Marathon Oil Corp.
) hit a 52-week high of $38.54 on Jun 11, 2014. In fact, the
Houston, TX-based energy exploration and production firm has seen
its stock price climb some 10.2% since the beginning of the year.
This price appreciation can be attributed to its attractive reserve
base and solid project pipeline.
Why the Bullishness?
Marathon Oil's strong inventory of development projects (in
liquid-rich resource plays and other focus areas such as Indonesia,
the Kurdistan Region of Iraq and Poland) provides for visible
production growth over the coming years. We believe that
management's guidance for 4% production growth for 2014 (excluding
Alaska, Angola, and Libya) is on the conservative side.
Marathon Oil has not been shy of divesting assets − particularly
those that do not fit into its long-term growth plan - as we see in
the company's latest deal with Det norske oljeselskap ASA to sell
its Norway operations for net proceeds of roughly $2.1 billion.
Since 2011, Marathon Oil has sold approximately $6.2 billion worth
of non-core oil and gas properties around the world, thereby
freeing up capital to concentrate on its long-term high-grade
Finally, Marathon Oil - which spun off its refining/sales business
into a separate, independent and publicly traded company
Marathon Petroleum Corp.
) in 2011 - remains in excellent financial health with net
debt-to-capital ratio of 24.6% its helps it to capitalize on
investment opportunities with the option to make strategic
acquisitions. Marathon Oil also pays a growing dividend that
currently yields almost 2.0%.
Zacks Rank & Stock Picks
With Marathon Oil shares trading at a 52-week high, any upside from
here may be limited, as suggested by the company's Zacks Rank #3
Meanwhile, one can consider better-ranked players in the energy
Ultra Petroleum Corp.
). Both stocks sport a Zacks Rank #1 (Strong Buy).
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