Discounted Cash Flow (DCF) Analysis Unlevered

Marathon Oil Corporation (MRO)

$22.16

+0.16 (+0.73%)

All numbers are in Millions, Currency in USD

Stock DCF: 43.52 | 22.16 | undervalue

Operating Data

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	5,902	5,063	3,097	5,601	8,036	9,468.03	11,155.24	13,143.12	15,485.25	18,244.74
Revenue (%)
EBITDA	4,148	3,069	1,130	3,327	5,532	5,597.97	6,595.53	7,770.86	9,155.64	10,787.19
EBITDA (%)
EBIT	4,148	3,069	1,130	3,327	3,779	3,532.58	4,162.09	4,903.78	5,777.64	6,807.22
EBIT (%)
Depreciation	-	-	-	-	1,753	2,065.39	2,433.44	2,867.08	3,378	3,979.97
Depreciation (%)

Balance Sheet Data

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Total Cash	1,462	858	742	580	334	1,518.44	1,789.03	2,107.84	2,483.46	2,926.02
Total Cash (%)
Account Receivables	1,079	1,122	747	1,142	1,146	1,878.70	2,213.49	2,607.93	3,072.67	3,620.23
Account Receivables (%)
Inventories	96	72	76	77	125	159.69	188.14	221.67	261.17	307.71
Inventories (%)
Accounts Payable	1,320	1,307	837	1,110	1,279	2,100.76	2,475.12	2,916.19	3,435.86	4,048.14
Accounts Payable (%)
Capital Expenditure	-2,753	-2,550	-1,343	-1,046	-1,450	-3,353.46	-3,951.06	-4,655.14	-5,484.69	-6,462.07
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 22.16
Beta	2.384
Diluted Shares Outstanding	687
Cost of Debt
Tax Rate	4.42
After-tax Cost of Debt	4.78%
Risk-Free Rate
Market Risk Premium
Cost of Equity	14.634
Total Debt	5,923
Total Equity	15,223.92
Total Capital	21,146.92
Debt Weighting	28.01
Equity Weighting	71.99
Wacc

Build Up Free Cash

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	5,902	5,063	3,097	5,601	8,036	9,468.03	11,155.24	13,143.12	15,485.25	18,244.74
EBITDA	4,148	3,069	1,130	3,327	5,532	5,597.97	6,595.53	7,770.86	9,155.64	10,787.19
EBIT	4,148	3,069	1,130	3,327	3,779	3,532.58	4,162.09	4,903.78	5,777.64	6,807.22
Tax Rate	23.20%	-22.45%	0.96%	5.78%	4.42%	2.38%	2.38%	2.38%	2.38%	2.38%
EBIAT	3,185.85	3,757.96	1,119.20	3,134.80	3,612	3,448.52	4,063.05	4,787.09	5,640.15	6,645.24
Depreciation	-	-	-	-	1,753	2,065.39	2,433.44	2,867.08	3,378	3,979.97
Accounts Receivable	-	-43	375	-395	-4	-732.70	-334.79	-394.45	-464.74	-547.55
Inventories	-	24	-4	-1	-48	-34.69	-28.46	-33.53	-39.50	-46.54
Accounts Payable	-	-13	-470	273	169	821.76	374.36	441.07	519.67	612.28
Capital Expenditure	-2,753	-2,550	-1,343	-1,046	-1,450	-3,353.46	-3,951.06	-4,655.14	-5,484.69	-6,462.07
UFCF	432.85	1,175.96	-322.80	1,965.80	4,032	2,214.82	2,556.55	3,012.13	3,548.89	4,181.31
WACC
PV UFCF						1,979.81	2,042.80	2,151.46	2,265.89	2,386.41
SUM PV UFCF										10,826.37

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	11.87
Free cash flow (t + 1)	4,264.94
Terminal Value	43,211.12
Present Value of Terminal Value	24,661.94

Intrinsic Value

Enterprise Value	35,488.31
Net Debt	5,589
Equity Value	29,899.31
Shares Outstanding	687
Equity Value Per Share	43.52