- 217 - B. Belle Fourche 1. Value of Total Equity on a Marketable Basis a. Kimball Report Mr. Kimball applied the guideline company method to value the subject interests in Belle Fourche as of June 4 and June 30, 1994. He rejected the discounted cash-flow method, reasoning that the cash-flow projections and discount rate determinations required would be too difficult to compute and would not reflect investors’ attitudes toward these types of companies. First, Mr. Kimball identified four guideline companies from the crude petroleum pipeline and refined petroleum pipeline industries, which are similar but not identical to Belle Fourche’s line of business. Mr. Kimball could not identify any publicly traded companies that were engaged in crude oil gathering. Mr. Kimball then analyzed six market multiples: EBIT, EBDIT, debt-free net income (DFNI), debt-free cash-flow (DFCF), revenues, and TBVIC. As with True Oil, he used data from the latest year and an average of the 5 preceding years to calculate the multiples. Mr. Kimball weighted the EBDIT and DFCF multiples at 30 percent each and the rest at 10 percent each. Mr. Kimball explained that he chose low multiples to apply to Belle Fourche’s financial fundamentals because the guideline companies were larger and more successful than Belle Fourche.Page: Previous 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 Next
Last modified: May 25, 2011