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Marathon Oil (MRO) Q1 Loss Narrower than Expected, View Up
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Houston, TX-based leading upstream energy firm Marathon Oil Corporation (MRO - Free Report) posted first-quarter adjusted loss of 7 cents per share, narrower than the Zacks Consensus Estimate of a loss of 8 cents. This was also significantly narrower than the year-earlier adjusted loss figure of 43 cents. 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.
Marathon Oil Corporation Price, Consensus and EPS Surprise
Marathon Oil, under the Zacks US Oil and gas Exploration & Production industry, carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.
Better-ranked players in the broader energy space include Bellatrix Exploration Ltd , McDermott International, Inc. and Penn Virginia Corporation . All the three companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bellatrix reported positive earnings surprise of 58.54% in the trailing four quarters.
McDermott posted positive average earnings surprise of 387.5% in the preceding four quarters.
Penn Virginia posted positive average earnings surprise of 36.67% in the preceding four quarters.
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Marathon Oil (MRO) Q1 Loss Narrower than Expected, View Up
Houston, TX-based leading upstream energy firm Marathon Oil Corporation (MRO - Free Report) posted first-quarter adjusted loss of 7 cents per share, narrower than the Zacks Consensus Estimate of a loss of 8 cents. This was also significantly narrower than the year-earlier adjusted loss figure of 43 cents. 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.
Marathon Oil Corporation Price, Consensus and EPS Surprise
Marathon Oil Corporation Price, Consensus and EPS Surprise | Marathon Oil Corporation Quote
Zacks Rank & Key Picks
Marathon Oil, under the Zacks US Oil and gas Exploration & Production industry, carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.
Better-ranked players in the broader energy space include Bellatrix Exploration Ltd , McDermott International, Inc. and Penn Virginia Corporation . All the three companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bellatrix reported positive earnings surprise of 58.54% in the trailing four quarters.
McDermott posted positive average earnings surprise of 387.5% in the preceding four quarters.
Penn Virginia posted positive average earnings surprise of 36.67% in the preceding four quarters.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>