Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
EOG Resources Inc., FCFF calculation
US$ in thousands
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
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- Net Cash Provided by Operating Activities
- The net cash provided by operating activities exhibited notable fluctuations over the five-year period. Beginning at approximately $3.60 billion in 2015, it decreased significantly in 2016 to around $2.36 billion. However, a substantial recovery followed, with cash flow rising to about $4.27 billion in 2017, and continuing its upward trajectory to reach approximately $7.77 billion in 2018. The growth stabilized somewhat in 2019, with net cash provided by operating activities reaching approximately $8.16 billion. This pattern suggests an initially declining but subsequently strong improvement in operating cash generation capacity.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm started from a negative position of roughly -$1.25 billion in 2015, indicating cash outflows exceeding inflows after capital expenditures. This negative trend sharply narrowed in 2016, with FCFF nearly breaching neutral at approximately -$24 million. Subsequently, FCFF turned positive in 2017, reaching about $330 thousand, reflecting an improved capacity to generate surplus cash after investments. Continued growth was evident in 2018 and 2019, with FCFF climbing to roughly $1.90 billion and maintaining a similar level at approximately $1.91 billion respectively, highlighting increased financial flexibility and operational efficiency.
- Overall Trends and Insights
- Over the five-year span, operating cash flow showed a marked recovery after an initial dip, culminating in a strong and stable cash generation position by 2018 and 2019. Correspondingly, free cash flow transitioned from deep negative territory toward increasingly positive values, suggesting improved capital management and operational performance. The stabilization of FCFF at around $1.9 billion in the latter years implies the firm had established a consistent ability to generate cash beyond its investment needs, which could be conducive to debt repayment, dividend distribution, or reinvestment opportunities. The data reflects overall strengthening liquidity and financial health during the period observed.
Interest Paid, Net of Tax
EOG Resources Inc., interest paid, net of tax calculation
US$ in thousands
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
2 2019 Calculation
Net cash paid for interest, net of capitalized interest, tax = Net cash paid for interest, net of capitalized interest × EITR
= 186,546 × 22.86% = 42,644
3 2019 Calculation
Interest expense, capitalized, tax = Interest expense, capitalized × EITR
= 38,292 × 22.86% = 8,754
- Effective Income Tax Rate (EITR)
- The effective income tax rate shows significant variability over the five-year period. It decreased from 34.63% in 2015 to 29.59% in 2016, then increased sharply to 37.5% in 2017. In the subsequent years, the rate declined markedly to 21.98% in 2018 and remained at a similar level of 22.86% in 2019. This trend suggests fluctuations in the company’s tax obligations or changes in tax regulations impacting the effective rate applied during these years.
- Net Cash Paid for Interest, Net of Capitalized Interest, Net of Tax
- The net cash paid for interest exhibited a rising trend from 2015 to 2018, increasing from $145,179 thousand to $189,806 thousand. However, in 2019, this amount decreased notably to $143,902 thousand, representing a decline to levels near those observed at the beginning of the period. This pattern could indicate changes in borrowing costs, debt levels, or refinancing activities over the period.
- Interest Expense, Capitalized, Net of Tax
- The interest expense that was capitalized and net of tax demonstrated a decreasing trend from 2015 through 2017, falling from $27,351 thousand to $17,143 thousand. Following this, there was a slight increase in 2018 to $19,113 thousand, succeeded by a marked rise to $29,538 thousand in 2019, exceeding the initial 2015 value. The fluctuations in capitalization of interest expense may reflect variations in capital investment projects and accounting practices related to interest capitalization during the period.
Enterprise Value to FCFF Ratio, Current
EOG Resources Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 38,070,738) |
| Free cash flow to the firm (FCFF) | 1,914,094) |
| Valuation Ratio | |
| EV/FCFF | 19.89 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Chevron Corp. | 17.87 |
| ConocoPhillips | 15.65 |
| Exxon Mobil Corp. | 15.92 |
| Occidental Petroleum Corp. | 13.25 |
Based on: 10-K (reporting date: 2019-12-31).
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
EOG Resources Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Enterprise value (EV)1 | 38,070,738) | 59,000,426) | 67,432,214) | 61,864,092) | 43,608,770) | |
| Free cash flow to the firm (FCFF)2 | 1,914,094) | 1,901,052) | 330,303) | (23,986) | (1,245,468) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 19.89 | 31.04 | 204.15 | — | — | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
| Occidental Petroleum Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
3 2019 Calculation
EV/FCFF = EV ÷ FCFF
= 38,070,738 ÷ 1,914,094 = 19.89
4 Click competitor name to see calculations.
The analysis of the financial data reveals significant changes in both enterprise value and free cash flow to the firm over the five-year period ending December 31, 2019.
- Enterprise Value (EV)
- The enterprise value exhibited an increasing trend from 2015 through 2017, rising from approximately 43.6 billion US dollars in 2015 to about 67.4 billion US dollars in 2017. However, this upward trajectory reversed in 2018 and 2019, with EV declining to roughly 59.0 billion and then further down to 38.1 billion US dollars, respectively. This decline in the last two years could indicate market revaluation, changes in capital structure, or operational factors affecting the company's overall valuation.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm showed a marked improvement over the same period. Initially, FCFF was negative in 2015 (-1.25 billion US dollars) and nearly neutral in 2016 (-24 thousand US dollars), indicating challenges in cash generation from operations after capital expenditures. Starting in 2017, FCFF turned positive, reaching approximately 330 million US dollars, and continued to grow substantially in 2018 and 2019, achieving about 1.9 billion US dollars in the last two years. This consistent positive cash flow indicates enhanced operational efficiency and/or reduced capital spending, contributing to stronger financial health.
- EV to FCFF Ratio
- The ratio of enterprise value to free cash flow to the firm was not calculated for the first two years due to negative or negligible FCFF. In 2017, the ratio was exceptionally high at 204.15, reflecting a substantial enterprise value relative to a modest positive free cash flow. This ratio declined sharply in subsequent years, with 31.04 in 2018 and 19.89 in 2019, signifying that the company's valuation became more aligned with its cash-generating ability. The decreasing ratio suggests improving market perceptions of the firm's cash flow sustainability and/or adjustments in valuation methodologies.