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Marathon Oil Q1 Loss Narrower than Expected, Revenues Miss - Analyst Blog

Houston, TX-based Marathon Oil Corp.MRO - a leading upstream energy firm -posted adjusted loss from continuing operations of 37 cents per share, narrower than the Zacks Consensus Estimate for a loss of 46 cents. The better-than-expected results came thanks to higher production from the U.S. resource plays and cost control initiatives

However, the bottom line deteriorated considerably from the first-quarter 2014 adjusted earnings of 63 cents amid a freefall in oil prices .

Marathon Oil Corporation - Quarterly EPS | FindTheCompany

Quarterly revenues of $1,532 million missed the Zacks Consensus Estimate of $1,707 million and also declined from the prior-year quarter level of $2,849 million.

Segmental Performance

North America E&P: Marathon Oil's North American upstream segment reported a loss of $161 million, compared with a profit of $242 million a year ago. Lower liquid prices hampered the result.

Marathon Oil reported production available for sale of 283,000 oil-equivalent barrels per day (BOE/d), up from 213,000 BOE/d in the first quarter of 2014. The improvement was mainly driven by increased output from the U.S. resource plays.

The company realized liquids (crude oil, condensate and natural gas liquids) price of $36.92 per barrel, significantly lower than the year-earlier quarter level of $84.79 per barrel. Natural gas realizations also decreased 43% year over year to $3.01 per thousand cubic feet (Mcf).

International E&P: The segment's income plunged over 90% year over year to $23 million. Substantially low realizations, reduced sales, falling income from equity interests in Equatorial Guinea and higher exploration costs - all pulled down the profits.

Marathon Oil reported production available for sale (excluding Libya and Discontinued Operations) of 119,000 BOE/d, essentially unchanged from the 121,000 BOE/d in the first quarter of 2014. The decline in output in Equatorial Guinea on the back of field decline and planned turnaround activities restricted growth.

The company realized liquids price of $37.31 per barrel, a 50.6% drop from the year-earlier quarter level of $75.55 per barrel. Moreover, natural gas realizations fell more than 15% year over year to 78 cents per thousand cubic feet (Mcf).

Oil Sands Mining: Marathon's Oil Sands Mining segment recorded a loss of $19 million compared with profit of $64 million in the year-ago quarter. The underperformance stemmed from lower Synthetic Crude Oil realizations, which came in at $40.37 per barrel, down 54.4% from $88.50 per barrel a year ago.

Synthetic crude oil sales volumes in the oil sands business was 50,000 barrels per day, higher than 37,000 barrels per day in the prior-year quarter, mainly attributable to better reliability.

Costs & Expenses

The company's exploration expenses for the quarter came at $90 million, higher than $73 million in the year-earlier quarter. However, Marathon Oil's total quarterly cost and expenses fell 13.5% to 1,905 million.

Capital Expenditure

During the reported quarter, Marathon Oil spent $1,102 million on capital programs (98% was on E&P).

Guidance

Marathon Oil expects second-quarter 2015 North America E&P output in the range of 270,000-280,000 BOE/d, International E&P (excluding Libya and discontinued operations) output in the range of 100,000-110,000 BOE/d and Oil Sands Mining output of 28,000-33,000 BOE/d.

For 2015, the company still expects North America and International E&P output in the 370,000-390,000 BOE/d band.

Marathon Oil - which spun off its refining/sales business into a separate, independent and publicly traded company Marathon Petroleum Corp. MPC in 2011 - further trimmed its capital spending to $3,300 million in 2015.

Zacks Rank & Stocks to Consider

Marathon Oil currently carries a Zacks Rank #3 (Hold).

Better-ranked players from the sector include Rice Energy Inc. RICE and Sanchez Energy Corp. SN . Both these stocks sport a Zacks Rank #2 (Buy).

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MARATHON OIL CP (MRO): Free Stock Analysis Report

SANCHEZ ENERGY (SN): Free Stock Analysis Report

MARATHON PETROL (MPC): Free Stock Analysis Report

RICE ENERGY INC (RICE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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