Marathon Oil (MRO) Expects to Achieve Q3 Production Target

Zacks Equity Research

Exploration and production (E&P) company Marathon Oil Corporation MRO recently stated that its third-quarter 2017 average production for sale from the United States will be toward the high end of its guidance in spite of Hurricane Harvey. It had guided production of around 230,000-240,000 net barrels of oil equivalent per day (BOE/d).

Due to Harvey, Marathon Oil had to stall its operations at the Eagle Ford assets located in the south of Texas, where the company has around 1,500 producing wells, toward the end of August. After inspections post-Harvey, the company declared there was minimal damage to its facilities. Marathon Oil resumed drilling and completions operations a few days later and reached pre-storm production level soon.

Marathon Oil attributed this to its strong early production level from the new wells it brought to sales. The company anticipates production from Eagle Ford in third-quarter 2017 to be in line with previous quarter rates at around 100,000 net BOE/d.

Moreover, the multi-billion company foresees its capital expenditure for 2017 to be in the $2.1-$2.2 billion range, dropping from $2.4 billion. The company's global E&P operations, excluding Libya, are expected to produce 345,000-360,000 net BOE/d.

About the Company

Houston, TX-based Marathon Oil is a leading oil and natural gas exploration and production company. At the end of 2016, Marathon Oil had approximately 2,096 million oil-equivalent barrels in net proved reserves (80% liquids). The company’s business is organized into two segments – North America Exploration and Production, and International Exploration and Production. In July 2011, Marathon completed the spin-off of its refining/sales business into a separate, independent and publicly traded company Marathon Petroleum Corporation MPC.

The recent oil sands mining divestiture and Permian acquisitions will boost Marathon Oil's prospects and position the company to generate significant cash flows over the long term. However, the company's upside potential is expected to remain limited until crude prices stabilize.

Price Performance

Marathon Oil has lost 19.7% of its value year to date compared with 11% fall of its industry.

Zacks Rank and Stocks to Consider

Marathon Oil currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the oil and energy sector are Lonestar Resources US Inc. LONE and Alliance Holdings GP, L.P. AHGP. Both sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lonestar Resources’ sales for 2017 are expected to surge 60.2% year over year. The company delivered a positive earnings surprise of 62.5% in the second quarter of 2017.

Alliance Holdings’ earnings for the third quarter of 2017 are expected to surge 12.4% year over year. The company delivered a positive average earnings surprise of 13.6% in the last four quarters.

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