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Why Is Marathon Oil (MRO) Down 3.8% Since the Last Earnings Report?
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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 3.8% in that time period, 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.
Fourth-Quarter 2016 Results
Marathon Oil posted fourth quarter adjusted loss of $0.10 per share, narrower than the Zacks Consensus Estimate for a loss of $0.13 and the year-earlier adjusted loss of $0.48.
The better-than-expected results came thanks to the recovery in crude prices and cost control initiatives.
Quarterly revenues of $1,389 million beat the Zacks Consensus Estimate of $1,186 million but fell from the prior-year quarter level of $1,475 million amid lower volumes.
Segmental Performance
North America E&P: Marathon Oil’s North American upstream segment reported a loss of $91 million, narrower than the loss of $219 million a year ago. Higher commodity prices buoyed the result.
Marathon Oil reported production available for sale of 212,000 oil-equivalent barrels per day (BOE/d), down from 260,000 BOE/d in the fourth quarter of 2015. The deterioration was mainly due to reduced drilling and completion activities.
The company realized liquids (crude oil, condensate and natural gas liquids) price of $39.00 per barrel, higher than the year-earlier quarter level of $32.47 per barrel. Natural gas realizations increased 35% year over year to $2.87 per thousand cubic feet (Mcf).
International E&P: The segment’s income jumped almost fivefold year over year to $110 million. Substantially higher liquids realizations magnified the profits.
Marathon Oil reported production available for sale (excluding Libya) of 129,000 BOE/d, up from the 123,000 BOE/d in the fourth quarter of 2015. The increase in output in Equatorial Guinea was responsible for the growth.
The company realized liquids price of $37.85 per barrel, a 30% rise from the year-earlier quarter level of $29.18 per barrel. However, natural gas realizations fell 9% year over year to 53 cents per thousand cubic feet (Mcf).
Oil Sands Mining: Marathon’s Oil Sands Mining segment recorded a profit of $16 million compared with loss of $6 million in the year-ago quarter. The improvement stemmed from higher Synthetic Crude Oil realizations, which came in at $43.35 per barrel, up 25% from $34.65 per barrel a year ago.
Synthetic crude oil sales volumes in the oil sands business was 47,000 barrels per day, down slightly from the prior-year quarter level of 49,000 barrels per day.
Costs & Expenses
The company’s exploration expenses for the quarter came at $34 million, significantly lower than $532 million in the year-earlier quarter. Moreover, Marathon Oil’s total quarterly cost and expenses fell 44% to 1,336 million.
Capital Expenditure
During the year, Marathon Oil spent $1,069 million on capital programs, $200 million less than the revised guidance. As oil prices expanded their rout to most of 2016, major energy companies chopped costs in an effort to shore up dwindling cash flows.
In 2015, Marathon Oil became the first major shale producer to cut dividend and was subsequently followed by major producers like Anadarko Petroleum Corp. and ConocoPhillips .
However, as crude continues to improve post the OPEC agreement, Marathon Oil announced a 2017 capital program of $2,200 million – a jump of 100% year-over-year – with 90% of the outlay earmarked for high return U.S. resource plays.
Production Guidance
Marathon Oil expects first-quarter 2017 North America E&P output available for sale in the range of 195,000–205,000 BOE/d, International E&P (excluding Libya) output in the range of 120,000–125,000 BOE/d and Oil Sands Mining output of 45,000–50,000 BOE/d. The company said that quarterly volumes will be impacted by severe winter weather in North America and downtime events internationally.
For full year, Marathon Oil forecasts sale-ready output from the combined North America and International E&P segments – excluding Libya – to average 335,000 to 355,000 net BOE/d. On a divestiture-adjusted basis, production is expected to be 5% higher than 2016. Meanwhile, Marathon Oil is looking to churn out 40,000-50,000 BOE daily in the Oil Sands Mining unit – similar to last year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates. There has been one revision higher for the current quarter.
At this time, Marathon Oil's stock has a average Growth Score of 'C', however its Momentum is lagging a lot with an 'F'. 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 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is solely suitable for growth investors.
Outlook
While estimates have been broadly trending upward for the stock the magnitude of this revision 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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Why Is Marathon Oil (MRO) Down 3.8% Since the Last Earnings Report?
A month has gone by since the last earnings report for Marathon Oil Corporation (MRO - Free Report) . Shares have lost about 3.8% in that time period, 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.
Fourth-Quarter 2016 Results
Marathon Oil posted fourth quarter adjusted loss of $0.10 per share, narrower than the Zacks Consensus Estimate for a loss of $0.13 and the year-earlier adjusted loss of $0.48.
The better-than-expected results came thanks to the recovery in crude prices and cost control initiatives.
Quarterly revenues of $1,389 million beat the Zacks Consensus Estimate of $1,186 million but fell from the prior-year quarter level of $1,475 million amid lower volumes.
Segmental Performance
North America E&P: Marathon Oil’s North American upstream segment reported a loss of $91 million, narrower than the loss of $219 million a year ago. Higher commodity prices buoyed the result.
Marathon Oil reported production available for sale of 212,000 oil-equivalent barrels per day (BOE/d), down from 260,000 BOE/d in the fourth quarter of 2015. The deterioration was mainly due to reduced drilling and completion activities.
The company realized liquids (crude oil, condensate and natural gas liquids) price of $39.00 per barrel, higher than the year-earlier quarter level of $32.47 per barrel. Natural gas realizations increased 35% year over year to $2.87 per thousand cubic feet (Mcf).
International E&P: The segment’s income jumped almost fivefold year over year to $110 million. Substantially higher liquids realizations magnified the profits.
Marathon Oil reported production available for sale (excluding Libya) of 129,000 BOE/d, up from the 123,000 BOE/d in the fourth quarter of 2015. The increase in output in Equatorial Guinea was responsible for the growth.
The company realized liquids price of $37.85 per barrel, a 30% rise from the year-earlier quarter level of $29.18 per barrel. However, natural gas realizations fell 9% year over year to 53 cents per thousand cubic feet (Mcf).
Oil Sands Mining: Marathon’s Oil Sands Mining segment recorded a profit of $16 million compared with loss of $6 million in the year-ago quarter. The improvement stemmed from higher Synthetic Crude Oil realizations, which came in at $43.35 per barrel, up 25% from $34.65 per barrel a year ago.
Synthetic crude oil sales volumes in the oil sands business was 47,000 barrels per day, down slightly from the prior-year quarter level of 49,000 barrels per day.
Costs & Expenses
The company’s exploration expenses for the quarter came at $34 million, significantly lower than $532 million in the year-earlier quarter. Moreover, Marathon Oil’s total quarterly cost and expenses fell 44% to 1,336 million.
Capital Expenditure
During the year, Marathon Oil spent $1,069 million on capital programs, $200 million less than the revised guidance. As oil prices expanded their rout to most of 2016, major energy companies chopped costs in an effort to shore up dwindling cash flows.
In 2015, Marathon Oil became the first major shale producer to cut dividend and was subsequently followed by major producers like Anadarko Petroleum Corp. and ConocoPhillips .
However, as crude continues to improve post the OPEC agreement, Marathon Oil announced a 2017 capital program of $2,200 million – a jump of 100% year-over-year – with 90% of the outlay earmarked for high return U.S. resource plays.
Production Guidance
Marathon Oil expects first-quarter 2017 North America E&P output available for sale in the range of 195,000–205,000 BOE/d, International E&P (excluding Libya) output in the range of 120,000–125,000 BOE/d and Oil Sands Mining output of 45,000–50,000 BOE/d. The company said that quarterly volumes will be impacted by severe winter weather in North America and downtime events internationally.
For full year, Marathon Oil forecasts sale-ready output from the combined North America and International E&P segments – excluding Libya – to average 335,000 to 355,000 net BOE/d. On a divestiture-adjusted basis, production is expected to be 5% higher than 2016. Meanwhile, Marathon Oil is looking to churn out 40,000-50,000 BOE daily in the Oil Sands Mining unit – similar to last year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates. There has been one revision higher 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, Marathon Oil's stock has a average Growth Score of 'C', however its Momentum is lagging a lot with an 'F'. 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 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is solely suitable for growth investors.
Outlook
While estimates have been broadly trending upward for the stock the magnitude of this revision 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.