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Marathon (MRO) Beats on Q4 Earnings, Backs Shareholder Returns
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Marathon Oil Corporation (MRO - Free Report) reported fourth-quarter 2021 adjusted net income per share of 77 cents, comprehensively beating the Zacks Consensus Estimate of 55 cents. In the year-ago period, the company had incurred a loss of 12 cents.
Marathon Oil’s bottom line was favorably impacted by stronger liquid realizations and better-than-expected domestic production. Precisely, volumes in the United States came in at 304,000 barrels of oil equivalent per day (BOE/d), beating the Zacks Consensus Estimate of 294 BOE/d.
Marathon Oil reported revenues of $1.8 billion that jumped from the year-ago sales of $830 million and also came above the consensus mark by 14.5%.
In good news for investors, the company is using the excess cash from a supportive environment to reward them with dividends and buybacks. As part of that, MRO has executed $1 billion of share repurchases since October (with $1.7 billion remaining under the current authorization) and recently announced a dividend hike for the fourth time in as many quarters.
Marathon Oil Corporation Price, Consensus and EPS Surprise
This Texas-based energy explorer’s total net production (from U.S. and International units) in the quarter under review came in at 353,000 BOE/d compared with 352,000 BOE/d in the year-ago period.
U.S. E&P: This U.S. upstream unit reported income of $553 million against a loss of $33 million in the year-ago period due to stronger price realizations.
Marathon Oil’s average realized liquids prices (crude oil and condensate) of $77.03 per barrel were significantly above the year-earlier level of $39.71. Natural gas liquids average price realizations soared 114.7% to $34.99 a barrel. Additionally, average realized natural gas prices were up 126.8% year over year to $5.24 per thousand cubic feet.
Meanwhile, production costs were $4.90 per BOE, representing a 6.1% year-over-year rise.
Net production of 304,000 BOE/d increased from 280,000 BOE/d in fourth-quarter 2020. The total U.S. output comprised 57% oil or 172,000 barrels per day (bpd), up 8.2% year over year.
The higher year-over-year production, especially from Eagle Ford and Bakken buoyed the company’s quarterly performance. The Eagle Ford region recorded production of 93,000 BOE/d, up 13.4% from the level in fourth-quarter 2020, while output from Bakken was 124,000 BOE/d compared with 110,000 BOE/d in the year-ago quarter. On a somewhat disappointing note, Oklahoma output came in at 56,000 BOE/d, reflecting a 3.4% fall from the year-ago level.
International E&P: The segment, which explores and produces oil and gas in Equatorial Guinea, reported earnings of $106 million, compared with $29 million in the year-ago period due to improvement in liquids prices.
Marathon Oil reported production available for sale of 49,000 BOE/d, down from 72,000 Boe/d in fourth-quarter 2020.
Marathon Oil’s average realized liquids prices (crude oil and condensate) of $71.29 per barrel reflected a 103.2% jump from the year-earlier quarter. Natural gas and natural gas liquids’ average price realizations came in at 24 cents per thousand cubic feet and $1 a barrel, respectively – same as the corresponding period of 2020.
Financial Position
Total costs in the quarter were $1.1 billion, $19 million lower than the prior-year period. Marathon Oil reported an operating cash flow of $1.1 billion for the fourth quarter, up significantly from $428 million a year ago.
As of Dec 31, it had cash and cash equivalents worth $580 million and long-term debt of 4 billion. The debt-to-capitalization ratio of the company was 27.1.
Marathon Oil spent $251 million in capital and exploratory expenditures during the quarter and raked in $898 million of free cash flow.
2022 Guidance
Marathon Oil has set the capital budget at $1.2 billion for this year, up modestly (16%) from $1 billion it spent in 2021 as it continues to target shareholder returns over production growth. The company is targeting production in the range of 340,000 BOE/d to 350,000 BOE/d – essentially unchanged from the last year. Further, Marathon Oil expects oil volumes in the band of 168,000-176,000 barrels per day. Assuming $60 WTI, Marathon Oil expects to return a minimum of 40% of its cash flow from operations.
Zacks Rank & Stock Picks
Marathon Oil currently carries a Zacks Rank #1 (Strong Buy).
Vermilion Energy: Vermilion Energy is valued at around $2.8 billion. The Zacks Consensus Estimate for VET’s 2022 earnings has been revised 40% upward over the past 60 days.
Vermilion Energy delivered a four-quarter average earnings surprise of 54.4%, including a 100% beat in Q3. VET shares have gained around 216.4% in a year.
ConocoPhillips: ConocoPhillips is valued at around $118 billion. The consensus estimate for COP’s 2022 earnings has been revised 16.6% upward over the past 60 days.
COP beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 12.6%. ConocoPhillips has rallied around 94.8% in a year.
ExxonMobil: ExxonMobil has a projected earnings growth rate of 27.3% for this year. The Zacks Consensus Estimate for XOM’s 2022 earnings has been revised 15.1% upward over the past 60 days.
ExxonMobil beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 5.8%. XOM shares have gained around 59% in a year.
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Marathon (MRO) Beats on Q4 Earnings, Backs Shareholder Returns
Marathon Oil Corporation (MRO - Free Report) reported fourth-quarter 2021 adjusted net income per share of 77 cents, comprehensively beating the Zacks Consensus Estimate of 55 cents. In the year-ago period, the company had incurred a loss of 12 cents.
Marathon Oil’s bottom line was favorably impacted by stronger liquid realizations and better-than-expected domestic production. Precisely, volumes in the United States came in at 304,000 barrels of oil equivalent per day (BOE/d), beating the Zacks Consensus Estimate of 294 BOE/d.
Marathon Oil reported revenues of $1.8 billion that jumped from the year-ago sales of $830 million and also came above the consensus mark by 14.5%.
In good news for investors, the company is using the excess cash from a supportive environment to reward them with dividends and buybacks. As part of that, MRO has executed $1 billion of share repurchases since October (with $1.7 billion remaining under the current authorization) and recently announced a dividend hike for the fourth time in as many quarters.
Marathon Oil Corporation Price, Consensus and EPS Surprise
Marathon Oil Corporation price-consensus-eps-surprise-chart | Marathon Oil Corporation Quote
Segmental Performance
This Texas-based energy explorer’s total net production (from U.S. and International units) in the quarter under review came in at 353,000 BOE/d compared with 352,000 BOE/d in the year-ago period.
U.S. E&P: This U.S. upstream unit reported income of $553 million against a loss of $33 million in the year-ago period due to stronger price realizations.
Marathon Oil’s average realized liquids prices (crude oil and condensate) of $77.03 per barrel were significantly above the year-earlier level of $39.71. Natural gas liquids average price realizations soared 114.7% to $34.99 a barrel. Additionally, average realized natural gas prices were up 126.8% year over year to $5.24 per thousand cubic feet.
Meanwhile, production costs were $4.90 per BOE, representing a 6.1% year-over-year rise.
Net production of 304,000 BOE/d increased from 280,000 BOE/d in fourth-quarter 2020. The total U.S. output comprised 57% oil or 172,000 barrels per day (bpd), up 8.2% year over year.
The higher year-over-year production, especially from Eagle Ford and Bakken buoyed the company’s quarterly performance. The Eagle Ford region recorded production of 93,000 BOE/d, up 13.4% from the level in fourth-quarter 2020, while output from Bakken was 124,000 BOE/d compared with 110,000 BOE/d in the year-ago quarter. On a somewhat disappointing note, Oklahoma output came in at 56,000 BOE/d, reflecting a 3.4% fall from the year-ago level.
International E&P: The segment, which explores and produces oil and gas in Equatorial Guinea, reported earnings of $106 million, compared with $29 million in the year-ago period due to improvement in liquids prices.
Marathon Oil reported production available for sale of 49,000 BOE/d, down from 72,000 Boe/d in fourth-quarter 2020.
Marathon Oil’s average realized liquids prices (crude oil and condensate) of $71.29 per barrel reflected a 103.2% jump from the year-earlier quarter. Natural gas and natural gas liquids’ average price realizations came in at 24 cents per thousand cubic feet and $1 a barrel, respectively – same as the corresponding period of 2020.
Financial Position
Total costs in the quarter were $1.1 billion, $19 million lower than the prior-year period. Marathon Oil reported an operating cash flow of $1.1 billion for the fourth quarter, up significantly from $428 million a year ago.
As of Dec 31, it had cash and cash equivalents worth $580 million and long-term debt of 4 billion. The debt-to-capitalization ratio of the company was 27.1.
Marathon Oil spent $251 million in capital and exploratory expenditures during the quarter and raked in $898 million of free cash flow.
2022 Guidance
Marathon Oil has set the capital budget at $1.2 billion for this year, up modestly (16%) from $1 billion it spent in 2021 as it continues to target shareholder returns over production growth. The company is targeting production in the range of 340,000 BOE/d to 350,000 BOE/d – essentially unchanged from the last year. Further, Marathon Oil expects oil volumes in the band of 168,000-176,000 barrels per day. Assuming $60 WTI, Marathon Oil expects to return a minimum of 40% of its cash flow from operations.
Zacks Rank & Stock Picks
Marathon Oil currently carries a Zacks Rank #1 (Strong Buy).
Some other top-ranked players in the energy space are Vermilion Energy (VET - Free Report) , ConocoPhillips (COP - Free Report) and ExxonMobil (XOM - Free Report) . All the companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vermilion Energy: Vermilion Energy is valued at around $2.8 billion. The Zacks Consensus Estimate for VET’s 2022 earnings has been revised 40% upward over the past 60 days.
Vermilion Energy delivered a four-quarter average earnings surprise of 54.4%, including a 100% beat in Q3. VET shares have gained around 216.4% in a year.
ConocoPhillips: ConocoPhillips is valued at around $118 billion. The consensus estimate for COP’s 2022 earnings has been revised 16.6% upward over the past 60 days.
COP beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 12.6%. ConocoPhillips has rallied around 94.8% in a year.
ExxonMobil: ExxonMobil has a projected earnings growth rate of 27.3% for this year. The Zacks Consensus Estimate for XOM’s 2022 earnings has been revised 15.1% upward over the past 60 days.
ExxonMobil beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 5.8%. XOM shares have gained around 59% in a year.