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Marathon Oil (MRO) Down 8.9% 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 8.9% 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 Narrower-Than-Expected Q4 Loss
Marathon Oil Corporation reported fourth-quarter 2020 adjusted net loss per share of 12 cents, narrower than the Zacks Consensus Estimate of a loss of 20 cents. The company’s bottom line was favorably impacted by a tight leash on costs and better-than-expected contribution from both segments. Precisely, the U.S. E&P and the International E&P reported a loss of $33 million and a profit of $29 million, beating the respective Zacks Consensus Estimates of a loss of $119 million and earnings of $8.4 million.
However, the fourth-quarter adjusted loss compared unfavorably with the year-earlier quarter's earnings of 7 cents due to lower liquids prices and production.
Marathon Oil reported revenues of $830 million that missed the Zacks Consensus Estimate of $844 million and fell 31.7% year over.
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 352,000 barrels of oil equivalent per day (BOE/d) compared with 413,000 BOE/d in the year-ago period.
U.S. E&P: This U.S. upstream unit reported a loss of $33 million as against a profit of $148 million in the year-ago period due to weak oil price realizations and falling output.
Marathon Oil’s average realized liquids prices (crude oil and condensate) of $39.71 per barrel were below the year-earlier level of $54.83. However, natural gas liquids average price realizations improved 5.4% to $16.30 a barrel. Additionally, average realized natural gas prices were up 10% year over year to $2.31 per thousand cubic feet.
Meanwhile, production costs were $4.62 per BOE, representing a 9.9% year-over-year decline.
Net production of 280,000 BOE/d decreased from 328,000 BOE/d in fourth-quarter 2019. The total U.S. output comprised 57% oil or 159,000 barrels per day (bpd), down 18.9% year over year.
The lower year-over-year production, especially from Eagle Ford and Oklahoma dragged down the company’s quarterly performance. Notably, Oklahoma output came in at 58,000 BOE/d, reflecting a 29.3% fall from the year-ago level. The Eagle Ford region recorded production of 82,000 BOE/d, down 21.9% from the level in fourth-quarter 2019. On a somewhat positive note, output from Bakken was 110,000 BOE/d compared with 108,000 BOE/d in the year-ago quarter.
International E&P: The segment, which explores and produces oil and gas in Equatorial Guinea, reported earnings of $29 million, down $4 million from the year-ago period due to lower production and liquids prices.
Marathon Oil reported production available for sale of 72,000 BOE/d, down from 85,000 Boe/d in fourth-quarter 2019.
Marathon Oil’s average realized liquids prices (crude oil and condensate) of $35.08 per barrel reflected a 27.3% decline from the year-earlier quarter. Natural gas and natural gas liquids’ average price realizations came in at 24 cents per thousand cubic feet and $1 a barrel, respectively – same as the corresponding period of 2019.
Financials
Total costs in the quarter were $1.1 billion, $62 million lower than the prior-year period. Marathon Oil, which recently resumed a stepped-down quarterly dividend of 3 cents per share, reported an operating cash flow of $418 million in the fourth quarter, down from $700 million a year ago.
As of Dec 31, it had cash and cash equivalents worth $742 million and long-term debt of 5.4 billion. Debt-to-capitalization ratio of the company was 33.8.
2021 Guidance
Marathon Oil has set $1 billion of capital budget for this year, down from $1.2 billion it spent in 2020. The company is targeting production in the range of 330,000 BOE/d to 350,000 BOE/d, 11% lower than 2020 production at the midpoint. Further, Marathon Oil expects oil volumes in the band of 169,000-175,000 barrels per day (91% at the midpoint).
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 70.99% due to these changes.
VGM Scores
At this time, Marathon Oil has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 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.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. 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 8.9% 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 8.9% 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 Narrower-Than-Expected Q4 Loss
Marathon Oil Corporation reported fourth-quarter 2020 adjusted net loss per share of 12 cents, narrower than the Zacks Consensus Estimate of a loss of 20 cents. The company’s bottom line was favorably impacted by a tight leash on costs and better-than-expected contribution from both segments. Precisely, the U.S. E&P and the International E&P reported a loss of $33 million and a profit of $29 million, beating the respective Zacks Consensus Estimates of a loss of $119 million and earnings of $8.4 million.
However, the fourth-quarter adjusted loss compared unfavorably with the year-earlier quarter's earnings of 7 cents due to lower liquids prices and production.
Marathon Oil reported revenues of $830 million that missed the Zacks Consensus Estimate of $844 million and fell 31.7% year over.
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 352,000 barrels of oil equivalent per day (BOE/d) compared with 413,000 BOE/d in the year-ago period.
U.S. E&P: This U.S. upstream unit reported a loss of $33 million as against a profit of $148 million in the year-ago period due to weak oil price realizations and falling output.
Marathon Oil’s average realized liquids prices (crude oil and condensate) of $39.71 per barrel were below the year-earlier level of $54.83. However, natural gas liquids average price realizations improved 5.4% to $16.30 a barrel. Additionally, average realized natural gas prices were up 10% year over year to $2.31 per thousand cubic feet.
Meanwhile, production costs were $4.62 per BOE, representing a 9.9% year-over-year decline.
Net production of 280,000 BOE/d decreased from 328,000 BOE/d in fourth-quarter 2019. The total U.S. output comprised 57% oil or 159,000 barrels per day (bpd), down 18.9% year over year.
The lower year-over-year production, especially from Eagle Ford and Oklahoma dragged down the company’s quarterly performance. Notably, Oklahoma output came in at 58,000 BOE/d, reflecting a 29.3% fall from the year-ago level. The Eagle Ford region recorded production of 82,000 BOE/d, down 21.9% from the level in fourth-quarter 2019. On a somewhat positive note, output from Bakken was 110,000 BOE/d compared with 108,000 BOE/d in the year-ago quarter.
International E&P: The segment, which explores and produces oil and gas in Equatorial Guinea, reported earnings of $29 million, down $4 million from the year-ago period due to lower production and liquids prices.
Marathon Oil reported production available for sale of 72,000 BOE/d, down from 85,000 Boe/d in fourth-quarter 2019.
Marathon Oil’s average realized liquids prices (crude oil and condensate) of $35.08 per barrel reflected a 27.3% decline from the year-earlier quarter. Natural gas and natural gas liquids’ average price realizations came in at 24 cents per thousand cubic feet and $1 a barrel, respectively – same as the corresponding period of 2019.
Financials
Total costs in the quarter were $1.1 billion, $62 million lower than the prior-year period. Marathon Oil, which recently resumed a stepped-down quarterly dividend of 3 cents per share, reported an operating cash flow of $418 million in the fourth quarter, down from $700 million a year ago.
As of Dec 31, it had cash and cash equivalents worth $742 million and long-term debt of 5.4 billion. Debt-to-capitalization ratio of the company was 33.8.
2021 Guidance
Marathon Oil has set $1 billion of capital budget for this year, down from $1.2 billion it spent in 2020. The company is targeting production in the range of 330,000 BOE/d to 350,000 BOE/d, 11% lower than 2020 production at the midpoint. Further, Marathon Oil expects oil volumes in the band of 169,000-175,000 barrels per day (91% at the midpoint).
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 70.99% due to these changes.
VGM Scores
At this time, Marathon Oil has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 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.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Marathon Oil has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.