Does it really matter how much the "barrels in the ground" are worth if the
company is not generating cash flow? Most oil and gas E&P company valuation
models focus on asset value, which is of little importance to equity investors
if those assets are not generating cash flow. That is why our Oil and Gas E&P
Company Equity Valuation Model for Microsoft ® Excel ® uses a unique approach to value the
cash flows generated by an E&P company
rather than valuing barrels in the ground.
Unless you're planning on being the last creditor standing in a liquidation or
looking to buy a company's assets directly, you should be looking at cash flows...not assets. The Oil and Gas
E&P Company Equity Valuation Model for Excel does just that.
The Oil and Gas E&P Company Equity Valuation Model for Excel is an
"out-of-the-box" professional valuation model tailored to analyzing and valuing
exploration and production companies. It was developed by a CFA charterholder in
order to provide oil and gas investors a way to value the equity of E&P
companies directly (based on discounted cash flows) rather than valuing the
assets and somehow extrapolating an approximate equity value from thin air. It
is designed to accept information from publicly-available 10-K reports in order
to calculate the total and per-share value of an oil and gas E&P business.
The model includes a basic and common-size income statement and balance sheet,
an easy-to-use cost of equity and WACC calculator, a detailed oil
industry-specific ratio analysis and a comprehensive oil industry-specific
discounted cash flow (DCF) analysis. The DCF analysis calculates the per-share
value based on both the weighted -average cost of capital and the SEC basis.
Cells requiring user input are clearly highlighted, making valuations very easy
The model is also flexible, allowing the practitioner to vary the analysis based
on variables such as: expected return on the overall market, perpetual future
growth rate of cash flows, expected new investments, new discoveries, reserve
adjustments, and the price of oil and gas. Changes made to one part of the model
automatically flow through to the other parts, ultimately affecting the overall
and per-share valuation of the company. (For example, lowering the assumed
risk-free rate decreases the cost of equity, which decreases the WACC, which
increases the valuation. By simply changing the risk-free rate, the valuation
automatically increases. Similarly, an increase in the price of oil, with all
other factors remaining equal, automatically increases the value of the
Date and number fields may be re-formatted by the user (using the built-in formatting capabilities of Excel) to accommodate non-US conventions.
The Oil and Gas E&P Company Equity Valuation Model for Excel is a
professional-grade "out-of-the-box" valuation model designed to provide detailed
valuations of oil and gas E&P companies from publicly-available information. It
provides a detailed valuation while remaining flexible and easy-to-use.
This spreadsheet was developed by a CFA charterholder.
Works with Excel 2003-2010.
- Save time by using a pre-designed template as a basis for your analysis.
Value the equity of an exploration
and production company, rather than just the assets. This is valuable if you
are deciding whether to buy stock in the company. If the assets aren't
generating cash flow, the equity may be worthless.
- Reduce formula errors caused when practitioners try to build valuation models from scratch. The calculations are already done for you. Simply enter the publicly-available information highlighted by the model, tweak it to match your expectations on the direction of the overall market, and view the completed valuation.
- Save money by spending your time on running your business or analyzing the results of the valuation rather than spending countless hours building a model from scratch.
- The model is easy-to-use and flexible. Cells requiring input are clearly highlighted within the model and are easily populated with publicly-available information from the company's 10-K report. The practitioner has the ability to influence the valuation by changing key variables within the model.
- Date and number fields may be re-formatted by the user (using the built-in formatting capabilities of Excel) to accommodate non-US conventions.
- The model was developed by a financial professional (CFA charterholder).
|Click the thumbnails below for partial
screenshots of the Oil and Gas E&P Company Equity Valuation Model for
Common-size Income Statement
Common-size Balance Sheet
Cost of Equity and WACC Calculation
The Oil and Gas E&P Company Equity Valuation Model for Excel runs on any version of Excel from 97-2007.
It is fully compatible with Microsoft® Windows® 7, Windows Vista® and Windows XP®.
This product is also compatible with Excel 2004 and Excel 2008 for Mac running
on Mac OSX Leopard or Tiger.