Marathon (MRO) Inks a Major LNG Sales Agreement With Glencore
Marathon Oil Corporation (MRO) inked a significant five-year firm liquified natural gas (LNG) sales agreement with Glencore Energy UK Ltd, a subsidiary of Glencore plc. The deal, effective from Jan 1, 2024, covers a portion of the equity natural gas produced in the Alba Field in Equatorial Guinea (E.G.).
Under the agreement, the pricing structure is closely tied to the Dutch Title Transfer Facility index, with a fixed transportation fee. Per the company, this move provides it with a substantial foothold in the European LNG market.
Additionally, Houston-based MRO is set to optimize its integrated gas operations in E.G. for 2024. This includes redirecting a portion of the Alba Unit's natural gas, where Marathon holds a 64% working interest, from the local methanol facility (where it holds a 45% working interest) to the LNG facility, where it has a 56% interest.
Marathon's chairman, president and CEO Lee Tillman expressed his optimism regarding the deal's financial implications. He stated that the company expects to realize an approximate year-on-year EBITDA increase of more than $300 million next year across E.G. integrated gas business at the recent forward curve pricing.
Tillman highlighted the advantageous timing of this agreement, citing E.G. LNG's reliable operational history and the facility's proximity to Europe as major contributing factors fueled high demand and fostered a highly competitive process.
However, specific financial terms of the deal have not been disclosed. The agreement is subject to regulatory approvals and customary closing conditions.
Zacks Rank & Other Key Picks
Currently, Marathon carries a Zack Rank #2 (Buy).
Some other top-ranked stocks in the energy sector are Matador Resources Company MTDR and Pioneer Natural Resources Company PXD, each currently sporting a Zacks Rank #1 (Strong Buy), and Diamondback Energy Inc. FANG, carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Matador Resources is among the leading oil and gas explorers in the shale and unconventional resources in the United States. The company’s prime intention is to create more value for shareholders and generate lucrative returns from the capital invested in unconventional plays. MTDR has witnessed an upward earnings estimate revision for 2024 over the past seven days.
Pioneer Natural Resources is a leading upstream energy firm with primary operations in the Permian basin, which is among the lucrative oil shale plays in the United States with fewer risks. Its total holding of more than 1 million net acres in the Permian basin will support long-term oil production growth. PXD has witnessed an upward earnings estimate revision for 2023 and 2024 in the past 30 days.
Diamondback Energy is an independent oil and gas exploration and production company with its primary focus on the Permian Basin, where it has around 491,000 net acres. With an attractive production profile, favorable industry trends and FANG’s low breakeven economics, the margin of safety on investment is likely very high. The company has witnessed an upward earnings estimate revision for 2023 in the past seven days.
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