Marathon Oil Raises U.S. Production Guidance

Houston, Texas oil producer and shale exploration company Marathon Oil reported worse than expected second quarter earnings after the close Wednesday. However $MRO guided production higher to 400,000-415,000 BOE/d from prior expectation of 390,000-410,000 BOE/d.

Houston, Texas oil producer and shale exploration company Marathon Oil reported worse than expected second quarter earnings after the close Wednesday. However $MRO guided production higher to 400,000-415,000 BOE/d from prior expectation of 390,000-410,000 BOE/d.

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Marathon Oil Corp (NYSE: $MRO) Missed Earnings After Close Wednesday

$0.15 Missed $0.21 EPS and $1.417 billion Missed $1.495 billion forecast in revenue 

Earnings

Marathon Oil Corporation second-quarter adjusted income from continuing operations of 15 cents per share, from the year-ago quarter’s loss of 24 cents but missed consensus of 21 cents, due to rise in operating cost and expenses. Revenues of $1,417 million missed the consensus of $1,495 million due to lower production from International E&P.

Marathon Oil Corporation NYSE: $MRO

Market Reaction  > After hours 20.10 −0.21 (-1.03%)

Segments

United States

  • Upstream profit of $123 million against a loss of $107 million a year ago.
  • Higher oil prices and production improved the segment’s results.
  • Production available for sale of 298,000 barrels of oil equivalent (BOE/d), up from 222,000 BOE/d in the second quarter of 2017.
  • The improvement mainly due impressive contribution from U.S. resource plays in Eagle Ford, Bakken, Oklahoma and Northern Delaware.
  • Realized liquids (crude oil and condensate) price of $66.03 per barrel, 44.1% higher than the year-earlier quarter’s level of $45.81 per barrel.
  • Natural gas liquids (NGLs) price realizations also recorded a year-over-year increase of 25.44% to stand at $22.09 a barrel.
  • Natural gas realizations decreased 28.5% year over year to $2.18 per thousand cubic feet (Mcf).

International

  • Income increased from $59 million in the prior-year quarter to $142 million in the second quarter of 2018 on higher realized liquids and NGLs.
  • Production available for sale (excluding Libya) of 121,000 BOE/d, down from 127,000 BOE/d in the second quarter of 2017.
  • The decrease in output was primarily due to a fall in natural gas production from Equatorial Guinea and United Kingdom.
  • The company realized liquids (crude oil and condensate) price of $66.12 per barrel, reflecting a 40.6% rise from the year-earlier quarter’s $47.04 per barrel.
  • Natural gas liquids realizations rose to $2.91 a barrel compared with $1.77 per barrel in the second quarter of 2017.
  • Natural gas realizations were down to 52 cents per thousand cubic feet (Mcf) from 57 cents a year ago.

Costs & Expenses 

  • Exploration expenses rose to $65 million, higher than $30 million in the year-earlier quarter.
  • Production costs rose to $205 million from $178 million in the year-ago period.
  • Shipping, handling and other operating costs surged to $126 million from $111 million in second-quarter 2017.
  • Total quarterly cost and expenses of $1,212 million for the company compared with the prior-year quarter’s $1,084 million.

Capex & Balance sheet

  • Marathon Oil’s capital expenditure was $608 million.
  • As of Jun 30, 2018, Marathon Oil had cash and cash equivalents of $1.7 billion and a $3.4 billion worth undrawn revolving credit facility.
  • At the end of the quarter, the company had long-term debt of around $5.5 billion.
  • Debt-to-capitalization ratio of the company was 31.2%.

Outlook

  • Marathon Oil expects third-quarter 2018 United States E&P output available for sale in the range of 290,000-300,000 BOE/d.
  • International E&P output is expected to remain within 105,000-115,000 BOE/d, down from the second-quarter level owing to planned maintenance in the United Kingdom and Equatorial Guinea.
  • Marathon Oil increased its full-year guidance to 400,000-415,000 BOE/d from prior expectation of 390,000-410,000 BOE/d, with capital expenditure budget remaining intact at $2.3 billion.

Marathon Oil  Q1 Earnings Recap

Earnings

Q1 EPS of $0.18 beats by $0.04, revenue of $1.73B (+61.7% Y/Y) beats consensus by $390M. djusted net income was $154 million, or $0.18 per diluted share. Net operating cash flow was $649 million, or $707 million before changes in working capital.

Marathon Oil Corporation NYSE: $MRO

  • Market Reaction >After hours 18.49 +0.19 (1.04%)

Highlights

  • Received $1.2 billion in proceeds from the Libya sale and the final Canadian oil sands payment
  • Raised 2018 annual resource play oil and boe production guidance to 25 – 30%, up from 20 – 25% previously, while maintaining the $2.3 billion 2018 development capital budget 

Production

  • Total production averaged 398,000 net boed, excluding Libya;
  • U.S. production averaged 284,000 net boed and U.S. oil production averaged 164,000 bopd, both up 9% sequentially on a divestiture-adjusted basis
  • Eagle Ford maintained flat production of 104,000 net boed; 11 wells in Atascosa County had average 30-day IP rates of 1,615 boed (76% oil)
  • Bakken production increased to 74,000 net boed, up 7% sequentially; Arkin well in Hector set new basin Three Forks record with 3,040 bopd 30-day IP; June and Chauncey wells in West Myrmidon set new basin Middle Bakken records with 3,470 bopd average 30-day IP rates
  • Oklahoma production up 17% sequentially to 75,000 net boed; oil production up 25% sequentially; STACK leasehold drilling largely completed in first quarter Northern Delaware production increased to 16,000 net boed; seven wells across Eddy and Lea Counties had average 30-day IP rates of 1,460 boed (69% oil)
  • Captured more than 250,000 net acres in multiple new plays in the last year, including a largely contiguous position in the emerging Louisiana Austin Chalk play at a cost of less than $900 per acre

Outlook 

Raised 2018 annual resource play oil and boe production guidance to 25 – 30%, up from 20 – 25% previously, while maintaining the $2.3 billion 2018 development capital budget

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Source: Marathon

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