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Marathon (MRO) Moves Up Since Q3 Earnings Beat: Here's Why
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The stock of independent energy explorer Marathon Oil Corporation (MRO - Free Report) has gained 6.2% since its third-quarter results were announced on Nov 2. The positive response could be attributed to the company’s comfortable earnings beat and its continued shareholder return initiatives.
What Did Marathon Oil’s Earnings Unveil?
Marathon Oil reported third-quarter 2022 adjusted net income per share of $1.24, beating the Zacks Consensus Estimate of $1.19 and soaring from the year-ago period’s profit of 39 cents.
Marathon Oil’s bottom line was favorably impacted by stronger liquid realizations and solid domestic production.
Marathon Oil reported revenues of $2.3 billion, which jumped from the year-ago sales of $1.5 billion and came 8.6% above the consensus mark.
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 $3.4 billion of share repurchases since October 2021 and hiked dividend six times in the past seven quarters.
Marathon Oil Corporation Price, Consensus and EPS Surprise
This Texas-based energy explorer’s total net production (from U.S. and International units) in the quarter under review came in at 352,000 barrels of oil equivalent per day (BOE/d) compared to 344,000 BOE/d in the year-ago period.
U.S. E&P: This U.S. upstream unit reported an income of $723 million, surging from $305 million in the year-ago period due to stronger production and commodity realizations.
Marathon Oil’s average realized liquids prices (crude oil and condensate) of $93.67 per barrel were significantly above the year-earlier level of $69.40. Natural gas liquids average price realizations increased 10.8% to $34 a barrel. Moreover, average realized natural gas prices jumped 88% year over year to $7.84 per thousand cubic feet.
Meanwhile, production costs were $6.40 per BOE, representing a 39.4% year-over-year rise.
Net production of 295,000 BOE/d was up 3.9% from third-quarter 2021. Total U.S. output comprised approximately 56% oil, or 166,000 barrels per day (bpd).
Higher year-over-year production from Bakken buoyed the company’s quarterly performance, which was partly offset by lower volumes from the Eagle Ford area. The Eagle Ford region recorded an average production of 90,000 BOE/d, down 5.3% from the level in third-quarter 2021 but output from Bakken was 118,000 BOE/d compared with 107,000 BOE/d in the year-ago quarter. Meanwhile, Oklahoma output came in at 54,000 BOE/d, essentially unchanged from the year-ago level of 55,000 BOE/d.
International E&P: The segment, which explores and produces oil and gas in Equatorial Guinea, reported earnings of $181 million compared with $93 million in the year-ago period due to higher liquids prices.
Marathon reported production available for sale of 57,000 BOE/d, down from 61,000 Boe/d in third-quarter 2021.
Marathon’s average realized liquids prices (crude oil and condensate) of $74.01 per barrel reflected a 31.3% improvement 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 $1.1 billion, $37 million higher than the prior-year period. Marathon Oil reported an adjusted operating cash flow of $1.4 billion for the third quarter, up significantly from $775 million a year ago.
As of Sep 30, it had cash and cash equivalents worth $1.1 billion and long-term debt of 3.6 billion. The debt-to-capitalization ratio of the company was 24.2.
Marathon Oil spent $413 million in capital and exploratory expenditures during the quarter and raked in $1 billion in adjusted free cash flow.
2022 Guidance
Marathon raised the capital budget guidance by $100 million to $1.4 billion for this year. Meanwhile, MRO continues to target shareholder returns over production growth. The Zacks Rank #3 (Hold) company is targeting production in the range of 340,000 BOE/d to 350,000 BOE/d – essentially unchanged from last year. Further, Marathon 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.
While we have discussed MRO’s third-quarter results in detail, let’s see how some other oil and gas exploration and production companies have fared this earnings season.
ConocoPhillips (COP - Free Report) reported third-quarter adjusted earnings per share of $3.60, beating the Zacks Consensus Estimate of $3.41. Further, COP’s bottom line significantly improved from the prior-year quarter’s $1.77 per share. One of the world’s largest independent oil and gas producers based in Houston, TX, ConocoPhillips’ strong quarterly results have been aided by increased oil-equivalent production volumes and realized commodity prices.
ConocoPhillips also announced a quarterly ordinary dividend of 51 cents per share, indicating a 10.9% increase from the last paid 46 cents. Additionally, COP declared a variable return of cash payment of 70 cents per share, while the company’s board of directors approved a $20-billion increase in the existing share repurchase program to $45 billion.
Another upstream giant, EOG Resources (EOG - Free Report) , reported third-quarter adjusted earnings per share of $3.71, missing the Zacks Consensus Estimate of $3.75. EOG’s weaker-than-expected earnings were attributed to higher lease and well expenses, as well as transportation costs. However, the bottom line jumped from the year-ago quarter’s earnings of $2.16 due to increased volumes and prices.
For the quarter under review, EOG Resources’ production increased around 9% year over year, while it generated $2.3 billion in free cash flow. Committed to shareholder returns, EOG announced a regular dividend of 82.5 cents per share, indicating a 10% increase from the last paid dividend.
Finally, we have Pioneer Natural Resources Company (PXD - Free Report) , which reported third-quarter earnings of $7.48 per share (excluding one-time items), beating the Zacks Consensus Estimate of $7.43. The bottom line surged from the year-ago quarter’s profit of $4.13 per share. PXD’s robust bottom line can be attributed to higher natural gas production volumes and commodity price realizations.
Pioneer Natural announced a dividend payment of $5.71 per share of common stock, which includes a variable dividend of $4.61 per share and a base dividend of $1.10. This suggests a 33.4% decline from the last paid $8.57 per share.
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Marathon (MRO) Moves Up Since Q3 Earnings Beat: Here's Why
The stock of independent energy explorer Marathon Oil Corporation (MRO - Free Report) has gained 6.2% since its third-quarter results were announced on Nov 2. The positive response could be attributed to the company’s comfortable earnings beat and its continued shareholder return initiatives.
What Did Marathon Oil’s Earnings Unveil?
Marathon Oil reported third-quarter 2022 adjusted net income per share of $1.24, beating the Zacks Consensus Estimate of $1.19 and soaring from the year-ago period’s profit of 39 cents.
Marathon Oil’s bottom line was favorably impacted by stronger liquid realizations and solid domestic production.
Marathon Oil reported revenues of $2.3 billion, which jumped from the year-ago sales of $1.5 billion and came 8.6% above the consensus mark.
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 $3.4 billion of share repurchases since October 2021 and hiked dividend six times in the past seven quarters.
Marathon Oil Corporation Price, Consensus and EPS Surprise
Marathon Oil Corporation price-consensus-eps-surprise-chart | Marathon Oil Corporation Quote
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 352,000 barrels of oil equivalent per day (BOE/d) compared to 344,000 BOE/d in the year-ago period.
U.S. E&P: This U.S. upstream unit reported an income of $723 million, surging from $305 million in the year-ago period due to stronger production and commodity realizations.
Marathon Oil’s average realized liquids prices (crude oil and condensate) of $93.67 per barrel were significantly above the year-earlier level of $69.40. Natural gas liquids average price realizations increased 10.8% to $34 a barrel. Moreover, average realized natural gas prices jumped 88% year over year to $7.84 per thousand cubic feet.
Meanwhile, production costs were $6.40 per BOE, representing a 39.4% year-over-year rise.
Net production of 295,000 BOE/d was up 3.9% from third-quarter 2021. Total U.S. output comprised approximately 56% oil, or 166,000 barrels per day (bpd).
Higher year-over-year production from Bakken buoyed the company’s quarterly performance, which was partly offset by lower volumes from the Eagle Ford area. The Eagle Ford region recorded an average production of 90,000 BOE/d, down 5.3% from the level in third-quarter 2021 but output from Bakken was 118,000 BOE/d compared with 107,000 BOE/d in the year-ago quarter. Meanwhile, Oklahoma output came in at 54,000 BOE/d, essentially unchanged from the year-ago level of 55,000 BOE/d.
International E&P: The segment, which explores and produces oil and gas in Equatorial Guinea, reported earnings of $181 million compared with $93 million in the year-ago period due to higher liquids prices.
Marathon reported production available for sale of 57,000 BOE/d, down from 61,000 Boe/d in third-quarter 2021.
Marathon’s average realized liquids prices (crude oil and condensate) of $74.01 per barrel reflected a 31.3% improvement 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 $1.1 billion, $37 million higher than the prior-year period. Marathon Oil reported an adjusted operating cash flow of $1.4 billion for the third quarter, up significantly from $775 million a year ago.
As of Sep 30, it had cash and cash equivalents worth $1.1 billion and long-term debt of 3.6 billion. The debt-to-capitalization ratio of the company was 24.2.
Marathon Oil spent $413 million in capital and exploratory expenditures during the quarter and raked in $1 billion in adjusted free cash flow.
2022 Guidance
Marathon raised the capital budget guidance by $100 million to $1.4 billion for this year. Meanwhile, MRO continues to target shareholder returns over production growth. The Zacks Rank #3 (Hold) company is targeting production in the range of 340,000 BOE/d to 350,000 BOE/d – essentially unchanged from last year. Further, Marathon 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.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Some Key E&P Earnings
While we have discussed MRO’s third-quarter results in detail, let’s see how some other oil and gas exploration and production companies have fared this earnings season.
ConocoPhillips (COP - Free Report) reported third-quarter adjusted earnings per share of $3.60, beating the Zacks Consensus Estimate of $3.41. Further, COP’s bottom line significantly improved from the prior-year quarter’s $1.77 per share. One of the world’s largest independent oil and gas producers based in Houston, TX, ConocoPhillips’ strong quarterly results have been aided by increased oil-equivalent production volumes and realized commodity prices.
ConocoPhillips also announced a quarterly ordinary dividend of 51 cents per share, indicating a 10.9% increase from the last paid 46 cents. Additionally, COP declared a variable return of cash payment of 70 cents per share, while the company’s board of directors approved a $20-billion increase in the existing share repurchase program to $45 billion.
Another upstream giant, EOG Resources (EOG - Free Report) , reported third-quarter adjusted earnings per share of $3.71, missing the Zacks Consensus Estimate of $3.75. EOG’s weaker-than-expected earnings were attributed to higher lease and well expenses, as well as transportation costs. However, the bottom line jumped from the year-ago quarter’s earnings of $2.16 due to increased volumes and prices.
For the quarter under review, EOG Resources’ production increased around 9% year over year, while it generated $2.3 billion in free cash flow. Committed to shareholder returns, EOG announced a regular dividend of 82.5 cents per share, indicating a 10% increase from the last paid dividend.
Finally, we have Pioneer Natural Resources Company (PXD - Free Report) , which reported third-quarter earnings of $7.48 per share (excluding one-time items), beating the Zacks Consensus Estimate of $7.43. The bottom line surged from the year-ago quarter’s profit of $4.13 per share. PXD’s robust bottom line can be attributed to higher natural gas production volumes and commodity price realizations.
Pioneer Natural announced a dividend payment of $5.71 per share of common stock, which includes a variable dividend of $4.61 per share and a base dividend of $1.10. This suggests a 33.4% decline from the last paid $8.57 per share.