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Oil and natural gas exploration and production firm Marathon Oil Corporation (MRO - Analyst Report) is set to release its fourth-quarter 2012 results before the opening bell tomorrow, Wednesday, Feb 6.

In the preceding quarter, Marathon Oil delivered a negative 1.54% earnings surprise, as crude oil and natural gas prices dropped. Let’s see how things are shaping up prior to this announcement.

Factors to Consider This Quarter

The transfer of the downstream assets (post-split) has left Marathon with a less diversified business. As a result, the business risk profile of the reorganized Marathon is weaker than that of the pre-spin-off company.

Moreover, a lackluster production growth outlook and the recent high priced acquisition of acreage in the Eagle Ford shale formation in South Texas may also limit Marathon Oil’s ability to generate positive earnings surprise in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Marathon Oil is likely to beat the Zacks Consensus Estimate in the fourth quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1 (Strong Buy) or at least Zacks Rank #2 (Buy) or Zacks Rank #3 (Hold) for this to happen. Unfortunately this is not the case here as elaborated below.

Negative Zacks ESP: This is because the Most Accurate estimate stands at 68 cents, while the Zacks Consensus is higher at 69 cents. This results in a difference of -1.45%.

Zacks Rank #3 (Hold): Marathon Oil’s Zacks Rank #3 (Hold), however, increases the predictive power of ESP. That said, we also need to have a positive ESP to be confident of an earnings surprise call.

Other Stocks to Consider

Here are some other firms you may want to consider on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter:

Northern Tier Energy L.P. (NTI - Snapshot Report), Earnings ESP of +7.97% and Zacks Rank #1 (Strong Buy).

Hercules Offshore Inc. (HERO - Snapshot Report), Earnings ESP of +14.29% and Zacks Rank #2 (Buy).

Sunoco Logistics L.P. (SXL - Analyst Report), Earnings ESP of +7.69% and Zacks Rank #2 (Buy).

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