Appendix A – Comparison of Research Philosophies
(Saunders, et al. 2016)
111 Appendix B - CWEI Consolidated Balance Sheet
Clayton Williams Consolidated Balance Sheet
2011 2012 2013 2014 2015 2016
CURRENT ASSETS
Cash and cash equivalents $ 17,525 $ 10,726 $ 26,623 $ 28,016 $ 7,780 $ 573,025 Accounts receivable:
Oil and gas sales $ 41,282 $ 32,371 $ 39,268 $ 36,526 $ 16,660 $ 18,752 Joint interest and other $ 14,517 $ 16,767 $ 17,121 $ 14,550 $ 3,661 $ 4,148 Affiliates $ 0,990 $ 0,353 $ 0,264 $ 0,322 $ 0,260 $ 0,258 Inventory $ 44,868 $ 41,703 $ 39,183 $ 42,087 $ 31,455 $ 25,781 Deferred income taxes $ 8,948 $ 8,560 $ 7,581 $ 6,911 $ 6,526 $ 6,520 Prepaids and other $ 14,813 $ 6,495 $ 5,753 $ 4,208 $ 2,463 $ 2,702 Fair value of derivatives $ - $ 7,495 $ 2,518
total current assets $ 142,943 $ 124,470 $ 138,311 $ 132,620 $ 68,805 $ 631,186
PROPERTY AND EQUIPMENT
Oil and gas properties, successful efforts method $ 2.103,085 $ 2.570,803 $ 2.403,277 $ 2.684,913 $ 2.585,502 $ 1.717,209 Pipelines and other midstream facilities $ 26,040 $ 49,839 $ 54,800 $ 59,542 $ 60,120 $ 63,228 Contract drilling equipment $ 75,956 $ 91,163 $ 96,270 $ 122,751 $ 123,876 $ 118,256 Other $ 19,134 $ 20,245 $ 20,620 $ 20,915 $ 19,371 $ 20,822 Less accumulated depreciation, depletion and amortization$ -1.156,664 $ -1.311,692 $ -1.375,860 $ -1.539,237 $ -1.587,585 $ -1.063,379 Net Property, Plant & Equipment $ 1.067,551 $ 1.420,358 $ 1.199,107 $ 1.348,884 $ 1.201,284 $ 856,136
OTHER ASSETS
Investments and other (non-current) $ 4,133 $ 15,261 $ 16,534 $ 16,669 $ 15,051 $ 7,317 Fair value of derivatives $ - $ 4,236 $ - $ - $ - $ -Debt issue costs, net (non-current) $ 11,644 $ 10,259 $ 12,785 $ 12,712 $ 9,629 $ -total other non-current assets $ 15,777 $ 29,756 $ 29,319 $ 29,381 $ 24,680 $ 7,317 Total Assets $ 1.226,271 $ 1.574,584 $ 1.366,737 $ 1.510,885 $ 1.294,769 $ 1.494,639
112 (CWEI Annual Reports, 2012, 2013, 2014, 2015, 2016, 2017)
CURRENT LIABILITIES Accounts payable:
Trade $ 98,645 $ 73,026 $ 75,872 $ 93,650 $ 29,197 $ 44,809 Oil and gas sales $ 37,409 $ 32,146 $ 37,834 $ 41,328 $ 19,490 $ 20,862 Affiliates $ 1,501 $ 0,164 $ 0,874 $ 0,717 $ 0,383 $ 0,252 Fair value of commodity derivatives $ 5,633 $ - $ 0,208 $ - $ - $ 12,895 Accrued liabilities and other $ 13,042 $ 15,578 $ 21,607 $ 20,658 $ 16,669 $ 27,948 Total Current Liabilties $ 156,230 $ 120,914 $ 136,395 $ 156,353 $ 65,739 $ 106,766
NON-CURRENT LIABILITIES
Long-term debt $ 529,535 $ 809,585 $ 639,638 $ 704,696 $ 749,759 $ 847,995 Fair value of common stock warrants $ - $ - $ - $ - $ - $ 246,743 Deferred income taxes $ 134,209 $ 155,830 $ 140,809 $ 164,599 $ 108,996 $ 76,590 Asset retirement obligations $ 40,794 $ 51,477 $ 49,981 $ 45,697 $ 48,728 $ 47,223 Accrued compensation under non-equity award plans $ 20,757 $ 20,058 $ 15,469 $ 17,866 $ 16,254 $ 4,655 Deferred revenue from volumetric production payment and other$ - $ 37,184 $ 29,770 $ 23,129 $ 5,470 $ 4,136 Fair value of derivatives $ 0,494 $ - $ - $ - $ - $ -Other $ 0,751 $ 0,920 $ 0,892 $ 0,751 $ 0,225 $ -Total Liabilties $ 726,540 $ 1.075,054 $ 876,559 $ 956,738 $ 929,432 $ 1.227,342
726,540
$ $ 1.075,054 $ 876,559 $ 956,738 $ 929,432 $ 1.227,342
-$ $ - $ - $ - $ - $ -SHAREHOLDER'S EQUITY
Preferred stock,
Common stock, $ 1,216 $ 1,216 $ 1,216 $ 1,216 $ 1,216 $ 1,763 Additional paid-in capital $ 152,515 $ 152,527 $ 152,556 $ 152,686 $ 152,686 $ 305,223 Retained earnings (accumulated deficit) $ 189,770 $ 224,873 $ 200,011 $ 243,892 $ 145,696 $ -146,455 Total Equity $ 343,501 $ 378,616 $ 353,783 $ 397,794 $ 299,598 $ 160,531
Total Liabilities + Equity $ 1.226,271 $ 1.574,584 $ 1.366,737 $ 1.510,885 $ 1.294,769 $ 1.494,639
113 Appendix C - CWEI Consolidated Income Statement
(Compiled by authors, 2018)
Clayton Williams Consolidated Income Statement
Income Statement 2011 2012 2013 2014 2015 2016
REVENUES
Oil & Gas Revenues $ 405,216 $ 403,143 $ 399,950 $ 418,330 $ 217,485 $ 160,331 Midstream Revenues $ 1,408 $ 1,974 $ 4,965 $ 6,705 $ 6,122 $ 5,688 Drilling rig services $ 4,060 $ 15,858 $ 17,812 $ 28,028 $ 0,023 $ -Other Operating Revenue
Gain (Loss) On Sale Of Assets$ 15,744 $ 1,496 $ 4,467 $ 11,685 $ 8,718 $ 123,392 Marketing Revenue $ - $ 0,581 $ 2,021 $ 3,708 $ 0,024 $ -Total Revenues $ 426,428 $ 423,052 $ 429,215 $ 468,456 $ 232,372 $ 289,411 COSTS AND EXPENSES
Production $ -101,099 $ -124,950 $ -108,405 $ -105,296 $ -87,557 $ -70,920 Exploration
Abandonment and Impairment $ -20,840 $ -4,222 $ -5,887 $ -20,647 $ -6,509 $ -3,536 Seismic and Other $ -5,363 $ -11,591 $ -3,906 $ -2,314 $ -1,318 $ -0,925 Midstream Services $ -1,039 $ -1,228 $ -1,816 $ -2,212 $ -1,688 $ -2,173 Drilling Rig Services $ -5,064 $ -17,423 $ -16,290 $ -19,232 $ -5,238 $ -3,938 Depreciation, depletion and amortization$ -104,880 $ -142,687 $ -150,902 $ -154,356 $ -162,262 $ -145,614 Impairment of property and equipment$ -10,355 $ -5,944 $ -89,811 $ -12,027 $ -41,917 $ -7,593 Accretion of asset retirement obligations$ -2,757 $ -3,696 $ -4,203 $ -3,662 $ -3,945 $ -4,364 General and administrative $ -41,560 $ -30,485 $ -33,279 $ -34,524 $ -22,788 $ -22,988 Other operating expenses
Loss on Sale of Assets $ -0,945 $ -0,523 $ -1,233 $ -2,511 $ -1,355 $ -3,152 Marketing Expense $ - $ - $ -0,658 $ - $ -0,849 $ -0,440 Impairment of Inventory $ -0,721 $ -0,510 $ -0,210 $ -0,036 $ -10,381 $ -1,454 Total Costs and Expenses $ -294,623 $ -343,259 $ -416,600 $ -356,817 $ -345,807 $ -267,097 Operating Income (Loss) $ 131,805 $ 79,793 $ 12,615 $ 111,639 $ -113,435 $ 22,314 Other Income (expense)
Interest expense (income) $ -32,919 $ -38,664 $ -43,079 $ -50,907 $ -54,422 $ -93,693 Gain on early extinguishment of long-term debt$ -5,501 $ - $ - $ - $ - $ 3,967 Loss on change in fair value of common stock warrants$ - $ - $ - $ - $ - $ -229,980 Gain (loss) on derivatives $ 47,027 $ 14,448 $ -8,731 $ 4,789 $ 12,519 $ -20,289 Impairment of investments and other $ 3,047 $ 2,003 $ -4,797 Other $ 5,553 $ 1,534 $ 1,905
Total other income (expense) $ 14,160 $ -22,682 $ -49,905 $ -43,071 $ -39,900 $ -344,792 Income before Income Tax $ 145,97 $ 57,11 $ -37,29 $ 68,57 $ -153,34 $ -322,48
Income tax (expense) benefit -52,142 -22,008 12,428 -24,687 55,139 30,327
Net Income (loss) $ 93,82 $ 35,10 $ -24,86 $ 43,88 $ -98,20 $ -292,15
114 Appendix D - CWEI Analytical Balance Sheet
(Compiled by authors, 2018)
2011 2012 2013 2014 2015 2016
Non-current Assets
Oil and gas properties, successful efforts method $ 2.103,09 $ 2.570,80 $ 2.403,28 $ 2.684,91 $ 2.585,50 $ 1.717,21 Pipelines and other midstream facilities $ 26,04 $ 49,84 $ 54,80 $ 59,54 $ 60,12 $ 63,23 Contract drilling equipment $ 75,96 $ 91,16 $ 96,27 $ 122,75 $ 123,88 $ 118,26
Other $ 19,13 $ 20,25 $ 20,62 $ 20,92 $ 19,37 $ 20,82
Less accumulated depreciation, depletion and amortization $ -1.156,66 $ -1.311,69 $ -1.375,86 $ -1.539,24 $ -1.587,59 $ -1.063,38 Net Property, Plant & Equipment $ 1.067,55 $ 1.420,36 $ 1.199,11 $ 1.348,88 $ 1.201,28 $ 856,14 Investments and other (non-current) $ 4,13 $ 15,26 $ 16,53 $ 16,67 $ 15,05 $ 7,32
Non-current Assets (oper.) $ 1.071,68 $ 1.435,62 $ 1.215,64 $ 1.365,55 $ 1.216,34 $ 863,45
Non-Current Liabilties
Deferred income taxes $ 134,21 $ 155,83 $ 140,81 $ 164,60 $ 109,00 $ 76,59 Deferred revenue from volumetric production payment and other$ - $ 37,18 $ 29,77 $ 23,13 $ 5,47 $ 4,14
Other $ 0,75 $ 0,92 $ 0,89 $ 0,75 $ 0,23 $
-Asset retirement obligations (non-current) $ 40,79 $ 51,48 $ 49,98 $ 45,70 $ 48,73 $ 47,22
Non-Current Liabilties (oper.) $ 175,75 $ 245,41 $ 221,45 $ 234,18 $ 163,42 $ 127,95 Net Working Capital
Accounts receivable:
Oil and gas sales $ 41,28 $ 32,37 $ 39,27 $ 36,53 $ 16,66 $ 18,75 Joint interest and other $ 14,52 $ 16,77 $ 17,12 $ 14,55 $ 3,66 $ 4,15 Affiliates $ 0,99 $ 0,35 $ 0,26 $ 0,32 $ 0,26 $ 0,26
Inventory $ 44,87 $ 41,70 $ 39,18 $ 42,09 $ 31,46 $ 25,78
Prepaids and other $ 14,81 $ 6,50 $ 5,75 $ 4,21 $ 2,46 $ 2,70 Deferred income taxes $ 8,95 $ 8,56 $ 7,58 $ 6,91 $ 6,53 $ 6,52
Current assets (oper.) $ 125,42 $ 106,25 $ 109,17 $ 104,60 $ 61,03 $ 58,16
Total Assets (oper.) $ 1.197,10 $ 1.541,87 $ 1.324,81 $ 1.470,16 $ 1.277,36 $ 921,61
Current liabilties Accounts payable:
Trade $ 98,65 $ 73,03 $ 75,87 $ 93,65 $ 29,20 $ 44,81
Oil and gas sales $ 37,41 $ 32,15 $ 37,83 $ 41,33 $ 19,49 $ 20,86 Affiliates $ 1,50 $ 0,16 $ 0,87 $ 0,72 $ 0,38 $ 0,25 Current liabilties (oper.) $ 137,56 $ 105,34 $ 114,58 $ 135,70 $ 49,07 $ 65,92 Operating Net Working Capital $ -12,14 $ 0,91 $ -5,41 $ -31,09 $ 11,96 $ -7,76
Invested Capital $ 883,79 $ 1.191,12 $ 988,78 $ 1.100,29 $ 1.064,87 $ 727,74
Interest bearing debt
Fair value of commodity derivatives (current) $ 5,63 $ - $ 0,21 $ - $ - $ 12,90 Accrued liabilities and other (current) $ 13,04 $ 15,58 $ 21,61 $ 20,66 $ 16,67 $ 27,95
Long-term debt $ 529,54 $ 809,59 $ 639,64 $ 704,70 $ 749,76 $ 848,00
Fair value of common stock warrants $ - $ - $ - $ - $ - $ 246,74 Accrued compensation under non-equity award plans $ 20,76 $ 20,06 $ 15,47 $ 17,87 $ 16,25 $ 4,66 Fair value of derivatives $ 0,49 $ - $ - $ - $ - $
-interest bearing debt $ 569,46 $ 845,22 $ 676,92 $ 743,22 $ 782,68 $ 1.140,24
Interest bearing assets
Fair value of derivatives (non-current) $ - $ 4,24 $ - $ - $ - $ -Debt issue costs, net (non-current) $ 11,64 $ 10,26 $ 12,79 $ 12,71 $ 9,63 $
-Fair value of derivatives $ - $ 7,50 $ 2,52
Cash and cash equivalents $ 17,53 $ 10,73 $ 26,62 $ 28,02 $ 7,78 $ 573,03 Interest bearing assets $ 29,17 $ 32,72 $ 41,93 $ 40,73 $ 17,41 $ 573,03
NIBD $ 540,29 $ 812,51 $ 635,00 $ 702,49 $ 765,27 $ 567,21
Total Equity $ 343,50 $ 378,62 $ 353,78 $ 397,79 $ 299,60 $ 160,53
Invested Capital $ 883,79 $ 1.191,12 $ 988,78 $ 1.100,29 $ 1.064,87 $ 727,74
115 Appendix E – CWEI Analytical Income Statement
(Compiled by authors, 2018)
Income State me nt 2011 2012 2013 2014 2015 2016
REVENUES
Oil & Gas Revenues $ 405,216 $ 403,143 $ 399,950 $ 418,330 $ 217,485 $ 160,331
Midstream Revenues $ 1,408 $ 1,974 $ 4,965 $ 6,705 $ 6,122 $ 5,688
Drilling rig services $ 4,060 $ 15,858 $ 17,812 $ 28,028 $ 0,023 $
-Other Operating Revenue
Gain (Loss) On Sale Of Assets $ 15,744 $ 1,496 $ 4,467 $ 11,685 $ 8,718 $ 123,392
Marketing Revenue $ - $ 0,581 $ 2,021 $ 3,708 $ 0,024 $
-Total Ope rating Income $ 426,428 $ 423,052 $ 429,215 $ 468,456 $ 232,372 $ 289,411
Ope rating Expe ns e s
Production $ -101,099 $ -124,950 $ -108,405 $ -105,296 $ -87,557 $ -70,920
Exploration
Seismic and Other $ -5,363 $ -11,591 $ -3,906 $ -2,314 $ -1,318 $ -0,925
Midstream Services $ -1,039 $ -1,228 $ -1,816 $ -2,212 $ -1,688 $ -2,173
Drilling Rig Services $ -5,064 $ -17,423 $ -16,290 $ -19,232 $ -5,238 $ -3,938
Other operating expenses
Loss on Sale of Assets $ -0,945 $ -0,523 $ -1,233 $ -2,511 $ -1,355 $ -3,152
Marketing Expense $ - $ - $ -0,658 $ - $ -0,849 $ -0,440
Total Ope rating Expe ns e s $ -113,510 $ -155,715 $ -132,308 $ -131,565 $ -98,005 $ -81,548
Gros s Profit $ 312,92 $ 267,34 $ 296,91 $ 336,89 $ 134,37 $ 207,86
General and administrative $ -41,560 $ -30,485 $ -33,279 $ -34,524 $ -22,788 $ -22,988
EBITDA $ 271,36 $ 236,85 $ 263,63 $ 302,37 $ 111,58 $ 184,88
Depreciation & Amortization
Depreciation, depletion and amortization $ -104,880 $ -142,687 $ -150,902 $ -154,356 $ -162,262 $ -145,614
Impairment
Impairment of property and equipment $ -10,355 $ -5,944 $ -89,811 $ -12,027 $ -41,917 $ -7,593
Impairment of Inventory $ -0,721 $ -0,510 $ -0,210 $ -0,036 $ -10,381 $ -1,454
Abandonment and Impairment $ -20,840 $ -4,222 $ -5,887 $ -20,647 $ -6,509 $ -3,536
Impairment of investments and other $ 3,047 $ 2,003 $ -4,797
Accretion of asset retirement obligations $ -2,757 $ -3,696 $ -4,203 $ -3,662 $ -3,945 $ -4,364
EBIT $ 131,81 $ 79,79 $ 12,62 $ 114,69 $ -111,43 $ 17,52
Income tax (expense) benefit $ -46,48 $ -31,08 $ -7,53 $ -43,13 $ 38,38 $ -105,67
NOPAT $ 85,33 $ 48,71 $ 5,08 $ 71,55 $ -73,05 $ -88,15
-Re s ult afte r e xtraordinary ite ms $ 85,33 $ 48,71 $ 5,08 $ 71,55 $ -73,05 $ -88,15
Financial Ite ms Other Income (expense)
Interest expense (income) $ -32,919 $ -38,664 $ -43,079 $ -50,907 $ -54,422 $ -93,693
Gain (loss) on early extinguishment of long-term debt $ -5,501 $ - $ - $ - $ - $ 3,967 Loss on change in fair value of common stock warrants $ - $ - $ - $ - $ - $ -229,980
Gain (loss) on derivatives $ 47,027 $ 14,448 $ -8,731 $ 4,789 $ 12,519 $ -20,289
Other $ 5,553 $ 1,534 $ 1,905 - -
-Ne t financial ite ms be fore tax $ 14,16 $ -22,68 $ -49,91 $ -46,12 $ -41,90 $ -340,00
Tax Shield $ -5,66 $ 9,07 $ 19,96 $ 18,45 $ 16,76 $ 136,00
Ne t financial ite ms afte r tax $ 8,50 $ -13,61 $ -29,94 $ -27,67 $ -25,14 $ -204,00
Re s ult afte r tax $ 93,82 $ 35,10 $ -24,86 $ 43,88 $ -98,20 $ -292,15
Tax s hie ld
Marginal tax rate 40% 40% 40% 40% 40% 40%
Tax from accounts -52,142 -22,008 12,428 -24,687 55,139 30,327
Net financial items before tax $ 14,16 $ -22,68 $ -49,91 $ -46,12 $ -41,90 $ -340,00
Tax shield $ 5,66 $ -9,07 $ -19,96 $ -18,45 $ -16,76 $ -136,00
Tax on operations $ -46,48 $ -31,08 $ -7,53 $ -43,13 $ 38,38 $ -105,67
Net Income (loss) 93,823 35,103 -24,862 43,881 -98,196 -292,151
Clayton Williams - Analytical Income Statement
116 Appendix F - Historical Oil Production and Growth rate, CWEI
(Compiled by authors, 2018)
Appendix G – Pro forma income statement, balance sheet and free cash flow statement
Terminal Period
Forecasting 2012 2013 2014 2015 2016 Average 2017e 2018e 2019e 2020e 2021e 2022e
Financial value drivers Growth Driver
2,45 %
Other Income / Oil & Gas Revenue 5% 7,3% 12% 6,8% 81% 8% 8% 8% 8% 8% 8% 7,8 %
Cost driver 0,0 %
Production 31% 27% 25% 40% 44% 28% 28% 28% 28% 28% 28% 27,8 %
Depletion/ Oil & Gas Revenue 33% 34% 34% 68% 82% 23% 23% 23% 23% 23% 23% 23,0 %
Exploraion/ Oil & Gas Revenue 3% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1,1 %
Other expenses/ Oil & Gas Revenue 4% 4% 5% 2% 2% 2% 2% 2% 2% 2% 2% 1,8 %
Total operating expenses ships/freight income 0% 1% 1% 2% 4% 2% 2% 2% 2% 2% 2% 1,8 %
General & Admin./ Oil & Gas Revenue 8% 8% 8% 10% 14% 8% 8% 8% 8% 8% 8% 8,0 %
EBITDA margin 26% 32% 38% -16% 34% 23% 47% 52% 50% 49% 48% 45%
Depreciations/Non-current operating assets 1% 1% 1% 1% 2% 1% 1% 1% 1% 1% 1% 1%
Impairment 1,0% 8,2% 2,4% 5,0% 3% 1% 3% 3% 1% 1% 1% 1%
EBIT margin 20% 3% 27% -51% 11% 2% 34% 37% 43% 43% 42% 42%
Tax on operations -39% -60% -38% -34% -603% -37% -27% -27% -27% -27% -27% -27%
Tax on net financial items 40% 40% 40% 40% 40% 40% -27% -27% -27% -27% -27% -27%
NOPAT margin 12% 1% 17% -34% -55% -12% 25% 27% 32% 31% 30% 28%
ROIC before tax (primo) ROIC before tax 14,09% 14,60% 11,95% 13,16% 12,86% 12,97%
ROIC after tax (primo) ROIC after tax 7,51% 7,67% 9,63% 9,44% 9,24% 9,24%
Invested capital turnover (primo) 0,01 0,34 0,42 0,20 0,15Invested capital turnover(primo) 0,42 0,39 0,28 0,31 0,31 0,31
Profit margin before tax 19,79% 3,15% 27,42% -51,24% 10,93% Profit before tax 31% 35% 40% 39% 39% 39%
Profit margin after tax 12,08% 1,27% 17,10% -33,59% -54,98% Profit after tax 25% 27% 32% 31% 30% 30%
Share price 26,75 26,75
Pro forma income statement, balance sheet and Free cash flow statement
Historical Period Budgeting Period
Investement drivers
856
982 1.365 1.235 1.256 1.276 1.307 15
11 15 14 14 14 14 22
29 41 12 12 13 13 7
12 17 16 17 17 17 942
1.309 1.209 1.230 1.249 1.279 CAPEX -91 -331 157 5 7 -4
Total fixed assets/ Oil & Gas Revenue 352% 300% 322% 552% 534% 324,9% 325% 325% 300% 300% 300% 300%
Total other non-current assets/ Oil & Gas Revenue 4% 4% 4% 7% 5% 4,0% 4% 4% 4% 4% 4% 4%
Net working capital/ Oil & Gas Revenue 0% -1% -7% 5% -5% 1,0% 1% 1% 1% 1% 1% 1%
Financing drivers
Total non-interest bearing debt/Invested capital 21% 22% 21% 15% 18% 19,4% 19% 19% 19% 19% 19% 19%
NIBD/Invested capital 68% 64% 64% 72% 77,94% 69% 69% 69% 69% 69% 69% 69%
Interest rate -2,1 % -4,3 % -3,6 % -4,4 % -3,6% -3,6 % -3,6 % -3,6 % -3,6 % -3,6 % -3,6 %
117
Pro Forma Income statement - Referance case 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e 2021e 2022e
Gas & Oil 403,14 399,95 418,33 217,49 160,33 302,42 389,86 381,84 388,46 394,57 404,23 Other (Midstream, Marketing, Gain on Assets,Drilling 19,91 29,27 50,13 14,89 129,08 23,50 30,30 29,67 30,19 30,66 31,41 Total income 423,05 429,22 468,46 232,37 289,41 325,92 420,15 411,52 418,65 425,23 435,65 Production 124,95 108,41 105,30 87,56 70,92 74,92 79,16 83,63 88,35 93,34 95,62
% 0,31 0,27 0,25 0,40 0,44 0,25 0,20 0,22 0,23 0,24 0,22 Depletion 133,49 137,30 142,54 147,43 130,99 69,56 89,67 87,82 89,35 90,75 92,97 Exploration 11,59 3,91 2,31 1,32 0,93 3,38 4,36 4,27 4,34 4,41 4,52 Drilling 17,42 16,29 19,23 5,24 3,94 5,40 6,96 6,82 6,94 7,05 7,22 Other (Loss on Assets & Marketing) 1,75 3,71 4,72 3,89 5,77 5,40 6,96 6,82 6,94 7,05 7,22 Gross profit 133,85 159,61 194,35 -13,07 76,88 167,26 233,05 222,16 222,74 222,64 228,09
% 0,33 0,40 0,46 -0,06 0,48 0,55 0,60 0,58 0,57 0,56 0,56
General & Admin. 30,49 33,28 34,52 22,79 22,99 24,33 31,36 30,72 31,25 31,74 32,52
Result from joint venture companies - - - - - - - - - - -EBITDA 103,36 126,33 159,82 -35,85 53,89 142,93 201,69 191,44 191,49 190,90 195,57
% 0,26 0,32 0,38 -0,16 0,34 0,47 0,52 0,50 0,49 0,48 0,45 Depreciations 9,20 13,61 11,81 14,83 14,63 10,88 15,12 13,68 13,91 14,13 14,48 Impairments 14,37 100,11 33,33 60,75 21,74 29,47 40,95 12,26 12,48 12,67 12,98 EBIT 79,79 12,62 114,69 -111,43 17,52 102,57 145,62 165,50 165,10 164,09 168,11
% 0,20 0,03 0,27 -0,51 0,11 0,34 0,37 0,43 0,43 0,42 0,39 Tax on operations -31,08 -7,53 -43,13 38,38 -105,67 -27,69 -39,32 -44,69 -44,58 -44,31 -45,39 NOPAT 48,71 5,08 71,55 -73,05 -88,15 74,88 106,30 120,82 120,52 119,79 122,72
% 0,12 0,01 0,17 -0,34 -0,55 0,23 0,25 0,29 0,29 0,28 0,28
- - -
-Result after extraordinary posts 48,71 5,08 71,55 -73,05 -88,15 74,88 106,30 120,82 120,52 119,79 122,72 Gain (loss) on exting. Of Debt, Loss on Stock Warrants & Other 1,53 1,91 - - -226,01
Interest Expense -38,66 -43,08 -50,91 -54,42 -93,69 Gain (loss) on Derivatives 14,45 -8,73 4,79 12,52 -20,29
Net financial items before tax -22,68 -49,91 -46,12 -41,90 -340,00 -24,95 -34,65 -31,38 -31,93 -32,43 -33,22 Tax on net financial items (tax shield) 9,07 19,96 18,45 16,76 136,00 6,74 9,36 8,47 8,62 8,76 8,97 Net financial items after tax -13,61 -29,94 -27,67 -25,14 -204,00 -18,21 -25,30 -22,91 -23,31 -23,67 -24,25 Net profit for the year 35,10 -24,86 43,88 -98,20 -292,15 56,67 81,01 97,91 97,22 96,12 98,47
% 0,09 -0,06 0,10 -0,45 -1,82 0,17 0,19 0,24 0,23 0,23 0,23
118
INVESTED CAPITAL - Balance Referance case 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e 2021e 2022e
Assets Oil & Gas Properties Pipelines & Midstream Contract Drilling Equip.
Other
Total fixed assets (Net PPE) 1.420,36 1.199,11 1.348,88 1.201,28 856,14 982,44 1.364,91 1.234,55 1.255,94 1.275,68 1.306,94 Investments & Other (non-current 15,26 16,53 16,67 15,05 7,32
Total other non-current assets 15,26 16,53 16,67 15,05 7,32 12,00 16,67 16,33 16,61 16,87 17,29 Total non-current operating assets 1.435,62 1.215,64 1.365,55 1.216,34 863,45 994,44 1.381,58 1.250,87 1.272,55 1.292,56 1.324,22
Deferred Revenue 37,18 29,77 23,13 5,47 4,14 Deferred Tax 155,83 140,81 164,60 109,00 76,59 Asset Retirment + Other 52,40 50,87 46,45 48,95 47,22 Total non-interest bearing debt 245,41 221,45 234,18 163,42 127,95
Net working capital
Inventory & Prepaids 48,20 44,94 46,30 33,92 28,48 Trade receivables and other receivables 49,49 56,65 51,40 20,58 23,16 Deferred Tax 8,56 7,58 6,91 6,53 6,52 Current assets 106,25 109,17 104,60 61,03 58,16 Total assets 1.541,87 1.324,81 1.470,16 1.277,36 921,61 Accounts payables 105,34 114,58 135,70 49,07 65,92
Current liabilties 105,34 114,58 135,70 49,07 65,92
Net-working capital 0,91 -5,41 -31,09 11,96 -7,76 3,02 3,90 3,82 3,88 3,95 4,04
Invested Capital 1.191,12 988,78 1.100,29 1.064,87 727,74 997,46 1.385,48 1.254,69 1.276,43 1.296,50 1.328,27
Equity, primo 160,53 307,05 426,49 386,23 392,92 399,10 Netto resultat 56,67 81,01 97,91 97,22 96,12 98,47 Dividend 89,85 38,44 -138,17 -90,52 -89,94 -88,69 Total equity 378,62 353,78 397,79 299,60 160,53 307,05 426,49 386,23 392,92 399,10 408,88
Interest bearing debt
Accrued compensation under non-equity award plans 20 15 18 16 5
Long-term debt 810 640 705 750 848
Fair Value of Stock Warrans 0 0 0 0 247
Financial derivatives, non-current 0 0 0 0 0
Financial derivatives, current 0 0 0 0 13
Accrued Liaiblties and Other 16 22 21 17 28
0 0 0 0 0
Total interest bearing debt 845 677 743 783 1.140
Interest bearing assets
Fair value of derivatives (non-current) 4 0 0 0 0
Debt Issue Costs 10 13 13 10 0
Fair value of derivatives 7 3 0 0 0
Cash and cash equivalents 11 27 28 8 573
Total interest bearing assets 33 42 41 17 573
NIBD 812,51 635,00 702,49 765,27 567,21 690 959 868 884 897 919
INVESTED CAPITAL 1.191 989 1.100 1.065 728 997,46 1.385 1.255 1.276 1.296,50 1.328
119 (Compiled by authors, 2018)
Appendix H – CWEI CAPM
(Compiled by authors, 2018)
Cash flow statement 2017e 2018e 2019e 2020e 2021e 2022e
NOPAT 75 106 121 121 120 123
Depreciations -11 -15 -14 -14 -14 -14
Impairments -29 -41 -12 -12 -13 -13
Changes in net working capital -11 -1 0 -0 -0 -0
Non-current operating receivables -128 - - - -
-Cash flow from operations -104 49 95 94 93 95
Investments PP&E -91 -331 157 5 7 -4
Free cash flow to the firm -195 -282 252 99 100 91
Changes in NIBD 123 269 -91 15 14 22
Net financial expenses after tax -18 -25 -23 -23 -24 -24
FCFE -90 -38 138 91 90 89
Dividends 90 38 -138 -91 -90 -89
Cash surplus 0 0 0 0 0 0
Cost of Capital
CAPM
Rf 2,27%
Beta 1,57
Market risk premium 6,125 %
Liquidity premium
Return on equity 11,90 %
120 Appendix I – Beta Calculations Peer Group
ApproachShare priceNo. of sharesMarket value of EQNIBDNIBD/EQFinancial leverageAvg. Financial leverage2011933,27mm43,50mm0,054,5 %2012970,75mm105,23mm0,119,8 %2013749,41mm191,24mm0,2620,3 %2014252,76mm390,88mm1,5560,7 %201571,17mm495,99mm6,9787,5 %2016134,78mm498,33mm3,7078,7 %2,1044%
Callon Share priceNo. of sharesMarket value of EQNIBDNIBD/EQFinancial leverageAvg. Financial leverage2011195,80mm81,55mm0,4229,4 %2012187,06mm119,53mm0,6439,0 %2013264,11mm72,74mm0,2821,6 %2014300,98mm320,61mm1,0751,6 %2015653,15mm327,34mm0,5033,4 %20163090,01mm-262,77mm-0,09-9,3 %0,4728%
LaredoShare priceNo. of sharesMarket value of EQNIBDNIBD/EQFinancial leverageAvg. Financial leverage20112846,06mm608,96mm0,2117,6 %20122328,67mm1183,54mm0,5133,7 %20133949,58mm853,39mm0,2217,8 %20141463,67mm1750,13mm1,2054,5 %20151687,55mm1385,07mm0,8245,1 %20163365,89mm1321,24mm0,3928,2 %0,5632,8 %Carrizzo0,000,000,000,000,000,00Avg. Financial leverage20111038,48mm685,09mm0,6639,7 %2012838,58mm915,71mm1,0952,2 %20132033,50mm742,81mm0,3726,8 %20141917,59mm1340,51mm0,7041,1 %20151725,29mm1193,10mm0,6940,9 %20162432,58mm1321,22mm0,5435,2 %0,6839,3 %Clayton Williams EnergyShare priceNo. of sharesMarket value of EQNIBDNIBD/EQFinancial leverageAvg. Financial leverage2011922,93mm512,01mm0,5535,7 %2012486,56mm798,86mm1,6462,1 %2013996,92mm613,02mm0,6138,1 %2014776,45mm676,68mm0,8746,6 %2015359,87mm734,63mm2,0467,1 %20162086,27mm521,71mm0,2520,0 %0,9244,9 %
Average financial leverage peer group37,6 %
121 Appendix J - Regression NYSE & CWEI
(Compiled by authors, 2018)
Regression Analysis
Variance 0,000099
Covariance 0,000146
Regression Beta 1,473543