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Will U.S. E&P Unit Boost Marathon Oil's (MRO) Q1 Earnings?
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Marathon Oil Corporation (MRO - Free Report) is set to release first-quarter 2018 financial results after the closing bell on May 2. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 15 cents on revenues of $1,342 million.
Last reported quarter, the company had delivered an impressive 250.00% positive earnings surprise on the back of higher commodity price realizations and robust production growth. The company boasts an encouraging history of bottom-line expectation beats. It surpassed estimates in three of the last four quarters with an average positive surprise of 58.48%.
Let’s see, how things are shaping up for this announcement.
Factors at Play
Marathon Oil’s strong inventories of development projects place it well for growth. The company has been improving the quality of assets which bodes well for production. The company has successfully established itself into the Delaware Basin and STACK/SCOOP resource plays while exiting the oil sands and conventional assets with limited upside. In fact, the company also divested its Libyan holdings to TOTAL S.A. last month amid stuttering operations in the region due to political instability and local conflicts.
Driven by the key low cost-high margin U.S. resource shales like Permian, Eagle Ford and Bakken, Marathon Oil has projected an 18% increase in total production for 2018.
In fact, the consensus estimate for total sales volume in the U.S. Exploration & Production (E&P) segment for the first quarter is pegged at 270,000 barrels of oil equivalent per day (BOE/d), above the year-ago quarter’s figure of 208,000 BOE/d.
Along with expanded production volumes, the North American market is likely to benefit from higher commodity price realizations.
The first quarter of this year saw the U.S. oil benchmark to attain its highest settlement since December 2014, despite a record high domestic production. Crude was supported by various catalysts including strong demand and a continued production curb from OPEC and its allies.
Analysts polled by Zacks envision realized prices in the United States to increase year over year, which might boost Marathon Oil’s top line. The Zacks Consensus Estimate for average oil price is expected to jump 19.6% from the prior-year quarter to $58 a barrel. The consensus mark is also higher than the realized price of $55 per barrel in fourth-quarter 2017.
What the Zacks Model Predicts
Our proven model conclusively shows that Marathon Oil is likely to beat on earnings in the to-be-reported quarter because it has the right combination of the following two key ingredients:
Zacks ESP: Marathon Oil has an Earnings ESP of +3.45%. A positive Zacks ESP indicates a likely earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Marathon Oil carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP and further, combined with a positive ESP, makes us confident of an earnings beat.
Notably, stocks with a favorable Zacks Ranks #1 (Strong Buy), 2 (Buy) or 3 have significantly higher chances of beating estimates.
Conversely, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.
Other Energy Stocks With Favorable Combination
Marathon Oil is not the only energy firm poised for an earnings beat this season. There are also some other companies worth considering from the energy space, which per our model, comprise the perfect combination of elements to beat on earnings this quarter:
Comstock Resources, Inc. (CRK - Free Report) has an Earnings ESP of +51.83% and a Zacks Rank #2. The independent oil and gas explorer is anticipated to release earnings on May 14.
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Will U.S. E&P Unit Boost Marathon Oil's (MRO) Q1 Earnings?
Marathon Oil Corporation (MRO - Free Report) is set to release first-quarter 2018 financial results after the closing bell on May 2. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 15 cents on revenues of $1,342 million.
Last reported quarter, the company had delivered an impressive 250.00% positive earnings surprise on the back of higher commodity price realizations and robust production growth. The company boasts an encouraging history of bottom-line expectation beats. It surpassed estimates in three of the last four quarters with an average positive surprise of 58.48%.
Marathon Oil Corporation Price and EPS Surprise
Marathon Oil Corporation Price and EPS Surprise | Marathon Oil Corporation Quote
Let’s see, how things are shaping up for this announcement.
Factors at Play
Marathon Oil’s strong inventories of development projects place it well for growth. The company has been improving the quality of assets which bodes well for production. The company has successfully established itself into the Delaware Basin and STACK/SCOOP resource plays while exiting the oil sands and conventional assets with limited upside. In fact, the company also divested its Libyan holdings to TOTAL S.A. last month amid stuttering operations in the region due to political instability and local conflicts.
Driven by the key low cost-high margin U.S. resource shales like Permian, Eagle Ford and Bakken, Marathon Oil has projected an 18% increase in total production for 2018.
In fact, the consensus estimate for total sales volume in the U.S. Exploration & Production (E&P) segment for the first quarter is pegged at 270,000 barrels of oil equivalent per day (BOE/d), above the year-ago quarter’s figure of 208,000 BOE/d.
Along with expanded production volumes, the North American market is likely to benefit from higher commodity price realizations.
The first quarter of this year saw the U.S. oil benchmark to attain its highest settlement since December 2014, despite a record high domestic production. Crude was supported by various catalysts including strong demand and a continued production curb from OPEC and its allies.
Analysts polled by Zacks envision realized prices in the United States to increase year over year, which might boost Marathon Oil’s top line. The Zacks Consensus Estimate for average oil price is expected to jump 19.6% from the prior-year quarter to $58 a barrel. The consensus mark is also higher than the realized price of $55 per barrel in fourth-quarter 2017.
What the Zacks Model Predicts
Our proven model conclusively shows that Marathon Oil is likely to beat on earnings in the to-be-reported quarter because it has the right combination of the following two key ingredients:
Zacks ESP: Marathon Oil has an Earnings ESP of +3.45%. A positive Zacks ESP indicates a likely earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Marathon Oil carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP and further, combined with a positive ESP, makes us confident of an earnings beat.
Notably, stocks with a favorable Zacks Ranks #1 (Strong Buy), 2 (Buy) or 3 have significantly higher chances of beating estimates.
Conversely, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.
Other Energy Stocks With Favorable Combination
Marathon Oil is not the only energy firm poised for an earnings beat this season. There are also some other companies worth considering from the energy space, which per our model, comprise the perfect combination of elements to beat on earnings this quarter:
EOG Resources, Inc (EOG - Free Report) has an Earnings ESP of +4.07% and a Zacks Rank of 1. The upstream player is anticipated to release earnings on May 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Comstock Resources, Inc. (CRK - Free Report) has an Earnings ESP of +51.83% and a Zacks Rank #2. The independent oil and gas explorer is anticipated to release earnings on May 14.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>