A Deep Look at Marathon Oil’s Operational Performance

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A Deep Look at Marathon Oil’s Operational Performance PART 1 OF 13

How Crude Oil Prices Moved Marathon Oil Stock

Marathon Oil’s price reversal

In 1Q16, Marathon Oil (MRO) stock marked a significant reversal. The stock had been on a downtrend from September 2014 to February 2016 due to declining crude oil (USO) prices. During those 18 months, Marathon Oil stock lost ~84.0% of its market capitalization.

How Crude Oil Prices Moved Marathon Oil Stock

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But since February 2016, due to higher trending crude oil prices, Marathon Oil stock has been rising. From February 2016 to December 2016, crude oil prices rose ~111.0%, from $26.05 per barrel to $55.03 per barrel. That strong rise added fuel to Marathon Oil’s rally, and MRO stock rose from the low of $6.38 in February 2016 to $19.07 in December 2016. You can see the price dynamics between crude oil prices and MRO stock in the above chart.

2017 year-to-date performance

After strong gains of around 40.0% in 2016, Marathon Oil stock has been on a downtrend in 2017. Even crude oil prices are hovering around $50 this year. Year-to-date, MRO stock has fallen ~22.0%, whereas crude oil (USO) has fallen ~3.0%.

Marathon’s peers

In 2017, Marathon Oil is focusing on US resource plays with a focus on Eagle Ford, Bakken, Oklahoma Basin, and Permian Basin. MRO’s peers EOG Resources (EOG), Occidental Petroleum (OXY), and Diamondback Energy (FANG), which also operate in the Permian Basin, have fallen ~4.0%, ~6.0%, and ~4.0%, respectively, year-to-date. As of September 26, 2017, Marathon Oil has a market capitalization of ~$11.0 billion. In comparison, EOG, OXY, and FANG have market capitalizations of ~$56.0 billion, ~$49.0 billion, and ~$9.0 billion, respectively.

In general, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) is significantly underperforming the SPDR S&P 500 ETF (SPY). XOP has fallen ~17.0%, whereas SPY has risen ~13.0% in 2017. MRO has even underperformed XOP by a rather high margin.

Series overview

Having analyzed the year-to-date price performance of MRO stock, we’ll look at MRO’s operational details in the following parts of this series. Specifically, we’ll look at its production, realized prices, hedges, costs, and margins.

Let’s start with MRO’s operational strategies for 2017.


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