Marathon Oil: What To Expect In 2016
Richard Zeits • 20 Comments
Richard Zeits • 20 Comments
Marathon Oil: Moving Towards A U.S.-Centric Resource Play Portfolio
Richard Zeits • 18 Comments
Richard Zeits • 18 Comments
The SCOOP On Marathon's Massive Oklahoma Resource Upgrade
Michael Fitzsimmons • 18 Comments
Michael Fitzsimmons • 18 Comments
Thu, Mar. 24, 6:45 PM
- At least 15 companies in the hard-hit E&P energy industry have announced new share offerings this year, and nearly all have been rewarded by stock investors who normally would cringe as their holdings are diluted.
- Amid widespread worries about energy companies collapsing under debt loads, analysts and investors say shareholders more easily stomach the dilution if it means the companies are adding cash to strengthen their balance sheets.
- Some companies did not urgently need cash but stood to "immunize” their balance sheets in case the oil markets remain ugly into 2017, and others have asset sales pending but the newly raised money means they do not have to worry about timing of proceeds, says Wunderlich's Irene Haas.
- But "the low-hanging fruit [has] been picked," says Christian Ledoux, senior portfolio manager at South Texas Money Management, "not because [other companies] don’t want to, but because they won’t be able to attract investors" until oil prices are much higher.
- E&P companies that have outperformed the S&P 500 Energy Index by more than 10 percentage points since their respective offerings YTD: EGN, OAS, DVN, MRO, NFX, CPE, FANG, WFT, QEP, HES, SYRG.
- Outperforming the index by 1-10 percentage points: PXD, GPOR, PDCE, MTDR
- Underperforming the index: COG
Wed, Mar. 2, 5:59 PM
- A new report from Credit Suisse effectively suggests that Marathon Oil (NYSE:MRO) share price could double from this morning's $7.90 level, even after trimming its target price to $16 from $18 following MRO's upsized 145M-share public offering.
- History will decide whether it would have been more or less dilutive for MRO to wait for oil prices to rebound, but "the rest of the Marathon game plan should remain unchanged," the firm writes, citing MRO's deep inventory - some of which could prove quite valuable over time and be worth selling once oil recovers, given the improvement in operational performance - which is not reflected in the share price.
- Worth noting: The last time MRO shares were under $10 before the current cycle was more than 10 years ago, on a split-adjusted basis.
Wed, Mar. 2, 9:58 AM
- Weatherford International (WFT +0.8%) moves ahead to modest gains in early trading after upsizing its public offering to 100M common shares and pricing it at $5.65/share; WFT's original offering had totaled 80M shares.
- WFT says it intends to use the proceeds for general corporate purposes, including repayment of existing indebtedness.
- WFT's move will boost the number of shares outstanding at least 13% but shores up the balance sheet and removes "the maturity overhang," Cowen analysts say, adding that the deal “should ensure favorable credit facility negotiations."
- Just yesterday, Marathon Oil (MRO +2.5%) upsized its share offering, as oil and gas companies rush in to raise capital while equity markets show some relative stability.
Tue, Mar. 1, 9:51 AM
- Marathon Oil (MRO -6.3%) opens sharply lower after upsizing its public offering to 145M common shares and pricing it at $7.65/share; MRO's original offering had totaled 135M shares.
- MRO says it intends to use the proceeds to strengthen its balance sheet and fund part of its capital program.
- While the offering represents a 20% dilution to MRO shareholders, it is a far better choice than adding to its $7.3B long-term debt load, according to TheStreet.com's Jim Collins.
- Energy companies have issued nearly $11B in equity YTD, with MRO just the latest to issue equity within the past two weeks following Devon Energy (DVN -3.6%), Enbridge (ENB -1%) and Newfield Exploration (NFX -0.9%).
Tue, Mar. 1, 9:19 AM
Mon, Feb. 29, 4:53 PM
- Marathon Oil (NYSE:MRO) -4.3% AH after announcing a public offering of 135M common shares, with an underwriters option to purchase up to an additional 20.25M shares.
- MRO says it plans to use the proceeds to strengthen its balance sheet and for general corporate purposes, including funding part of its capital program.
Fri, Feb. 26, 1:10 PM
- Chevron's (CVX -0.1%) Aa1 credit rating is placed on review for a downgrade at Moody's, which predicts negative free cash flow this year and next, and possibly even into 2018.
- Moody’s expects CVX's negative free cash flow exceeding $15B in 2016, despite the company's planned 25% capex cut, after recording negative free cash flow of ~$16B in 2015.
- Newly downgraded at Moody's: Occidental Petroleum (OXY +1.2%) to A3, EOG Resources (EOG -2.3%) to Baa1, ConocoPhillips (COP +4.5%) to Baa2, Apache (APA +5.1%) to Baa3, Marathon Oil (MRO +5.5%) to Ba1, Devon Energy (DVN +4.6%) to Ba2 and EnLink Midstream Partners (ENLK +4.9%) to Ba2.
- Earlier: Exxon's AAA rating affirmed by Moody's but outlook turns negative (Feb. 25)
Fri, Feb. 26, 9:17 AM
- Gainers: RRM +49%. SUNE +31%. AMTG +31%. SGMS +27%. STMP +26%. GOL +19%. SPLK +17%. JCP +16%. HLF +13%. BIDU +11%. SYN +10%. GLBL +8%. WLL +9%. FCX +7%. CHK +7%. PANW +8%. NRF +6%. TCK +6%. MRO +6%. KHC +6%. GRPN 5%. HLT 5%.
- Losers: RJET -83%. PPHM -60%. CARA -36%. WTW -28%. SWN -14%. GG -11%. FOLD -9%. RBS -8%. MNKD -6%. ARI -5%.
Tue, Feb. 23, 6:41 PM
- Exxon Mobil (NYSE:XOM) and ConocoPhillips (NYSE:COP) make the grade as the Top Picks among E&P stocks at Wells Fargo, while Occidental Petroleum (NYSE:OXY) remains Buy rated but is pulled as a Top Pick.
- Wells raises its valuation range for XOM to $89-$98, citing the company's large size and capitalization as assets that will help at a time of capital constraints in the sector.
- COP is “not out of the woods,” as Wells estimates it will outspend cash flows this year and likely will be hit by credit downgrades, but the firm sees a “clear path” to generate free cash flow in 2017.
- OXY is up more than 20% in the past month, so it is off the Top Pick list due to valuation.
- Wells also sees an equity capital raise as an increasingly likely outcome for Marathon Oil (NYSE:MRO) and possibly for Murphy Oil (NYSE:MUR) after last week’s credit rating downgrade by Moody’s.
Wed, Feb. 17, 6:29 PM
- Marathon Oil (NYSE:MRO) +3.5% AH after reporting a Q4 loss in-line with expectations and better than expected revenue of $1.48B.
- MRO says Q4 net production averaged 432K boe/day, roughly flat Q/Q and up 8% Y/Y, but the cost of production fell 28% Y/Y.
- MRO sees total FY 2016 production coming in 6%-8% lower than 2015, amid plans to cap spending on capital projects at $1.4B compared with $3B spent in 2015, which was ~$500M below the outlay the company originally planned.
- MRO says it expects to sell $750M-$1B in assets this year, compared with its previous projection of non-core asset sales of at least $500M.
Wed, Feb. 17, 5:47 PM
- North Dakota's crude oil production fell in December for the first time in three months, down 2.5% to 1,152,280 bbl/day, as oil producers begin to acknowledging the low-price reality rolling over the entire energy industry.
- Only 41 drilling rigs are operating in the state as of Wednesday, the lowest level since July 2009, and North Dakota producers have cut back requests to drill new wells, with only 78 permitted in January compared to 125 in November.
- Bakken shale exposure includes: CLR, HES, WLL, STO, OAS, MRO, EOG, XOM, NOG, CHK, DNR, SM, NFX, OXY, MUR, OXY, COP, SSN, CXO, EOX
Wed, Feb. 17, 4:36 PM
Tue, Feb. 16, 5:35 PM| Tue, Feb. 16, 5:35 PM
Thu, Feb. 11, 2:44 PM
- More dividend cuts and equity raises are coming for oil and gas stocks such as Apache (APA -4.3%), Devon Energy (DVN -5.1%), Encana (ECA -5.7%), Anadarko Petroleum (APC -6.2%) and Marathon Oil (MRO -5.1%), as management teams have become more willing to take stronger steps to strength balance sheets, Barclays believes.
- The firm views 4x debt to pre-interest cash flow as a warning sign that companies may have leverage concerns, at which roughly half of its energy coverage universe remains overlevered.
- Barclays thinks Canadian Natural Resource (CNQ -4.4%) likely will maintain its dividend, while Occidental Petroleum (OXY -0.8%) has the financial strength to maintain or even increase the dividend.
- The firm sees leveraged companies such as DVN, ECA and Range Resources (RRC -3%), and companies with large deficits including DVN and APC as most likely to consider raising equity; it also thinks MRO, WPX Energy (WPX -7.8%), Southwestern Energy (SWN -7.7%), Continental Resources (CLR +0.2%), Noble Energy (NBL -2%) and Newfield Exploration (NFX -1.2%) could issue equity; APA, CNQ, OXY, EOG Resources (EOG -0.9%) and Pioneer Natural Resources (PXD -0.3%) are considered unlikely to issue equity this year.
Tue, Feb. 9, 12:58 PM
- Crude oil at $30/bbl is blowing a hole in the insurance that U.S. shale drillers bought to protect themselves against a crash, Bloomberg reports.
- Companies including Callon Petroleum (CPE -5.6%), Noble Energy (NBL -3.5%), Pioneer Natural Resources (PXD -3.6%), Marathon Oil (MRO -8%), Rex Energy (REXX -1.8%) and Bonanza Creek Energy (BCEI -11.4%) used a three-way hedge strategy that does not guarantee a minimum price if oil falls below a certain level; while three-ways can be cheaper than other hedges, they leave drillers exposed to sharp declines and risk worsening a cash shortfall for companies trying to survive the worst oil crash in 30 years.
- For example, CPE CFO Joseph Gatto told investors in December that the company had hedged ~4K bbl/day in 2016, or 40% of its projected output, at $56/bbl; roughly half of those contracts are worth significantly less at $30/bbl because CPE employed three-ways.
Wed, Feb. 3, 5:17 AM
- Just ten days after Moody's put over half a trillion dollars in energy debt on review for downgrade, S&P decided it wanted to be the first one out of the gate.
- Companies that saw their ratings cut by one notch: Chevron (NYSE:CVX), Apache (NYSE:APA), Continental Resources (NYSE:CLR), Devon Energy (NYSE:DVN), EOG Resources (NYSE:EOG), Hess (NYSE:HES), Hunt Oil, Marathon Oil (NYSE:MRO), Murphy Oil (NYSE:MUR) and Southwestern Energy (NYSE:SWN).
- Oil futures settled below $30 a barrel again on Tuesday, but prices have taken a positive turn this morning after two days of steep declines.
- Previously: Moody's places 175 oil, gas and mining companies on review for downgrade (Jan. 22 2016)
Marathon Oil Corp. engages in the exploration, production, and market of liquid hydrocarbons and natural gas. It operates through the following segments: North America E&P, International E&P, and Oil Sands Mining. The North America E&P segment engages in the oil and gas exploration, development... More
Sector: Basic Materials
Industry: Oil & Gas Drilling & Exploration
Country: United States
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