Net Present Value [NPV] of $68 a share for Hold-rated Marathon Oil Corporation (MRO) may be getting less attention from investors than conditions in the volatile refined products business. Indeed results for the first quarter reported today included sharply lower cash flow for that segment.

Projected volumes along with current futures prices promise a continuing high level of unlevered cash flow (Ebitda). NPV is supported by projected cash flow capitalized at unlevered multiples (PV/Ebitda) related to reserve life (Adjusted R/P). Last year’s acquisition of oil sands boosts oil and gas reserves by 20%. The timeliness of that deal is borne out by a continued trend upward in oil price.

Originally published on May 1, 2008.

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Kurt Wulff

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