Intrinsic value of WPX Energy - WPX

Previous Close

$14.39

  Intrinsic Value

$2.46

stock screener

  Rating & Target

str. sell

-83%

Previous close

$14.39

 
Intrinsic value

$2.46

 
Up/down potential

-83%

 
Rating

str. sell

We calculate the intrinsic value of WPX 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 6.0

 

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, %
  22.90
  21.11
  19.50
  18.05
  16.74
  15.57
  14.51
  13.56
  12.71
  11.93
  11.24
  10.62
  10.06
  9.55
  9.09
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
  6.96
  6.76
  6.59
  6.43
  6.29
  6.16
  6.04
  5.94
  5.84
Revenue, $m
  1,642
  1,989
  2,376
  2,805
  3,275
  3,785
  4,334
  4,922
  5,547
  6,209
  6,907
  7,641
  8,409
  9,212
  10,050
  10,923
  11,831
  12,776
  13,758
  14,778
  15,839
  16,941
  18,087
  19,278
  20,517
  21,807
  23,149
  24,548
  26,005
  27,525
Variable operating expenses, $m
  3,335
  4,039
  4,826
  5,697
  6,651
  7,687
  8,803
  9,996
  11,266
  12,611
  14,029
  15,518
  17,079
  18,710
  20,411
  22,184
  24,029
  25,948
  27,942
  30,015
  32,169
  34,407
  36,734
  39,154
  41,671
  44,290
  47,016
  49,856
  52,816
  55,902
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
  3,335
  4,039
  4,826
  5,697
  6,651
  7,687
  8,803
  9,996
  11,266
  12,611
  14,029
  15,518
  17,079
  18,710
  20,411
  22,184
  24,029
  25,948
  27,942
  30,015
  32,169
  34,407
  36,734
  39,154
  41,671
  44,290
  47,016
  49,856
  52,816
  55,902
Operating income, $m
  -1,693
  -2,050
  -2,450
  -2,892
  -3,376
  -3,902
  -4,468
  -5,074
  -5,719
  -6,402
  -7,121
  -7,877
  -8,670
  -9,498
  -10,361
  -11,261
  -12,198
  -13,172
  -14,184
  -15,237
  -16,330
  -17,466
  -18,648
  -19,876
  -21,153
  -22,483
  -23,867
  -25,309
  -26,811
  -28,378
EBITDA, $m
  -862
  -1,044
  -1,247
  -1,472
  -1,719
  -1,987
  -2,275
  -2,583
  -2,912
  -3,259
  -3,626
  -4,011
  -4,414
  -4,835
  -5,275
  -5,733
  -6,210
  -6,706
  -7,221
  -7,757
  -8,314
  -8,892
  -9,494
  -10,119
  -10,769
  -11,446
  -12,151
  -12,885
  -13,650
  -14,448
Interest expense (income), $m
  0
  188
  256
  333
  419
  515
  619
  733
  855
  986
  1,125
  1,272
  1,428
  1,591
  1,762
  1,941
  2,127
  2,321
  2,524
  2,734
  2,952
  3,180
  3,416
  3,661
  3,916
  4,181
  4,457
  4,744
  5,043
  5,354
  5,678
Earnings before tax, $m
  -1,881
  -2,306
  -2,783
  -3,311
  -3,891
  -4,521
  -5,201
  -5,929
  -6,705
  -7,527
  -8,394
  -9,305
  -10,260
  -11,259
  -12,302
  -13,388
  -14,519
  -15,695
  -16,918
  -18,189
  -19,510
  -20,882
  -22,308
  -23,792
  -25,334
  -26,940
  -28,611
  -30,352
  -32,165
  -34,056
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
  -1,881
  -2,306
  -2,783
  -3,311
  -3,891
  -4,521
  -5,201
  -5,929
  -6,705
  -7,527
  -8,394
  -9,305
  -10,260
  -11,259
  -12,302
  -13,388
  -14,519
  -15,695
  -16,918
  -18,189
  -19,510
  -20,882
  -22,308
  -23,792
  -25,334
  -26,940
  -28,611
  -30,352
  -32,165
  -34,056

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
  10,073
  12,200
  14,579
  17,210
  20,092
  23,220
  26,590
  30,196
  34,032
  38,094
  42,376
  46,875
  51,588
  56,515
  61,655
  67,010
  72,583
  78,379
  84,404
  90,665
  97,172
  103,933
  110,962
  118,271
  125,873
  133,784
  142,020
  150,600
  159,540
  168,863
Adjusted assets (=assets-cash), $m
  10,073
  12,200
  14,579
  17,210
  20,092
  23,220
  26,590
  30,196
  34,032
  38,094
  42,376
  46,875
  51,588
  56,515
  61,655
  67,010
  72,583
  78,379
  84,404
  90,665
  97,172
  103,933
  110,962
  118,271
  125,873
  133,784
  142,020
  150,600
  159,540
  168,863
Revenue / Adjusted assets
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
Average production assets, $m
  7,894
  9,561
  11,425
  13,487
  15,746
  18,197
  20,838
  23,664
  26,671
  29,854
  33,210
  36,736
  40,430
  44,291
  48,319
  52,516
  56,884
  61,426
  66,148
  71,055
  76,154
  81,453
  86,961
  92,689
  98,647
  104,847
  111,302
  118,026
  125,033
  132,338
Working capital, $m
  406
  491
  587
  693
  809
  935
  1,071
  1,216
  1,370
  1,534
  1,706
  1,887
  2,077
  2,275
  2,482
  2,698
  2,922
  3,156
  3,398
  3,650
  3,912
  4,184
  4,467
  4,762
  5,068
  5,386
  5,718
  6,063
  6,423
  6,799
Total debt, $m
  3,501
  4,558
  5,741
  7,048
  8,480
  10,035
  11,710
  13,502
  15,409
  17,428
  19,556
  21,792
  24,134
  26,583
  29,138
  31,799
  34,569
  37,450
  40,444
  43,556
  46,789
  50,150
  53,643
  57,275
  61,054
  64,986
  69,079
  73,343
  77,787
  82,420
Total liabilities, $m
  5,006
  6,063
  7,246
  8,553
  9,985
  11,540
  13,215
  15,007
  16,914
  18,933
  21,061
  23,297
  25,639
  28,088
  30,643
  33,304
  36,074
  38,955
  41,949
  45,061
  48,294
  51,655
  55,148
  58,780
  62,559
  66,491
  70,584
  74,848
  79,292
  83,925
Total equity, $m
  5,067
  6,136
  7,333
  8,657
  10,106
  11,680
  13,375
  15,188
  17,118
  19,161
  21,315
  23,578
  25,949
  28,427
  31,013
  33,706
  36,509
  39,425
  42,455
  45,605
  48,877
  52,278
  55,814
  59,490
  63,314
  67,293
  71,436
  75,752
  80,249
  84,938
Total liabilities and equity, $m
  10,073
  12,199
  14,579
  17,210
  20,091
  23,220
  26,590
  30,195
  34,032
  38,094
  42,376
  46,875
  51,588
  56,515
  61,656
  67,010
  72,583
  78,380
  84,404
  90,666
  97,171
  103,933
  110,962
  118,270
  125,873
  133,784
  142,020
  150,600
  159,541
  168,863
Debt-to-equity ratio
  0.690
  0.740
  0.780
  0.810
  0.840
  0.860
  0.880
  0.890
  0.900
  0.910
  0.920
  0.920
  0.930
  0.940
  0.940
  0.940
  0.950
  0.950
  0.950
  0.960
  0.960
  0.960
  0.960
  0.960
  0.960
  0.970
  0.970
  0.970
  0.970
  0.970
Adjusted equity ratio
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,881
  -2,306
  -2,783
  -3,311
  -3,891
  -4,521
  -5,201
  -5,929
  -6,705
  -7,527
  -8,394
  -9,305
  -10,260
  -11,259
  -12,302
  -13,388
  -14,519
  -15,695
  -16,918
  -18,189
  -19,510
  -20,882
  -22,308
  -23,792
  -25,334
  -26,940
  -28,611
  -30,352
  -32,165
  -34,056
Depreciation, amort., depletion, $m
  831
  1,006
  1,203
  1,420
  1,657
  1,916
  2,194
  2,491
  2,807
  3,143
  3,496
  3,867
  4,256
  4,662
  5,086
  5,528
  5,988
  6,466
  6,963
  7,479
  8,016
  8,574
  9,154
  9,757
  10,384
  11,037
  11,716
  12,424
  13,161
  13,930
Funds from operations, $m
  -1,050
  -1,299
  -1,580
  -1,891
  -2,234
  -2,606
  -3,008
  -3,438
  -3,897
  -4,384
  -4,898
  -5,438
  -6,005
  -6,597
  -7,216
  -7,860
  -8,531
  -9,230
  -9,955
  -10,710
  -11,493
  -12,308
  -13,155
  -14,035
  -14,951
  -15,903
  -16,895
  -17,928
  -19,004
  -20,126
Change in working capital, $m
  76
  86
  96
  106
  116
  126
  136
  145
  154
  164
  172
  181
  190
  198
  207
  216
  224
  233
  243
  252
  262
  272
  283
  294
  306
  319
  332
  345
  360
  375
Cash from operations, $m
  -1,125
  -1,385
  -1,676
  -1,997
  -2,350
  -2,732
  -3,143
  -3,583
  -4,052
  -4,548
  -5,070
  -5,619
  -6,194
  -6,795
  -7,423
  -8,076
  -8,756
  -9,463
  -10,198
  -10,962
  -11,755
  -12,580
  -13,438
  -14,329
  -15,257
  -16,222
  -17,227
  -18,273
  -19,364
  -20,501
Maintenance CAPEX, $m
  -676
  -831
  -1,006
  -1,203
  -1,420
  -1,657
  -1,916
  -2,194
  -2,491
  -2,807
  -3,143
  -3,496
  -3,867
  -4,256
  -4,662
  -5,086
  -5,528
  -5,988
  -6,466
  -6,963
  -7,479
  -8,016
  -8,574
  -9,154
  -9,757
  -10,384
  -11,037
  -11,716
  -12,424
  -13,161
New CAPEX, $m
  -1,470
  -1,667
  -1,864
  -2,062
  -2,258
  -2,452
  -2,641
  -2,826
  -3,007
  -3,183
  -3,356
  -3,526
  -3,694
  -3,861
  -4,028
  -4,197
  -4,368
  -4,542
  -4,722
  -4,907
  -5,099
  -5,299
  -5,508
  -5,728
  -5,958
  -6,200
  -6,455
  -6,724
  -7,007
  -7,306
Cash from investing activities, $m
  -2,146
  -2,498
  -2,870
  -3,265
  -3,678
  -4,109
  -4,557
  -5,020
  -5,498
  -5,990
  -6,499
  -7,022
  -7,561
  -8,117
  -8,690
  -9,283
  -9,896
  -10,530
  -11,188
  -11,870
  -12,578
  -13,315
  -14,082
  -14,882
  -15,715
  -16,584
  -17,492
  -18,440
  -19,431
  -20,467
Free cash flow, $m
  -3,272
  -3,883
  -4,547
  -5,262
  -6,028
  -6,841
  -7,700
  -8,603
  -9,549
  -10,538
  -11,569
  -12,641
  -13,755
  -14,912
  -16,113
  -17,359
  -18,652
  -19,993
  -21,385
  -22,831
  -24,334
  -25,896
  -27,520
  -29,211
  -30,971
  -32,806
  -34,718
  -36,713
  -38,795
  -40,968
Issuance/(repayment) of debt, $m
  926
  1,057
  1,182
  1,308
  1,432
  1,555
  1,675
  1,792
  1,907
  2,019
  2,128
  2,236
  2,343
  2,449
  2,555
  2,661
  2,770
  2,881
  2,994
  3,112
  3,234
  3,361
  3,493
  3,632
  3,778
  3,932
  4,094
  4,264
  4,444
  4,633
Issuance/(repurchase) of shares, $m
  2,821
  3,375
  3,979
  4,635
  5,340
  6,095
  6,896
  7,743
  8,635
  9,570
  10,548
  11,568
  12,631
  13,737
  14,887
  16,082
  17,322
  18,611
  19,949
  21,338
  22,782
  24,283
  25,844
  27,468
  29,158
  30,919
  32,754
  34,667
  36,663
  38,745
Cash from financing (excl. dividends), $m  
  3,747
  4,432
  5,161
  5,943
  6,772
  7,650
  8,571
  9,535
  10,542
  11,589
  12,676
  13,804
  14,974
  16,186
  17,442
  18,743
  20,092
  21,492
  22,943
  24,450
  26,016
  27,644
  29,337
  31,100
  32,936
  34,851
  36,848
  38,931
  41,107
  43,378
Total cash flow (excl. dividends), $m
  475
  550
  615
  680
  745
  809
  871
  932
  992
  1,050
  1,107
  1,163
  1,219
  1,274
  1,329
  1,384
  1,441
  1,498
  1,558
  1,619
  1,682
  1,748
  1,817
  1,889
  1,965
  2,045
  2,129
  2,218
  2,311
  2,410
Retained Cash Flow (-), $m
  -2,821
  -3,375
  -3,979
  -4,635
  -5,340
  -6,095
  -6,896
  -7,743
  -8,635
  -9,570
  -10,548
  -11,568
  -12,631
  -13,737
  -14,887
  -16,082
  -17,322
  -18,611
  -19,949
  -21,338
  -22,782
  -24,283
  -25,844
  -27,468
  -29,158
  -30,919
  -32,754
  -34,667
  -36,663
  -38,745
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
  -2,346
  -2,826
  -3,364
  -3,955
  -4,595
  -5,286
  -6,025
  -6,811
  -7,643
  -8,520
  -9,440
  -10,405
  -11,413
  -12,464
  -13,558
  -14,697
  -15,882
  -17,112
  -18,391
  -19,720
  -21,100
  -22,535
  -24,027
  -25,578
  -27,193
  -28,874
  -30,624
  -32,449
  -34,351
  -36,335
Discount rate, %
  6.40
  6.72
  7.06
  7.41
  7.78
  8.17
  8.58
  9.01
  9.46
  9.93
  10.42
  10.95
  11.49
  12.07
  12.67
  13.31
  13.97
  14.67
  15.40
  16.17
  16.98
  17.83
  18.72
  19.66
  20.64
  21.67
  22.76
  23.89
  25.09
  26.34
PV of cash for distribution, $m
  -2,205
  -2,481
  -2,742
  -2,971
  -3,160
  -3,300
  -3,387
  -3,417
  -3,389
  -3,306
  -3,171
  -2,992
  -2,774
  -2,529
  -2,265
  -1,992
  -1,720
  -1,456
  -1,209
  -984
  -783
  -610
  -464
  -345
  -250
  -176
  -121
  -80
  -52
  -33
Current shareholders' claim on cash, %
  68.2
  46.9
  32.5
  22.7
  16.0
  11.3
  8.1
  5.8
  4.2
  3.0
  2.2
  1.6
  1.2
  0.9
  0.6
  0.5
  0.3
  0.3
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

WPX Energy, Inc. is an oil and natural gas exploration and production company. The Company is engaged in the exploitation and development of unconventional properties. It operates in the exploration and production segment of the oil and gas industry and its operations are conducted in the United States. It is focused on exploiting, developing and growing its oil positions in the Delaware (a subset of the Permian Basin) and San Juan Basins in the southwestern United States and the Williston Basin in North Dakota. As of December 31, 2016, it operated 642 wells in the Delaware Basin and also owned interests in 783 wells operated by others. As of December 31, 2016, it held approximately 98,000 acres in the Delaware Basin, with operations located in Eddy, Lea and Chaves Counties in New Mexico and Loving, Pecos, Reeves, Ward and Winkler Counties in Texas. Its activity in the Delaware Basin is focused on the Wolfcamp Shale formation, the Bone Spring interval and the Delaware sand interval.

FINANCIAL RATIOS  of  WPX Energy (WPX)

Valuation Ratios
P/E Ratio -8.3
Price to Sales 7.2
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 18.9
Price to Free Cash Flow -15.7
Growth Rates
Sales Growth Rate -49.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -48.6%
Cap. Spend. - 3 Yr. Gr. Rate -12.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 74.3%
Total Debt to Equity 74.3%
Interest Coverage 0
Management Effectiveness
Return On Assets -7.7%
Ret/ On Assets - 3 Yr. Avg. -8.6%
Return On Total Capital -9.4%
Ret/ On T. Cap. - 3 Yr. Avg. -10.9%
Return On Equity -17.2%
Return On Equity - 3 Yr. Avg. -19.1%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 70%
Gross Margin - 3 Yr. Avg. 70.7%
EBITDA Margin -44.2%
EBITDA Margin - 3 Yr. Avg. 25.4%
Operating Margin -105.6%
Oper. Margin - 3 Yr. Avg. -23.2%
Pre-Tax Margin -135.2%
Pre-Tax Margin - 3 Yr. Avg. -39.2%
Net Profit Margin -86.7%
Net Profit Margin - 3 Yr. Avg. -68.9%
Effective Tax Rate 34.7%
Eff/ Tax Rate - 3 Yr. Avg. 63.8%
Payout Ratio -3%

WPX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WPX stock intrinsic value calculation we used $1336 million for the last fiscal year's total revenue generated by WPX Energy. The default revenue input number comes from 0001 income statement of WPX 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 WPX stock valuation model: a) initial revenue growth rate of 22.9% 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 6.4%, whose default value for WPX is calculated based on our internal credit rating of WPX 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 WPX 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 WPX stock the variable cost ratio is equal to 203.1%.

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 WPX 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 7.3% for WPX Energy.

Corporate tax rate of 27% is the nominal tax rate for WPX 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 WPX 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 WPX are equal to 480.8%.

Life of production assets of 9.5 years is the average useful life of capital assets used in WPX 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 WPX is equal to 24.7%. 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 - $4127 million for WPX 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 420.014 million for WPX 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 WPX Energy at the current share price and the inputted number of shares is $6.0 billion.

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COMPANY NEWS

▶ Portfolio manager on his energy stock picks   [Nov-14-18 06:54AM  CNBC Videos]
▶ Daniel Loeb Purchases 7 Stocks in 3rd Quarter   [Nov-13-18 05:20PM  GuruFocus.com]
▶ WPX: 3Q Earnings Snapshot   [04:41PM  Associated Press]
▶ WPX Energy Reports 3Q 2018 Results   [04:15PM  Business Wire]
▶ WPX Energy to Host Nov. 1 Webcast   [Oct-02-18 04:15PM  Business Wire]
▶ Permian Drillers Are Literally Burning Profit   [Sep-04-18 05:00PM  Oilprice.com]
▶ 10 Ways to Play Rising Energy   [Aug-10-18 01:50PM  Investopedia]
▶ WPX: 2Q Earnings Snapshot   [Aug-01-18 06:11PM  Associated Press]
▶ WPX Energy Reports 2Q 2018 Results   [04:15PM  Business Wire]
▶ Energy Earnings: 8 Stocks to Buy Now   [Jul-18-18 02:36PM  Barrons.com]
▶ 6 Oil Stocks to Benefit From Higher Prices: Goldman   [Jun-26-18 06:05AM  Investopedia]
▶ Goldman Touts Oil Stocks to Buy After OPEC Agreement   [Jun-25-18 10:00PM  TheStreet.com]
▶ 3 Energy Stocks to Play the Permian Bottleneck   [Jun-15-18 12:25PM  Barrons.com]
▶ WPX Energy Executives to Speak at June Conferences   [Jun-11-18 11:44AM  Business Wire]
▶ WPX Energy Announces Upsize and Pricing of Senior Notes   [May-09-18 07:00PM  Business Wire]
▶ WPX: 1Q Earnings Snapshot   [May-02-18 04:40PM  Associated Press]
▶ WPX Energy Reports 1Q 2018 Results   [04:15PM  Business Wire]
▶ WPX Energy to Host May 3 Webcast   [Apr-05-18 11:43AM  Business Wire]
▶ Why WPX Energy Inc's Stock Is Tumbling Today   [Apr-02-18 04:17PM  Motley Fool]
▶ WPX Energy Inc (NYSE:WPX): Is Breakeven Near?   [Mar-29-18 06:07PM  Simply Wall St.]
▶ Valerie M. Williams Joins WPX Energy Board of Directors   [Mar-15-18 04:15PM  Business Wire]
▶ Top 5 Positions in T. Boone Pickens' Portfolio   [Feb-28-18 01:54PM  Investopedia]
▶ WPX reports 4Q loss   [Feb-21-18 04:53PM  Associated Press]
▶ WPX Energy Declares Dividend on Preferred Stock   [Feb-20-18 08:28AM  Business Wire]
▶ WPX Energy Sells San Juan Gallup Holdings for $700 Million   [Feb-05-18 08:30AM  Business Wire]
▶ Whats Holding Back Natural-Gas-Weighted Stocks Returns?   [Jan-18-18 12:30PM  Market Realist]
▶ Could Natural Gas Rise after Inventory Data?   [04:00PM  Market Realist]

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