Intrinsic value of Marathon Oil Corporation - MRO

Previous Close

$12.45

  Intrinsic Value

$55.92

stock screener

  Rating & Target

str. buy

+349%

Previous close

$12.45

 
Intrinsic value

$55.92

 
Up/down potential

+349%

 
Rating

str. buy

We calculate the intrinsic value of MRO stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 10.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  27.70
  25.43
  23.39
  21.55
  19.89
  18.40
  17.06
  15.86
  14.77
  13.79
  12.92
  12.12
  11.41
  10.77
  10.19
  9.67
  9.21
  8.79
  8.41
  8.07
  7.76
  7.48
  7.24
  7.01
  6.81
  6.63
  6.47
  6.32
  6.19
  6.07
Revenue, $m
  8,405
  10,543
  13,008
  15,811
  18,957
  22,446
  26,276
  30,442
  34,939
  39,759
  44,894
  50,336
  56,080
  62,120
  68,452
  75,074
  81,985
  89,188
  96,687
  104,486
  112,594
  121,020
  129,776
  138,876
  148,334
  158,168
  168,397
  179,039
  190,118
  201,657
Variable operating expenses, $m
  1,720
  2,155
  2,657
  3,228
  3,868
  4,578
  5,357
  6,205
  7,121
  8,102
  9,137
  10,245
  11,414
  12,643
  13,932
  15,279
  16,686
  18,152
  19,678
  21,266
  22,916
  24,631
  26,413
  28,265
  30,190
  32,191
  34,273
  36,439
  38,694
  41,042
Fixed operating expenses, $m
  4,077
  4,166
  4,258
  4,352
  4,448
  4,545
  4,645
  4,748
  4,852
  4,959
  5,068
  5,179
  5,293
  5,410
  5,529
  5,650
  5,775
  5,902
  6,032
  6,164
  6,300
  6,438
  6,580
  6,725
  6,873
  7,024
  7,179
  7,337
  7,498
  7,663
Total operating expenses, $m
  5,797
  6,321
  6,915
  7,580
  8,316
  9,123
  10,002
  10,953
  11,973
  13,061
  14,205
  15,424
  16,707
  18,053
  19,461
  20,929
  22,461
  24,054
  25,710
  27,430
  29,216
  31,069
  32,993
  34,990
  37,063
  39,215
  41,452
  43,776
  46,192
  48,705
Operating income, $m
  2,608
  4,221
  6,093
  8,232
  10,641
  13,322
  16,273
  19,489
  22,966
  26,698
  30,689
  34,912
  39,373
  44,067
  48,991
  54,144
  59,524
  65,134
  70,977
  77,056
  83,378
  89,951
  96,783
  103,886
  111,272
  118,953
  126,945
  135,264
  143,926
  152,951
EBITDA, $m
  5,727
  8,130
  10,914
  14,089
  17,662
  21,634
  26,001
  30,758
  35,899
  41,413
  47,293
  53,529
  60,115
  67,043
  74,309
  81,911
  89,847
  98,122
  106,737
  115,701
  125,022
  134,711
  144,782
  155,251
  166,134
  177,453
  189,228
  201,483
  214,243
  227,536
Interest expense (income), $m
  375
  297
  434
  595
  780
  991
  1,228
  1,491
  1,780
  2,093
  2,432
  2,795
  3,182
  3,592
  4,025
  4,479
  4,956
  5,455
  5,976
  6,518
  7,083
  7,670
  8,281
  8,916
  9,575
  10,261
  10,973
  11,714
  12,484
  13,286
  14,120
Earnings before tax, $m
  2,311
  3,787
  5,498
  7,452
  9,650
  12,094
  14,782
  17,710
  20,873
  24,266
  27,894
  31,730
  35,781
  40,043
  44,512
  49,188
  54,069
  59,159
  64,458
  69,973
  75,707
  81,670
  87,867
  94,311
  101,011
  107,980
  115,231
  122,779
  130,640
  138,831
Tax expense, $m
  624
  1,023
  1,485
  2,012
  2,605
  3,265
  3,991
  4,782
  5,636
  6,552
  7,531
  8,567
  9,661
  10,812
  12,018
  13,281
  14,599
  15,973
  17,404
  18,893
  20,441
  22,051
  23,724
  25,464
  27,273
  29,155
  31,112
  33,150
  35,273
  37,484
Net income, $m
  1,687
  2,765
  4,014
  5,440
  7,044
  8,829
  10,791
  12,928
  15,237
  17,714
  20,362
  23,163
  26,120
  29,231
  32,494
  35,907
  39,471
  43,186
  47,055
  51,080
  55,266
  59,619
  64,143
  68,847
  73,738
  78,825
  84,119
  89,629
  95,367
  101,347

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  27,201
  34,119
  42,098
  51,169
  61,349
  72,639
  85,034
  98,519
  113,071
  128,669
  145,287
  162,900
  181,489
  201,036
  221,527
  242,957
  265,325
  288,635
  312,901
  338,141
  364,380
  391,650
  419,987
  449,437
  480,046
  511,872
  544,973
  579,415
  615,269
  652,611
Adjusted assets (=assets-cash), $m
  27,201
  34,119
  42,098
  51,169
  61,349
  72,639
  85,034
  98,519
  113,071
  128,669
  145,287
  162,900
  181,489
  201,036
  221,527
  242,957
  265,325
  288,635
  312,901
  338,141
  364,380
  391,650
  419,987
  449,437
  480,046
  511,872
  544,973
  579,415
  615,269
  652,611
Revenue / Adjusted assets
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
  0.309
Average production assets, $m
  22,072
  27,685
  34,160
  41,521
  49,780
  58,942
  69,000
  79,941
  91,750
  104,406
  117,890
  132,183
  147,266
  163,127
  179,755
  197,144
  215,293
  234,209
  253,899
  274,379
  295,671
  317,798
  340,792
  364,688
  389,526
  415,350
  442,209
  470,157
  499,250
  529,551
Working capital, $m
  -479
  -601
  -741
  -901
  -1,081
  -1,279
  -1,498
  -1,735
  -1,992
  -2,266
  -2,559
  -2,869
  -3,197
  -3,541
  -3,902
  -4,279
  -4,673
  -5,084
  -5,511
  -5,956
  -6,418
  -6,898
  -7,397
  -7,916
  -8,455
  -9,016
  -9,599
  -10,205
  -10,837
  -11,494
Total debt, $m
  8,030
  11,011
  14,450
  18,360
  22,747
  27,614
  32,956
  38,768
  45,040
  51,762
  58,924
  66,516
  74,528
  82,952
  91,784
  101,021
  110,661
  120,708
  131,166
  142,045
  153,354
  165,107
  177,321
  190,013
  203,206
  216,923
  231,189
  246,034
  261,487
  277,581
Total liabilities, $m
  11,724
  14,705
  18,144
  22,054
  26,441
  31,308
  36,650
  42,462
  48,734
  55,456
  62,618
  70,210
  78,222
  86,646
  95,478
  104,715
  114,355
  124,402
  134,860
  145,739
  157,048
  168,801
  181,015
  193,707
  206,900
  220,617
  234,883
  249,728
  265,181
  281,275
Total equity, $m
  15,478
  19,414
  23,954
  29,115
  34,907
  41,332
  48,385
  56,057
  64,338
  73,213
  82,668
  92,690
  103,267
  114,389
  126,049
  138,243
  150,970
  164,234
  178,041
  192,402
  207,332
  222,849
  238,973
  255,729
  273,146
  291,255
  310,089
  329,687
  350,088
  371,336
Total liabilities and equity, $m
  27,202
  34,119
  42,098
  51,169
  61,348
  72,640
  85,035
  98,519
  113,072
  128,669
  145,286
  162,900
  181,489
  201,035
  221,527
  242,958
  265,325
  288,636
  312,901
  338,141
  364,380
  391,650
  419,988
  449,436
  480,046
  511,872
  544,972
  579,415
  615,269
  652,611
Debt-to-equity ratio
  0.520
  0.570
  0.600
  0.630
  0.650
  0.670
  0.680
  0.690
  0.700
  0.710
  0.710
  0.720
  0.720
  0.730
  0.730
  0.730
  0.730
  0.730
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.750
  0.750
  0.750
  0.750
Adjusted equity ratio
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569
  0.569

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,687
  2,765
  4,014
  5,440
  7,044
  8,829
  10,791
  12,928
  15,237
  17,714
  20,362
  23,163
  26,120
  29,231
  32,494
  35,907
  39,471
  43,186
  47,055
  51,080
  55,266
  59,619
  64,143
  68,847
  73,738
  78,825
  84,119
  89,629
  95,367
  101,347
Depreciation, amort., depletion, $m
  3,118
  3,909
  4,821
  5,858
  7,021
  8,311
  9,728
  11,269
  12,932
  14,715
  16,604
  18,617
  20,742
  22,976
  25,318
  27,767
  30,323
  32,987
  35,760
  38,645
  41,644
  44,760
  47,999
  51,365
  54,863
  58,500
  62,283
  66,219
  70,317
  74,585
Funds from operations, $m
  4,806
  6,674
  8,835
  11,297
  14,065
  17,140
  20,519
  24,197
  28,169
  32,429
  36,967
  41,780
  46,862
  52,207
  57,811
  63,674
  69,794
  76,173
  82,815
  89,725
  96,910
  104,379
  112,142
  120,211
  128,601
  137,325
  146,402
  155,848
  165,684
  175,931
Change in working capital, $m
  -104
  -122
  -141
  -160
  -179
  -199
  -218
  -237
  -256
  -275
  -293
  -310
  -327
  -344
  -361
  -377
  -394
  -411
  -427
  -445
  -462
  -480
  -499
  -519
  -539
  -561
  -583
  -607
  -631
  -658
Cash from operations, $m
  4,909
  6,795
  8,975
  11,457
  14,245
  17,339
  20,737
  24,435
  28,426
  32,704
  37,259
  42,091
  47,189
  52,551
  58,172
  64,051
  70,188
  76,584
  83,242
  90,170
  97,372
  104,859
  112,641
  120,730
  129,140
  137,886
  146,985
  156,455
  166,316
  176,589
Maintenance CAPEX, $m
  -2,435
  -3,109
  -3,899
  -4,811
  -5,848
  -7,011
  -8,302
  -9,718
  -11,259
  -12,923
  -14,705
  -16,604
  -18,617
  -20,742
  -22,976
  -25,318
  -27,767
  -30,323
  -32,987
  -35,760
  -38,645
  -41,644
  -44,760
  -47,999
  -51,365
  -54,863
  -58,500
  -62,283
  -66,219
  -70,317
New CAPEX, $m
  -4,785
  -5,613
  -6,475
  -7,361
  -8,260
  -9,162
  -10,058
  -10,942
  -11,809
  -12,656
  -13,484
  -14,292
  -15,084
  -15,861
  -16,628
  -17,389
  -18,150
  -18,915
  -19,690
  -20,481
  -21,291
  -22,127
  -22,994
  -23,896
  -24,838
  -25,824
  -26,859
  -27,948
  -29,093
  -30,300
Cash from investing activities, $m
  -7,220
  -8,722
  -10,374
  -12,172
  -14,108
  -16,173
  -18,360
  -20,660
  -23,068
  -25,579
  -28,189
  -30,896
  -33,701
  -36,603
  -39,604
  -42,707
  -45,917
  -49,238
  -52,677
  -56,241
  -59,936
  -63,771
  -67,754
  -71,895
  -76,203
  -80,687
  -85,359
  -90,231
  -95,312
  -100,617
Free cash flow, $m
  -2,310
  -1,926
  -1,399
  -715
  137
  1,166
  2,377
  3,775
  5,358
  7,125
  9,070
  11,194
  13,489
  15,949
  18,569
  21,345
  24,271
  27,345
  30,565
  33,929
  37,436
  41,088
  44,887
  48,835
  52,938
  57,199
  61,625
  66,224
  71,003
  75,972
Issuance/(repayment) of debt, $m
  2,531
  2,981
  3,439
  3,910
  4,387
  4,866
  5,342
  5,812
  6,272
  6,723
  7,162
  7,592
  8,012
  8,425
  8,832
  9,236
  9,640
  10,047
  10,459
  10,878
  11,309
  11,753
  12,213
  12,693
  13,193
  13,717
  14,267
  14,845
  15,453
  16,094
Issuance/(repurchase) of shares, $m
  1,662
  1,171
  526
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  4,193
  4,152
  3,965
  3,910
  4,387
  4,866
  5,342
  5,812
  6,272
  6,723
  7,162
  7,592
  8,012
  8,425
  8,832
  9,236
  9,640
  10,047
  10,459
  10,878
  11,309
  11,753
  12,213
  12,693
  13,193
  13,717
  14,267
  14,845
  15,453
  16,094
Total cash flow (excl. dividends), $m
  1,883
  2,226
  2,567
  3,195
  4,524
  6,032
  7,720
  9,586
  11,630
  13,847
  16,232
  18,785
  21,500
  24,373
  27,401
  30,581
  33,912
  37,392
  41,024
  44,807
  48,745
  52,841
  57,100
  61,528
  66,130
  70,916
  75,892
  81,069
  86,456
  92,066
Retained Cash Flow (-), $m
  -3,350
  -3,936
  -4,540
  -5,162
  -5,792
  -6,424
  -7,053
  -7,673
  -8,281
  -8,875
  -9,455
  -10,022
  -10,577
  -11,122
  -11,660
  -12,194
  -12,727
  -13,264
  -13,807
  -14,362
  -14,930
  -15,516
  -16,124
  -16,757
  -17,417
  -18,109
  -18,834
  -19,598
  -20,401
  -21,248
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -1,466
  -1,709
  -1,973
  -1,967
  -1,268
  -392
  667
  1,914
  3,350
  4,972
  6,777
  8,763
  10,923
  13,251
  15,741
  18,387
  21,184
  24,129
  27,216
  30,446
  33,815
  37,325
  40,976
  44,771
  48,713
  52,807
  57,057
  61,471
  66,055
  70,818
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  -1,406
  -1,565
  -1,717
  -1,620
  -983
  -285
  451
  1,196
  1,924
  2,607
  3,218
  3,740
  4,153
  4,449
  4,621
  4,673
  4,609
  4,444
  4,191
  3,869
  3,498
  3,097
  2,686
  2,280
  1,895
  1,541
  1,225
  951
  721
  533
Current shareholders' claim on cash, %
  86.0
  78.9
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4
  76.4

Marathon Oil Corporation is an exploration and production (E&P) company. The Company operates through three segments: North America E&P, International E&P and Oil Sands Mining. The North America E&P segment explores for, produces and markets crude oil and condensate, natural gas liquids (NGLs) and natural gas in North America. The International E&P segment explores for, produces and markets crude oil and condensate, NGLs and natural gas outside of North America, and produces and markets products manufactured from natural gas, such as liquefied natural gas (LNG) and methanol, in Equatorial Guinea (E.G.). The Oil Sands Mining segment mines, extracts and transports bitumen from oil sands deposits in Alberta, Canada, and upgrades the bitumen to produce and market synthetic crude oil and vacuum gas oil.

FINANCIAL RATIOS  of  Marathon Oil Corporation (MRO)

Valuation Ratios
P/E Ratio -4.9
Price to Sales 2.5
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow 9.8
Price to Free Cash Flow -61.3
Growth Rates
Sales Growth Rate -25.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -64.2%
Cap. Spend. - 3 Yr. Gr. Rate -22.5%
Financial Strength
Quick Ratio 4
Current Ratio 0.1
LT Debt to Equity 37.5%
Total Debt to Equity 41.4%
Interest Coverage -2
Management Effectiveness
Return On Assets -4.7%
Ret/ On Assets - 3 Yr. Avg. -0.5%
Return On Total Capital -8.5%
Ret/ On T. Cap. - 3 Yr. Avg. -1.8%
Return On Equity -11.9%
Return On Equity - 3 Yr. Avg. -2.6%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 62.6%
Gross Margin - 3 Yr. Avg. 61.6%
EBITDA Margin 36%
EBITDA Margin - 3 Yr. Avg. 27.1%
Operating Margin -21.1%
Oper. Margin - 3 Yr. Avg. -18%
Pre-Tax Margin -29%
Pre-Tax Margin - 3 Yr. Avg. -22.8%
Net Profit Margin -50.2%
Net Profit Margin - 3 Yr. Avg. -20.6%
Effective Tax Rate -73.3%
Eff/ Tax Rate - 3 Yr. Avg. -6.3%
Payout Ratio -7.6%

MRO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MRO stock intrinsic value calculation we used $6582 million for the last fiscal year's total revenue generated by Marathon Oil Corporation. The default revenue input number comes from 0001 income statement of Marathon Oil Corporation. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MRO stock valuation model: a) initial revenue growth rate of 27.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for MRO is calculated based on our internal credit rating of Marathon Oil Corporation, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Marathon Oil Corporation.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MRO stock the variable cost ratio is equal to 20.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3989 million in the base year in the intrinsic value calculation for MRO stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Marathon Oil Corporation.

Corporate tax rate of 27% is the nominal tax rate for Marathon Oil Corporation. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MRO stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MRO are equal to 262.6%.

Life of production assets of 7.1 years is the average useful life of capital assets used in Marathon Oil Corporation operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MRO is equal to -5.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $12128 million for Marathon Oil Corporation - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 818.761 million for Marathon Oil Corporation is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Marathon Oil Corporation at the current share price and the inputted number of shares is $10.2 billion.

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