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Understanding Marathon Oil’s 3Q17 Earnings

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Understanding Marathon Oil’s 3Q17 Earnings PART 1 OF 4

Marathon Oil Reduced Losses More than 29% in 3Q17

Marathon Oil’s 3Q17 adjusted net income

Marathon Oil (MRO) announced its 3Q17 earnings on November 1 before the market opened. Per the company’s earnings press release, it reported a better-than-expected loss of ~$68 million in 3Q17. Wall Street analysts were expecting a loss of ~$127 million. On a year-over-year basis, MRO cut its losses by more than 29%. In 3Q16, MRO reported a loss of ~$97 million. Even on a sequential basis, and excluding any one-time items, MRO’s losses have decreased ~24%. MRO reported a loss of ~$128 million in 2Q17.

Marathon Oil Reduced Losses More than 29% in 3Q17

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Marathon Oil’s 3Q17 reported net income

Marathon Oil’s 3Q17 adjusted net income excludes one-time benefits and charges totaling -$531 million, the majority of which relates to proved and unproved property impairment charges and exploratory dry well costs. Including these one-time items, MRO’s reported net income on GAAP1 basis was lower at -$599 million, or -$0.70 per share, in 3Q17 from -$192 million, or -$0.23 per share, in 3Q16.

How MRO’s quarterly reported net incomes are trending in 2017

In 1Q17, Marathon Oil reported lower net income from all operations on year-over-year and sequential bases. Marathon Oil reported net income of about -$4.96 billion, or -$5.84 per share, in 1Q17 compared to about -$407 million, or -$0.56 per share, in 1Q16. Sequentially, MRO’s 1Q17 net income is ~$3.59 billion lower from about -$1.37 billion in 4Q16. MRO’s discontinued operations reported a loss of ~$4.91 billion in 1Q17, mainly due to asset impairment charges.

In 2Q17, MRO’s reported net income on a GAAP basis was higher at -$139 million, or -$0.16 per share, in 2Q17 from -$170 million, or -$0.20 per share, in 2Q16.

MRO’s peer ConocoPhillips (COP), which is also part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), reported adjusted net income of ~$198 million in 3Q17. ConocoPhillips turned profitable after a loss of ~$826 million in 3Q16.

In this series…

Having analyzed Marathon Oil’s 3Q17 net income, in the course of this series, we’ll also look at Marathon Oil’s revenues, production, and Wall Street analyst ratings.

  1. Generally accepted accounting principles.
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