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Why Is Marathon Oil (MRO) Up 12.7% Since Last Earnings Report?
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It has been about a month since the last earnings report for Marathon Oil (MRO - Free Report) . Shares have added about 12.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Marathon Oil due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Marathon Oil Corporation reported first-quarter 2022 adjusted net income per share of $1.02, beating the Zacks Consensus Estimate of 98 cents and improving from the year-ago period’s profit of 21 cents. Marathon Oil’s bottom line was favorably impacted by stronger liquid realizations and solid domestic production.
Marathon Oil reported revenues of $1.8 billion that jumped from the year-ago sales of $1.1 billion but came 3.1% below the consensus mark, primarily due to a fall in U.S. natural gas prices.
In good news for investors, the company is using the excess cash from a supportive environment to reward them with dividends and buybacks. As part of that, MRO has executed $1.6 billion of share repurchases since October and recently announced a dividend hike for the fifth time in as many quarters to 8 cents. Further, MRO announced the expansion of its buyback program to $2.5 billion.
Segmental Performance
This Texas-based energy explorer’s total net production (from U.S. and International units) in the quarter under review came in at 345,000 barrels of oil equivalent per day (BOE/d), the same as the year-ago period.
U.S. E&P: This U.S. upstream unit reported an income of $661 million, surging from $212 million in the year-ago period due to stronger liquids realizations and output.
Marathon Oil’s average realized liquids prices (crude oil and condensate) of $94.43 per barrel were significantly above the year-earlier level of $55.38. Natural gas liquids average price realizations increased 55.9% to $37.32 a barrel. However, average realized natural gas prices were down 24.1% year over year to $4.79 per thousand cubic feet.
Meanwhile, production costs were $5.59 per BOE, representing a 25.3% year-over-year rise.
Net production of 281,000 BOE/d increased from 276,000 BOE/d in first-quarter 2021. Total U.S. output comprised 56% oil or 158,000 barrels per day (bpd).
Higher year-over-year production, especially from Eagle Ford and Bakken buoyed the company’s quarterly performance. The Eagle Ford region recorded production of 80,000 BOE/d, up 3.9% from the level in first-quarter 2021, while output from Bakken was 118,000 BOE/d compared with 112,000 BOE/d in the year-ago quarter. On a somewhat disappointing note, Oklahoma output came in at 52,000 BOE/d, reflecting a 1,000 BOE/d fall from the year-ago level.
International E&P: The segment, which explores and produces oil and gas in Equatorial Guinea, reported earnings of $115 million compared with $50 million in the year-ago period due to improvement in liquids prices.
Marathon Oil reported production available for sale of 64,000 BOE/d, down from 69,000 Boe/d in first-quarter 2021.
Marathon Oil’s average realized liquids prices (crude oil and condensate) of $59.63 per barrel reflected a 35.1% jump from the year-earlier quarter. Natural gas and natural gas liquids’ average price realizations came in at 24 cents per thousand cubic feet and $1 a barrel, respectively – the same as the corresponding period of 2021.
Financial Position
Total costs in the quarter were $948 million, $6 million lower than the prior-year period. Marathon Oil reported an operating cash flow of $1.3 billion for the first quarter, up significantly from $637 million a year ago. As of Mar 31, it had cash and cash equivalents worth $681 million and long-term debt of 3.9 billion. The debt-to-capitalization ratio of the company was 25.6. Marathon Oil spent $348 million in capital and exploratory expenditures during the quarter and raked in $940 million of free cash flow.
2022 Guidance
Marathon Oil has set the capital budget at $1.3 billion for this year, up from $1.2 billion it projected previously to reflect inflation adjustments. Meanwhile, the company continues to target shareholder returns over production growth. The company is targeting production in the range of 340,000 BOE/d to 350,000 BOE/d – essentially unchanged from the last year. Further, Marathon Oil expects oil volumes in the band of 168,000-176,000 barrels per day. Assuming $60 WTI, Marathon Oil expects to return a minimum of 40% of its cash flow from operations.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Marathon Oil has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Marathon Oil has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Marathon Oil belongs to the Zacks Oil and Gas - Integrated - United States industry. Another stock from the same industry, Antero Midstream Corporation (AM - Free Report) , has gained 5.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.
Antero Midstream Corporation reported revenues of $218.49 million in the last reported quarter, representing a year-over-year change of -2.5%. EPS of $0.19 for the same period compares with $0.21 a year ago.
For the current quarter, Antero Midstream Corporation is expected to post earnings of $0.20 per share, indicating a change of -13% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.3% over the last 30 days.
Antero Midstream Corporation has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Why Is Marathon Oil (MRO) Up 12.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Marathon Oil (MRO - Free Report) . Shares have added about 12.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Marathon Oil due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Marathon Oil Reports Better-Than-Expected Q1 Earnings
Marathon Oil Corporation reported first-quarter 2022 adjusted net income per share of $1.02, beating the Zacks Consensus Estimate of 98 cents and improving from the year-ago period’s profit of 21 cents. Marathon Oil’s bottom line was favorably impacted by stronger liquid realizations and solid domestic production.
Marathon Oil reported revenues of $1.8 billion that jumped from the year-ago sales of $1.1 billion but came 3.1% below the consensus mark, primarily due to a fall in U.S. natural gas prices.
In good news for investors, the company is using the excess cash from a supportive environment to reward them with dividends and buybacks. As part of that, MRO has executed $1.6 billion of share repurchases since October and recently announced a dividend hike for the fifth time in as many quarters to 8 cents. Further, MRO announced the expansion of its buyback program to $2.5 billion.
Segmental Performance
This Texas-based energy explorer’s total net production (from U.S. and International units) in the quarter under review came in at 345,000 barrels of oil equivalent per day (BOE/d), the same as the year-ago period.
U.S. E&P: This U.S. upstream unit reported an income of $661 million, surging from $212 million in the year-ago period due to stronger liquids realizations and output.
Marathon Oil’s average realized liquids prices (crude oil and condensate) of $94.43 per barrel were significantly above the year-earlier level of $55.38. Natural gas liquids average price realizations increased 55.9% to $37.32 a barrel. However, average realized natural gas prices were down 24.1% year over year to $4.79 per thousand cubic feet.
Meanwhile, production costs were $5.59 per BOE, representing a 25.3% year-over-year rise.
Net production of 281,000 BOE/d increased from 276,000 BOE/d in first-quarter 2021. Total U.S. output comprised 56% oil or 158,000 barrels per day (bpd).
Higher year-over-year production, especially from Eagle Ford and Bakken buoyed the company’s quarterly performance. The Eagle Ford region recorded production of 80,000 BOE/d, up 3.9% from the level in first-quarter 2021, while output from Bakken was 118,000 BOE/d compared with 112,000 BOE/d in the year-ago quarter. On a somewhat disappointing note, Oklahoma output came in at 52,000 BOE/d, reflecting a 1,000 BOE/d fall from the year-ago level.
International E&P: The segment, which explores and produces oil and gas in Equatorial Guinea, reported earnings of $115 million compared with $50 million in the year-ago period due to improvement in liquids prices.
Marathon Oil reported production available for sale of 64,000 BOE/d, down from 69,000 Boe/d in first-quarter 2021.
Marathon Oil’s average realized liquids prices (crude oil and condensate) of $59.63 per barrel reflected a 35.1% jump from the year-earlier quarter. Natural gas and natural gas liquids’ average price realizations came in at 24 cents per thousand cubic feet and $1 a barrel, respectively – the same as the corresponding period of 2021.
Financial Position
Total costs in the quarter were $948 million, $6 million lower than the prior-year period. Marathon Oil reported an operating cash flow of $1.3 billion for the first quarter, up significantly from $637 million a year ago. As of Mar 31, it had cash and cash equivalents worth $681 million and long-term debt of 3.9 billion. The debt-to-capitalization ratio of the company was 25.6. Marathon Oil spent $348 million in capital and exploratory expenditures during the quarter and raked in $940 million of free cash flow.
2022 Guidance
Marathon Oil has set the capital budget at $1.3 billion for this year, up from $1.2 billion it projected previously to reflect inflation adjustments. Meanwhile, the company continues to target shareholder returns over production growth. The company is targeting production in the range of 340,000 BOE/d to 350,000 BOE/d – essentially unchanged from the last year. Further, Marathon Oil expects oil volumes in the band of 168,000-176,000 barrels per day. Assuming $60 WTI, Marathon Oil expects to return a minimum of 40% of its cash flow from operations.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Marathon Oil has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Marathon Oil has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Marathon Oil belongs to the Zacks Oil and Gas - Integrated - United States industry. Another stock from the same industry, Antero Midstream Corporation (AM - Free Report) , has gained 5.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.
Antero Midstream Corporation reported revenues of $218.49 million in the last reported quarter, representing a year-over-year change of -2.5%. EPS of $0.19 for the same period compares with $0.21 a year ago.
For the current quarter, Antero Midstream Corporation is expected to post earnings of $0.20 per share, indicating a change of -13% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.3% over the last 30 days.
Antero Midstream Corporation has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.