This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Marathon Oil Is Poised to Benefit From Production Growth in U.S.

NEW YORK (TheStreet) -- Marathon Oil's (MRO - Get Report) revenue fell in the second quarter, but a deeper look inside its earnings report reveals that the company is on track to post double-digit growth from its core assets in the U.S.

In announcing its second-quarter results on Monday, Marathon said revenue fell 1.6% to $2.94 billion, partly because of asset sales. But earnings from continuing operations rose almost 50% to $360 million on a 9.1% increase in sales volume from continuing operations, excluding Libya, and on higher oil prices in the U.S.

Chevon Highlight Up and Down Year in Oil Sector

Furthermore, Commerce Department has recently allowed Pioneer Natural Resources (PXD) and Enterprise Product Partners (EPD) to export condensates, a type of ultra-light crude oil. The government had banned all exports of crude oil since the 1970s.

Marathon could benefit from the government's move, because exports may push the U.S. condensate prices higher. That may boost Marathon's earnings,  because the company is one of the top condensate producers in the Eagle Ford shale in south Texas.

On a post-earnings conference call, Marathon CEO Lee Tillman has said Marathon will attempt to capitalize on the positive regulatory changes. Although Tillman didn't say that the company has applied for an export license, I believe that will be the next step.

Shares of Marathon have risen 8.5% year to date, compared with a 4.2% gain for the Standard and Poor's 500 Index. The stock was down 1% to $38.48 on Thursday morning.

It trades at 15.5 times last year's earnings, much lower than than the average price-to-earnings ratio of 22.5 of Marathon's peers EOG Resources (EOG), Continental Resources (CLR), Murphy Oil (MUR), ConocoPhillips (COP) and Whiting Petroleum (WLL).

Like other energy companies such as ConocoPhillips, Apache (APA), Devon Energy (DVN) and Hess Corp. (HESS), Marathon has been reducing its exposure to international markets, where it derived 30% of its segment income in the second quarter, in order to focus more on North America.

In June, Marathon Oil announced the sale of its Norwegian assets for $2.1 billion in cash. So far this year, the company has collected $2.2 billion as proceeds from sale of other non-core assets, including oil fields in Angola.

Three Market Props Are Gone

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
MRO $26.39 0.04%
AAPL $124.24 0.00%
FB $83.01 0.00%
GOOG $555.17 0.00%
TSLA $190.41 0.00%

Markets

DOW 17,678.23 -40.31 -0.23%
S&P 500 2,056.15 -4.90 -0.24%
NASDAQ 4,863.3620 -13.1570 -0.27%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs