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.

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Furthermore, Commerce Department has recently allowedPioneer Natural Resources(PXD) - Get Report and Enterprise Product Partners(EPD) - Get Report 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) - Get Report, Continental Resources(CLR) - Get Report, Murphy Oil(MUR) - Get Report, ConocoPhillips(COP) - Get Report and Whiting Petroleum(WLL) - Get Report.

Like other energy companies such as ConocoPhillips, Apache(APA) - Get Report, Devon Energy(DVN) - Get Report 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.

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The asset sales should help Marathon boost growth from its domestic operations. The company gets most of its production from three oil and gas areas in the U.S. -- Eagle Ford, Bakken shale formation in North Dakota and the Oklahoma resource basins.

In the second quarter, Marathon Oil produced 170,000 barrels of oil equivalents per day, or roughly half of its total production excluding Libya and discontinued operations, from the three U.S. areas.

The three regions have driven Marathon Oil's production growth during the last two years. Since the first quarter of 2012, the company's output from Eagle Ford, Bakken and Oklahoma resource basins has increased by more than 3.5 times, or 124,000 barrels of oil equivalents per day. 

The growth in the U.S. is unlikely to stop any time soon. At Eagle Ford and Bakken, Marathon has been working to improve its pace of turning wells into sales. For instance, in the second quarter, Marathon Oil brought 55% more Eagle Ford wells to sales than it did in the first quarter.

Marathon reported a 29% increase in second-quarter production from Eagle Ford, Bakken and Oklahoma resource basins. For 2014, the company has predicted more than 30% increase in production from this region.

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At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

TheStreet Ratings team rates MARATHON OIL CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate MARATHON OIL CORP (MRO) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, expanding profit margins and increase in stock price during the past year. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Oil, Gas & Consumable Fuels industry average. The net income increased by 26.8% when compared to the same quarter one year prior, rising from $426.00 million to $540.00 million.
  • The gross profit margin for MARATHON OIL CORP is rather high; currently it is at 52.01%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, MRO's net profit margin of 18.69% significantly outperformed against the industry.
  • MRO, with its decline in revenue, underperformed when compared the industry average of 1.3%. Since the same quarter one year prior, revenues fell by 26.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • MARATHON OIL CORP's earnings per share declined by 11.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, MARATHON OIL CORP reported lower earnings of $2.25 versus $2.27 in the prior year. This year, the market expects an improvement in earnings ($3.14 versus $2.25).
  • In its most recent trading session, MRO has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.