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Marathon (MRO) Q4 Earnings Beat on Oil Price, Production

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Marathon Oil Corporation (MRO - Free Report) – a leading upstream energy firm based in Houston, TX – 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.

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 $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 -- which spun off its refining/sales business into a separate, independent and publicly traded company Marathon Petroleum Corporation (MPC - Free Report) in 2011 -- 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.

Zacks Rank & Stock Picks

Marathon Oil holds a Zacks Rank #3 (Hold).

Meanwhile, one can look at a better-ranked energy players like ConocoPhillips (COP - Free Report) and Occidental Petroleum Corporation (OXY - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ConocoPhillips is a major global exploration and production (E&P) company with operations and activities in 21 countries. Over 30 days, the Houston, TX-based company has seen the Zacks Consensus Estimate for 2018 and 2019 increase 42.5% and 21.2%, to $2.85 and $2.92 per share, respectively.

Also headquartered in Houston, TX, Occidental is an integrated oil and gas company, with significant exploration and production exposure. It has a 100% track of outperforming estimates over the last four quarters at an average rate of 24.6%.

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