- Marathon Oil Corporation is an oil exploration and production company with resource plays in the Bakken in North Dakota, STACK, and the Eagle Ford in Texas among other regions.
- The rights to produce the reserves are worth many dollars. If the oil price increases, the rights will be worth much more.
- Like many other analysts, I believe that MRO will pay its debt in 2022. The reduction in debt will most likely enhance the FCF.
- In my base case scenario, with long-term growth of 4%-5.5% and a WACC of 11%, I obtained an implied price of $14.7-$18.7. Notice that MRO currently sells at $10-$12.
- The FCF will most likely be around $1.8 billion and $739 million in 2021 and 2025, respectively. My numbers are not far from that given by other analysts.
For further details see:
Marathon Oil's DCF: Why The Stock Is Getting Cheaper