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ConocoPhillips (COP)

Enterprise Value to FCFF (EV/FCFF)

Medium level of difficulty

Free Cash Flow to The Firm (FCFF)

ConocoPhillips, FCFF calculation

US$ in millions

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12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Net income (loss) attributable to ConocoPhillips 6,257  (855) (3,615) (4,428) 6,869 
Net income attributable to noncontrolling interests 48  62  56  57  69 
Net noncash charges 5,994  7,855  8,443  11,965  10,159 
Working capital adjustments 635  15  (481) (22) (505)
Net cash provided by operating activities 12,934  7,077  4,403  7,572  16,592 
Cash payments, interest, net of tax1 487  732  741  556  414 
Interest capitalized, net of tax2 107  75  101  178  302 
Capital expenditures and investments (6,750) (4,591) (4,869) (10,050) (17,085)
Proceeds from asset dispositions 1,082  13,860  1,286  1,952  1,603 
Increase (decrease) in PP&E and debt related to a capital lease asset and obligation —  —  —  (7) 84 
Free cash flow to the firm (FCFF) 7,860  17,152  1,662  200  1,910 

Based on: 10-K (filing date: 2019-02-19), 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24).

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Item Description The company
FCFF Free cash flow to the firm is the cash flow available to the ConocoPhillips’s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made. ConocoPhillips’s FCFF increased from 2016 to 2017 but then slightly declined from 2017 to 2018 not reaching 2016 level.

Interest Paid, Net of Tax

ConocoPhillips, interest paid, net of tax calculation

US$ in millions

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12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Effective Income Tax Rate (EITR)
EITR1 36.90% 37.10% 35.60% 39.60% 38.10%
Interest Paid, Net of Tax
Cash payments, interest, before tax 772  1,163  1,151  920  669 
Less: Cash payments, interest, tax2 285  431  410  364  255 
Cash payments, interest, net of tax 487  732  741  556  414 
Interest Costs Capitalized, Net of Tax
Interest capitalized, before tax 170  119  157  294  488 
Less: Interest capitalized, tax3 63  44  56  116  186 
Interest capitalized, net of tax 107  75  101  178  302 

Based on: 10-K (filing date: 2019-02-19), 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24).

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2 2018 Calculation
Cash payments, interest, tax = Cash payments, interest × EITR
= 772 × 36.90% = 285

3 2018 Calculation
Interest capitalized, tax = Interest capitalized × EITR
= 170 × 36.90% = 63

Enterprise Value to FCFF Ratio, Current

ConocoPhillips, current EV/FCFF calculation, comparison to benchmarks

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Selected Financial Data (US$ in millions)
Enterprise value (EV) 72,108 
Free cash flow to the firm (FCFF) 7,860 
Valuation Ratio
EV/FCFF 9.17
Benchmarks
EV/FCFF, Competitors1
Chevron Corp. 14.57
EOG Resources Inc. 24.97
Exxon Mobil Corp. 19.45
Occidental Petroleum Corp. 13.95
Phillips 66 11.90
EV/FCFF, Sector
Oil & Gas Producers 15.41
EV/FCFF, Industry
Oil & Gas 15.88

Based on: 10-K (filing date: 2019-02-19).

1 Click competitor name to see calculations.

If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.

Enterprise Value to FCFF Ratio, Historical

ConocoPhillips, historical EV/FCFF calculation, comparison to benchmarks

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (US$ in millions)
Enterprise value (EV)1 86,298  74,214  83,348  63,528  100,484 
Free cash flow to the firm (FCFF)2 7,860  17,152  1,662  200  1,910 
Valuation Ratio
EV/FCFF3 10.98 4.33 50.14 317.23 52.60
Benchmarks
EV/FCFF, Competitors4
Chevron Corp. 14.48 31.50 — — —
EOG Resources Inc. 31.04 204.15 — — 101.82
Exxon Mobil Corp. 21.68 23.04 52.60 83.25 32.32
Occidental Petroleum Corp. 19.00 37.33 2,081.74 — —
Phillips 66 10.33 26.04 119.84 223.52 —
EV/FCFF, Sector
Oil & Gas Producers 16.72 18.21 — — 79.68
EV/FCFF, Industry
Oil & Gas 17.12 19.40 — 349.79 54.93

Based on: 10-K (filing date: 2019-02-19), 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24).

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3 2018 Calculation
EV/FCFF = EV ÷ FCFF
= 86,298 ÷ 7,860 = 10.98

4 Click competitor name to see calculations.

Valuation ratio Description The company
EV/FCFF Enterprise value to free cash flow to the firm is whole company valuation indicator. ConocoPhillips’s EV/FCFF ratio declined from 2016 to 2017 but then slightly increased from 2017 to 2018.