OilGas DCF Nav
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Transcript of OilGas DCF Nav
7/25/2019 OilGas DCF Nav
http://slidepdf.com/reader/full/oilgas-dcf-nav 1/12
Oil & Gas NAV ModelingCopyright
© by Wall Street Prep, Inc
. | All rights reserved
7/25/2019 OilGas DCF Nav
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• The NAV approach is based on the theory that the value of the E&P company is based onthe cash flows stemming from its exist ing assets, net of liabilities.
• Existing proved reserves are blown-down (reduced to zero) as they get produced over acertain future period.
• Proved oil and natural gas reserves
• Crude oil and gas price assumptions
• Discount rate
• Future production profile
• Royalties and taxes
• Production costs
• Future development costs
• Future abandonment and dismantlement costs
Net asset value (NAV) in theory
Major considerations/assumptions in NAV modeling
NAV overview
7/25/2019 OilGas DCF Nav
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Reference from SEC PV-10
section (OXY’s 2006 10-K)
Make assumptions for:
• % of total development costs per year
• Annual oil production decline
• Annual natural gas production decline
NAV modeling
7/25/2019 OilGas DCF Nav
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Reference the following from the core model:
• 2006 year-end crude oil reserves
• 2007-2013 oil production• 2007-2013 oil price
Apply crude oil production decline assumptions to forecast oil production beyond the
projection period
Input crude oil price assumptions beyond the projection period
NAV modeling
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Reference the following from the core model:
• 2006 year-end natural gas reserves
• 2007-2013 natural gas production• 2007-2013 natural gas price
Apply natural gas production decline assumptions to forecast natural gas production
beyond the projection period
Input natural gas price assumptions beyond the projection period
NAV modeling
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Calculate oil revenues (oil price x oil production)
Calculate natural gas revenues (natural gas price x natural gas production)
Calculate total revenues
NAV modeling
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• Reference production costs per boe through 2013 from the core model
• Input production cost assumptions beyond the projection period
• Calculate development costs based on development costs per year assumptions inputtedearlier
NAV modeling
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• Calculate total pre-tax cash flows (revenues – production costs – development costs)
• Reference tax rate through 2013 from the core model and input tax rate assumptions
beyond the projection period• Calculate after-tax cash flows
NAV modeling
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• Calculate present value of all after-tax cash flows
NAV modeling
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• Input assumptions for undeveloped acreage valuation and calculate total value of the E&P
segment
NAV modeling
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• Reference 2007 chemicals segment EBITDA from the core model
• Input EV/EBITDA multiple (derived from comps analysis)
• Calculate the value of the chemicals segment• Calculate Oxy’s implied enterprise value
NAV modeling
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• Reference 2006 year-end debt and cash balances from the core model
• Reference shares outstanding calculated earier in the DCF tab
• Calculate share price
NAV modeling