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Discounted Cash Flow (DCF) Analysis Unlevered


Marathon Oil Corporation

Marathon Oil Corporation (MRO)

Energy

Operating Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 11,783.0011,257.484,953.293,787.294,765.546,582.646,318.686,065.305,822.085,588.625,364.51
Revenue (%)
EBITDA 5,992.836,537.2264.891,271.01-2,704.924,093.751,242.881,193.041,145.201,099.281,055.20
EBITDA (%)
EBIT 3,492.483,676.69-2,655.95-885.09-5,076.731,652.90-1,589.78-1,526.03-1,464.84-1,406.10-1,349.71
EBIT (%)
Depreciation 2,500.352,860.532,720.842,156.102,371.812,440.842,832.662,719.072,610.042,505.382,404.91
Depreciation (%)

Balance Sheet Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Total Cash 263.942,397.841,220.992,487.871,311.001,462.002,039.041,957.271,878.791,803.451,731.13
Total Cash (%)
Account Receivables 2,133.901,729.15911.90747.991,081.781,078.901,170.221,123.291,078.251,035.01993.51
Account Receivables (%)
Inventories 364.09356.86313.05135.96125.8196.11217.36208.65200.28192.25184.54
Inventories (%)
Accounts Payable 2,446.152,735.571,445.871,096.041,503.051,473.851,723.101,654.011,587.681,524.021,462.90
Accounts Payable (%)
Capital Expenditure -4,443.37-5,160.43-3,485.14-1,203.98-1,973.89-2,752.86-2,922.39-2,805.20-2,692.71-2,584.73-2,481.09
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 12.47
Diluted Shares Outstanding 847.00
Cost of Debt
Tax Rate 23.20
After-tax Cost of Debt -1.11
Risk-Free Rate
Market Risk Premium
Cost of Equity 20.57
Total Debt 5,499.00
Total Equity 10,562.09
Total Capital 16,061.09
Debt Weighting 34.24
Equity Weighting 65.76
Wacc

Build Up Free Cash

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 11,783.0011,257.484,953.293,787.294,765.546,582.646,318.686,065.305,822.085,588.625,364.51
EBITDA 5,992.836,537.2264.891,271.01-2,704.924,093.751,242.881,193.041,145.201,099.281,055.20
EBIT 3,492.483,676.69-2,655.95-885.09-5,076.731,652.90-1,589.78-1,526.03-1,464.84-1,406.10-1,349.71
Tax Rate 45.47%11.40%25.08%-75.84%-7.03%23.20%3.71%3.71%3.71%3.71%3.71%
EBIAT 1,904.303,257.48-1,989.71-1,556.36-5,433.731,269.50-1,530.74-1,469.36-1,410.44-1,353.88-1,299.59
Depreciation 2,500.352,860.532,720.842,156.102,371.812,440.842,832.662,719.072,610.042,505.382,404.91
Accounts Receivable -404.75817.25163.91-333.792.88-91.3246.9345.0443.2441.50
Inventories -7.2343.81177.0810.1529.70-121.268.728.378.037.71
Accounts Payable -289.42-1,289.70-349.82407.01-29.20249.25-69.10-66.33-63.67-61.11
Capital Expenditure -717.06-1,675.29-2,281.16769.91778.97169.53-117.19-112.49-107.98-103.65
UFCF 4,404.657,536.46-1,372.80-1,690.24-2,208.634,492.711,508.121,119.081,074.201,031.13989.78
WACC
PV UFCF 1,313.24848.54709.26592.84495.53
SUM PV UFCF 10,250.78

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 14.84
Free cash flow (t + 1) 1,029.37
Terminal Value 9,496.01
Present Value of Terminal Value 4,754.18

Intrinsic Value

Enterprise Value 15,004.96
Net Debt 4,037.00
Equity Value 10,967.96
Shares Outstanding 847.00
Equity Value Per Share 12.95

Results Unlevered DCF

Wacc / Long-term Growth -4 (%)-3 (%)-2 (%)-1 (%)0 (%)1 (%)2 (%)3 (%)4 (%)
16.84 (%) 10.98 Sell 11.25 Sell 11.55 Sell 11.91 Sell 12.31 Sell 12.79 Buy 13.35 Buy 14.02 Buy 14.85 Buy
16.34 (%) 10.80 Sell 11.05 Sell 11.33 Sell 11.65 Sell 12.02 Sell 12.45 Sell 12.96 Buy 13.56 Buy 14.29 Buy
15.84 (%) 10.63 Sell 10.86 Sell 11.12 Sell 11.41 Sell 11.75 Sell 12.14 Sell 12.60 Buy 13.14 Buy 13.80 Buy
15.34 (%) 10.47 Sell 10.68 Sell 10.92 Sell 11.20 Sell 11.51 Sell 11.86 Sell 12.28 Sell 12.77 Buy 13.35 Buy
14.84 (%) 10.32 Sell 10.52 Sell 10.74 Sell 10.99 Sell 11.28 Sell 11.61 Sell 11.98 Sell 12.43 Sell 12.95 Buy
14.34 (%) 10.18 Sell 10.36 Sell 10.57 Sell 10.80 Sell 11.07 Sell 11.37 Sell 11.71 Sell 12.11 Sell 12.59 Buy
13.84 (%) 10.05 Sell 10.22 Sell 10.41 Sell 10.63 Sell 10.87 Sell 11.15 Sell 11.47 Sell 11.83 Sell 12.26 Sell
13.34 (%) 9.92 Sell 10.09 Sell 10.27 Sell 10.47 Sell 10.69 Sell 10.95 Sell 11.24 Sell 11.57 Sell 11.96 Sell
12.84 (%) 9.81 Sell 9.96 Sell 10.13 Sell 10.31 Sell 10.52 Sell 10.76 Sell 11.02 Sell 11.33 Sell 11.68 Sell