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Marathon Oil Q3 Loss Narrower than Expected, Revenues Lag

Houston, TX-based Marathon Oil Corp.MRO - a leading upstream energy firm - posted third-quarter adjusted loss from continuing operations of 20 cents per share, narrower than the Zacks Consensus Estimate of a loss of 42 cents. The narrower-than-expected loss was backed by higher production from Eagle Ford and Oklahoma resource plays along with cost control initiatives.

Last year, the company posted profit of 57 cents per share. The year-over-year downfall was owing to lower liquid price realizations.

Marathon Oil Corporation (MRO) - Earnings Surprise | FindTheCompany

Quarterly revenues of $1,323 million missed the Zacks Consensus Estimate of $1,399 million and declined from the prior-year quarter level of $2,971 million.

Segmental Performance

North America E&P: The North American upstream segment reported a loss of $61 million. The segment had reported a profit of $292 million a year ago. Lower commodity prices hurt the results.

Marathon Oil reported production available for sale of 263,000 oil-equivalent barrels per day (BOE/d), up from 250,000 BOE/d in the third quarter of 2014. The improvement was mainly driven by increased output from the Eagle Ford and Oklahoma resource plays.

The company realized liquids (crude oil, condensate and natural gas liquids) price of $35.75 per barrel, significantly lower than the year-earlier quarter level of $80.89 per barrel. Natural gas realizations also decreased 34.7% year over year to $2.75 per thousand cubic feet (Mcf).

International E&P: The segment's income plunged over 72% year over year to $29 million. Substantially low liquids realizations pulled the profits down.

Marathon Oil reported production available for sale (excluding Libya and Discontinued Operations) of 114,000 BOE/d, up from 112,000 BOE/d in the third quarter of 2014. The improvement in output in Equatorial Guinea favored growth.

The company realized liquids price of $35.88 per barrel, reflecting a 46.3% plunge from the year-earlier quarter level of $66.80 per barrel. However, natural gas realizations rose more than 5% year over year to 59 cents per Mcf.

Oil Sands Mining: The segment suffered a loss of $11 million in the reported quarter. In the year-ago quarter, the segment had reported profit of $93 million. The underperformance stemmed from lower Synthetic Crude Oil realizations, which came in at $39.49 per barrel, down 55.2% from $88.22 per barrel a year ago.

Costs & Expenses

The company's exploration expenses for the quarter came at $585 million, much higher than $96 million in the year-earlier quarter. However, Marathon Oil's total quarterly cost and expenses fell 2.8% year over year to $2,393 million.

Capital Expenditure

During the reported quarter, Marathon Oil spent $595 million on capital programs (99.8% was on E&P), less than half of $1,633 million spent a year ago.

Guidance

Marathon Oil expects fourth-quarter 2015 North America E&P output available for sale in the range of 244,000-257,000 BOE/d, International E&P (excluding Libya and discontinued operations) output in the range of 121,000-128,000 BOE/d and Oil Sands Mining output of 40,000-45,000 BOE/d.

For 2015, the company expects total year-over-year production growth of 7%, on the higher end of previous guidance range of 5-7%.

Marathon Oil - which spun off its refining/sales business into a separate, independent and publicly traded company Marathon Petroleum Corp. MPC in 2011 - lowered its capital spending for the year to $3,100 million from the prior projection of $3,300 million.

Zacks Rank

Marathon Oil currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector are Natural Gas Services Group Inc. NGS and Seadrill Partners LLC SDLP . Both these stocks sport a Zacks Rank #1 (Strong Buy).

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MARATHON OIL CP (MRO): Free Stock Analysis Report

MARATHON PETROL (MPC): 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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