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Valuation Mod-11 Oil and Gas Field Services

Valuation Mod-11 Oil and Gas Field Services. Chris Jennis 4 /7/2014. Agenda Quick Recap Module 11 Summary Operating Lease Adjustment Share-Based Compensation Adjustment Questions. Abnormal Enterprise Income Growth Model. Module 11 “Adjusting Enterprise Operations”

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Valuation Mod-11 Oil and Gas Field Services

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  1. Valuation Mod-11Oil and Gas Field Services Chris Jennis 4/7/2014

  2. Agenda Quick Recap Module 11 Summary Operating Lease Adjustment Share-Based Compensation Adjustment Questions

  3. Abnormal Enterprise Income Growth Model

  4. Module 11 • “Adjusting Enterprise Operations” • Adjustment A: Inventory Method • Making financial statements comparable due to inventory costing methods • Important for companies holding large amounts of inventory and when prices markedly rise or fall • Adjustment B: Operating Leases • Bring operating leases onto balance sheet • Some managers believe keeping assets and liabilities off balance sheet improves market’s perception of their enterprise’s performance • Adjustment C: Special Purpose Entities • Speed up receipt of company’s operating cash flows and by mitigating certain types of risk • Certain assets and related debt moved off balance sheet • Adjustment D: Share-Based Compensation • Subsequent changes in value of options that occur prior to exercise should be considered

  5. Operating Lease Adjustment

  6. Operating Leases Cost of Debt = 4.98% Remaining life= 558/136

  7. Adjustments (2014 Operating Lease Amount – Depreciation) * (1-T) = 28 (Sum of PV * Cost of Debt) * (1-T)

  8. Stock Based Compensation

  9. Value of ESO

  10. Share-Based Compensation

  11. Stock Options

  12. Adjustments

  13. Adjustments

  14. Questions?

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