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Marathon Oil (MRO) Down 17.8% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Marathon Oil (MRO). Shares have lost about 17.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Marathon Oil due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Marathon Oil Reports Better-Than-Expected Q4 Earnings

Marathon Oil Corporation reported fourth-quarter 2022 adjusted net income per share of 88 cents, beating the Zacks Consensus Estimate of 80 cents and improving from the year-ago profit of 77 cents.

Marathon Oil’s bottom line was favorably impacted by stronger oil realizations in the United States and lower overall costs.

The company reported revenues of $1.7 billion, which came 1.1% above the consensus mark but fell 3.7% from the year-ago sales of $1.8 billion due to and lower domestic production.

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 333,000 barrels of oil equivalent per day (BOE/d) compared to 353,000 BOE/d in the year-ago period.

U.S. E&P: This U.S. upstream unit reported an income of $510 million, down from $553 million in the year-ago period due to weaker production and higher costs, partly offset by higher oil realizations.

Marathon Oil’s average realized liquids prices (crude oil and condensate) of $84.29 per barrel were higher than the year-earlier level of $77.03. However, natural gas liquids average price realizations decreased 25.6% to $26.02 a barrel. Moreover, average realized natural gas prices fell 5.9% year over year to $4.93 per thousand cubic feet.

Meanwhile, production costs were $6.29 per BOE, representing a 28.4% year-over-year rise. Net production of 278,000 BOE/d was down 8.6% from fourth-quarter 2021. Total U.S. output comprised approximately 56% oil, or 156,000 barrels per day (bpd).

Lower year-over-year production from Bakken adversely affected the company’s quarterly performance, which was compounded by lower volumes from the Eagle Ford area. The Eagle Ford region recorded an average production of 91,000 BOE/d, down 2.2% from the level in fourth-quarter 2022, while output from Bakken was 94,000 BOE/d compared with 124,000 BOE/d in the year-ago quarter. Meanwhile, Oklahoma output came in at 50,000 BOE/d, down from the year-ago level of 56,000 BOE/d.

International E&P: The segment, which explores and produces oil and gas in Equatorial Guinea, reported earnings of $129 million compared with $106 million in the year-ago period due to higher output. Marathon reported production available for sale of 55,000 BOE/d, up from 49,000 Boe/d in fourth-quarter 2021.

Marathon’s average realized liquids prices (crude oil and condensate) of $59.27 per barrel reflected a 16.9% deterioration 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 $985 million, $76 million lower than the prior-year period. Marathon Oil reported an adjusted operating cash flow of $1.1 billion for the fourth quarter, essentially unchanged from a year ago.

As of Dec 31, 2022, it had cash and cash equivalents worth $334 million and long-term debt of 5.5 billion. The debt-to-capitalization ratio of the company was 34.2. Marathon Oil spent $344 million in capital and exploratory expenditures during the quarter and raked in $763 million in adjusted free cash flow.

2023 Guidance

Marathon has budgeted capital spending between $1.9 billion and 42 billion this year. Meanwhile, MRO continues to prioritize shareholder returns over production growth. The company is targeting production in the range of 385,000 BOE/d to 405,000 BOE/d – up more than 15% (at the midpoint) from last year. Further, Marathon expects oil volumes in the band of 185,000-195,000 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?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -12.28% due to these changes.

VGM Scores

At this time, Marathon Oil has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Marathon Oil has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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