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Will Marathon (MRO) See Its U.S. E&P Segment Grow in Q1?
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Independent oil and gas producer Marathon Oil Corporation (MRO - Free Report) is gearing up to release its first-quarter results on May 4. This time around, the primary contributor to the company’s earnings — its U.S. E&P (or exploration and production) division — is likely to have benefited from the ongoing momentum in oil and natural gas prices. Marathon also has an International E&P division that explores and produces oil and gas in Equatorial Guinea.
Click here for a complete rundown of the company’s expected Q1 performance.
A Look at Marathon’s U.S. Upstream Performance in Q4
Marathon’s 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.
Meanwhile, production costs were $4.90 per barrels of oil equivalent (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.
Higher Oil, Gas Prices to Boost Q1 U.S. E&P Income
Benchmark oil prices have risen sharply so far in 2022, thanks to geopolitical uncertainty amid Russia’s military operations in Ukraine. Last month, crude prices surged to multi-year highs of $130 on concerns about supplies from Russia, which is one of the world's largest producers of the commodity. The Biden administration’s ban on the import of Russian crude and energy products contributed to oil’s rapid price increase.
Marathon is likely to have cashed in on the surge in hydrocarbon realizations. In the previous three-month period, MRO’s key U.S. E&P segment realized average liquids prices (crude oil and condensate) of $77.03 per barrel — significantly above the year-earlier level of $39.71. Additionally, average realized natural gas prices were up 126.8% year over year to $5.24 per thousand cubic feet. The increase in price is most likely to have continued in the to-be-reported quarter, with fundamentals pointing to a tighter market. This price boost is likely to have buoyed the first-quarter revenues and cash flows of Marathon.
In its Q4 earnings release, MRO indicated that its capital budget is aimed at maintaining average production for 2022 at the year-ago levels. However, following from the previous quarter, the Zacks Rank #1 (Strong Buy) company is likely to have increased volumes from its high-margin U.S. resource plays (Eagle Ford, Bakken, Oklahoma and Permian) during the January-March period.
The Zacks Consensus Estimate for MRO’s first-quarter earnings is pegged at 98 cents per share, suggesting a 366.7% surge on the prior-year quarter’s reported figure of 21 cents. For quarterly sales, the consensus mark of $1.8 billion suggests a rise of 68.9% from the year-earlier quarter’s reported number.
Important Energy Releases So Far
While we wait till tomorrow for MRO to come out with its Q1 numbers, let’s take a look at two key energy releases so far.
Schlumberger (SLB - Free Report) , the largest oilfield contractor, announced first-quarter earnings of 34 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 32 cents. SLB recorded total revenues of $6 billion, outpacing the Zacks Consensus Estimate by 1.2%.
Schlumberger’s robust quarterly earnings resulted from strong drilling activities in North America, Latin America and the Middle East. Higher evaluation and intervention activities across the international offshore markets also buoyed the company’s first-quarter results. In more good news for investors, SLB raised its quarterly dividend by 40% to 17.5 cents per share (or 70 cents per share annualized).
Refining giant Valero Energy (VLO - Free Report) reported adjusted earnings of $2.31 per share, improving from a loss of $1.73 in the year-ago quarter. The bottom line also beat the Zacks Consensus Estimate of $1.61 per share. VLO’s strong quarterly results have been driven by increased refinery throughput volumes and a higher refining margin.
Valero generated total quarterly revenues of $38,542 million, which increased from $20,806 million in the prior-year quarter. The top line also surpassed the Zacks Consensus Estimate of $32,055 million. For the quarter, Valero’s refining throughput volumes were 2,800 thousand barrels per day (MBbls/d), up from 2,410 MBbls/d in first-quarter 2021.
Integrated energy major Chevron (CVX - Free Report) reported adjusted first-quarter earnings per share of $3.36, missing the Zacks Consensus Estimate of $3.44 on weaker-than-expected performance from the downstream segment. Precisely, income from the unit totaled $331 million, below the Zacks Consensus Estimate of $569 million. However, the energy major’s bottom line compared favorably with the year-earlier quarter's earnings of 90 cents on the back of sharply higher commodity prices.
CVX recorded $8.1 billion in cash flow from operations, compared to $4.2 billion a year ago. The soaring cash flow could be attributed to strong price realizations in the upstream business. Importantly, Chevron’s free cash flow for the quarter was $6.1 billion. Further, Chevron paid $2.7 billion in dividends and bought back $1.3 billion worth of its shares.
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Will Marathon (MRO) See Its U.S. E&P Segment Grow in Q1?
Independent oil and gas producer Marathon Oil Corporation (MRO - Free Report) is gearing up to release its first-quarter results on May 4. This time around, the primary contributor to the company’s earnings — its U.S. E&P (or exploration and production) division — is likely to have benefited from the ongoing momentum in oil and natural gas prices. Marathon also has an International E&P division that explores and produces oil and gas in Equatorial Guinea.
Click here for a complete rundown of the company’s expected Q1 performance.
A Look at Marathon’s U.S. Upstream Performance in Q4
Marathon’s 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.
Meanwhile, production costs were $4.90 per barrels of oil equivalent (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.
Higher Oil, Gas Prices to Boost Q1 U.S. E&P Income
Benchmark oil prices have risen sharply so far in 2022, thanks to geopolitical uncertainty amid Russia’s military operations in Ukraine. Last month, crude prices surged to multi-year highs of $130 on concerns about supplies from Russia, which is one of the world's largest producers of the commodity. The Biden administration’s ban on the import of Russian crude and energy products contributed to oil’s rapid price increase.
Marathon is likely to have cashed in on the surge in hydrocarbon realizations. In the previous three-month period, MRO’s key U.S. E&P segment realized average liquids prices (crude oil and condensate) of $77.03 per barrel — significantly above the year-earlier level of $39.71. Additionally, average realized natural gas prices were up 126.8% year over year to $5.24 per thousand cubic feet. The increase in price is most likely to have continued in the to-be-reported quarter, with fundamentals pointing to a tighter market. This price boost is likely to have buoyed the first-quarter revenues and cash flows of Marathon.
In its Q4 earnings release, MRO indicated that its capital budget is aimed at maintaining average production for 2022 at the year-ago levels. However, following from the previous quarter, the Zacks Rank #1 (Strong Buy) company is likely to have increased volumes from its high-margin U.S. resource plays (Eagle Ford, Bakken, Oklahoma and Permian) during the January-March period.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Overall Earnings & Revenue Projections
The Zacks Consensus Estimate for MRO’s first-quarter earnings is pegged at 98 cents per share, suggesting a 366.7% surge on the prior-year quarter’s reported figure of 21 cents. For quarterly sales, the consensus mark of $1.8 billion suggests a rise of 68.9% from the year-earlier quarter’s reported number.
Important Energy Releases So Far
While we wait till tomorrow for MRO to come out with its Q1 numbers, let’s take a look at two key energy releases so far.
Schlumberger (SLB - Free Report) , the largest oilfield contractor, announced first-quarter earnings of 34 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 32 cents. SLB recorded total revenues of $6 billion, outpacing the Zacks Consensus Estimate by 1.2%.
Schlumberger’s robust quarterly earnings resulted from strong drilling activities in North America, Latin America and the Middle East. Higher evaluation and intervention activities across the international offshore markets also buoyed the company’s first-quarter results. In more good news for investors, SLB raised its quarterly dividend by 40% to 17.5 cents per share (or 70 cents per share annualized).
Refining giant Valero Energy (VLO - Free Report) reported adjusted earnings of $2.31 per share, improving from a loss of $1.73 in the year-ago quarter. The bottom line also beat the Zacks Consensus Estimate of $1.61 per share. VLO’s strong quarterly results have been driven by increased refinery throughput volumes and a higher refining margin.
Valero generated total quarterly revenues of $38,542 million, which increased from $20,806 million in the prior-year quarter. The top line also surpassed the Zacks Consensus Estimate of $32,055 million. For the quarter, Valero’s refining throughput volumes were 2,800 thousand barrels per day (MBbls/d), up from 2,410 MBbls/d in first-quarter 2021.
Integrated energy major Chevron (CVX - Free Report) reported adjusted first-quarter earnings per share of $3.36, missing the Zacks Consensus Estimate of $3.44 on weaker-than-expected performance from the downstream segment. Precisely, income from the unit totaled $331 million, below the Zacks Consensus Estimate of $569 million. However, the energy major’s bottom line compared favorably with the year-earlier quarter's earnings of 90 cents on the back of sharply higher commodity prices.
CVX recorded $8.1 billion in cash flow from operations, compared to $4.2 billion a year ago. The soaring cash flow could be attributed to strong price realizations in the upstream business. Importantly, Chevron’s free cash flow for the quarter was $6.1 billion. Further, Chevron paid $2.7 billion in dividends and bought back $1.3 billion worth of its shares.
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