Intrinsic value of Cimarex Energy - XEC

Previous Close

$88.90

  Intrinsic Value

$5.11

stock screener

  Rating & Target

str. sell

-94%

Previous close

$88.90

 
Intrinsic value

$5.11

 
Up/down potential

-94%

 
Rating

str. sell

We calculate the intrinsic value of XEC 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 8.5

 

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, %
  21.90
  20.21
  18.69
  17.32
  16.09
  14.98
  13.98
  13.08
  12.27
  11.55
  10.89
  10.30
  9.77
  9.30
  8.87
  8.48
  8.13
  7.82
  7.54
  7.28
  7.05
  6.85
  6.66
  6.50
  6.35
  6.21
  6.09
  5.98
  5.88
  5.80
Revenue, $m
  2,338
  2,811
  3,336
  3,914
  4,544
  5,224
  5,955
  6,734
  7,561
  8,434
  9,352
  10,316
  11,324
  12,377
  13,474
  14,617
  15,805
  17,041
  18,325
  19,660
  21,047
  22,488
  23,987
  25,545
  27,167
  28,855
  30,613
  32,444
  34,354
  36,345
Variable operating expenses, $m
  3,283
  3,935
  4,658
  5,454
  6,322
  7,260
  8,266
  9,339
  10,478
  11,681
  12,884
  14,212
  15,601
  17,051
  18,563
  20,137
  21,774
  23,477
  25,246
  27,085
  28,995
  30,981
  33,046
  35,193
  37,427
  39,753
  42,174
  44,698
  47,328
  50,071
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
  3,283
  3,935
  4,658
  5,454
  6,322
  7,260
  8,266
  9,339
  10,478
  11,681
  12,884
  14,212
  15,601
  17,051
  18,563
  20,137
  21,774
  23,477
  25,246
  27,085
  28,995
  30,981
  33,046
  35,193
  37,427
  39,753
  42,174
  44,698
  47,328
  50,071
Operating income, $m
  -945
  -1,124
  -1,322
  -1,540
  -1,778
  -2,035
  -2,311
  -2,605
  -2,917
  -3,247
  -3,532
  -3,896
  -4,277
  -4,674
  -5,089
  -5,520
  -5,969
  -6,436
  -6,921
  -7,425
  -7,949
  -8,493
  -9,059
  -9,648
  -10,260
  -10,898
  -11,561
  -12,253
  -12,974
  -13,726
EBITDA, $m
  -384
  -462
  -548
  -643
  -746
  -858
  -978
  -1,106
  -1,242
  -1,385
  -1,536
  -1,694
  -1,860
  -2,032
  -2,213
  -2,400
  -2,595
  -2,798
  -3,009
  -3,228
  -3,456
  -3,693
  -3,939
  -4,195
  -4,461
  -4,738
  -5,027
  -5,328
  -5,641
  -5,968
Interest expense (income), $m
  80
  83
  112
  145
  182
  222
  266
  314
  365
  419
  477
  538
  602
  669
  739
  813
  889
  969
  1,052
  1,138
  1,228
  1,321
  1,418
  1,518
  1,623
  1,732
  1,845
  1,963
  2,085
  2,213
  2,346
Earnings before tax, $m
  -1,028
  -1,236
  -1,467
  -1,722
  -2,000
  -2,301
  -2,625
  -2,970
  -3,336
  -3,724
  -4,070
  -4,498
  -4,946
  -5,414
  -5,901
  -6,410
  -6,938
  -7,488
  -8,059
  -8,653
  -9,270
  -9,911
  -10,577
  -11,271
  -11,992
  -12,742
  -13,524
  -14,338
  -15,187
  -16,072
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
  -1,028
  -1,236
  -1,467
  -1,722
  -2,000
  -2,301
  -2,625
  -2,970
  -3,336
  -3,724
  -4,070
  -4,498
  -4,946
  -5,414
  -5,901
  -6,410
  -6,938
  -7,488
  -8,059
  -8,653
  -9,270
  -9,911
  -10,577
  -11,271
  -11,992
  -12,742
  -13,524
  -14,338
  -15,187
  -16,072

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
  6,154
  7,397
  8,780
  10,300
  11,957
  13,749
  15,671
  17,721
  19,896
  22,194
  24,611
  27,147
  29,800
  32,570
  35,458
  38,465
  41,592
  44,844
  48,224
  51,736
  55,386
  59,179
  63,123
  67,225
  71,492
  75,934
  80,560
  85,380
  90,404
  95,644
Adjusted assets (=assets-cash), $m
  6,154
  7,397
  8,780
  10,300
  11,957
  13,749
  15,671
  17,721
  19,896
  22,194
  24,611
  27,147
  29,800
  32,570
  35,458
  38,465
  41,592
  44,844
  48,224
  51,736
  55,386
  59,179
  63,123
  67,225
  71,492
  75,934
  80,560
  85,380
  90,404
  95,644
Revenue / Adjusted assets
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
Average production assets, $m
  4,043
  4,860
  5,768
  6,767
  7,856
  9,033
  10,296
  11,643
  13,072
  14,582
  16,170
  17,836
  19,579
  21,399
  23,297
  25,272
  27,327
  29,464
  31,684
  33,992
  36,390
  38,882
  41,473
  44,168
  46,972
  49,890
  52,930
  56,096
  59,397
  62,840
Working capital, $m
  -143
  -171
  -204
  -239
  -277
  -319
  -363
  -411
  -461
  -514
  -570
  -629
  -691
  -755
  -822
  -892
  -964
  -1,039
  -1,118
  -1,199
  -1,284
  -1,372
  -1,463
  -1,558
  -1,657
  -1,760
  -1,867
  -1,979
  -2,096
  -2,217
Total debt, $m
  2,080
  2,691
  3,370
  4,116
  4,930
  5,809
  6,753
  7,760
  8,828
  9,956
  11,143
  12,388
  13,691
  15,051
  16,469
  17,945
  19,481
  21,077
  22,737
  24,461
  26,253
  28,116
  30,052
  32,066
  34,162
  36,343
  38,614
  40,980
  43,447
  46,020
Total liabilities, $m
  3,021
  3,632
  4,311
  5,057
  5,871
  6,751
  7,694
  8,701
  9,769
  10,897
  12,084
  13,329
  14,632
  15,992
  17,410
  18,886
  20,422
  22,019
  23,678
  25,402
  27,195
  29,057
  30,994
  33,007
  35,103
  37,284
  39,555
  41,922
  44,388
  46,961
Total equity, $m
  3,132
  3,765
  4,469
  5,243
  6,086
  6,998
  7,976
  9,020
  10,127
  11,297
  12,527
  13,818
  15,168
  16,578
  18,048
  19,578
  21,171
  22,826
  24,546
  26,334
  28,191
  30,122
  32,130
  34,218
  36,390
  38,651
  41,005
  43,458
  46,016
  48,683
Total liabilities and equity, $m
  6,153
  7,397
  8,780
  10,300
  11,957
  13,749
  15,670
  17,721
  19,896
  22,194
  24,611
  27,147
  29,800
  32,570
  35,458
  38,464
  41,593
  44,845
  48,224
  51,736
  55,386
  59,179
  63,124
  67,225
  71,493
  75,935
  80,560
  85,380
  90,404
  95,644
Debt-to-equity ratio
  0.660
  0.710
  0.750
  0.790
  0.810
  0.830
  0.850
  0.860
  0.870
  0.880
  0.890
  0.900
  0.900
  0.910
  0.910
  0.920
  0.920
  0.920
  0.930
  0.930
  0.930
  0.930
  0.940
  0.940
  0.940
  0.940
  0.940
  0.940
  0.940
  0.950
Adjusted equity ratio
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,028
  -1,236
  -1,467
  -1,722
  -2,000
  -2,301
  -2,625
  -2,970
  -3,336
  -3,724
  -4,070
  -4,498
  -4,946
  -5,414
  -5,901
  -6,410
  -6,938
  -7,488
  -8,059
  -8,653
  -9,270
  -9,911
  -10,577
  -11,271
  -11,992
  -12,742
  -13,524
  -14,338
  -15,187
  -16,072
Depreciation, amort., depletion, $m
  561
  662
  774
  898
  1,032
  1,177
  1,333
  1,499
  1,676
  1,862
  1,996
  2,202
  2,417
  2,642
  2,876
  3,120
  3,374
  3,637
  3,912
  4,197
  4,493
  4,800
  5,120
  5,453
  5,799
  6,159
  6,535
  6,925
  7,333
  7,758
Funds from operations, $m
  -467
  -574
  -693
  -825
  -968
  -1,124
  -1,292
  -1,470
  -1,661
  -1,862
  -2,073
  -2,296
  -2,528
  -2,772
  -3,025
  -3,289
  -3,564
  -3,850
  -4,147
  -4,456
  -4,777
  -5,110
  -5,457
  -5,818
  -6,193
  -6,583
  -6,989
  -7,413
  -7,854
  -8,314
Change in working capital, $m
  -26
  -29
  -32
  -35
  -38
  -42
  -45
  -48
  -50
  -53
  -56
  -59
  -61
  -64
  -67
  -70
  -73
  -75
  -78
  -81
  -85
  -88
  -91
  -95
  -99
  -103
  -107
  -112
  -116
  -121
Cash from operations, $m
  -441
  -545
  -661
  -789
  -930
  -1,083
  -1,247
  -1,423
  -1,610
  -1,808
  -2,017
  -2,237
  -2,467
  -2,707
  -2,958
  -3,220
  -3,492
  -3,775
  -4,069
  -4,375
  -4,692
  -5,023
  -5,366
  -5,723
  -6,094
  -6,480
  -6,882
  -7,301
  -7,738
  -8,193
Maintenance CAPEX, $m
  -409
  -499
  -600
  -712
  -835
  -970
  -1,115
  -1,271
  -1,437
  -1,614
  -1,800
  -1,996
  -2,202
  -2,417
  -2,642
  -2,876
  -3,120
  -3,374
  -3,637
  -3,912
  -4,197
  -4,493
  -4,800
  -5,120
  -5,453
  -5,799
  -6,159
  -6,535
  -6,925
  -7,333
New CAPEX, $m
  -727
  -817
  -908
  -999
  -1,089
  -1,177
  -1,263
  -1,347
  -1,429
  -1,510
  -1,588
  -1,666
  -1,743
  -1,820
  -1,897
  -1,975
  -2,055
  -2,137
  -2,221
  -2,308
  -2,398
  -2,492
  -2,591
  -2,695
  -2,804
  -2,918
  -3,039
  -3,167
  -3,301
  -3,443
Cash from investing activities, $m
  -1,136
  -1,316
  -1,508
  -1,711
  -1,924
  -2,147
  -2,378
  -2,618
  -2,866
  -3,124
  -3,388
  -3,662
  -3,945
  -4,237
  -4,539
  -4,851
  -5,175
  -5,511
  -5,858
  -6,220
  -6,595
  -6,985
  -7,391
  -7,815
  -8,257
  -8,717
  -9,198
  -9,702
  -10,226
  -10,776
Free cash flow, $m
  -1,577
  -1,861
  -2,169
  -2,501
  -2,854
  -3,229
  -3,625
  -4,041
  -4,477
  -4,932
  -5,406
  -5,899
  -6,412
  -6,945
  -7,498
  -8,071
  -8,667
  -9,285
  -9,927
  -10,594
  -11,287
  -12,007
  -12,757
  -13,538
  -14,350
  -15,198
  -16,081
  -17,002
  -17,964
  -18,969
Issuance/(repayment) of debt, $m
  547
  611
  679
  747
  814
  879
  944
  1,007
  1,068
  1,128
  1,187
  1,245
  1,303
  1,360
  1,418
  1,476
  1,536
  1,597
  1,659
  1,724
  1,792
  1,863
  1,936
  2,014
  2,095
  2,181
  2,271
  2,366
  2,467
  2,573
Issuance/(repurchase) of shares, $m
  1,592
  1,869
  2,171
  2,496
  2,844
  3,213
  3,603
  4,013
  4,444
  4,893
  5,300
  5,788
  6,296
  6,824
  7,371
  7,940
  8,530
  9,143
  9,779
  10,440
  11,127
  11,842
  12,585
  13,358
  14,164
  15,003
  15,879
  16,792
  17,744
  18,739
Cash from financing (excl. dividends), $m  
  2,139
  2,480
  2,850
  3,243
  3,658
  4,092
  4,547
  5,020
  5,512
  6,021
  6,487
  7,033
  7,599
  8,184
  8,789
  9,416
  10,066
  10,740
  11,438
  12,164
  12,919
  13,705
  14,521
  15,372
  16,259
  17,184
  18,150
  19,158
  20,211
  21,312
Total cash flow (excl. dividends), $m
  561
  618
  680
  742
  803
  863
  922
  979
  1,035
  1,090
  1,081
  1,134
  1,187
  1,239
  1,292
  1,345
  1,399
  1,454
  1,512
  1,571
  1,632
  1,697
  1,764
  1,835
  1,909
  1,987
  2,069
  2,156
  2,247
  2,344
Retained Cash Flow (-), $m
  -1,592
  -1,869
  -2,171
  -2,496
  -2,844
  -3,213
  -3,603
  -4,013
  -4,444
  -4,893
  -5,300
  -5,788
  -6,296
  -6,824
  -7,371
  -7,940
  -8,530
  -9,143
  -9,779
  -10,440
  -11,127
  -11,842
  -12,585
  -13,358
  -14,164
  -15,003
  -15,879
  -16,792
  -17,744
  -18,739
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
  -1,030
  -1,251
  -1,491
  -1,754
  -2,041
  -2,350
  -2,681
  -3,034
  -3,409
  -3,804
  -4,219
  -4,654
  -5,109
  -5,585
  -6,080
  -6,595
  -7,131
  -7,688
  -8,268
  -8,869
  -9,495
  -10,145
  -10,821
  -11,524
  -12,255
  -13,017
  -13,810
  -14,636
  -15,497
  -16,396
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
  -988
  -1,145
  -1,297
  -1,444
  -1,582
  -1,705
  -1,811
  -1,897
  -1,958
  -1,994
  -2,003
  -1,986
  -1,943
  -1,875
  -1,785
  -1,676
  -1,552
  -1,416
  -1,273
  -1,127
  -982
  -842
  -709
  -587
  -477
  -380
  -296
  -226
  -169
  -123
Current shareholders' claim on cash, %
  84.2
  71.3
  60.7
  51.9
  44.6
  38.4
  33.3
  28.9
  25.1
  21.9
  19.2
  16.8
  14.8
  13.0
  11.5
  10.1
  8.9
  7.9
  7.0
  6.2
  5.5
  4.9
  4.3
  3.8
  3.4
  3.0
  2.7
  2.4
  2.1
  1.9

Cimarex Energy Co. is an independent oil and gas exploration and production company. The Company operates in exploration and production (E&P) segment. Its operations are located in Oklahoma, Texas and New Mexico. Its E&P activities take place primarily in two areas: the Permian Basin and the Mid-Continent region. Its Permian Basin region encompasses west Texas and southeast New Mexico. Its Mid-Continent region consists of Oklahoma and the Texas Panhandle. As of fiscal year ended December 31, 2016 (fiscal 2016), its activities in the Mid-Continent were focused in the Woodford shale and the Meramec horizon, both in Oklahoma. During fiscal 2016, production from the Mid-Continent averaged 457 millions of cubic feet equivalent (MMcfe) per day, or 47% of total company production. All of the Company's oil and gas assets are located in the United States. As of December 31, 2016, 63% of its total proved reserves were located in the Mid-Continent region and 37% were in the Permian Basin.

FINANCIAL RATIOS  of  Cimarex Energy (XEC)

Valuation Ratios
P/E Ratio -20.7
Price to Sales 6.7
Price to Book 4.1
Price to Tangible Book
Price to Cash Flow 14.1
Price to Free Cash Flow -68.7
Growth Rates
Sales Growth Rate -13.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -31.2%
Cap. Spend. - 3 Yr. Gr. Rate -15%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 72.8%
Total Debt to Equity 72.8%
Interest Coverage -7
Management Effectiveness
Return On Assets -8%
Ret/ On Assets - 3 Yr. Avg. -12.8%
Return On Total Capital -10.9%
Ret/ On T. Cap. - 3 Yr. Avg. -17.8%
Return On Equity -18.2%
Return On Equity - 3 Yr. Avg. -26.7%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 63.9%
Gross Margin - 3 Yr. Avg. 68.2%
EBITDA Margin -12%
EBITDA Margin - 3 Yr. Avg. -55.2%
Operating Margin -45.5%
Oper. Margin - 3 Yr. Avg. -95.5%
Pre-Tax Margin -49.6%
Pre-Tax Margin - 3 Yr. Avg. -98%
Net Profit Margin -32.5%
Net Profit Margin - 3 Yr. Avg. -62.8%
Effective Tax Rate 34.3%
Eff/ Tax Rate - 3 Yr. Avg. 35.9%
Payout Ratio -9.3%

XEC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the XEC stock intrinsic value calculation we used $1918.249 million for the last fiscal year's total revenue generated by Cimarex Energy. The default revenue input number comes from 0001 income statement of Cimarex 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 XEC stock valuation model: a) initial revenue growth rate of 21.9% 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 4.3%, whose default value for XEC is calculated based on our internal credit rating of Cimarex 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 Cimarex 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 XEC stock the variable cost ratio is equal to 141%.

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 XEC 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 Cimarex Energy.

Corporate tax rate of 27% is the nominal tax rate for Cimarex 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 XEC 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 XEC are equal to 172.9%.

Life of production assets of 8.1 years is the average useful life of capital assets used in Cimarex 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 XEC is equal to -6.1%. 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 - $2568.278 million for Cimarex 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 95.356 million for Cimarex 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 Cimarex Energy at the current share price and the inputted number of shares is $8.5 billion.

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COMPANY NEWS

▶ Dow Gains 545 Points Because Its Finally Over   [Nov-07-18 05:53PM  Barrons.com]
▶ /C O R R E C T I O N -- Cimarex Energy Co./   [Nov-06-18 08:56PM  PR Newswire]
▶ Cimarex: 3Q Earnings Snapshot   [04:16PM  Associated Press]
▶ 3 Top Oil Stocks to Buy Right Now   [08:19AM  Motley Fool]
▶ Why Cimarex Energy Co's Stock Slumped 12% in August   [Sep-05-18 12:22PM  Motley Fool]
▶ Cimarex Announces Closing of Ward County Asset Sale   [Sep-04-18 07:30AM  PR Newswire]
▶ This Beaten-Down Oil Stock Is Worth a Closer Look   [Aug-31-18 02:31PM  Motley Fool]
▶ Cimarex Energy Increases Quarterly Cash Dividend   [Aug-30-18 07:50PM  PR Newswire]
▶ Company News For Aug 9, 2018   [Aug-09-18 10:28AM  Zacks]
▶ 5 Energy Stocks to Sell Now   [08:48AM  InvestorPlace]
▶ Cimarex: 2Q Earnings Snapshot   [04:35PM  Associated Press]
▶ MARKETS: Here's why crude oil won't break above $75 per barrel   [Jul-26-18 01:23PM  Yahoo Finance Video]
▶ The 3 Worst Oil Stocks of 2018 (So Far)   [08:29AM  Motley Fool]
▶ Surging Oil Prices Are Doing Nothing for Stocks in 2018   [Jun-27-18 02:57PM  TheStreet.com]
▶ Are Cimarex Energy Cos (NYSE:XEC) Interest Costs Too High?   [Jun-26-18 10:48AM  Simply Wall St.]
▶ 6 Lagging Oil Stocks Ready to Rebound   [Jun-25-18 06:00AM  Investopedia]
▶ 3 Permian Oil Stocks Ready to Rebound   [Jun-20-18 10:14AM  Barrons.com]
▶ Global Gloom: Cramer's 'Mad Money' Recap (Monday 6/18/18)   [Jun-18-18 06:48PM  TheStreet.com]
▶ Small caps close at record high   [04:06PM  CNBC Videos]
▶ Cimarex's Slump May Soon Be Over   [Jun-13-18 03:10PM  TheStreet.com]
▶ A Permian Basin Trade From Jefferies   [Jun-11-18 11:46AM  Benzinga]
▶ Cimarex Preparing to Break Out   [May-18-18 01:36PM  TheStreet.com]
▶ Cimarex Energy Declares Quarterly Cash Dividend   [May-11-18 06:00AM  PR Newswire]
▶ Cimarex Reports First Quarter 2018 Results   [May-08-18 04:15PM  PR Newswire]
▶ MARKETS: Crude oil will slowly tick higher over the coming weeks   [Apr-25-18 01:36PM  Yahoo Finance Video]
▶ GE and Kohl's Are Among 2 Stocks Poised For Reversal   [Apr-23-18 01:22PM  TheStreet.com]
▶ Commodities Surge as Energy Stocks Lead Market Higher   [Apr-18-18 12:45PM  TheStreet.com]
▶ Cimarex Energy Co. to Host Earnings Call   [Feb-15-18 09:00AM  ACCESSWIRE]

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