WPX
WPX Energy, Inc.
stock NYSE

Thanks for this analysis.  I went through a similar exercise before investing in WPX Energy in 2015.   There are a few flaws in your analysis:
1.    BoE is an energy equivalency, not an economic equivalency. The stuff that comes out of the ground is a mix of oil, natural gas, and NGLs. Thus if OXY’s wells are 90% natural gas, their reserves are not worth $70 per barrel.
2.    $70 per barrel may be the spot price at the WTI terminal, but there are several costs to get it to market:
a.    There is a cost to develop the wells. This is capitalized and does not hit the income statement immediately. This have to be amortized.  The way to figure this out is to look at known reserves at the beginning of year one, known reserves at the beginning of year two, production during year one and the capital expenditures during year one. 
Here is an example:
Beginning year 1 known reserves: 100
Beginning of year 2 known reserves: 120
Production in year 1: 30.       
Capitalized expenditures during year 1: $75
                     Here is the math:       120 – 100 + 30 = 50  
                     Capital costs per unit: $75/50 = $1.50
                     Those are the uplift costs per unit.  It is best to look at this over a number of years, not just from year 1 to year 2.
b.    The cost of get the product from the field to the terminal is expensed, and shows up in  the income statement. To get this number, divide this expense by the yearly production.  Thus if the costs to get the product to market is $60 for year 1, the cost per unit is $60/30 = $2.
In this simplistic example, the cost of the oil is $1.50 + $2 = $3.50.
My numbers are placeholders to illustrate the concept.
The other point is that my math is flawed because of the mix issue of oil to natural gas to NGLs identified above. I’m assuming costs on an BoE basis, and not based on the actual ratio of oil, natural gas, and NGLs. 
When I did this analysis for my WPX investment, I could not figure a way around this problem.  For my investment, I was buying WPX’s reserves at about 40% on the dollar, i.e. a 60% margin of safety.  Even if my math was off, I figured I still had at 25% margin of safety. 
This gets to the fundamental tenet of being approximately right rather than precisely wrong.
c.    The time value of money.  The stuff in the ground does not get to market immediately, so the future cash flows need to be discounted.  The oil industry uses are standard called DCF 10.  I’m hardly an expert in this, but my understanding is that 10% is used at the hurdle rate.  I don’t know the time component in the formula.  I suggest looking at online resources such as Investopedia to learn more.

Thanks for this analysis.  I went through a similar exercise before investing in WPX Energy in 2015.   There are a few flaws in your analysis:
1.    BoE is an energy equivalency, not an economic equivalency. The stuff that comes out of the ground is a mix of oil, natural gas, and NGLs. Thus if OXY’s wells are 90% natural gas, their reserves are not worth $70 per barrel.
2.    $70 per barrel may be the spot price at the WTI terminal, but there are several costs to get it to market:
a.    There is a cost to develop the wells. This is capitalized and does not hit the income statement immediately. This have to be amortized.  The way to figure this out is to look at known reserves at the beginning of year one, known reserves at the beginning of year two, production during year one and the capital expenditures during year one. 
Here is an example:
Beginning year 1 known reserves: 100
Beginning of year 2 known reserves: 120
Production in year 1: 30.       
Capitalized expenditures during year 1: $75
                     Here is the math:       120 – 100 + 30 = 50  
                     Capital costs per unit: $75/50 = $1.50
                     Those are the uplift costs per unit.  It is best to look at this over a number of years, not just from year 1 to year 2.
b.    The cost of get the product from the field to the terminal is expensed, and shows up in  the income statement. To get this number, divide this expense by the yearly production.  Thus if the costs to get the product to market is $60 for year 1, the cost per unit is $60/30 = $2.
In this simplistic example, the cost of the oil is $1.50 + $2 = $3.50.
My numbers are placeholders to illustrate the concept.
The other point is that my math is flawed because of the mix issue of oil to natural gas to NGLs identified above. I’m assuming costs on an BoE basis, and not based on the actual ratio of oil, natural gas, and NGLs. 
When I did this analysis for my WPX investment, I could not figure a way around this problem.  For my investment, I was buying WPX’s reserves at about 40% on the dollar, i.e. a 60% margin of safety.  Even if my math was off, I figured I still had at 25% margin of safety. 
This gets to the fundamental tenet of being approximately right rather than precisely wrong.
c.    The time value of money.  The stuff in the ground does not get to market immediately, so the future cash flows need to be discounted.  The oil industry uses are standard called DCF 10.  I’m hardly an expert in this, but my understanding is that 10% is used at the hurdle rate.  I don’t know the time component in the formula.  I suggest looking at online resources such as Investopedia to learn more.