  -17,820
  -22,931
  -28,963
  -35,966
  -43,972
  -53,001
  -63,060
  -74,148
  -86,251
  -99,354
  -113,435
  -128,471
  -144,440
  -161,320
  -179,095
  -197,750
  -217,277
  -237,673
  -258,941
  -281,089
  -304,134
  -328,095
  -352,999
EBITDA, $m
  -36
  -55
  -83
  -120
  -169
  -232
  -312
  -409
  -527
  -665
  -826
  -1,010
  -1,218
  -1,449
  -1,703
  -1,981
  -2,282
  -2,606
  -2,951
  -3,318
  -3,706
  -4,114
  -4,543
  -4,991
  -5,460
  -5,948
  -6,457
  -6,987
  -7,537
  -8,109
Interest expense (income), $m
  240
  201
  338
  536
  814
  1,193
  1,694
  2,339
  3,148
  4,141
  5,336
  6,747
  8,384
  10,256
  12,368
  14,720
  17,313
  20,143
  23,207
  26,499
  30,015
  33,749
  37,697
  41,853
  46,215
  50,781
  55,550
  60,524
  65,703
  71,091
  76,694
Earnings before tax, $m
  -1,756
  -2,740
  -4,129
  -6,027
  -8,548
  -11,805
  -15,910
  -20,968
  -27,072
  -34,299
  -42,713
  -52,356
  -63,257
  -75,428
  -88,868
  -103,564
  -119,497
  -136,642
  -154,971
  -174,455
  -195,070
  -216,791
  -239,602
  -263,492
  -288,454
  -314,491
  -341,613
  -369,836
  -399,186
  -429,693
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
  -1,756
  -2,740
  -4,129
  -6,027
  -8,548
  -11,805
  -15,910
  -20,968
  -27,072
  -34,299
  -42,713
  -52,356
  -63,257
  -75,428
  -88,868
  -103,564
  -119,497
  -136,642
  -154,971
  -174,455
  -195,070
  -216,791
  -239,602
  -263,492
  -288,454
  -314,491
  -341,613
  -369,836
  -399,186
  -429,693

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
  13,024
  20,121
  30,092
  43,661
  61,600
  84,686
  113,673
  149,260
  192,061
  242,589
  301,241
  368,296
  443,920
  528,177
  621,043
  722,422
  832,169
  950,108
  1,076,047
  1,209,796
  1,351,182
  1,500,055
  1,656,305
  1,819,859
  1,990,691
  2,168,827
  2,354,340
  2,547,354
  2,748,045
  2,956,638
Adjusted assets (=assets-cash), $m
  13,024
  20,121
  30,092
  43,661
  61,600
  84,686
  113,673
  149,260
  192,061
  242,589
  301,241
  368,296
  443,920
  528,177
  621,043
  722,422
  832,169
  950,108
  1,076,047
  1,209,796
  1,351,182
  1,500,055
  1,656,305
  1,819,859
  1,990,691
  2,168,827
  2,354,340
  2,547,354
  2,748,045
  2,956,638
Revenue / Adjusted assets
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
Average production assets, $m
  13,065
  20,186
  30,187
  43,801
  61,796
  84,955
  114,035
  149,735
  192,673
  243,362
  302,200
  369,468
  445,334
  529,859
  623,020
  724,722
  834,819
  953,133
  1,079,473
  1,213,648
  1,355,484
  1,504,832
  1,661,578
  1,825,653
  1,997,030
  2,175,733
  2,361,836
  2,555,465
  2,756,795
  2,966,052
Working capital, $m
  -455
  -703
  -1,052
  -1,526
  -2,153
  -2,959
  -3,972
  -5,216
  -6,711
  -8,477
  -10,527
  -12,870
  -15,512
  -18,457
  -21,702
  -25,244
  -29,079
  -33,201
  -37,601
  -42,275
  -47,216
  -52,418
  -57,878
  -63,593
  -69,563
  -75,787
  -82,270
  -89,015
  -96,028
  -103,317
Total debt, $m
  6,258
  9,927
  15,082
  22,097
  31,372
  43,307
  58,293
  76,692
  98,820
  124,943
  155,266
  189,933
  229,031
  272,592
  320,603
  373,016
  429,756
  490,730
  555,841
  624,989
  698,085
  775,053
  855,834
  940,391
  1,028,712
  1,120,808
  1,216,718
  1,316,506
  1,420,264
  1,528,106
Total liabilities, $m
  6,733
  10,403
  15,557
  22,573
  31,847
  43,783
  58,769
  77,167
  99,296
  125,419
  155,741
  190,409
  229,507
  273,068
  321,079
  373,492
  430,232
  491,206
  556,316
  625,465
  698,561
  775,529
  856,310
  940,867
  1,029,187
  1,121,284
  1,217,194
  1,316,982
  1,420,739
  1,528,582
Total equity, $m
  6,290
  9,719
  14,534
  21,088
  29,753
  40,903
  54,904
  72,093
  92,766
  117,171
  145,499
  177,887
  214,413
  255,110
  299,964
  348,930
  401,938
  458,902
  519,731
  584,332
  652,621
  724,527
  799,995
  878,992
  961,504
  1,047,544
  1,137,146
  1,230,372
  1,327,306
  1,428,056
Total liabilities and equity, $m
  13,023
  20,122
  30,091
  43,661
  61,600
  84,686
  113,673
  149,260
  192,062
  242,590
  301,240
  368,296
  443,920
  528,178
  621,043
  722,422
  832,170
  950,108
  1,076,047
  1,209,797
  1,351,182
  1,500,056
  1,656,305
  1,819,859
  1,990,691
  2,168,828
  2,354,340
  2,547,354
  2,748,045
  2,956,638
Debt-to-equity ratio
  0.990
  1.020
  1.040
  1.050
  1.050
  1.060
  1.060
  1.060
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
  1.070
Adjusted equity ratio
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,756
  -2,740
  -4,129
  -6,027
  -8,548
  -11,805
  -15,910
  -20,968
  -27,072
  -34,299
  -42,713
  -52,356
  -63,257
  -75,428
  -88,868
  -103,564
  -119,497
  -136,642
  -154,971
  -174,455
  -195,070
  -216,791
  -239,602
  -263,492
  -288,454
  -314,491
  -341,613
  -369,836
  -399,186
  -429,693
Depreciation, amort., depletion, $m
  1,519
  2,347
  3,510
  5,093
  7,186
  9,879
  13,260
  17,411
  22,404
  28,298
  35,140
  42,961
  51,783
  61,612
  72,444
  84,270
  97,072
  110,829
  125,520
  141,122
  157,614
  174,980
  193,207
  212,285
  232,213
  252,992
  274,632
  297,147
  320,558
  344,890
Funds from operations, $m
  -237
  -393
  -619
  -934
  -1,362
  -1,926
  -2,650
  -3,557
  -4,668
  -6,002
  -7,573
  -9,394
  -11,474
  -13,816
  -16,423
  -19,294
  -22,425
  -25,813
  -29,451
  -33,333
  -37,455
  -41,811
  -46,396
  -51,206
  -56,241
  -61,499
  -66,981
  -72,689
  -78,628
  -84,803
Change in working capital, $m
  -171
  -248
  -348
  -474
  -627
  -807
  -1,013
  -1,244
  -1,496
  -1,766
  -2,050
  -2,343
  -2,643
  -2,944
  -3,245
  -3,543
  -3,835
  -4,121
  -4,401
  -4,674
  -4,941
  -5,202
  -5,460
  -5,715
  -5,970
  -6,225
  -6,483
  -6,745
  -7,013
  -7,289
Cash from operations, $m
  -66
  -145
  -270
  -460
  -735
  -1,120
  -1,637
  -2,314
  -3,172
  -4,236
  -5,524
  -7,051
  -8,831
  -10,872
  -13,178
  -15,751
  -18,590
  -21,691
  -25,050
  -28,660
  -32,515
  -36,609
  -40,936
  -45,491
  -50,271
  -55,274
  -60,498
  -65,945
  -71,615
  -77,514
Maintenance CAPEX, $m
  -949
  -1,519
  -2,347
  -3,510
  -5,093
  -7,186
  -9,879
  -13,260
  -17,411
  -22,404
  -28,298
  -35,140
  -42,961
  -51,783
  -61,612
  -72,444
  -84,270
  -97,072
  -110,829
  -125,520
  -141,122
  -157,614
  -174,980
  -193,207
  -212,285
  -232,213
  -252,992
  -274,632
  -297,147
  -320,558
New CAPEX, $m
  -4,902
  -7,120
  -10,002
  -13,613
  -17,996
  -23,159
  -29,080
  -35,700
  -42,938
  -50,689
  -58,838
  -67,268
  -75,865
  -84,525
  -93,161
  -101,702
  -110,097
  -118,314
  -126,340
  -134,175
  -141,836
  -149,348
  -156,747
  -164,074
  -171,377
  -178,703
  -186,103
  -193,629
  -201,330
  -209,256
Cash from investing activities, $m
  -5,851
  -8,639
  -12,349
  -17,123
  -23,089
  -30,345
  -38,959
  -48,960
  -60,349
  -73,093
  -87,136
  -102,408
  -118,826
  -136,308
  -154,773
  -174,146
  -194,367
  -215,386
  -237,169
  -259,695
  -282,958
  -306,962
  -331,727
  -357,281
  -383,662
  -410,916
  -439,095
  -468,261
  -498,477
  -529,814
Free cash flow, $m
  -5,917
  -8,785
  -12,619
  -17,583
  -23,824
  -31,465
  -40,596
  -51,274
  -63,521
  -77,328
  -92,660
  -109,459
  -127,658
  -147,180
  -167,951
  -189,897
  -212,957
  -237,078
  -262,219
  -288,355
  -315,472
  -343,571
  -372,663
  -402,772
  -433,933
  -466,190
  -499,594
  -534,206
  -570,093
  -607,328
Issuance/(repayment) of debt, $m
  2,534
  3,670
  5,155
  7,016
  9,274
  11,935
  14,986
  18,398
  22,128
  26,123
  30,323
  34,667
  39,098
  43,561
  48,011
  52,413
  56,739
  60,974
  65,110
  69,148
  73,096
  76,968
  80,781
  84,557
  88,321
  92,096
  95,910
  99,788
  103,757
  107,842
Issuance/(repurchase) of shares, $m
  4,127
  6,169
  8,944
  12,581
  17,212
  22,955
  29,911
  38,157
  47,745
  58,704
  71,041
  84,743
  99,784
  116,124
  133,721
  152,530
  172,505
  193,607
  215,799
  239,056
  263,359
  288,697
  315,071
  342,488
  370,966
  400,531
  431,216
  463,062
  496,120
  530,443
Cash from financing (excl. dividends), $m  
  6,661
  9,839
  14,099
  19,597
  26,486
  34,890
  44,897
  56,555
  69,873
  84,827
  101,364
  119,410
  138,882
  159,685
  181,732
  204,943
  229,244
  254,581
  280,909
  308,204
  336,455
  365,665
  395,852
  427,045
  459,287
  492,627
  527,126
  562,850
  599,877
  638,285
Total cash flow (excl. dividends), $m
  744
  1,053
  1,480
  2,014
  2,662
  3,426
  4,302
  5,281
  6,352
  7,499
  8,704
  9,952
  11,223
  12,505
  13,782
  15,046
  16,288
  17,503
  18,690
  19,850
  20,983
  22,094
  23,189
  24,273
  25,353
  26,437
  27,532
  28,645
  29,784
  30,957
Retained Cash Flow (-), $m
  -4,127
  -6,169
  -8,944
  -12,581
  -17,212
  -22,955
  -29,911
  -38,157
  -47,745
  -58,704
  -71,041
  -84,743
  -99,784
  -116,124
  -133,721
  -152,530
  -172,505
  -193,607
  -215,799
  -239,056
  -263,359
  -288,697
  -315,071
  -342,488
  -370,966
  -400,531
  -431,216
  -463,062
  -496,120
  -530,443
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
  -3,383
  -5,115
  -7,465
  -10,568
  -14,550
  -19,529
  -25,609
  -32,875
  -41,393
  -51,206
  -62,337
  -74,792
  -88,560
  -103,620
  -119,939
  -137,484
  -156,218
  -176,103
  -197,109
  -219,207
  -242,376
  -266,603
  -291,882
  -318,215
  -345,613
  -374,094
  -403,684
  -434,417
  -466,335
  -499,486
Discount rate, %
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.12
  16.93
  17.78
  18.67
  19.60
  20.58
  21.61
  22.69
  23.82
  25.01
  26.26
  27.58
PV of cash for distribution, $m
  -3,171
  -4,465
  -6,028
  -7,838
  -9,837
  -11,937
  -14,028
  -15,990
  -17,700
  -19,049
  -19,949
  -20,345
  -20,220
  -19,592
  -18,514
  -17,065
  -15,345
  -13,459
  -11,512
  -9,600
  -7,802
  -6,176
  -4,758
  -3,566
  -2,597
  -1,837
  -1,260
  -838
  -539
  -335
Current shareholders' claim on cash, %
  41.1
  17.6
  7.8
  3.6
  1.7
  0.8
  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
  0.0

Whiting Petroleum Corporation is an independent oil and gas company. The Company is engaged in development, production, acquisition and exploration activities primarily in the Rocky Mountains region of the United States. It is engaged in the exploration and production of crude oil, natural gas liquid (NGLs) and natural gas. Its Northern Rocky Mountains operations included properties in the Williston Basin of North Dakota and Montana targeting the Bakken and Three Forks formations and encompassing approximately 736,000 gross developed and undeveloped acres, as of December 31, 2016. Its Central Rocky Mountains operations included properties at its Redtail field in the Denver Julesburg Basin in Weld County, Colorado targeting the Niobrara and Codell/Fort Hays formations and encompassing approximately 157,200 gross developed and undeveloped acres, as of December 31, 2016. Its other operations primarily relate to non-core assets in Colorado, Mississippi, North Dakota, Texas and Wyoming.

FINANCIAL RATIOS  of  Whiting Petroleum (WLL)

Valuation Ratios
P/E Ratio -2.1
Price to Sales 2.2
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow 4.8
Price to Free Cash Flow 68.3
Growth Rates
Sales Growth Rate -38.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -77.9%
Cap. Spend. - 3 Yr. Gr. Rate -25.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0.8
LT Debt to Equity 68.8%
Total Debt to Equity 68.8%
Interest Coverage -5
Management Effectiveness
Return On Assets -10.5%
Ret/ On Assets - 3 Yr. Avg. -8.4%
Return On Total Capital -14.4%
Ret/ On T. Cap. - 3 Yr. Avg. -11.5%
Return On Equity -27.1%
Return On Equity - 3 Yr. Avg. -22.7%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 65.7%
Gross Margin - 3 Yr. Avg. 71%
EBITDA Margin -1.2%
EBITDA Margin - 3 Yr. Avg. -8.5%
Operating Margin -67.7%
Oper. Margin - 3 Yr. Avg. -66.1%
Pre-Tax Margin -111.1%
Pre-Tax Margin - 3 Yr. Avg. -83.1%
Net Profit Margin -104.2%
Net Profit Margin - 3 Yr. Avg. -69.4%
Effective Tax Rate 6.2%
Eff/ Tax Rate - 3 Yr. Avg. 29%
Payout Ratio 0%

WLL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WLL stock intrinsic value calculation we used $1481.435 million for the last fiscal year's total revenue generated by Whiting Petroleum. The default revenue input number comes from 0001 income statement of Whiting 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 WLL 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 6.7%, whose default value for WLL is calculated based on our internal credit rating of Whiting 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 Whiting 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 WLL stock the variable cost ratio is equal to 165.6%.

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 WLL 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 Whiting Petroleum.

Corporate tax rate of 27% is the nominal tax rate for Whiting 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 WLL 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 WLL are equal to 551.2%.

Life of production assets of 8.6 years is the average useful life of capital assets used in Whiting 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 WLL is equal to -19.2%. 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 - $3919.142 million for Whiting 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 90.967 million for Whiting 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 Whiting Petroleum at the current share price and the inputted number of shares is $2.9 billion.

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COMPANY NEWS

▶ Whiting Petroleum buoyed by third-quarter growth   [Oct-31-18 04:47PM  American City Business Journals]
▶ Whiting: 3Q Earnings Snapshot   [04:11PM  Associated Press]
▶ Oil Edges Higher On Iran Fears   [Aug-21-18 03:00PM  Oilprice.com]
▶ Scott Black's Top 5 Buys in 2nd Quarter   [Aug-20-18 07:14PM  GuruFocus.com]
▶ Colorado oil and gas stocks hit hard by anti-fracking ballot initiative news   [Aug-10-18 04:48PM  American City Business Journals]
▶ Whiting Petroleum changes course on its future in Colorado's oil fields   [Aug-01-18 04:50PM  American City Business Journals]
▶ Whiting: 2Q Earnings Snapshot   [04:07PM  Associated Press]
▶ Playing $80 Oil: Be Safe, or Be Daring   [May-21-18 10:15AM  InvestorPlace]
▶ The Rise in Oil Prices Is Just Temporary   [May-14-18 04:09PM  InvestorPlace]
▶ Updated Bullish Technical Strategy for Whiting Petroleum   [May-08-18 01:36PM  TheStreet.com]
▶ Whiting: 1Q Earnings Snapshot   [Apr-30-18 04:16PM  Associated Press]
▶ Two oil and gas CEOs: One likes doing business in Colorado, one wants out   [Apr-25-18 04:58PM  American City Business Journals]

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