Marathon Oil Beats on Q1 Earnings & Revs - Analyst Blog
May 07 2014 - 10:00AM
Zacks
Oil and natural gas exploration and
production (E&P) firm, Marathon Oil
Corporation (MRO) reported better-than-expected
first-quarter 2014 earnings amid solid production growth from the
U.S. resource plays and an 84% decline in exploration costs.
Following the earnings release, Marathon Oil’s shares gained about
1.5% in the after-market trading session on May 6.
The Houston, TX-based company reported first-quarter adjusted
earnings of 88 cents per share, a substantial improvement from 51
cents in first-quarter 2013. The reported figure also easily
surpassed the Zacks Consensus Estimate of 72 cents.
Revenues came in at $3,529.0 million, exceeding the Zacks Consensus
Estimate of $3,403.0 million. However, the top line declined from
the prior-year quarter level by 12.2%. A weak performance by the
company’s International E&P segment, with lower output and
realizations, led to the year-over-year fall.
Marathon Oil Corporation -
Quarterly Earnings Per Share | FindTheBest
Segmental Performance
North America E&P: Income from
Marathon Oil’s North American upstream segment totaled $242.0
million in the reported quarter, compared with a loss of 59.0
million in previous-year period. Production growth and a
significant rise in natural gas realizations led to the segment’s
strong performance.
Marathon Oil reported production (available for sale) of 213,000
oil-equivalent barrels per day (BOE/d), up from 198,000 BOE/d in
the first quarter of 2013. The increase was primarily driven by
higher output from the U.S. resource plays, partially offset by
weather-related disruptions.
The company realized crude oil and condensate price of $92.48 per
barrel, below the year-earlier quarter level of $94.68 per barrel,
while natural gas realizations increased by 36.8% year over year to
$5.28 per thousand cubic feet (Mcf).
International E&P: The segment’s
income was down 27.1% year over year to $331.0 million from $454.0
million. Lower volumes and a decrease in price realization affected
the segment’s results.
Marathon Oil reported production (excluding Libya and Angola) of
190,000 oil-equivalent barrels per day (BOE/d), compared with
222,000 BOE/d in the first quarter of 2013. Natural decline from
the North Sea assets, unplanned downtime and unfavorable weather
conditions impacted the results.
Marathon’s natural gas realizations
decreased nearly 23.0% year over year to $1.98 per thousand cubic
feet (Mcf).
Oil Sands Mining: Marathon’s Oil Sands
Mining segment recorded an income of $64.0 million against $38.0
million in the comparable year-ago period. The rise came on the
back of higher realizations, partially offset by lower volumes.
Synthetic crude oil sales volumes in the oil sands business fell
about 16.0% year over year to 37,000 barrels per day due to planned
maintenance activity and lower mine reliability.
Price realization from Synthetic Crude Oil came in at $88.50 per
barrel, up 10.7% from $79.98 per barrel in the year-ago period.
Capital Expenditure
During the reported quarter, Marathon Oil spent $1,153.0 million on
capital programs (90.0% on E&P).
Guidance
Marathon Oil expects second-quarter North America E&P output in
the range of 220,000–230,000 BOE/d, International E&P
(excluding Libya and Angola) output in the range of 182,000–192,000
BOE/d and Oil Sands Mining output in the range of 37,000–42,000
BOE/d.
Zacks Rank & Other Stocks to Consider
Marathon Oil currently holds a
Zacks Rank #2 (Buy), implying that it is expected to outperform the
broader U.S. equity market over the next one to three months.
Apart from Marathon Oil, investors
interested in the energy sector could consider stocks like
Clayton Williams Energy, Inc. (CWEI),
Pioneer Energy Services Corp. (PES) and
Unit Corporation (UNT). All of these have a Zacks
Rank #1 (Strong Buy).
WILLIAMS(C)ENGY (CWEI): Free Stock Analysis Report
MARATHON OIL CP (MRO): Free Stock Analysis Report
PIONEER EGY SVC (PES): Free Stock Analysis Report
UNIT CORP (UNT): Free Stock Analysis Report
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