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Marathon Oil Corporation (MRO - Free Report) posted second-quarter adjusted income from continuing operations of 15 cents per share, turning around from the year-ago quarter’s loss of 24 cents. The strong numbers are attributed to higher production in its United States E&P unit. However, the bottom line missed the Zacks Consensus Estimate of 21 cents, due to rise in operating cost and expenses.
Quarterly revenues of $1,417 million missed the Zacks Consensus Estimate of $1,495 million due to lower year-over-year production from the International E&P segment. However, the figure increased from the prior-year level of $1,059 million due to higher liquids prices.
Marathon Oil Corporation Price, Consensus and EPS Surprise
United States E&P: Marathon Oil’s United States upstream segment reported a profit of $123 million against a loss of $107 million a year ago. Higher oil prices and production improved the segment’s results.
Marathon Oil reported production available for sale of 298,000 barrels of oil equivalent (BOE/d), up from 222,000 BOE/d in the second quarter of 2017. The output also surpassed the Zacks Consensus Estimate of 288 BOE/d. The improvement was mainly due impressive contribution from U.S. resource plays in Eagle Ford, Bakken, Oklahoma and Northern Delaware.
The company realized liquids (crude oil and condensate) price of $66.03 per barrel, 44.1% higher than the year-earlier quarter’s level of $45.81 per barrel. Natural gas liquids (NGLs) price realizations also recorded a year-over-year increase of 25.44% to stand at $22.09 a barrel. However, natural gas realizations decreased 28.5% year over year to $2.18 per thousand cubic feet (Mcf).
International E&P: The segment’s income increased from $59 million in the prior-year quarter to $142 million in the second quarter of 2018 on higher realized liquids and NGLs.
Marathon Oil reported production available for sale (excluding Libya) of 121,000 BOE/d, down from 127,000 BOE/d in the second quarter of 2017. The decrease in output was primarily due to a fall in natural gas production from Equatorial Guinea and United Kingdom.
The company realized liquids (crude oil and condensate) price of $66.12 per barrel, reflecting a 40.6% rise from the year-earlier quarter’s $47.04 per barrel. Also, natural gas liquids realizations rose to $2.91 a barrel compared with $1.77 per barrel in the second quarter of 2017. However, natural gas realizations were down to 52 cents per thousand cubic feet (Mcf) from 57 cents a year ago.
Costs & Expenses
The company’s exploration expenses in the quarter came in at $65 million, higher than $30 million in the year-earlier quarter. Production costs rose to $205 million from $178 million in the year-ago period.
Moreover, Shipping, handling and other operating costs surged to $126 million from $111 million in second-quarter 2017. All these led to total quarterly cost and expenses of $1,212 million for the company compared with the prior-year quarter’s $1,084 million.
Capex & Balance sheet
During the quarter, Marathon Oil’s capital expenditure came in at $608 million. As of Jun 30, 2018, Marathon Oil had cash and cash equivalents of $1.7 billion and a $3.4 billion worth undrawn revolving credit facility. At the end of the quarter, the company had long-term debt of around $5.5 billion. Debt-to-capitalization ratio of the company was 31.2%.
Guidance
Marathon Oil expects third-quarter 2018 United States E&P output available for sale in the range of 290,000-300,000 BOE/d. International E&P output is expected to remain within 105,000-115,000 BOE/d, down from the second-quarter level owing to planned maintenance in the United Kingdom and Equatorial Guinea.
Marathon Oil increased its full-year guidance to 400,000-415,000 BOE/d from prior expectation of 390,000-410,000 BOE/d, with capital expenditure budget remaining intact at $2.3 billion.
Zacks Rank & Key Picks
Currently, Houston, TX-based Marathon Oil has a Zacks Rank #3 (Hold). Investors interested in the Energy sector can opt for some better-ranked stocks like Canadian Natural Resources Limited (CNQ - Free Report) , ConocoPhillips (COP - Free Report) and Cheniere Energy, Inc. (LNG - Free Report) . While Canadian Natural Resources sports a Zacks Rank #1 (Strong Buy), ConocoPhillips and Cheniere Energy both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Calgary, Canada-based Canadian Natural Resources is an upstream energy company. The company’s top line for 2018 is anticipated to improve 35.3% year over year, while its bottom line is expected to increase more than 170%.
Houston, TX-based ConocoPhillips is an integrated energy company. The company’s top line for 2018 is likely to improve 14.4% year over year. In the last four reported quarters, the company delivered an average positive earnings surprise of 27.6%.
Houston, TX-based Cheniere Energy mainly focuses on liquefied natural gas-related businesses. The company’s top line for 2018 is anticipated to improve 25.9% year over year, while its bottom line is expected to increase more than 225%.
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It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Marathon Oil (MRO) Q2 Earnings & Revenues Miss, Improve Y/Y
Marathon Oil Corporation (MRO - Free Report) posted second-quarter adjusted income from continuing operations of 15 cents per share, turning around from the year-ago quarter’s loss of 24 cents. The strong numbers are attributed to higher production in its United States E&P unit. However, the bottom line missed the Zacks Consensus Estimate of 21 cents, due to rise in operating cost and expenses.
Quarterly revenues of $1,417 million missed the Zacks Consensus Estimate of $1,495 million due to lower year-over-year production from the International E&P segment. However, the figure increased from the prior-year level of $1,059 million due to higher liquids prices.
Marathon Oil Corporation Price, Consensus and EPS Surprise
Marathon Oil Corporation Price, Consensus and EPS Surprise | Marathon Oil Corporation Quote
Segmental Performance
United States E&P: Marathon Oil’s United States upstream segment reported a profit of $123 million against a loss of $107 million a year ago. Higher oil prices and production improved the segment’s results.
Marathon Oil reported production available for sale of 298,000 barrels of oil equivalent (BOE/d), up from 222,000 BOE/d in the second quarter of 2017. The output also surpassed the Zacks Consensus Estimate of 288 BOE/d. The improvement was mainly due impressive contribution from U.S. resource plays in Eagle Ford, Bakken, Oklahoma and Northern Delaware.
The company realized liquids (crude oil and condensate) price of $66.03 per barrel, 44.1% higher than the year-earlier quarter’s level of $45.81 per barrel. Natural gas liquids (NGLs) price realizations also recorded a year-over-year increase of 25.44% to stand at $22.09 a barrel. However, natural gas realizations decreased 28.5% year over year to $2.18 per thousand cubic feet (Mcf).
International E&P: The segment’s income increased from $59 million in the prior-year quarter to $142 million in the second quarter of 2018 on higher realized liquids and NGLs.
Marathon Oil reported production available for sale (excluding Libya) of 121,000 BOE/d, down from 127,000 BOE/d in the second quarter of 2017. The decrease in output was primarily due to a fall in natural gas production from Equatorial Guinea and United Kingdom.
The company realized liquids (crude oil and condensate) price of $66.12 per barrel, reflecting a 40.6% rise from the year-earlier quarter’s $47.04 per barrel. Also, natural gas liquids realizations rose to $2.91 a barrel compared with $1.77 per barrel in the second quarter of 2017. However, natural gas realizations were down to 52 cents per thousand cubic feet (Mcf) from 57 cents a year ago.
Costs & Expenses
The company’s exploration expenses in the quarter came in at $65 million, higher than $30 million in the year-earlier quarter. Production costs rose to $205 million from $178 million in the year-ago period.
Moreover, Shipping, handling and other operating costs surged to $126 million from $111 million in second-quarter 2017. All these led to total quarterly cost and expenses of $1,212 million for the company compared with the prior-year quarter’s $1,084 million.
Capex & Balance sheet
During the quarter, Marathon Oil’s capital expenditure came in at $608 million. As of Jun 30, 2018, Marathon Oil had cash and cash equivalents of $1.7 billion and a $3.4 billion worth undrawn revolving credit facility. At the end of the quarter, the company had long-term debt of around $5.5 billion. Debt-to-capitalization ratio of the company was 31.2%.
Guidance
Marathon Oil expects third-quarter 2018 United States E&P output available for sale in the range of 290,000-300,000 BOE/d. International E&P output is expected to remain within 105,000-115,000 BOE/d, down from the second-quarter level owing to planned maintenance in the United Kingdom and Equatorial Guinea.
Marathon Oil increased its full-year guidance to 400,000-415,000 BOE/d from prior expectation of 390,000-410,000 BOE/d, with capital expenditure budget remaining intact at $2.3 billion.
Zacks Rank & Key Picks
Currently, Houston, TX-based Marathon Oil has a Zacks Rank #3 (Hold). Investors interested in the Energy sector can opt for some better-ranked stocks like Canadian Natural Resources Limited (CNQ - Free Report) , ConocoPhillips (COP - Free Report) and Cheniere Energy, Inc. (LNG - Free Report) . While Canadian Natural Resources sports a Zacks Rank #1 (Strong Buy), ConocoPhillips and Cheniere Energy both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Calgary, Canada-based Canadian Natural Resources is an upstream energy company. The company’s top line for 2018 is anticipated to improve 35.3% year over year, while its bottom line is expected to increase more than 170%.
Houston, TX-based ConocoPhillips is an integrated energy company. The company’s top line for 2018 is likely to improve 14.4% year over year. In the last four reported quarters, the company delivered an average positive earnings surprise of 27.6%.
Houston, TX-based Cheniere Energy mainly focuses on liquefied natural gas-related businesses. The company’s top line for 2018 is anticipated to improve 25.9% year over year, while its bottom line is expected to increase more than 225%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>