MRO to Increase Output in U.S. Plays - Analyst Blog

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On Dec 11, 2013, oil and natural gas exploration and production (E&P) firm Marathon Oil Corp. ( MRO ) reported that it intends to ramp up its rig operations in U.S resource plays, namely, Eagle Ford, Bakken and Oklahoma Woodford in 2014. This is expected to result in a 30% hike in oil and gas production from the plays. Marathon Oil also projects its total output to increase 4% in the coming year.

Moreover, with a target to divest non-core assets, Marathon Oil will likely vend its North Sea properties in 2014. To date, the company has divested assets worth roughly $3.5 billion since 2011.

Marathon Oil also offered a glimpse into its 2014 capital spending plans. The Houston, Texas-based upstream operator has set the total capital, investment and exploration budget for 2014 at $5.9 billion.

The company is expected to allocate $3.6 billion or 60% of the total 2014 budget toward liquids-rich plays in North America. $1.4 billion will likely be directed for exploration and production activities in conventional assets. $529.0 million and $294.0 million are expected to be spent for exploration and oil sands mining operations, respectively. And the remaining $105.0 million will be utilized for corporate activities.

Of the amount due for North American liquids-rich plays in 2014, roughly $2.3 billion will be invested for drilling 250-260 net wells in the Eagle Ford play. Over 1.0 billion will be expended to drill Bakken shale based 80-90 net wells. While the remaining, $236.0 million will likely be used for drilling 17-23 net wells in the Woodford asset. Marathon Oil expects those North American resource plays to have a high growth potential.

Marathon Oil also reveals that its board of directors has approved the expansion of the residual stock buyback program to roughly $2.5 billion.

The news was out in the press release of Marathon Oil before the market opened on Wednesday. The stock opened at $36.47 per share that day, reflecting a nominal increase from the closing price of $36.10 on Dec 10, 2013.

Marathon Oil presently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at better-ranked players in the energy sector like Helmerich & Payne Inc. ( HP ), Harvest Natural Resources Inc. ( HNR ) and Matador Resources Company ( MTDR ). All the stocks sport a Zacks Rank #1 (Strong Buy).

HARVEST NATURAL (HNR): Free Stock Analysis Report

HELMERICH&PAYNE (HP): Free Stock Analysis Report

MARATHON OIL CP (MRO): Free Stock Analysis Report

MATADOR RESOURC (MTDR): 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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