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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 • Wed, Aug. 6
- 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 • Mon, May. 12
- 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
Tue, Dec. 2, 3:13 PM
- Apache (APA -1%), Bill Barrett (BBG -5.6%) and Laredo Petroleum (LPI -4.9%) are downgraded to Neutral from Buy at Mizuho, as the firm lowers its crude oil price deck and views OPEC's decision not to cut production as a structural shift in crude oil markets.
- Although the current excess supply/weak demand situation will be resolved gradually, market fundamentals will increasingly drive crude prices in a ~$70/bbl world, the firm says; in the E&P space, it prefers APC, MRO, FANG, RSPP and RICE.
Tue, Dec. 2, 2:48 PM
- Energy stocks (XLE +1.4%) are posting the day's largest gains among S&P sectors, rebounding from recent losses even as Nymex crude oil fell another $2.05 to $66.97/bbl.
- Refiners Marathon Petroleum (MPC +4%) and Valero (VLO +4.1%) and pipeline operator Williams Cos. (WMB +1.5%) are among the top gainers, while losers include most oil services companies such as Halliburton (HAL -2.2%) and rig operator Transocean (RIG -3.7%).
- Anadarko Petroleum (APC +1.6%), Cimarex Energy (XEC +1%), Devon Energy (DVN +0.7%), EOG Resources (EOG +3.8%) and Marathon Oil (MRO +3.5%) were selected top “safe haven” picks for analysts at Tudor Pickering Holt, which said they are “liquid names with high-quality assets and healthy balance sheets."
Mon, Nov. 3, 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.
Thu, Oct. 9, 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
Tue, Aug. 5, 8:24 AM
- Marathon Oil (NYSE:MRO) +1.8% premarket after reporting better than expected Q2 earnings, driven by strong production growth and higher crude oil and condensate prices in the U.S.
- Production available for sale from continuing operations, excluding Libya, rose 6% Y/Y to 383K boe/day, attributed to continued growth in North American shale production.
- MRO expects the region to produce 235M-248M boe/day in Q3 vs. 200M boe/day in the year-ago quarter.
- Three high-quality Eagle Ford plays averaged net production of 170K boe/day, up 29% Y/Y and on track for greater than 30% Y/Y production growth.
- Income from North American exploration and production rose 37% to $302M on higher sales volume that offset a 16% increase in exploration expenses.
- Recorded 98% average operational availability for Company-operated assets.
Mon, Jul. 14, 2:21 PM
- Whiting Petroleum's (WLL +7.4%) $6B buyout of Kodiak Oil & Gas (KOG +5.1%) is renewing investor attention on independent energy firms with operations in the Bakken Shale, especially those significantly owned by hedge funds; Paulson & Co. is the single biggest owner of KOG stock, with just under 10% of shares outstanding as of the last filing date.
- While many of the largest Bakken producers are huge companies or parts of huge companies - Hess (NYSE:HES), EOG, Statoil (NYSE:STO), Marathon Oil (NYSE:MRO), XTO Energy (NYSE:XOM) - a few small and mid-cap independent players show hedge fund interest, CNBC's Brian Sullivan writes.
- The single biggest holder of Oasis Petroleum (OAS +0.5%) also is John Paulson's hedge fund, which owns 9.9M shares (~9.8% of shares outstanding), Jana Partners owns 16M-plus shares in QEP Resources (QEP +1.4%), and WPX Energy (WPX +1.1%) has substantial hedge fund ownership.
Tue, May. 6, 5:59 PM
- Marathon Oil (MRO) +1.8% AH after Q1 earnings more than tripled despite a drop in revenue, as domestic production continues to grow and exploration costs fell 84%.
- North American shale production jumped 10% Y/Y, but overseas production fell 14% due to a strike in Libya and aging fields in Norway and the U.K.; says the sale of its North Sea assets is on schedule and that bids are due this quarter.
- Q1 revenue fell 12% to $3.53B, sales volume slipped 11% to $463M, while net production available for sales dropped 13% to $448M.
- Operating margin narrowed to 33.5% from 35.8%, while provisions for income taxes fell 40% to $590M.
Mon, Apr. 21, 5:45 PM
Wed, Feb. 5, 5:49 PM
- Marathon Oil (MRO) -1.5% AH after reporting lower Q4 sales volume, though the bottom line grew 16% due to fewer income tax provisions.
- MRO has generally posted higher production in recent periods from its extensive activity in areas such as the Bakken shale in North Dakota and Eagle Ford shale in Texas, boosting earnings.
- Total net proved reserves were ~2.2B boe at the end of 2013, up 8% Y/Y; reserve replacement ratio was 194%, with 344M boe of net proved reserves added.
- Operating margin narrowed to 26.8% from 39.8%, while provisions for income taxes tumbled 60% to $522M.
- Sales volumes slid 13% Y/Y and fell 3.3% Q/Q.
Mon, Jan. 6, 12:27 PM
- Bonanza Creek Energy (BCEI +3.8%) is upgraded to Buy from Neutral and Hess (HES -0.7%) is cut to Neutral from Buy at Mizuho on valuation as part of the firm's broader sector outlook, which sees crude prices remaining above breakeven for key basins despite headwinds.
- The firm expects further efficiency gains as key players in the Bakken (HES), Permian (APA, APC), Eagle Ford (MRO, APC) and DJ Basin (APC, NBL, PDCE, SYRG, BCEI) continue to hone skills; its top picks going into 2014 are APA, Kosmos (KOS) and, on the riskier side, APC.
- With APA, the firm sees a continued turnaround to a leaner, shareholder-focused E&P with material catalysts; with KOS, a seasoned explorer with big drilling upside alongside cash flow generation; with APC, market caution until a Tronox damages number is revealed but rebounding given solid assets and liquidity.
Aug. 28, 2013, 11:59 AM
- Energy stocks (XLE +1.9%) lead the way this session as West Texas crude tests $110, with tensions over Syria continuing to feed Middle East supply concerns; Syria concerns and Libyan export cuts are trumping the bearish influence from a surprise gain for U.S. crude supplies.
- Among sector leaders: MRO +3.3%, EOG +3.1%, CVX +2.5%, TOT +2.4%, WLL +2.4%, APC +2.2%, RDS.A +2.1%, XOM +2.1%, HAL +2%, SLB +2%, COP +1.8%, PSX +1.7%, BP +1.6%, APA +1.6%, HES +1.5%, KOG +1.3%.
- ETFs: ERX, VDE, DIG, IEO, IEZ, IYE, PXE, PXI, XES, XOP, RYE, FXN, OIH, PXJ, PSCE, ERY, DUG, DDG, FRAK.
- After big losses yesterday, gold miners (GDX +2.4%) are strong today despite only a slight gain in the metal.
- Miners: ABX +3.6%, GG +3.2%, NEM +2.2%, KGC +2%, SLW +2%, GFI +1.2%.
Aug. 28, 2013, 9:44 AM
- Libyan oil production has dropped to one-eighth of capacity as protests over pay and allegations of corruption spread to fields operated by Eni (E +2.5%) and Repsol (REPYY.PK, REPYF.PK).
- Earlier protests were in the central and eastern regions that produce and export the majority of Libya’s crude, affecting companies such as Royal Dutch Shell (RDS.A, RDS.B), Marathon Oil (MRO), Hess (HES) and ConocoPhillips (COP).
- Libyan output has slumped to ~200K bbl/day vs. 640K earlier this month and optimal capacity of 1.6M, according to the chairman of the state oil company.
Aug. 19, 2013, 11:12 AM
- Operator Total (TOT -0.7%) and partner Marathon Oil (MRO -2.6%) say their pre-salt Diaman-1B deepwater exploration well off Gabon’s coast encountered gas condensate, but it continues to analyze the scale of the discovery.
- Wells Fargo says the discovery is unlikely to be developed on a fast track, so it is not making meaningful changes in its estimates for reserves, margins, cash flow or profitability.
- Cobalt Energy (CIE -12.8%) also is a partner in the Diaba license where the gas was found (earlier); Gabon's government owns a 15% stake.
Aug. 16, 2013, 2:55 PM
- Petrobras (PBR -1.6%) becomes the first company to shut in production due to the low-pressure system headed towards the Gulf of Mexico, evacuating workers from its Cottonwood natural gas and condensate field.
- BP and Marathon Oil (MRO) have evacuated non-essential workers from their Gulf facilities but say production has not been affected.
- Crews remain on board the FPSO on site at PBR's 80K bbl/day Cascade and Chinook fields.
- Cottonwood, off the Texas coast, produces at a peak of ~70K boe/day.
Aug. 7, 2013, 12:20 PM
- Marathon Oil (MRO -5%) is downgraded to Neutral from Buy with a $42 price target (down from $42) at BAML, as the company's re-rating has played out.
- The firm believes most gains anchored around MRO's transition to an unconventional resource play have been recognized, but the investment case now takes a pause; production is declining except for the U.S., and visibility on the next major source of incremental value and production is less clear.
- Q2 earnings grew 8.4% but results missed Wall Street expectations.
Jun. 18, 2013, 2:58 PMMarathon Oil's (MRO +3%) outlook is upgraded to positive from stable by Fitch Ratings, which cites strong growth in its shale liquids plays, particularly at Eagle Ford. MRO also boasts a sizable, multi-year inventory of drilling opportunities in the shale plays that provides good visibility on future production and reserve growth, raising Fitch's confidence that it should be able to sustain its positive momentum. | 1 Comment
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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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