Intrinsic value of Extraction Oil & Gas, Inc. - XOG

Previous Close

$4.16

  Intrinsic Value

$152.73

stock screener

  Rating & Target

str. buy

+999%

Previous close

$4.16

 
Intrinsic value

$152.73

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of XOG 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 0.7

 

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, %
  34.60
  31.64
  28.98
  26.58
  24.42
  22.48
  20.73
  19.16
  17.74
  16.47
  15.32
  14.29
  13.36
  12.52
  11.77
  11.09
  10.48
  9.94
  9.44
  9.00
  8.60
  8.24
  7.91
  7.62
  7.36
  7.12
  6.91
  6.72
  6.55
  6.39
Revenue, $m
  1,428
  1,880
  2,425
  3,069
  3,819
  4,677
  5,647
  6,728
  7,922
  9,227
  10,640
  12,161
  13,785
  15,512
  17,338
  19,261
  21,281
  23,395
  25,604
  27,908
  30,308
  32,805
  35,402
  38,101
  40,905
  43,820
  46,849
  49,998
  53,272
  56,678
Variable operating expenses, $m
  246
  207
  161
  106
  42
  -31
  -113
  -205
  -307
  -418
  -905
  -1,035
  -1,173
  -1,320
  -1,475
  -1,639
  -1,811
  -1,991
  -2,179
  -2,375
  -2,579
  -2,791
  -3,012
  -3,242
  -3,481
  -3,729
  -3,986
  -4,254
  -4,533
  -4,823
Fixed operating expenses, $m
  489
  499
  510
  521
  533
  545
  557
  569
  581
  594
  607
  621
  634
  648
  663
  677
  692
  707
  723
  739
  755
  772
  788
  806
  824
  842
  860
  879
  898
  918
Total operating expenses, $m
  735
  706
  671
  627
  575
  514
  444
  364
  274
  176
  -298
  -414
  -539
  -672
  -812
  -962
  -1,119
  -1,284
  -1,456
  -1,636
  -1,824
  -2,019
  -2,224
  -2,436
  -2,657
  -2,887
  -3,126
  -3,375
  -3,635
  -3,905
Operating income, $m
  694
  1,173
  1,754
  2,442
  3,243
  4,163
  5,203
  6,365
  7,648
  9,050
  10,938
  12,575
  14,324
  16,183
  18,150
  20,223
  22,399
  24,679
  27,060
  29,544
  32,132
  34,825
  37,626
  40,537
  43,562
  46,707
  49,975
  53,373
  56,906
  60,583
EBITDA, $m
  1,645
  2,309
  3,112
  4,064
  5,172
  6,443
  7,879
  9,483
  11,254
  13,190
  15,289
  17,547
  19,960
  22,525
  25,239
  28,098
  31,100
  34,244
  37,529
  40,955
  44,524
  48,238
  52,100
  56,115
  60,287
  64,623
  69,129
  73,815
  78,687
  83,756
Interest expense (income), $m
  31
  143
  227
  331
  457
  605
  778
  975
  1,198
  1,447
  1,722
  2,022
  2,347
  2,697
  3,071
  3,468
  3,889
  4,331
  4,796
  5,283
  5,791
  6,321
  6,873
  7,448
  8,046
  8,667
  9,312
  9,983
  10,680
  11,404
  12,158
Earnings before tax, $m
  551
  946
  1,422
  1,985
  2,638
  3,386
  4,228
  5,167
  6,200
  7,328
  8,916
  10,227
  11,627
  13,112
  14,682
  16,334
  18,068
  19,883
  21,778
  23,754
  25,811
  27,952
  30,178
  32,491
  34,896
  37,395
  39,992
  42,693
  45,502
  48,425
Tax expense, $m
  149
  255
  384
  536
  712
  914
  1,142
  1,395
  1,674
  1,979
  2,407
  2,761
  3,139
  3,540
  3,964
  4,410
  4,878
  5,368
  5,880
  6,413
  6,969
  7,547
  8,148
  8,773
  9,422
  10,097
  10,798
  11,527
  12,286
  13,075
Net income, $m
  402
  691
  1,038
  1,449
  1,926
  2,471
  3,086
  3,772
  4,526
  5,350
  6,509
  7,466
  8,487
  9,572
  10,718
  11,924
  13,190
  14,514
  15,898
  17,340
  18,842
  20,405
  22,030
  23,719
  25,474
  27,298
  29,194
  31,166
  33,216
  35,350

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
  5,600
  7,372
  9,509
  12,036
  14,975
  18,341
  22,143
  26,386
  31,067
  36,183
  41,726
  47,689
  54,060
  60,830
  67,991
  75,534
  83,454
  91,746
  100,410
  109,445
  118,856
  128,648
  138,830
  149,414
  160,413
  171,842
  183,721
  196,069
  208,910
  222,268
Adjusted assets (=assets-cash), $m
  5,600
  7,372
  9,509
  12,036
  14,975
  18,341
  22,143
  26,386
  31,067
  36,183
  41,726
  47,689
  54,060
  60,830
  67,991
  75,534
  83,454
  91,746
  100,410
  109,445
  118,856
  128,648
  138,830
  149,414
  160,413
  171,842
  183,721
  196,069
  208,910
  222,268
Revenue / Adjusted assets
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
  0.255
Average production assets, $m
  4,613
  6,072
  7,832
  9,913
  12,334
  15,107
  18,238
  21,733
  25,588
  29,802
  34,368
  39,279
  44,526
  50,103
  56,001
  62,214
  68,737
  75,567
  82,702
  90,144
  97,896
  105,961
  114,348
  123,065
  132,124
  141,538
  151,321
  161,492
  172,068
  183,071
Working capital, $m
  -233
  -306
  -395
  -500
  -622
  -762
  -920
  -1,097
  -1,291
  -1,504
  -1,734
  -1,982
  -2,247
  -2,528
  -2,826
  -3,140
  -3,469
  -3,813
  -4,174
  -4,549
  -4,940
  -5,347
  -5,770
  -6,210
  -6,668
  -7,143
  -7,636
  -8,150
  -8,683
  -9,239
Total debt, $m
  2,252
  3,282
  4,523
  5,991
  7,699
  9,655
  11,864
  14,329
  17,048
  20,021
  23,242
  26,706
  30,407
  34,341
  38,501
  42,884
  47,485
  52,303
  57,336
  62,586
  68,054
  73,743
  79,659
  85,808
  92,198
  98,839
  105,740
  112,914
  120,375
  128,136
Total liabilities, $m
  3,254
  4,283
  5,525
  6,993
  8,701
  10,656
  12,865
  15,330
  18,050
  21,022
  24,243
  27,707
  31,409
  35,342
  39,503
  43,885
  48,487
  53,305
  58,338
  63,588
  69,055
  74,745
  80,661
  86,810
  93,200
  99,840
  106,742
  113,916
  121,376
  129,138
Total equity, $m
  2,347
  3,089
  3,984
  5,043
  6,275
  7,685
  9,278
  11,056
  13,017
  15,161
  17,483
  19,982
  22,651
  25,488
  28,488
  31,649
  34,967
  38,442
  42,072
  45,857
  49,801
  53,904
  58,170
  62,605
  67,213
  72,002
  76,979
  82,153
  87,533
  93,130
Total liabilities and equity, $m
  5,601
  7,372
  9,509
  12,036
  14,976
  18,341
  22,143
  26,386
  31,067
  36,183
  41,726
  47,689
  54,060
  60,830
  67,991
  75,534
  83,454
  91,747
  100,410
  109,445
  118,856
  128,649
  138,831
  149,415
  160,413
  171,842
  183,721
  196,069
  208,909
  222,268
Debt-to-equity ratio
  0.960
  1.060
  1.140
  1.190
  1.230
  1.260
  1.280
  1.300
  1.310
  1.320
  1.330
  1.340
  1.340
  1.350
  1.350
  1.350
  1.360
  1.360
  1.360
  1.360
  1.370
  1.370
  1.370
  1.370
  1.370
  1.370
  1.370
  1.370
  1.380
  1.380
Adjusted equity ratio
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419
  0.419

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  402
  691
  1,038
  1,449
  1,926
  2,471
  3,086
  3,772
  4,526
  5,350
  6,509
  7,466
  8,487
  9,572
  10,718
  11,924
  13,190
  14,514
  15,898
  17,340
  18,842
  20,405
  22,030
  23,719
  25,474
  27,298
  29,194
  31,166
  33,216
  35,350
Depreciation, amort., depletion, $m
  951
  1,136
  1,359
  1,622
  1,928
  2,279
  2,676
  3,118
  3,606
  4,140
  4,350
  4,972
  5,636
  6,342
  7,089
  7,875
  8,701
  9,565
  10,469
  11,411
  12,392
  13,413
  14,474
  15,578
  16,725
  17,916
  19,155
  20,442
  21,781
  23,174
Funds from operations, $m
  1,353
  1,826
  2,397
  3,071
  3,854
  4,751
  5,762
  6,890
  8,132
  9,489
  10,859
  12,438
  14,124
  15,914
  17,807
  19,799
  21,891
  24,080
  26,366
  28,751
  31,234
  33,818
  36,504
  39,296
  42,198
  45,214
  48,349
  51,608
  54,997
  58,524
Change in working capital, $m
  -60
  -74
  -89
  -105
  -122
  -140
  -158
  -176
  -195
  -213
  -230
  -248
  -265
  -281
  -298
  -314
  -329
  -345
  -360
  -376
  -391
  -407
  -423
  -440
  -457
  -475
  -494
  -513
  -534
  -555
Cash from operations, $m
  1,413
  1,900
  2,485
  3,176
  3,977
  4,891
  5,920
  7,066
  8,327
  9,702
  11,090
  12,686
  14,389
  16,195
  18,104
  20,113
  22,220
  24,424
  26,726
  29,126
  31,625
  34,225
  36,927
  39,736
  42,655
  45,689
  48,843
  52,121
  55,531
  59,079
Maintenance CAPEX, $m
  -434
  -584
  -769
  -991
  -1,255
  -1,561
  -1,912
  -2,309
  -2,751
  -3,239
  -3,772
  -4,350
  -4,972
  -5,636
  -6,342
  -7,089
  -7,875
  -8,701
  -9,565
  -10,469
  -11,411
  -12,392
  -13,413
  -14,474
  -15,578
  -16,725
  -17,916
  -19,155
  -20,442
  -21,781
New CAPEX, $m
  -1,186
  -1,459
  -1,760
  -2,082
  -2,421
  -2,773
  -3,132
  -3,494
  -3,856
  -4,214
  -4,566
  -4,911
  -5,248
  -5,576
  -5,898
  -6,213
  -6,523
  -6,830
  -7,136
  -7,442
  -7,751
  -8,065
  -8,387
  -8,717
  -9,059
  -9,414
  -9,784
  -10,171
  -10,576
  -11,002
Cash from investing activities, $m
  -1,620
  -2,043
  -2,529
  -3,073
  -3,676
  -4,334
  -5,044
  -5,803
  -6,607
  -7,453
  -8,338
  -9,261
  -10,220
  -11,212
  -12,240
  -13,302
  -14,398
  -15,531
  -16,701
  -17,911
  -19,162
  -20,457
  -21,800
  -23,191
  -24,637
  -26,139
  -27,700
  -29,326
  -31,018
  -32,783
Free cash flow, $m
  -206
  -143
  -43
  103
  301
  557
  876
  1,263
  1,720
  2,249
  2,751
  3,425
  4,169
  4,983
  5,864
  6,811
  7,822
  8,894
  10,025
  11,216
  12,463
  13,767
  15,128
  16,545
  18,019
  19,551
  21,143
  22,796
  24,513
  26,296
Issuance/(repayment) of debt, $m
  835
  1,030
  1,241
  1,468
  1,708
  1,956
  2,209
  2,465
  2,720
  2,972
  3,221
  3,464
  3,702
  3,934
  4,160
  4,383
  4,601
  4,818
  5,033
  5,250
  5,468
  5,689
  5,916
  6,149
  6,390
  6,640
  6,901
  7,174
  7,460
  7,761
Issuance/(repurchase) of shares, $m
  198
  52
  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 from financing (excl. dividends), $m  
  1,033
  1,082
  1,241
  1,468
  1,708
  1,956
  2,209
  2,465
  2,720
  2,972
  3,221
  3,464
  3,702
  3,934
  4,160
  4,383
  4,601
  4,818
  5,033
  5,250
  5,468
  5,689
  5,916
  6,149
  6,390
  6,640
  6,901
  7,174
  7,460
  7,761
Total cash flow (excl. dividends), $m
  826
  938
  1,198
  1,571
  2,009
  2,513
  3,086
  3,728
  4,440
  5,222
  5,972
  6,889
  7,871
  8,916
  10,025
  11,194
  12,423
  13,711
  15,059
  16,465
  17,931
  19,457
  21,044
  22,694
  24,409
  26,191
  28,044
  29,970
  31,973
  34,057
Retained Cash Flow (-), $m
  -600
  -742
  -895
  -1,059
  -1,232
  -1,410
  -1,593
  -1,777
  -1,961
  -2,144
  -2,323
  -2,498
  -2,670
  -2,837
  -3,000
  -3,161
  -3,318
  -3,474
  -3,630
  -3,786
  -3,943
  -4,103
  -4,266
  -4,435
  -4,608
  -4,789
  -4,977
  -5,174
  -5,380
  -5,597
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
  226
  196
  303
  512
  777
  1,102
  1,492
  1,951
  2,479
  3,078
  3,649
  4,390
  5,201
  6,080
  7,024
  8,033
  9,105
  10,237
  11,429
  12,679
  13,988
  15,354
  16,777
  18,259
  19,800
  21,402
  23,067
  24,796
  26,593
  28,460
Discount rate, %
  4.60
  4.83
  5.07
  5.33
  5.59
  5.87
  6.16
  6.47
  6.80
  7.14
  7.49
  7.87
  8.26
  8.67
  9.11
  9.56
  10.04
  10.54
  11.07
  11.62
  12.21
  12.82
  13.46
  14.13
  14.84
  15.58
  16.36
  17.17
  18.03
  18.93
PV of cash for distribution, $m
  216
  178
  262
  416
  592
  783
  982
  1,181
  1,372
  1,545
  1,648
  1,769
  1,853
  1,897
  1,900
  1,863
  1,790
  1,685
  1,555
  1,406
  1,246
  1,082
  920
  766
  623
  496
  386
  293
  217
  157
Current shareholders' claim on cash, %
  86.1
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4

Extraction Oil & Gas, Inc., formerly Extraction Oil & Gas, LLC, is an energy company. It is focused on the acquisition, development and production of oil, natural gas and natural gas liquids (NGL) reserves in the Rocky Mountains, primarily in the Wattenberg Field of the Denver-Julesburg Basin (the DJ Basin) of Colorado. It focuses on the development of the Codell and Niobrara formations. It offers its exploration and production processes in various steps, such as seismic, site preparation, drilling the well, completing the well, monitoring the well and reclaiming the site. The Company utilizes sound walls to mute or redirect noise caused by its operations. The Company uses an electric rig to manage its drilling operations. It uses vapor recovery units to capture emissions from storage facilities. It uses lease automatic custody transfer (LACT) units to collect oil from tanks in a closed-loop system that manages air emissions associated with the oil gathering and transportation process.

FINANCIAL RATIOS  of  Extraction Oil & Gas, Inc. (XOG)

Valuation Ratios
P/E Ratio -1.6
Price to Sales 2.6
Price to Book 0.4
Price to Tangible Book
Price to Cash Flow 6.2
Price to Free Cash Flow -0.9
Growth Rates
Sales Growth Rate 40.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 63.7%
Cap. Spend. - 3 Yr. Gr. Rate 107.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 30.4%
Total Debt to Equity 30.4%
Interest Coverage -15
Management Effectiveness
Return On Assets -19.3%
Ret/ On Assets - 3 Yr. Avg. -2.5%
Return On Total Capital -24.7%
Ret/ On T. Cap. - 3 Yr. Avg. -6.4%
Return On Equity -36.1%
Return On Equity - 3 Yr. Avg. -8.4%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 70.1%
Gross Margin - 3 Yr. Avg. 76.6%
EBITDA Margin -89.6%
EBITDA Margin - 3 Yr. Avg. 33.4%
Operating Margin -113.7%
Oper. Margin - 3 Yr. Avg. -42.1%
Pre-Tax Margin -174.5%
Pre-Tax Margin - 3 Yr. Avg. -48.1%
Net Profit Margin -164%
Net Profit Margin - 3 Yr. Avg. -44.7%
Effective Tax Rate 6%
Eff/ Tax Rate - 3 Yr. Avg. 2%
Payout Ratio 0%

XOG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the XOG stock intrinsic value calculation we used $1061 million for the last fiscal year's total revenue generated by Extraction Oil & Gas, Inc.. The default revenue input number comes from 0001 income statement of Extraction Oil & Gas, Inc.. 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 XOG stock valuation model: a) initial revenue growth rate of 34.6% 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 4.6%, whose default value for XOG is calculated based on our internal credit rating of Extraction Oil & Gas, Inc., 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 Extraction Oil & Gas, Inc..
    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 XOG stock the variable cost ratio is equal to 26.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $478 million in the base year in the intrinsic value calculation for XOG 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 10.1% for Extraction Oil & Gas, Inc..

Corporate tax rate of 27% is the nominal tax rate for Extraction Oil & Gas, Inc.. 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 XOG 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 XOG are equal to 323%.

Life of production assets of 7.9 years is the average useful life of capital assets used in Extraction Oil & Gas, Inc. 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 XOG is equal to -16.3%. 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 - $1746.814 million for Extraction Oil & Gas, Inc. - 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 171.556 million for Extraction Oil & Gas, Inc. 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 Extraction Oil & Gas, Inc. at the current share price and the inputted number of shares is $0.7 billion.

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