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Marathon Oil (MRO) Down 8.6% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Marathon Oil Corporation (MRO - Free Report) . Shares have lost about 8.6% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is MRO due for a breakout? 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.
Fourth-Quarter 2017 Results
Marathon Oil posted fourth-quarter adjusted income of 7 cents per share, ahead of the Zacks Consensus Estimate of 2 cents. In the year-earlier quarter, the company incurred adjusted loss of 10 cents.
The strong numbers came thanks to higher production and the recovery in crude prices. In particular, total quarterly output rose 12% year over year to 383,000 oil-equivalent barrels per day (BOE/d).
Quarterly revenues of $1,382 million beat the Zacks Consensus Estimate of $1,280 million and also rose from the prior-year quarter level of $1,124 million.
Segmental Performance
United States E&P: Marathon Oil’s United States upstream segment reported a profit of $76 million, turning around from the loss of $91 million a year ago. Higher oil prices and production improved the results.
Marathon Oil reported production available for sale of 262,000 BOE/d, up from 212,000 BOE/d in the fourth quarter of 2016. The improvement was mainly due impressive contribution from U.S. resource plays.
The company realized liquids (crude oil, condensate and natural gas liquids) price of $47.61 per barrel, 22.1% higher than the year-earlier quarter level of $39.00 per barrel. But natural gas realizations decreased 7.7% year over year to $2.65 per thousand cubic feet (Mcf).
International E&P: The segment’s income increased 7.3% year over year to $118 million. Substantially higher liquids realizations led to the profit growth.
Marathon Oil reported production available for sale (excluding Libya) of 121,000 BOE/d, down from the 129,000 BOE/d in the fourth quarter of 2016. The decrease in output could be blamed on the temporary shut-down of the third party-operated Forties Pipeline System, natural field declines and planned turnaround activity in the U.K.
The company realized liquids price of $51.13 per barrel, reflecting a 35.1% rise from the year-earlier quarter level of $37.85 per barrel. Also, natural gas realizations were up 11.3% year over year to 59 cents per thousand cubic feet (Mcf).
Costs & Expenses
The company’s exploration expenses for the quarter came at $57 million, higher than $34 million in the year-earlier quarter. Moreover, Marathon Oil’s total quarterly cost and expenses rose 7.3% to 1,174 million.
Capital Expenditure
During the year, Marathon Oil spent $2,100 million on capital programs, in line with its guidance. The company announced a 2018 capital program of $2,300 million, with 90% of the outlay earmarked for high return U.S. resource plays.
Guidance
Marathon Oil expects first-quarter 2018 United States E&P output available for sale in the range of 265,000–275,000 BOE/d and International E&P output in the range of 105,000–115,000 BOE/d.
For the full year, Marathon Oil forecasts sale-ready output from the combined United States and International E&P segments to average 390,000 to 410,000 net BOE/d.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter. In the past month, the consensus estimate has shifted by 30.3% due to these changes.
At this time, MRO has a strong Growth Score of A, a grade with the same score on the momentum front. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for growth and momentum investors.
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. Notably, MRO 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 8.6% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Marathon Oil Corporation (MRO - Free Report) . Shares have lost about 8.6% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is MRO due for a breakout? 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.
Fourth-Quarter 2017 Results
Marathon Oil posted fourth-quarter adjusted income of 7 cents per share, ahead of the Zacks Consensus Estimate of 2 cents. In the year-earlier quarter, the company incurred adjusted loss of 10 cents.
The strong numbers came thanks to higher production and the recovery in crude prices. In particular, total quarterly output rose 12% year over year to 383,000 oil-equivalent barrels per day (BOE/d).
Quarterly revenues of $1,382 million beat the Zacks Consensus Estimate of $1,280 million and also rose from the prior-year quarter level of $1,124 million.
Segmental Performance
United States E&P: Marathon Oil’s United States upstream segment reported a profit of $76 million, turning around from the loss of $91 million a year ago. Higher oil prices and production improved the results.
Marathon Oil reported production available for sale of 262,000 BOE/d, up from 212,000 BOE/d in the fourth quarter of 2016. The improvement was mainly due impressive contribution from U.S. resource plays.
The company realized liquids (crude oil, condensate and natural gas liquids) price of $47.61 per barrel, 22.1% higher than the year-earlier quarter level of $39.00 per barrel. But natural gas realizations decreased 7.7% year over year to $2.65 per thousand cubic feet (Mcf).
International E&P: The segment’s income increased 7.3% year over year to $118 million. Substantially higher liquids realizations led to the profit growth.
Marathon Oil reported production available for sale (excluding Libya) of 121,000 BOE/d, down from the 129,000 BOE/d in the fourth quarter of 2016. The decrease in output could be blamed on the temporary shut-down of the third party-operated Forties Pipeline System, natural field declines and planned turnaround activity in the U.K.
The company realized liquids price of $51.13 per barrel, reflecting a 35.1% rise from the year-earlier quarter level of $37.85 per barrel. Also, natural gas realizations were up 11.3% year over year to 59 cents per thousand cubic feet (Mcf).
Costs & Expenses
The company’s exploration expenses for the quarter came at $57 million, higher than $34 million in the year-earlier quarter. Moreover, Marathon Oil’s total quarterly cost and expenses rose 7.3% to 1,174 million.
Capital Expenditure
During the year, Marathon Oil spent $2,100 million on capital programs, in line with its guidance. The company announced a 2018 capital program of $2,300 million, with 90% of the outlay earmarked for high return U.S. resource plays.
Guidance
Marathon Oil expects first-quarter 2018 United States E&P output available for sale in the range of 265,000–275,000 BOE/d and International E&P output in the range of 105,000–115,000 BOE/d.
For the full year, Marathon Oil forecasts sale-ready output from the combined United States and International E&P segments to average 390,000 to 410,000 net BOE/d.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter. In the past month, the consensus estimate has shifted by 30.3% due to these changes.
Marathon Oil Corporation Price and Consensus
Marathon Oil Corporation Price and Consensus | Marathon Oil Corporation Quote
VGM Scores
At this time, MRO has a strong Growth Score of A, a grade with the same score on the momentum front. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for growth and momentum investors.
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. Notably, MRO has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.