Intrinsic value of WPX Energy - WPX

Previous Close

$12.41

  Intrinsic Value

$2.18

stock screener

  Rating & Target

str. sell

-82%

Previous close

$12.41

 
Intrinsic value

$2.18

 
Up/down potential

-82%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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 2016), $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 4.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -49.27
  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
  693
  1,109
  1,713
  2,562
  3,717
  5,244
  7,210
  9,678
  12,708
  16,352
  20,653
  25,647
  31,356
  37,794
  44,968
  52,874
  61,505
  70,849
  80,890
  91,612
  102,999
  115,037
  127,711
  141,014
  154,939
  169,483
  184,649
  200,443
  216,876
  233,962
  251,721
Variable operating expenses, $m
 
  939
  1,451
  2,170
  3,149
  4,442
  6,107
  8,197
  10,763
  13,850
  17,494
  21,723
  26,558
  32,012
  38,088
  44,784
  52,095
  60,009
  68,514
  77,596
  87,240
  97,436
  108,171
  119,439
  131,233
  143,552
  156,398
  169,775
  183,694
  198,166
  213,208
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
  1,425
  939
  1,451
  2,170
  3,149
  4,442
  6,107
  8,197
  10,763
  13,850
  17,494
  21,723
  26,558
  32,012
  38,088
  44,784
  52,095
  60,009
  68,514
  77,596
  87,240
  97,436
  108,171
  119,439
  131,233
  143,552
  156,398
  169,775
  183,694
  198,166
  213,208
Operating income, $m
  -732
  170
  262
  392
  569
  802
  1,103
  1,481
  1,944
  2,502
  3,160
  3,924
  4,797
  5,783
  6,880
  8,090
  9,410
  10,840
  12,376
  14,017
  15,759
  17,601
  19,540
  21,575
  23,706
  25,931
  28,251
  30,668
  33,182
  35,796
  38,513
EBITDA, $m
  -101
  1,179
  1,822
  2,724
  3,953
  5,577
  7,667
  10,291
  13,513
  17,388
  21,963
  27,273
  33,343
  40,190
  47,818
  56,226
  65,404
  75,340
  86,018
  97,419
  109,528
  122,328
  135,807
  149,953
  164,760
  180,226
  196,354
  213,149
  230,623
  248,793
  267,678
Interest expense (income), $m
  0
  90
  171
  287
  450
  673
  967
  1,345
  1,820
  2,403
  3,105
  3,933
  4,894
  5,993
  7,233
  8,613
  10,135
  11,797
  13,596
  15,529
  17,593
  19,785
  22,102
  24,542
  27,102
  29,783
  32,583
  35,502
  38,542
  41,706
  44,995
Earnings before tax, $m
  -937
  80
  91
  105
  118
  130
  136
  136
  124
  98
  55
  -9
  -97
  -211
  -353
  -524
  -725
  -957
  -1,219
  -1,512
  -1,834
  -2,184
  -2,562
  -2,966
  -3,397
  -3,852
  -4,331
  -4,834
  -5,360
  -5,910
  -6,482
Tax expense, $m
  -325
  21
  25
  28
  32
  35
  37
  37
  34
  27
  15
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -601
  58
  67
  77
  86
  95
  100
  99
  91
  72
  40
  -9
  -97
  -211
  -353
  -524
  -725
  -957
  -1,219
  -1,512
  -1,834
  -2,184
  -2,562
  -2,966
  -3,397
  -3,852
  -4,331
  -4,834
  -5,360
  -5,910
  -6,482

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  496
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  7,264
  10,871
  16,795
  25,117
  36,444
  51,417
  70,686
  94,881
  124,585
  160,311
  202,485
  251,441
  307,410
  370,533
  440,861
  518,374
  602,994
  694,598
  793,040
  898,159
  1,009,797
  1,127,809
  1,252,072
  1,382,490
  1,519,006
  1,661,597
  1,810,284
  1,965,129
  2,126,235
  2,293,748
  2,467,857
Adjusted assets (=assets-cash), $m
  6,768
  10,871
  16,795
  25,117
  36,444
  51,417
  70,686
  94,881
  124,585
  160,311
  202,485
  251,441
  307,410
  370,533
  440,861
  518,374
  602,994
  694,598
  793,040
  898,159
  1,009,797
  1,127,809
  1,252,072
  1,382,490
  1,519,006
  1,661,597
  1,810,284
  1,965,129
  2,126,235
  2,293,748
  2,467,857
Revenue / Adjusted assets
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
  0.102
Average production assets, $m
  6,498
  10,397
  16,064
  24,023
  34,857
  49,178
  67,608
  90,749
  119,160
  153,330
  193,668
  240,491
  294,024
  354,398
  421,663
  495,801
  576,736
  664,351
  758,506
  859,047
  965,824
  1,078,697
  1,197,549
  1,322,288
  1,452,859
  1,589,241
  1,731,454
  1,879,555
  2,033,646
  2,193,865
  2,360,392
Working capital, $m
  77
  -671
  -1,036
  -1,550
  -2,249
  -3,173
  -4,362
  -5,855
  -7,688
  -9,893
  -12,495
  -15,516
  -18,970
  -22,866
  -27,206
  -31,989
  -37,211
  -42,864
  -48,938
  -55,425
  -62,315
  -69,597
  -77,265
  -85,313
  -93,738
  -102,537
  -111,713
  -121,268
  -131,210
  -141,547
  -152,291
Total debt, $m
  2,575
  4,875
  8,199
  12,868
  19,222
  27,622
  38,432
  52,005
  68,669
  88,711
  112,371
  139,835
  171,234
  206,646
  246,100
  289,585
  337,056
  388,447
  443,672
  502,644
  565,273
  631,478
  701,189
  774,354
  850,939
  930,933
  1,014,347
  1,101,214
  1,191,595
  1,285,570
  1,383,245
Total liabilities, $m
  3,798
  6,098
  9,422
  14,091
  20,445
  28,845
  39,655
  53,228
  69,892
  89,934
  113,594
  141,058
  172,457
  207,869
  247,323
  290,808
  338,279
  389,670
  444,895
  503,867
  566,496
  632,701
  702,412
  775,577
  852,162
  932,156
  1,015,570
  1,102,437
  1,192,818
  1,286,793
  1,384,468
Total equity, $m
  3,466
  4,772
  7,373
  11,026
  15,999
  22,572
  31,031
  41,653
  54,693
  70,376
  88,891
  110,382
  134,953
  162,664
  193,538
  227,566
  264,714
  304,929
  348,144
  394,292
  443,301
  495,108
  549,659
  606,913
  666,844
  729,441
  794,715
  862,692
  933,417
  1,006,955
  1,083,389
Total liabilities and equity, $m
  7,264
  10,870
  16,795
  25,117
  36,444
  51,417
  70,686
  94,881
  124,585
  160,310
  202,485
  251,440
  307,410
  370,533
  440,861
  518,374
  602,993
  694,599
  793,039
  898,159
  1,009,797
  1,127,809
  1,252,071
  1,382,490
  1,519,006
  1,661,597
  1,810,285
  1,965,129
  2,126,235
  2,293,748
  2,467,857
Debt-to-equity ratio
  0.743
  1.020
  1.110
  1.170
  1.200
  1.220
  1.240
  1.250
  1.260
  1.260
  1.260
  1.270
  1.270
  1.270
  1.270
  1.270
  1.270
  1.270
  1.270
  1.270
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
Adjusted equity ratio
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -601
  58
  67
  77
  86
  95
  100
  99
  91
  72
  40
  -9
  -97
  -211
  -353
  -524
  -725
  -957
  -1,219
  -1,512
  -1,834
  -2,184
  -2,562
  -2,966
  -3,397
  -3,852
  -4,331
  -4,834
  -5,360
  -5,910
  -6,482
Depreciation, amort., depletion, $m
  631
  1,009
  1,560
  2,332
  3,384
  4,775
  6,564
  8,811
  11,569
  14,886
  18,803
  23,349
  28,546
  34,408
  40,938
  48,136
  55,994
  64,500
  73,641
  83,403
  93,769
  104,728
  116,267
  128,378
  141,054
  154,295
  168,102
  182,481
  197,441
  212,997
  229,164
Funds from operations, $m
  174
  1,067
  1,626
  2,409
  3,471
  4,869
  6,663
  8,910
  11,659
  14,958
  18,843
  23,340
  28,449
  34,197
  40,586
  47,612
  55,269
  63,543
  72,422
  81,891
  91,936
  102,544
  113,705
  125,411
  137,658
  150,443
  163,771
  177,647
  192,081
  207,087
  222,683
Change in working capital, $m
  -88
  -252
  -366
  -514
  -699
  -924
  -1,189
  -1,493
  -1,833
  -2,205
  -2,603
  -3,021
  -3,454
  -3,895
  -4,340
  -4,783
  -5,222
  -5,653
  -6,075
  -6,487
  -6,889
  -7,283
  -7,668
  -8,048
  -8,424
  -8,799
  -9,175
  -9,555
  -9,942
  -10,337
  -10,744
Cash from operations, $m
  262
  1,319
  1,992
  2,923
  4,170
  5,793
  7,853
  10,403
  13,493
  17,163
  21,446
  26,361
  31,903
  38,092
  44,926
  52,396
  60,490
  69,196
  78,497
  88,378
  98,825
  109,826
  121,373
  133,459
  146,082
  159,243
  172,946
  187,202
  202,023
  217,424
  233,427
Maintenance CAPEX, $m
  0
  -631
  -1,009
  -1,560
  -2,332
  -3,384
  -4,775
  -6,564
  -8,811
  -11,569
  -14,886
  -18,803
  -23,349
  -28,546
  -34,408
  -40,938
  -48,136
  -55,994
  -64,500
  -73,641
  -83,403
  -93,769
  -104,728
  -116,267
  -128,378
  -141,054
  -154,295
  -168,102
  -182,481
  -197,441
  -212,997
New CAPEX, $m
  -578
  -3,899
  -5,666
  -7,960
  -10,833
  -14,321
  -18,430
  -23,142
  -28,410
  -34,170
  -40,338
  -46,824
  -53,532
  -60,374
  -67,266
  -74,138
  -80,935
  -87,615
  -94,155
  -100,542
  -106,777
  -112,873
  -118,851
  -124,740
  -130,571
  -136,382
  -142,212
  -148,102
  -154,090
  -160,219
  -166,527
Cash from investing activities, $m
  310
  -4,530
  -6,675
  -9,520
  -13,165
  -17,705
  -23,205
  -29,706
  -37,221
  -45,739
  -55,224
  -65,627
  -76,881
  -88,920
  -101,674
  -115,076
  -129,071
  -143,609
  -158,655
  -174,183
  -190,180
  -206,642
  -223,579
  -241,007
  -258,949
  -277,436
  -296,507
  -316,204
  -336,571
  -357,660
  -379,524
Free cash flow, $m
  572
  -3,211
  -4,684
  -6,597
  -8,996
  -11,912
  -15,352
  -19,303
  -23,728
  -28,576
  -33,779
  -39,266
  -44,978
  -50,828
  -56,748
  -62,680
  -68,580
  -74,413
  -80,158
  -85,805
  -91,355
  -96,816
  -102,206
  -107,547
  -112,867
  -118,194
  -123,561
  -129,002
  -134,549
  -140,236
  -146,097
Issuance/(repayment) of debt, $m
  -621
  2,300
  3,324
  4,669
  6,354
  8,400
  10,810
  13,574
  16,664
  20,042
  23,660
  27,464
  31,399
  35,412
  39,454
  43,485
  47,472
  51,390
  55,226
  58,972
  62,629
  66,205
  69,711
  73,165
  76,585
  79,994
  83,413
  86,868
  90,380
  93,975
  97,675
Issuance/(repurchase) of shares, $m
  540
  1,744
  2,534
  3,577
  4,886
  6,479
  8,360
  10,523
  12,949
  15,612
  18,474
  21,500
  24,667
  27,921
  31,227
  34,552
  37,873
  41,171
  44,435
  47,659
  50,843
  53,991
  57,113
  60,220
  63,327
  66,450
  69,605
  72,811
  76,086
  79,448
  82,915
Cash from financing (excl. dividends), $m  
  -96
  4,044
  5,858
  8,246
  11,240
  14,879
  19,170
  24,097
  29,613
  35,654
  42,134
  48,964
  56,066
  63,333
  70,681
  78,037
  85,345
  92,561
  99,661
  106,631
  113,472
  120,196
  126,824
  133,385
  139,912
  146,444
  153,018
  159,679
  166,466
  173,423
  180,590
Total cash flow (excl. dividends), $m
  476
  833
  1,174
  1,649
  2,244
  2,966
  3,818
  4,793
  5,885
  7,078
  8,355
  9,699
  11,088
  12,506
  13,933
  15,357
  16,764
  18,148
  19,503
  20,826
  22,117
  23,380
  24,618
  25,838
  27,046
  28,250
  29,457
  30,677
  31,918
  33,187
  34,494
Retained Cash Flow (-), $m
  69
  -1,802
  -2,601
  -3,653
  -4,972
  -6,573
  -8,459
  -10,622
  -13,040
  -15,684
  -18,515
  -21,500
  -24,667
  -27,921
  -31,227
  -34,552
  -37,873
  -41,171
  -44,435
  -47,659
  -50,843
  -53,991
  -57,113
  -60,220
  -63,327
  -66,450
  -69,605
  -72,811
  -76,086
  -79,448
  -82,915
Prev. year cash balance distribution, $m
 
  496
  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
 
  -473
  -1,427
  -2,005
  -2,728
  -3,607
  -4,642
  -5,828
  -7,155
  -8,606
  -10,159
  -11,802
  -13,579
  -15,416
  -17,293
  -19,195
  -21,109
  -23,023
  -24,932
  -26,833
  -28,726
  -30,611
  -32,495
  -34,382
  -36,281
  -38,200
  -40,148
  -42,134
  -44,168
  -46,261
  -48,422
Discount rate, %
 
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
 
  -442
  -1,238
  -1,604
  -1,998
  -2,398
  -2,778
  -3,111
  -3,375
  -3,549
  -3,624
  -3,598
  -3,496
  -3,307
  -3,048
  -2,739
  -2,401
  -2,053
  -1,712
  -1,393
  -1,106
  -855
  -645
  -474
  -339
  -235
  -159
  -104
  -66
  -41
  -24
Current shareholders' claim on cash, %
  100
  70.8
  51.6
  38.5
  29.4
  22.9
  18.2
  14.7
  12.1
  10.0
  8.5
  7.3
  6.3
  5.5
  4.8
  4.3
  3.8
  3.5
  3.1
  2.9
  2.6
  2.4
  2.2
  2.1
  1.9
  1.8
  1.7
  1.6
  1.5
  1.4
  1.3

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 -7.1
Price to Sales 6.2
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 16.3
Price to Free Cash Flow -13.5
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 $693 million for the last fiscal year's total revenue generated by WPX Energy. The default revenue input number comes from 2016 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 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 7%, 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 84.7%.

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 3.5% 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 937.7%.

Life of production assets of 10.3 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 -60.5%. 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 - $3466 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 398.305 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 $4.9 billion.

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COMPANY NEWS

▶ What Does Wall Street Predict for WPX Energy?   [Dec-13-17 07:33AM  Market Realist]
▶ Whats WPX Energys Price Forecast for This Week?   [Dec-12-17 10:32AM  Market Realist]
▶ WPX Energy Earns Relative Strength Rating Upgrade; Hits Key Benchmark   [Dec-11-17 03:00AM  Investor's Business Daily]
▶ Unexpected Rise in US Natural Gas Inventories   [Dec-08-17 10:06AM  Market Realist]
▶ IBD Rating Upgrades: WPX Energy Shows Improved Price Strength   [03:00AM  Investor's Business Daily]
▶ Are Gas-Weighted Stocks Deviating from Natural Gas Prices?   [Dec-05-17 01:05PM  Market Realist]
▶ WPX Energy Sees IBD RS Rating Rise To 74   [03:00AM  Investor's Business Daily]
▶ US Natural Gas Inventories Have Fallen 8% from Last Year   [Nov-24-17 09:15AM  Market Realist]
▶ Which Gas-Weighted Stocks Are Outperforming Natural Gas?   [Nov-21-17 09:44AM  Market Realist]
▶ Is Natural Gas Tracking Oil Prices?   [Nov-20-17 10:31AM  Market Realist]
▶ Weather Could Help Natural Gas Bulls Next Week   [Nov-17-17 09:44AM  Market Realist]
▶ OPECs Meeting Could Help Natural Gas Bears   [Nov-10-17 01:20PM  Market Realist]
▶ WPX Energy Declares Dividend on Preferred Stock   [Nov-09-17 08:45AM  Business Wire]
▶ ETFs with exposure to WPX Energy, Inc. : November 8, 2017   [Nov-08-17 06:43PM  Capital Cube]
▶ WPX Energy Getting Closer To Key Technical Benchmark   [03:00AM  Investor's Business Daily]
▶ These 16 Stocks Look Ready to Reverse   [Nov-06-17 02:30PM  TheStreet.com]
▶ Are Natural Gas Prices Underperforming Crude Oil?   [Nov-02-17 03:52PM  Market Realist]
▶ WPX reports 3Q loss   [Nov-01-17 05:28PM  Associated Press]
▶ Natural GasWeighted Stocks That Are Rising with Oil Prices   [Oct-31-17 12:45PM  Market Realist]
▶ How Oil Prices Matter to Natural Gas   [Oct-26-17 12:36PM  Market Realist]
▶ Oils Moves Are Vital for Gas-Weighted Stocks   [Oct-24-17 01:29PM  Market Realist]
▶ US Natural Gas Consumption Could Help the Prices   [Oct-20-17 01:35PM  Market Realist]
▶ How the Inventory Spread Could Boost Natural Gas Prices   [Oct-19-17 01:36PM  Market Realist]
▶ Will US Natural Gas Prices Take a Tumble in 2018?   [Oct-18-17 07:39AM  Market Realist]
▶ Why US Crude Oil Production Hit a 5-Week Low   [Oct-13-17 03:25PM  Market Realist]
▶ Oil Prices Fell despite the Draw in US Crude Oil Inventories   [Oct-05-17 12:36PM  Market Realist]
▶ WPX Energy to Host Nov. 2 Webcast   [03:12PM  Business Wire]
▶ Natural GasWeighted Stocks Ignore Gass Weakness   [Sep-26-17 03:06PM  Market Realist]
▶ US drilling activity likely to pickup in 2018   [Sep-25-17 08:37PM  CNBC Videos]
▶ Will US Natural Gas Consumption Rise in 2018?   [Sep-22-17 01:06PM  Market Realist]
▶ Texas oil co. building Permian pipeline in NM   [Sep-20-17 04:34PM  American City Business Journals]
▶ Leon Coopermans Solution for Low Oil Prices   [Sep-14-17 03:06PM  Market Realist]
▶ Gas-Weighted Stocks That Could Avoid Natural Gass Weakness   [Sep-12-17 03:41PM  Market Realist]
▶ Inventories Spread: What to Expect from Natural Gas   [Sep-07-17 01:27PM  Market Realist]
▶ The Natural GasWeighted Stocks Most Aligned with Oil Prices   [Sep-05-17 02:18PM  Market Realist]
▶ Supply and Demand Factors Impact Natural Gas Prices   [Aug-28-17 11:36AM  Market Realist]
▶ Do Gas-Weighted Stocks Returns Match Natural Gass Gains?   [Aug-23-17 09:08AM  Market Realist]
Financial statements of WPX
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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