uploads///YTD net income and margin

How Did Marathon Oil Perform in 1H15?

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Aug. 27 2015, Updated 2:06 a.m. ET

Marathon Oil’s revenue in 1H15 

After analyzing Marathon Oil’s (MRO) 2Q15 performance, we’ll discuss its YTD (year-to-date) revenue and earnings. Marathon Oil recorded ~$3.06 billion in total revenue and other income for 1H15. It fell 47% from ~$5.79 billion in 1H14. Its 1H15 average crude oil price realization, as well as its International E&P (exploration and production) segment’s production volume, fell compared to the average levels in 1H14.

Marathon Oil’s 1H15 net income swung to a loss of $662 million—compared to ~$1.69 billion in net profit last year. The net income margin was -21.60% in 1H15—compared to a margin of 29.20% in 1H14. The bulk of the fall in crude oil prices was in 2H14. The number in 1H15 reflects this fall.

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What affected Marathon Oil’s YTD net income?

Marathon Oil’s North America production volume rose in all three product categories in 1H15—compared to 1H14. This was primarily due to 42% and 41% higher 1H15 production in the Eagle Ford and Oklahoma Resource Basins over 1H14, respectively. In contrast, the crude oil and condensate production volume fell 8.60% in its international operations, while the natural gas volume from international operations fell 10.40% during the same period.

In North America, Marathon Oil’s 1H15 crude oil and condensate price realization fell 50% compared to 1H14. Its natural gas and NGL (natural gas liquid) price realizations fell 44% and 62%, respectively. In comparison, the fall in natural gas and NGL realized prices from its international operations were milder. They fell by 2.50% and 9.60%, respectively, during the same period. The International E&P segment’s crude oil price fall was similar to the North America E&P segment at 46%.

Operating income in 1H15

Marathon Oil’s North America E&P segment’s operating income fell by $206 million in 1H15—compared to a $544 million operating profit in 1H14. The company’s International E&P segment performed better. It fell 83% during the same period. The Oil Sands Mining segment crashed to a $96 million net operating loss from a $119 million net operating income the year before.

In 1H15, Marathon Oil’s EBITDA (earnings before interest, tax, depreciation, and amortization) fell 64% compared to the year before. Concho Resources’ (CXO) EBITDA fell 10% during the same period. Whiting Petroleum’s (WLL) 1H15 EBITDA fell 55% from 1H14 to 1H15. Marathon Oil accounts for 0.85% of the iShares US Energy ETF (IYE) and 0.87% of the Vanguard Energy ETF (VDE).

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