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Shares of Marathon Oil Corp. (MRO - Free Report) hit a 52-week high of $38.54 on Jun 11, 2014. In fact, the Houston, TX-based energy exploration and production firm has seen its stock price climb some 10.2% since the beginning of the year. This price appreciation can be attributed to its attractive reserve base and solid project pipeline.  

Why the Bullishness?

Marathon Oil’s strong inventory of development projects (in liquid-rich resource plays and other focus areas such as Indonesia, the Kurdistan Region of Iraq and Poland) provides for visible production growth over the coming years. We believe that management’s guidance for 4% production growth for 2014 (excluding Alaska, Angola, and Libya) is on the conservative side.

Marathon Oil has not been shy of divesting assets − particularly those that do not fit into its long-term growth plan – as we see in the company’s latest deal with Det norske oljeselskap ASA to sell its Norway operations for net proceeds of roughly $2.1 billion. Since 2011, Marathon Oil has sold approximately $6.2 billion worth of non-core oil and gas properties around the world, thereby freeing up capital to concentrate on its long-term high-grade prospects.

Finally, Marathon Oil – which spun off its refining/sales business into a separate, independent and publicly traded company Marathon Petroleum Corp. (MPC - Free Report) in 2011 – remains in excellent financial health with net debt-to-capital ratio of 24.6% its helps it to capitalize on investment opportunities with the option to make strategic acquisitions. Marathon Oil also pays a growing dividend that currently yields almost 2.0%.

Zacks Rank & Stock Picks

With Marathon Oil shares trading at a 52-week high, any upside from here may be limited, as suggested by the company's Zacks Rank #3 (Hold).

Meanwhile, one can consider better-ranked players in the energy sector like Ultra Petroleum Corp. (UPL - Free Report) and Encana Corp. (ECA - Free Report) . Both stocks sport a Zacks Rank #1 (Strong Buy).

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