- Low-cost, high-yield acreage should help the company weather production and budget constraints.
- Eagle Ford’s proximity to nearby refineries and its crude price discount will result in high margins for the company.
- Austin Chalk formations and Bakken acreage should act as a safeguard against ongoing low crude prices.
Marathon Oil Follows Others And Cuts, Has Austin Chalk For Future Growth
- Marathon Oil Corporation is following other E&P players by reducing spending.
- By cutting exploration spending and focusing on shale, Marathon still sees its production base growing by high-single digits next year.
- When Marathon does need to discover additional resources to support its growth ambitions, it has already delineated 18,000 net acres in the Austin Chalk.
Cost Advantage Will Allow Marathon To Do Well In The Poor Market Conditions
- The company has assets in some of the highest yielding areas in the U.S.
- Focus on low-cost methods will allow the company to remain profitable even at low crude prices.
- Marathon's drilling technology gives it an advantage compared to its peers and the company is able to grow production at a lower cost.
- Marathon recently announced that it added another 520 million BOE to its 2P reserve base.
- The Oklahoma Resource Basins added 310 million BOE to Marathon's growth runway, and exploration efforts could uncover another 490 million BOE.
- Extended laterals and successful wells targeting the Springer shales are an instrumental part of Marathon's plan to reward shareholders.
- Continental Resources has discovered 127 million BOE in the Springer shales so far on 46,000 net acres, with 72,000 net acres yet to be explored.
- The industry's success in the Springer formation points towards plenty of upside for Marathon.
The SCOOP On Marathon's Massive Oklahoma Resource Upgrade
- Marathon Oil recently increased its 2P reserves in Oklahoma by a whopping 310 million boe.
- 2P reserves in Oklahoma are now 1 billion+ boe.
- Oklahoma is strong catalyst going forward - joining the Eagle Ford & Bakken.
- Marathon appears to be on track to become very "EOG like" over the next year or two.
- As a result, MRO could gain 50% over the next 18-24 months. It is a STRONG BUY.
Is Marathon Well Positioned To Expand Its Bottom Line?
- The industry prospects for Marathon Oil are highly favorable as the demand for liquid hydrocarbons is surging and the prices of hydrocarbons and natural gas are expected to rise.
- Marathon’s total production level is projected to grow at a CAGR of 8% to 10% up until 2017 enabling the company to meet the increasing global demand for liquid hydrocarbons.
- These factors would allow the top and bottom lines to display noticeable growth.
- The reduction in development costs would add further growth and enhance the company’s net earnings and operating cash flows.
Downspacing Allows Marathon Oil To Pump Out More Crude, A Win For Investors
- Marathon is boosting its reserve base by targeting different horizons in the Eagle Ford and Bakken/Three-Forks plays.
- Downspacing efforts in the Eagle Ford are pushing wells closer together, boosting Marathon's drilling inventory.
- There is room for upside in its 40-acre Eagle Ford downspacing program through higher recovery rates.
- Downspacing is working well in the Bakken/Three-Forks, and Marathon is pushing its efforts even further.
- Kodiak Oil & Gas has gotten a pretty good idea of how much value downspacing creates.
Ask The Austin Chalk Or Three-Forks, Marathon Oil's Shale Growth Story Is Only Just BeginningCallum Turcan • Aug. 6, 2014
- Marathon is focused on three high growth shale plays, the Eagle Ford, the Bakken/Three-Forks, and the Oklahoma Resources Basin.
- Three wells came online this quarter targeting the Austin Chalk, with very strong production results.
- The Austin Chalk could be the next big thing in the Eagle Ford as Marathon delineates part of its acreage.
- Targeting the second bench of the Three-Forks and then the third could push Marathon's reserve base in the Bakken up to 1 billion BOE and beyond.
- Better drilling techniques will make the Bakken/Three-Forks produce even higher returns.
Marathon Oil: Staying Bullish As The Company Hikes Its Dividend
- On Wednesday, July 30, MRO announced it would be increasing its quarterly dividend by 11.1%.
- MRO's upcoming earnings could exceed Street estimates if the company can demonstrate increases in both its cash flow from operations and its net income.
- Trend behavior could improve during the second half of the year, especially if MRO can meet and/or exceed analysts' earnings expectations for the upcoming quarter.
- With the sale of its Norwegian assets, Marathon Oil will be spending a majority of its time and resources on its most lucrative assets.
- The company expects to invest approximately $3.6 billion of its $5.9 billion capital budget on its U.S. resources.
- The higher capital expenditure will result in an increase in Marathon's production by 20% in the coming years.
- The Bakken region is expected to deliver 15-20 years of inventory at its current rig levels. Marathon increased its rig activity in the Bakken region by 20 percent.
- The company is making an effort to restructure its portfolio by selling high political-risk assets abroad and concentrating more on its North American properties.
Marathon Oil: Focusing More On Unconventional Plays
- To streamline its portfolio of assets, Marathon Oil is divesting its overseas activities and is focusing more on domestic activities.
- The Oklahoma resource play is one of the promising unconventional plays, which will provide an upside to the company's total production.
- The longer lateral wells in the company's SCOOP formation and lower initial decline rate will help the company to sustain its long-term production performance.
- The addition of working interest in the Rift basin could be beneficial for strengthening its financial performance.
Marathon Oil - Attractive On Dips Despite 'Rushed' Norwegian Asset Sale
- Marathon completes another divestment, selling its Norwegian assets.
- The deal tag is a bit disappointing; investors act reserved.
- However, I remain a buyer on dips, as management is committed to creating shareholder value.
- Marathon Oil has produced strong performance for investors since it conducted the spin-off of MPC in 2011.
- However, past performance is not a predictor of the future, so understanding the valuation currently embedded in the stock is of paramount importance for investors.
- Marathon Oil appears to be attractively priced based on relative and intrinsic valuation analyses.
Marathon Oil - Strong Domestic Unconventional Growth And Increased Shareholder Focus Drives ValueThe Value Investor • May. 12, 2014
- Marathon Oil is showing impressive growth in its US unconventional plays.
- North Sea divestment proceeds to be used to repurchase share.
- Growth story with focus on shareholder value should bode well for long term shareholders.
- Marathon announced it would begin accepting bids for divestment of its North Sea business during 2Q of 2014.The proceeds will most likely be utilized in share repurchases.
- The company increased its rig activity in all of the major resource plays (Eagle Ford, Bakken and Woodford) by allocating prioritized capital budget.
- The increased activity will result in resource play production growth of 30% during 2014 while for the long term production is expected to grow at a CAGR of 25%.
- Argus reiterated a price target of $42 for Marathon reflecting an upside potential of 22 percent from the current price target of 34.47.
Eagle Ford Shale: Economic Side Effects Of Downspacing
Nov. 17, 2014, 3:59 PM
- In the wake of Halliburton's (NYSE:HAL) $34.6B offer for Baker Hughes (NYSE:BHI), it appears the next hot sector for M&A action is energy: More consolidation is likely, given the weakness for stocks in the oilfield services subsector, low interest rates, and as a drop in demand for oil increases cutthroat pricing competition.
- Speculation is running rampant as investors try to figure out who is next in an industry that is sure to undergo some more consolidation; some names identified as possible candidates include Kodiak Oil and Gas (NYSE:KOG), Marathon Oil (NYSE:MRO), Northern Oil and Gas (NYSEMKT:NOG), Anadarko Petroleum (NYSE:APC), Pioneer Natural Resources (NYSE:PXD).
- GE could go after National Oilwell Varco (NYSE:NOV) to show it is serious about the energy industry after last year’s purchase of pumpmaker Lufkin, Royal Bank of Canada says, and Oppenheimer says even BP could be an acquisition candidate.
- But Morgan Stanley does not see offshore drillers getting in on the action, as larger players like Diamond Offshore (NYSE:DO), Transocean (NYSE:RIG) and Seadrill (NYSE:SDRL) are still addressing dividend concerns while smaller companies such as Atwood Oceanics (NYSE:ATW) and Pacific Drilling (NYSE:PACD) still trade close to replacement value.
Nov. 13, 2014, 7:23 PM
- North Dakota regulators today proposed standards for requiring energy companies to treat the crude they pump from the Bakken Shale to make it less volatile before shipment by pipeline or train.
- "Our crude oil leaving North Dakota will behave like the gasoline you put in your car," says the head of the state's Department of Mineral Resources, which came up with the recommendations.
- The new rules would require every barrel of oil produced in the state to undergo some kind of treatment, with the goal that all oil-producing Bakken Shale wells ship crude with a vapor pressure below 13.7 psi, similar to 13.5 psi for most automobile gasoline.
- Top Bakken producers: CLR, EOG, KOG, WLL, HES, XOM, OAS, NOG, EOX, MRO.
Nov. 13, 2014, 11:59 AM
- Regulators set to decide on rules for shipping crude oil via railroad are relying on testing methods that may understate the explosive risk of North Dakota crude, according to a WSJ report citing industry and Canadian officials.
- The testing controversy centers on how to determine vapor pressure, a measure of how quickly a liquid fuel evaporates and emits gases; the industry has long relied on a decades-old methodology that does not require sealed or pressurized containers to collect or test crude samples.
- The North Dakota Industrial Commission is set to rule on what steps, if any, producers must take to strip volatile gases out of crude oil before loading it into railroad tank cars.
- Top Bakken producers include CLR, EOG, KOG, WLL, HES, XOM, OAS, NOG, EOX, MRO.
Nov. 3, 2014, 6:36 PM
- Marathon Oil (NYSE:MRO) +1.7% AH despite reporting Q3 earnings that came in short of analyst expectations and revenues that fell 5% Y/Y.
- Total company sales volume from continuing operations excluding Libya averaged 411K boe/day, up more than 7% from a year ago.
- MRO says income from its Q3 E&P business rose 20% Y/Y to $292M on higher sales; exploration expenses fell 34%.
- Says its high-quality resource plays in the Bakken, Eagle Ford and Oklahoma resource basins averaged net production of 192K boe/day, up 43%.
- Despite lower oil prices, Mro says it plans to grow production in Q4; last month, MRO finalized the $2.1B sale of its Norway business and plans to reinvest the cash into expanding in U.S. shale plays.
Nov. 3, 2014, 5:05 PM
Nov. 2, 2014, 5:35 PM
- ACXM, AEIS, AGU, AIG, AMTG, ANV, APL, BDE, BKH, CHGG, CKP, CRK, CUTR, CVD, CXW, CYH, DXPE, EGAN, ELNK, ENH, EOX, EPAM, EQC, FN, FTR, GALE, GRT, GTY, HLF, IART, ININ, KAMN, KBR, LCI, MCEP, MDU, MR, MRO, NBIX, NLS, NOR, NTRI, OGS, OTTR, PKT, PL, PLOW, PQ, QLYS, RBC, REG, RKT, RKUS, RLD, RTEC, SALE, SBRA, SGY, SKH, SNHY, SRC, SSW, SUP, TDW, THC, TXRH, VNO, VNR, WTR, Y
Oct. 29, 2014, 5:53 PM
Oct. 15, 2014, 10:19 AM
- Ethiopia will grant Tullow Oil (OTCPK:TUWLF, OTCPK:TUWOY) an extension to its exploration license after the company reported “encouraging” results in its search so far, the country's mining minister says.
- Tullow had requested more time to analyze data from drilling and seismic surveys in southern Ethiopia after two out of four wells it drilled in the past two years, along with partners Marathon Oil (NYSE:MRO) and Africa Oil (OTCPK:AOIFF), show they may contain petroleum deposits.
- No oil or gas is currently produced by Ethiopia.
Oct. 13, 2014, 5:57 PM
- Bakken shale oil producers are under pressure to scale back their 2015 drilling plans after Bakken oil fell below $80/bbl for the first time in nearly a year, as worldwide crude prices decline amid ample North American supplies and Persian Gulf producers signaling they’re prepared to keep output high to protect their market shares in Asia.
- The "body language" among producers is that capex next year will be flat or only slightly higher, vs. earlier expectations for 5%-10% increases, says Topeka Capital's Gabriele Sorbara, who adds Bakken drillers need prices of $70-$80/bbl to earn a typical 15%-25% return.
- Bakken wells produced a record 1.047M barrels of crude in July, accounting for 12% of total U.S. output: CLR, EOG, KOG, WLL, HES, XOM, OAS, NOG, EOX, MRO.
Oct. 9, 2014, 3:25 PM
- Crushed by relentless anxiety about oversupply and weakening global demand, Nymex crude oil futures closed down $1.54 at $85.76/bbl, their lowest close since Dec. 2012, while Brent crude fell below $90/bbl for the first time in more than two years.
- Including today's losses, WTI crude is down 6.2% since the start of the month and Brent has surrendered ~5%.
- In the face of surging output, a move in WTI below its 10-year average at $82 is not out of the realm of possibility, Brown Brothers Harriman says, adding that "a break of $73/barrel could send WTI toward $64, which corresponds with the 2010 low."
- Among big oil names so far today: APC -6.3%, LINE -4.6%, EPD -3.8%, DVN -3.8%, MRO -3.6%, HES -3.8%, KMI -3.7%, TOT -3.5%, STO -3.3%, RDS.A -3.1%, OXY -3%, KMP -3%, XOM -2.6%, COP -2.6%, MUR -2.6%, CVX -2.5%, BP -2.4%.
- ETFs: USO, XLE, OIL, UCO, ERX, VDE, OIH, SCO, ERY, XOP, DIG, BNO, DTO, DBO, DUG, IYE, XES, IEO, CRUD, IEZ, PXE, USL, UWTI, PXJ, FENY, DNO, DWTI, RYE, FXN, SZO, OLO, DDG, OLEM, TWTI
Sep. 15, 2014, 11:58 AM
- North Dakota's daily oil production jumped 5% in July to an all-time high 34.4M barrels (~1.1M bbl/day), state regulators say, although the number was lower than expected as producers worked to meet aggressive flaring-reduction targets.
- Natural gas production hit 1.3B cf/day, also an all-time high, but the percentage of natural gas flared in the state fell to 26% in July from 30% in June.
- In an effort to curb flaring, state regulators issued strict goals earlier this year with key benchmarks for flaring percentages each month; for October, for instance, the state's oil producers cannot flare more than 74% of natural gas produced.
- Bakken producers include CLR, EOG, KOG, WLL, HES, XOM, OAS, NOG, EOX, MRO.
Sep. 8, 2014, 6:43 PM
- The energy sector has seen little M&A activity despite a growth shortfall and cheap borrowing rates, but UBS analysts think a focus on incremental returns may lead to less exploration and more deals as resource prices on the market have fallen.
- The firm figures four large-cap E&P companies - Anadarko Petroleum (NYSE:APC), EOG Resources (NYSE:EOG), Marathon Oil (NYSE:MRO) and Pioneer Natural Resources (NYSE:PXD) - could prove tantalizing acquisition targets, but the buyer likely would need very deep pockets.
- In the case of EOG, UBS says the company's strong position in the three biggest tight oil plays - the Eagle Ford, Bakken and Permian - make it a perfect fit for an integrated major looking to expand in those areas.
Aug. 29, 2014, 8:54 AM
- Libya's largest oil port Es Sider is now receiving supplies from oil fields, with Waha Oil Co. supplying 22K bbl/day after oil in storage at the port started to be shipped last week, ending a year-long stoppage.
- Libya's oil production has jumped to more than 600K bbl/day, 4x the level in late May, as the country's oil industry steadily recovers despite fighting between rival militias in the capital of Tripoli.
- Waha Oil is a partnership between Libya's National Oil Co. and U.S. companies Marathon Oil (NYSE:MRO), Hess (NYSE:HES) and ConocoPhillips (NYSE:COP).
Aug. 25, 2014, 7:57 AM
- Libya says normal operations have resumed at the giant Waha oil field, paving the way for a return to exported production later this week, in a report that's in stark contrast with claims by an Islamist militia to have taken over of Tripoli's airport over the weekend.
- Waha, which normally produces 160K bbl/day, supplies crude to the Es Sider terminal, which restarted exports using stored oil last week after a year-long interruption.
- Waha is partly owned by ConocoPhillips (NYSE:COP), Hess (NYSE:HES) and Marathon Oil (NYSE:MRO).
Aug. 11, 2014, 10:59 AM
- Noble Energy (NBL +0.3%) and Australia’s Woodside Petroleum (OTCPK:WOPEF) sign an agreement to explore a deepwater prospect off the coast of Gabon; NBL will be the operator with a 60% working interest.
- NBL says the execution of the production sharing contract represents its initial entry into Gabon and meaningfully expands the company's exploration portfolio.
- Marathon Oil (MRO +0.1%) also signed a production sharing deal with Gabon for a separate offshore deepwater location in which it has a 100% working interest.
Aug. 5, 2014, 4:58 PM
- An industry-funded study concludes that crude oil from the Bakken region is similar to other North American light, sweet crudes and does not pose a greater risk to transport by rail than other crudes and transportation fuels.
- But the study also outlines several best practices intended to boost safety, including classifying the crude higher on the hazardous material shipping scale.
- The group hopes the report allays fears that Bakken oil may be more prone to ignition after a series of accidents involving rail shipments of the oil.
- Bakken producers include CLR, EOG, KOG, WLL, HES, XOM, OAS, NOG, EOX, MRO.
MRO vs. ETF Alternatives
Marathon Oil Corp is an energy company engaged in the exploration, production and marketing of liquid hydrocarbons and natural gas, production and marketing of products manufactured from natural gas and oil sands mining.
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