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Marathon Oil (MRO) Down 0.7% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Marathon Oil (MRO - Free Report) . Shares have lost about 0.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Marathon Oil due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Marathon Oil Corporation reported second-quarter 2024 adjusted net income per share of 63 cents, missing the Zacks Consensus Estimate of 67 cents. The underperformance reflects higher costs and tepid production numbers.
However, the company’s bottom line rose from the year-ago adjusted profit of 48 cents due to higher commodity price realizations.
The company reported revenues of $1.7 billion, which came $15 million above the consensus mark and rose 12.8% from the year-ago sales.
Investors should know that on May 29, U.S. upstream behemoth ConocoPhillips (COP Quick QuoteCOP - Research Report) announced a definitive agreement to acquire Marathon Oil in an all-stock transaction valued at $22.5 billion. Completion of the transaction is expected by the fourth quarter of 2024.
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 393,000 barrels of oil equivalent per day (BOE/d) compared with 399,000 BOE/d in the year-ago period.
U.S. E&P: This U.S. upstream unit reported an income of $379 million, up from $365 million in the year-ago period due to an uptick in oil and gas realizations, partly offset by higher costs. We modeled the segment income at $434 million.
Marathon Oil’s average realized liquids price (crude oil and condensate) of $79.12 per barrel was 9.1% higher than the year-earlier level of $72.49 but narrowly missed our projection of $80.48. Meanwhile, natural gas liquids’ average price realizations increased 13.1% to $21.18 a barrel. Finally, average realized natural gas prices plunged 24.9% year over year to $1.42 per thousand cubic feet and underperformed our estimate of $1.44.
As far as production costs are concerned, they averaged $6.21 per BOE, or a 5.6% year-over-year increase.
Net production of 351,000 BOE/d was down 1.4% from second-quarter 2023. Total U.S. output, which came over our projection of 345,000 BOE/d, comprised approximately 52% oil, or 183,000 barrels per day (bpd).
The Eagle Ford region recorded an average production of 153,000 BOE/d, while output from Bakken was 107,000 BOE/d. The Oklahoma output came in at 42,000 BOE/d. In the Permian Basin, MRO produced 47,000 BOE/d.
International E&P: The segment, which explores and produces oil and gas in Equatorial Guinea, reported earnings of $79 million compared with $30 million in the year-ago period and our projection of $45.8 million. The significantly improved results could be primarily attributed to higher natural gas sales prices.
Marathon reported production available for sale of 42,000 BOE/d, essentially in line with our projection as well as the second-quarter 2023 level of 43,000 Boe/d.
Marathon’s average realized liquids prices (crude oil and condensate) of $57.31 per barrel reflected a 6.8% improvement from the year-earlier quarter. Natural gas and natural gas liquids’ average price realizations came in at $4.96 per thousand cubic feet and $1 a barrel, respectively, compared to 24 cents and $1 in the corresponding period of 2023.
Financial Position
Total costs in the second quarter were $1.2 billion, up 11.8% from the prior-year period and exceeded our expectation by 6.6%. Marathon Oil reported an adjusted operating cash flow of $1 billion, down 8.3% from a year ago.
As of Jun 30, 2024, Marathon Oil had cash and cash equivalents worth $77 million and long-term debt of $4.6 billion. The debt-to-capitalization ratio of the company was 29.
Marathon Oil spent $665 million in capital and exploratory expenditures during the quarter and raked in $364 million in adjusted free cash flow. The company also executed $231 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 have trended downward during the past month.
VGM Scores
At this time, Marathon Oil has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Marathon Oil has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Marathon Oil (MRO) Down 0.7% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Marathon Oil (MRO - Free Report) . Shares have lost about 0.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Marathon Oil due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Marathon Oil Reports Lower-Than-Expected Q2 Earnings
Marathon Oil Corporation reported second-quarter 2024 adjusted net income per share of 63 cents, missing the Zacks Consensus Estimate of 67 cents. The underperformance reflects higher costs and tepid production numbers.
However, the company’s bottom line rose from the year-ago adjusted profit of 48 cents due to higher commodity price realizations.
The company reported revenues of $1.7 billion, which came $15 million above the consensus mark and rose 12.8% from the year-ago sales.
Investors should know that on May 29, U.S. upstream behemoth ConocoPhillips (COP Quick QuoteCOP - Research Report) announced a definitive agreement to acquire Marathon Oil in an all-stock transaction valued at $22.5 billion. Completion of the transaction is expected by the fourth quarter of 2024.
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 393,000 barrels of oil equivalent per day (BOE/d) compared with 399,000 BOE/d in the year-ago period.
U.S. E&P: This U.S. upstream unit reported an income of $379 million, up from $365 million in the year-ago period due to an uptick in oil and gas realizations, partly offset by higher costs. We modeled the segment income at $434 million.
Marathon Oil’s average realized liquids price (crude oil and condensate) of $79.12 per barrel was 9.1% higher than the year-earlier level of $72.49 but narrowly missed our projection of $80.48. Meanwhile, natural gas liquids’ average price realizations increased 13.1% to $21.18 a barrel. Finally, average realized natural gas prices plunged 24.9% year over year to $1.42 per thousand cubic feet and underperformed our estimate of $1.44.
As far as production costs are concerned, they averaged $6.21 per BOE, or a 5.6% year-over-year increase.
Net production of 351,000 BOE/d was down 1.4% from second-quarter 2023. Total U.S. output, which came over our projection of 345,000 BOE/d, comprised approximately 52% oil, or 183,000 barrels per day (bpd).
The Eagle Ford region recorded an average production of 153,000 BOE/d, while output from Bakken was 107,000 BOE/d. The Oklahoma output came in at 42,000 BOE/d. In the Permian Basin, MRO produced 47,000 BOE/d.
International E&P: The segment, which explores and produces oil and gas in Equatorial Guinea, reported earnings of $79 million compared with $30 million in the year-ago period and our projection of $45.8 million. The significantly improved results could be primarily attributed to higher natural gas sales prices.
Marathon reported production available for sale of 42,000 BOE/d, essentially in line with our projection as well as the second-quarter 2023 level of 43,000 Boe/d.
Marathon’s average realized liquids prices (crude oil and condensate) of $57.31 per barrel reflected a 6.8% improvement from the year-earlier quarter. Natural gas and natural gas liquids’ average price realizations came in at $4.96 per thousand cubic feet and $1 a barrel, respectively, compared to 24 cents and $1 in the corresponding period of 2023.
Financial Position
Total costs in the second quarter were $1.2 billion, up 11.8% from the prior-year period and exceeded our expectation by 6.6%. Marathon Oil reported an adjusted operating cash flow of $1 billion, down 8.3% from a year ago.
As of Jun 30, 2024, Marathon Oil had cash and cash equivalents worth $77 million and long-term debt of $4.6 billion. The debt-to-capitalization ratio of the company was 29.
Marathon Oil spent $665 million in capital and exploratory expenditures during the quarter and raked in $364 million in adjusted free cash flow. The company also executed $231 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 have trended downward during the past month.
VGM Scores
At this time, Marathon Oil has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Marathon Oil has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.