Marathon Oil Corporation is set to release second-quarter results on Aug 2. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 43 cents per share on revenues of $1.5 billion.

Let’s delve into the factors that might have influenced the independent oil and gas producer’s performance in the June quarter. But it’s worth taking a look at MRO’s previous-quarter results first.

Highlights of Q1 Earnings & Surprise History

In the last reported quarter, the Houston, TX-based upstream player beat the consensus mark on higher domestic oil and gas production. MRO had reported adjusted earnings per share of 67 cents, beating the Zacks Consensus Estimate of 57 cents. Revenues of $1.7 billion generated by the firm also came in 4.4% above the Zacks Consensus Estimate.

Marathon Oil beat the Zacks Consensus Estimate for earnings in each of the last four quarters, resulting in an earnings surprise of 9.8%, on average. This is depicted in the graph below:
 

Factors to Consider

Marathon Oil is expected to have benefited from higher output during the quarter. Considering MRO’s impressive production profile from its high-margin U.S. resource plays (Eagle Ford, Bakken, Oklahoma and Permian), our expectation for the company’s second-quarter volume is pegged at some 346,000 barrels of oil equivalent per day (BOE/d), 22.1% up from the year-ago quarter’s level of 283,000 BOE/d.

However, lower oil and natural gas realizations are likely to have hurt Marathon Oil’s revenues and cash flows. Going by our model, MRO’s second-quarter key U.S. E&P segment realized average liquids prices (crude oil and condensate) is pegged at $72.72 per barrel — significantly down from the year-earlier level of $110.10. Additionally, our projection for the average realized natural gas prices reflects a 73.9% year-over-year drop.

On a further bearish note, the increase in Marathon Oil’s costs might have dented its to-be-reported bottom line. In particular, our estimate for production cost is pegged at $197.1 million, indicating a 20.2% increase from $164 million reported in the year-ago quarter. Our model also predicts the company’s total expenses to rise 4.4% year over year to $1.1 billion. The upward cost trajectory could be attributed to the ongoing inflationary environment and tight labor market.

What Does Our Model Say?

The proven Zacks model does not conclusively show that MRO is likely to beat estimates in the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Marathon Oil has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 43 cents per share each.

Zacks Rank: MRO currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult this earnings season.

Stocks to Consider

While an earnings beat looks uncertain for Marathon Oil, here are some firms from the energy space that you may want to consider on the basis of our model:

MPLX LP (MPLX Quick QuoteMPLX - Free Report) has an Earnings ESP of +1.01% and a Zacks Rank #2. The firm is scheduled to release earnings on Aug 1.

You can see the complete list of today’s Zacks #1 Rank stocks here.

MPLX has a trailing four-quarter earnings surprise of 5.9%, on average. Over the past 60 days, the partnership saw the Zacks Consensus Estimate for 2023 move up 2%. Valued at around $35.5 billion, the partnership has gained 11.3% in a year.

Murphy USA (MUSA Quick QuoteMUSA - Free Report) has an Earnings ESP of +0.20% and a Zacks Rank #2. The firm is scheduled to release earnings on Aug 2.

Murphy USA has a trailing four-quarter earnings surprise of 15.6%, on average. Over the past 60 days, MUSA saw the Zacks Consensus Estimate for 2023 move up 7.5%. Valued at around $6.9 billion, the company has gained 15.5% in a year.

Pembina Pipeline Corporation (PBA Quick QuotePBA - Free Report) has an Earnings ESP of +1.48% and a Zacks Rank #2. The firm is scheduled to release earnings on Aug 3.

Pembina Pipeline beat the Zacks Consensus Estimate for earnings in two of the last four quarters and missed in the other two. It has a trailing four-quarter earnings surprise of 30.7%, on average. Valued at around $17.4 billion, PBA has lost 15.3% in a year.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.