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Marathon Oil (MRO) Down 7.6% Since Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Marathon Oil Corporation (MRO - Free Report) . Shares have lost about 7.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it 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 Q1 Loss Narrower than Expected, View Up
Marathon Oil posted first-quarter adjusted loss of $0.07 per share, narrower than the Zacks Consensus Estimate of a loss of $0.08. This was also significantly narrower than the year-earlier adjusted loss figure of $0.43. The better-than-expected results were driven by increased price realizations and cost-control initiatives.
Quarterly revenues of $1,072 million missed the Zacks Consensus Estimate of $1,093 million. However, revenues increased by 47% from the prior-year figure of $570 million.
Segmental Performance
North America E&P: Marathon Oil’s North American upstream segment reported a loss of $79 million, narrower than the loss of $195 million a year ago. Higher commodity prices benefited results.
Marathon Oil reported production available for sale of 208,000 oil-equivalent barrels per day (BOE/d), down from 239,000 BOE/d in the first quarter of 2016. The deterioration was mainly due to reduced drilling and completion activities.
The company realized liquids (crude oil, condensate and natural gas liquids) price of $41.13 per barrel, higher than the year-earlier quarter level of $24.00 per barrel, reflecting an increase of 71%. Natural gas realizations increased 50% year over year to $3.02 per thousand cubic feet (Mcf).
International E&P: The segment’s income jumped to $93 million, compared with the year-ago income of $4 million. Substantially higher liquids realizations and increased production boosted profit margin.
The company reported production available for sale (excluding Libya) of 122,000 BOE/d, up from the 100,000 BOE/d in the first quarter of 2016. The increase in output in Equatorial Guinea was responsible for growth.
The company realized liquids price of $38.64 per barrel, a 70% rise from the year-earlier quarter level of $22.66 per barrel. However, natural gas realizations fell 8% year over year to 55 cents per thousand cubic feet (Mcf).
During the reported quarter, Marathon Oil entered into an agreement to divest its Canadian Oil Sands unit, which has been reflected as ‘discontinued operations’ in the first quarter earnings report of the company. The company reported a loss of $4907 million from the discontinued operations. Synthetic crude oil sales volumes for the unit were 45,000 barrels per day, down from the prior-year quarter level of 49,000 barrels.
Costs & Expenses
Marathon Oil’s total quarterly cost and expenses declined by 8.5% to $1,010 million in the reported quarter. The decrease is attributed to the lower general and administrative costs, production, marketing and other operating costs. However, the decrease was partially offset by higher exploration expenses in North America E&P unit along with increased impairment and depreciation costs in the quarter.
Balance Sheet
As of Mar 31, 2017, Marathon Oil had cash and cash equivalents of $2,490 million. The long-term debt of the company was $5,723 million, leading to a debt capitalization ratio of 31.2%.
Production Guidance
Marathon Oil has raised its production guidance for the full-year 2017 owing to the inclusion of production from the Northern Delaware acquisition. The company expects the production available for sale from the combined North America and International E&P segments, excluding Libya, to average 340,000 to 360,000 BOE/d, about 6% higher than 2016.
Marathon Oil expects second-quarter 2017 North America E&P output available for sale in the range of 210,000–220,000 BOE/d and International E&P (excluding Libya) output in the range of 120,000–130,000 BOE/d.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter.
At this time, the stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Marathon Oil (MRO) Down 7.6% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Marathon Oil Corporation (MRO - Free Report) . Shares have lost about 7.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it 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 Q1 Loss Narrower than Expected, View Up
Marathon Oil posted first-quarter adjusted loss of $0.07 per share, narrower than the Zacks Consensus Estimate of a loss of $0.08. This was also significantly narrower than the year-earlier adjusted loss figure of $0.43. The better-than-expected results were driven by increased price realizations and cost-control initiatives.
Quarterly revenues of $1,072 million missed the Zacks Consensus Estimate of $1,093 million. However, revenues increased by 47% from the prior-year figure of $570 million.
Segmental Performance
North America E&P: Marathon Oil’s North American upstream segment reported a loss of $79 million, narrower than the loss of $195 million a year ago. Higher commodity prices benefited results.
Marathon Oil reported production available for sale of 208,000 oil-equivalent barrels per day (BOE/d), down from 239,000 BOE/d in the first quarter of 2016. The deterioration was mainly due to reduced drilling and completion activities.
The company realized liquids (crude oil, condensate and natural gas liquids) price of $41.13 per barrel, higher than the year-earlier quarter level of $24.00 per barrel, reflecting an increase of 71%. Natural gas realizations increased 50% year over year to $3.02 per thousand cubic feet (Mcf).
International E&P: The segment’s income jumped to $93 million, compared with the year-ago income of $4 million. Substantially higher liquids realizations and increased production boosted profit margin.
The company reported production available for sale (excluding Libya) of 122,000 BOE/d, up from the 100,000 BOE/d in the first quarter of 2016. The increase in output in Equatorial Guinea was responsible for growth.
The company realized liquids price of $38.64 per barrel, a 70% rise from the year-earlier quarter level of $22.66 per barrel. However, natural gas realizations fell 8% year over year to 55 cents per thousand cubic feet (Mcf).
During the reported quarter, Marathon Oil entered into an agreement to divest its Canadian Oil Sands unit, which has been reflected as ‘discontinued operations’ in the first quarter earnings report of the company. The company reported a loss of $4907 million from the discontinued operations. Synthetic crude oil sales volumes for the unit were 45,000 barrels per day, down from the prior-year quarter level of 49,000 barrels.
Costs & Expenses
Marathon Oil’s total quarterly cost and expenses declined by 8.5% to $1,010 million in the reported quarter. The decrease is attributed to the lower general and administrative costs, production, marketing and other operating costs. However, the decrease was partially offset by higher exploration expenses in North America E&P unit along with increased impairment and depreciation costs in the quarter.
Balance Sheet
As of Mar 31, 2017, Marathon Oil had cash and cash equivalents of $2,490 million. The long-term debt of the company was $5,723 million, leading to a debt capitalization ratio of 31.2%.
Production Guidance
Marathon Oil has raised its production guidance for the full-year 2017 owing to the inclusion of production from the Northern Delaware acquisition. The company expects the production available for sale from the combined North America and International E&P segments, excluding Libya, to average 340,000 to 360,000 BOE/d, about 6% higher than 2016.
Marathon Oil expects second-quarter 2017 North America E&P output available for sale in the range of 210,000–220,000 BOE/d and International E&P (excluding Libya) output in the range of 120,000–130,000 BOE/d.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter.
Marathon Oil Corporation Price and Consensus
Marathon Oil Corporation Price and Consensus | Marathon Oil Corporation Quote
VGM Scores
At this time, the stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.