Seeking Alpha

Marathon Oil (MRO): Q4 EPS of $0.55 misses by $0.12. Revenue of $4.23B beats by $0.14B. (PR)

Marathon Oil (MRO): Q4 EPS of $0.55 misses by $0.12. Revenue of $4.23B beats by $0.14B. (PR)
From other sites
Comments (9)
  • lenfla
    , contributor
    Comments (7) | Send Message
     
    i got out of mro at 34.15. i didnt want to hold into earnings.it has been a great run from 23.i will continue to monitor it for ist q 2013.
    6 Feb 2013, 08:10 AM Reply Like
  • BTM
    , contributor
    Comments (452) | Send Message
     
    MRO misses EPS once again. Its becoming a broken record.
    6 Feb 2013, 09:46 AM Reply Like
  • jjmc2001
    , contributor
    Comments (1334) | Send Message
     
    Listen to the conference call and look at the asset growth. That is the key to MRO. An analyst;s quarterly prediction is not near as important as the added oil in the ground and the ultimate production cost.
    6 Feb 2013, 11:42 AM Reply Like
  • BTM
    , contributor
    Comments (452) | Send Message
     
    We've been through this before. That's part of being a public company. If meeting analysts estimates is a problem take it private like Michael Dell.

     

    Since the spin off of MPC, MRO has missed quarterly estimates the last three times. Meanwhile MPC has more than doubled its stock price. Its hard to escape the conclusion that MPC got the better executives in the spin off and MRO shareholders were left with the idiots. Spinning off MPC from MRO has been great for MPC but not so much for MRO. Why?
    6 Feb 2013, 02:21 PM Reply Like
  • jjmc2001
    , contributor
    Comments (1334) | Send Message
     
    @BTM,
    I am not going to argue the quality of analysts opinions. This is a tricky sector to forecast as the analyst has to be on target with the company cost structure and also the commodity price forecast.
    Again I suggest you listen to the MRO(and MPC) conference calls to gain your own insight. Personally I do not often read analyst opinions in this sector as I was one many years ago in the O&G sector so I prefer to do my own due diligence. MRO has made some strategic shifts in production drilling (more Eagle Ford/less Bakken) and continues to forecast a 6-8% growth rate. Personally I think we are seeing some frothiness in WTI right now so I would not be surprised for a 5-10% pullback in WTI soon which might affect the MRO stock price adversely.
    I would not chase MRO at this level ($34 per share) as I tend to go in and out of MRO since the spinoff based on WTI prices. I am currently long since June of 2012 at a price less than $24. I have sold covered calls (2/16/13 $34) against most of my position so I may be out of MRO next week with a 42% gain (without dividends).

     

    MPC is in a different business than MRO since the spinoff and the margins in the refinery side have been very good recently. I sold my shares of MPC on the way up (too early) and currently do not follow the refiners. These two companies operated independently prior to the spinoff so I think the division of executives was not a significant event. Clarence Cazalot (MRO-CEO) is a seasoned exec and doing a good job although his compensation is very high. They lost a key executive last year who many thought was an heir apparent but they do have a strong bench. Cazalot is 62 and will be facing a mandatory retirement at 65 so that may prove to be a concern in the future. Calling any of these executives idiots is an unfortunate choice of words.

     

    When looking at E&P companies I look for proven reserve growth in known fields (Eagle Ford, Bakken, Norway) with some upside from more speculative plays (Angola, Kurdistan, Libya). I would be happy to hear some of your thoughts on better (than MRO) medium to large E & P plays. Cheers.
    6 Feb 2013, 03:48 PM Reply Like
  • BTM
    , contributor
    Comments (452) | Send Message
     
    JJMC 2001

     

    Since the spinoff MRO has done very little. It was initially around $30/31, and sold off sharply down to the mid to low $20s. Since then it has recovered some but those who sold MPC to buy MRO when they split, have not faired all that well (yes, that would be me).

     

    I have a small position in MRO that I will be exiting. While I don't have an energy stock to replace it with yet, I am researching this. Maybe it'll be a medium sized E&P, maybe it will be something different.

     

    I am of the belief that MRO are missing a opportunity. Now is the time to make hay in the E&P space. I'm not sure its going to get much better than it is currently. Its been a long run up, (starting at the bottom in 1998), for the energy E&P players. I suspect this run is getting long in the tooth. Continually missing EPS numbers is going to get old with investors. You may believe otherwise and can rationalize it away, but I don't think that investors are going to continue to tolerate such performance.
    6 Feb 2013, 05:20 PM Reply Like
  • jjmc2001
    , contributor
    Comments (1334) | Send Message
     
    @btm
    I understand your point and I am not trying to rationalize anything about MRO as it is just another name to me. I do not buy and hold E&P stocks unless I really think Oil prices have not peaked. I will argue that MRO has done a lot since June of 2011 but you would have had to buy and sell it twice. As I mentioned in my earlier post I may be partly out of MRO next week. Currently that is my only E&P name although I have owned TPLM, SSN, KOG, CHK, COP in the last 12 months.
    I also sold MPC (around $54) as I thought the refiners had reached a top (wrong guess).
    I realize that is not easy to time these names but trailing stops and options can be your friend. There are some really good articles about E&P names on Seeking Alpha. Read every article by Michael Filloon. The one thing that I really like about MRO is the Eagle Ford acreage they have. I would encourage you to listen to today's conference call and look at the charts on their website as there is some good info on prodcuction costs that may be applicable to other names. Good luck on your quest.
    6 Feb 2013, 06:39 PM Reply Like
  • BTM
    , contributor
    Comments (452) | Send Message
     
    I do read Filoon articles and pay attention to his comments. Like I said in another post, maybe its just time to leave the space. Demand destruction is coming, its just matter of how much. Higher MPG requirements on US autos are going to begin eating into oil demand and if the US ever converts the commercial fleet (18 wheelers and the like) to nat gas then demand destruction could really be substantial.

     

    And if there was some improvement of the political situation in the Middle East... even just a little like a sightly more moderate regime in Iran... how much of that premium would come out of the price of oil?

     

    Obviously I'm somewhat unhappy with the performance of MRO. IMO now is the time to be beating estimates. It may get much more difficult in a few years.
    6 Feb 2013, 10:01 PM Reply Like
  • jjmc2001
    , contributor
    Comments (1334) | Send Message
     
    Valid points which tie in with my concern about oil markets staying at current levels. Then again Chinese growth and an Israeli air strike could wreak havoc with oil markets. That is precisely why I take profits when offered in the E&P names.
    6 Feb 2013, 10:30 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs