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Why Is Marathon Oil (MRO) Up 8.1% Since Last Earnings Report?
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It has been about a month since the last earnings report for Marathon Oil (MRO - Free Report) . Shares have added about 8.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Marathon Oil due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Marathon Oil Corporation reported first-quarter 2024 adjusted net income per share of 55 cents, beating the Zacks Consensus Estimate of 52 cents. The outperformance reflects higher domestic liquids price.
However, the company’s bottom line fell from the year-ago adjusted profit of 67 cents due to weaker production numbers.
The company reported revenues of $1.7 billion, which came 1.4% below the consensus mark and fell 7.7% from year-ago sales.
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 371,000 barrels of oil equivalent per day (BOE/d) compared with 396,000 BOE/d in the year-ago period.
U.S. E&P: This U.S. upstream unit reported an income of $334 million, down from $425 million in the year-ago period due to lower production and higher costs, partly offset by a slight uptick in oil realizations. We modeled the segment income at $421.3 million.
Marathon Oil’s average realized liquids price (crude oil and condensate) of $75.39 per barrel was 0.9% higher than the year-earlier level of $74.69 but narrowly missed our projection of $75.54. Meanwhile, natural gas liquids’ average price realizations decreased 8.4% to $22.24 a barrel. Finally, average realized natural gas prices plunged 33.2% year over year to $1.97 per thousand cubic feet though the figure outperformed our estimate of $1.92.
As far as production costs are concerned, they averaged $6.77 per BOE, or a 16.3% year-over-year increase.
Net production of 326,000 BOE/d was down 4.4% from first-quarter 2023. Total U.S. output, which came under our projection of 339,000 BOE/d, comprised approximately 53% oil, or 172,000 barrels per day (bpd).
Lower year-over-year production from Eagle Ford affected the company’s quarterly performance. The Eagle Ford region recorded an average production of 127,000 BOE/d, dropping 11.8% from the first-quarter 2023 level, while output from Bakken was 105,000 BOE/d compared with 95,000 BOE/d in the year-ago quarter. The Oklahoma output came in at 45,000 BOE/d, down from the year-ago level of 54,000 BOE/d. In the Permian Basin, MRO produced 48,000 BOE/d compared with 45,000 BOE/d a year ago.
International E&P: The segment, which explores and produces oil and gas in Equatorial Guinea, reported earnings of $82 million compared with $89 million in the year-ago period and our projection of $59.2 million. These results could be primarily blamed on lower output.
Marathon reported production available for sale of 45,000 BOE/d, down from 55,000 Boe/d in first-quarter 2023 and in line with our projection.
Marathon’s average realized liquids prices (crude oil and condensate) of $61.86 per barrel reflected a 5.6% improvement from the year-earlier quarter. Natural gas and natural gas liquids’ average price realizations came in at $3.71 per thousand cubic feet and $1 a barrel, respectively, compared to 24 cents and $1 in the corresponding period of 2022.
Financial Position
Total costs in the first quarter were $1.1 billion, up 2.6% from the prior-year period and exceeded our expectation by 5.1%. Marathon Oil reported an adjusted operating cash flow of $861 million, down 8.6% from a year ago.
As of Mar 31, 2024, Marathon Oil had cash and cash equivalents worth $49 million and long-term debt of $4.6 billion. The debt-to-capitalization ratio of the company was 29.1.
Marathon Oil spent $603 million in capital and exploratory expenditures during the quarter and raked in $239 million in adjusted free cash flow. The company also executed $285 million in share repurchases during the period.
2024 Guidance
Marathon continues to budget its capital spending between $1.9 billion and $2.1 billion this year. Meanwhile, MRO continues to prioritize shareholder returns over production growth. The company is targeting production between 380,000 BOE/d and 400,000 BOE/d. Further, Marathon expects oil volumes in the band of 185,000-195,000 barrels per day.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
At this time, Marathon Oil has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Marathon Oil has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Marathon Oil belongs to the Zacks Oil and Gas - Integrated - United States industry. Another stock from the same industry, Antero Midstream Corporation (AM - Free Report) , has gained 2.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.
Antero Midstream reported revenues of $279.05 million in the last reported quarter, representing a year-over-year change of +7.5%. EPS of $0.24 for the same period compares with $0.21 a year ago.
Antero Midstream is expected to post earnings of $0.23 per share for the current quarter, representing a year-over-year change of +4.6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Antero Midstream. Also, the stock has a VGM Score of C.
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Why Is Marathon Oil (MRO) Up 8.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Marathon Oil (MRO - Free Report) . Shares have added about 8.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Marathon Oil due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Marathon Oil Reports Better-Than-Expected Q1 Earnings
Marathon Oil Corporation reported first-quarter 2024 adjusted net income per share of 55 cents, beating the Zacks Consensus Estimate of 52 cents. The outperformance reflects higher domestic liquids price.
However, the company’s bottom line fell from the year-ago adjusted profit of 67 cents due to weaker production numbers.
The company reported revenues of $1.7 billion, which came 1.4% below the consensus mark and fell 7.7% from year-ago sales.
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 371,000 barrels of oil equivalent per day (BOE/d) compared with 396,000 BOE/d in the year-ago period.
U.S. E&P: This U.S. upstream unit reported an income of $334 million, down from $425 million in the year-ago period due to lower production and higher costs, partly offset by a slight uptick in oil realizations. We modeled the segment income at $421.3 million.
Marathon Oil’s average realized liquids price (crude oil and condensate) of $75.39 per barrel was 0.9% higher than the year-earlier level of $74.69 but narrowly missed our projection of $75.54. Meanwhile, natural gas liquids’ average price realizations decreased 8.4% to $22.24 a barrel. Finally, average realized natural gas prices plunged 33.2% year over year to $1.97 per thousand cubic feet though the figure outperformed our estimate of $1.92.
As far as production costs are concerned, they averaged $6.77 per BOE, or a 16.3% year-over-year increase.
Net production of 326,000 BOE/d was down 4.4% from first-quarter 2023. Total U.S. output, which came under our projection of 339,000 BOE/d, comprised approximately 53% oil, or 172,000 barrels per day (bpd).
Lower year-over-year production from Eagle Ford affected the company’s quarterly performance. The Eagle Ford region recorded an average production of 127,000 BOE/d, dropping 11.8% from the first-quarter 2023 level, while output from Bakken was 105,000 BOE/d compared with 95,000 BOE/d in the year-ago quarter. The Oklahoma output came in at 45,000 BOE/d, down from the year-ago level of 54,000 BOE/d. In the Permian Basin, MRO produced 48,000 BOE/d compared with 45,000 BOE/d a year ago.
International E&P: The segment, which explores and produces oil and gas in Equatorial Guinea, reported earnings of $82 million compared with $89 million in the year-ago period and our projection of $59.2 million. These results could be primarily blamed on lower output.
Marathon reported production available for sale of 45,000 BOE/d, down from 55,000 Boe/d in first-quarter 2023 and in line with our projection.
Marathon’s average realized liquids prices (crude oil and condensate) of $61.86 per barrel reflected a 5.6% improvement from the year-earlier quarter. Natural gas and natural gas liquids’ average price realizations came in at $3.71 per thousand cubic feet and $1 a barrel, respectively, compared to 24 cents and $1 in the corresponding period of 2022.
Financial Position
Total costs in the first quarter were $1.1 billion, up 2.6% from the prior-year period and exceeded our expectation by 5.1%. Marathon Oil reported an adjusted operating cash flow of $861 million, down 8.6% from a year ago.
As of Mar 31, 2024, Marathon Oil had cash and cash equivalents worth $49 million and long-term debt of $4.6 billion. The debt-to-capitalization ratio of the company was 29.1.
Marathon Oil spent $603 million in capital and exploratory expenditures during the quarter and raked in $239 million in adjusted free cash flow. The company also executed $285 million in share repurchases during the period.
2024 Guidance
Marathon continues to budget its capital spending between $1.9 billion and $2.1 billion this year. Meanwhile, MRO continues to prioritize shareholder returns over production growth. The company is targeting production between 380,000 BOE/d and 400,000 BOE/d. Further, Marathon expects oil volumes in the band of 185,000-195,000 barrels per day.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
At this time, Marathon Oil has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Marathon Oil has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Marathon Oil belongs to the Zacks Oil and Gas - Integrated - United States industry. Another stock from the same industry, Antero Midstream Corporation (AM - Free Report) , has gained 2.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.
Antero Midstream reported revenues of $279.05 million in the last reported quarter, representing a year-over-year change of +7.5%. EPS of $0.24 for the same period compares with $0.21 a year ago.
Antero Midstream is expected to post earnings of $0.23 per share for the current quarter, representing a year-over-year change of +4.6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Antero Midstream. Also, the stock has a VGM Score of C.