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Marathon Oil’s 2Q15 Adjusted Earnings Closely Matched Estimates

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Quarterly revenue versus consensus

Marathon Oil’s (MRO) 2Q15 revenue fell short of the estimates. The company’s 2Q15 adjusted revenue was $1.53 billion. It was 9% lower than the $1.68 billion consensus sell side analysts’ revenue estimate.

On average, the adjusted revenue has fallen short of the consensus revenue by ~1% in the past 13 quarters. Between 2Q12 and 2Q15, Marathon Oil’s adjusted revenue fell 60%. It fell by 48% from 2Q14 to 2Q15. Energy prices fell during this period.

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Quarterly EPS versus consensus

Marathon Oil’s 2Q15 adjusted earnings nearly matched estimates. Its 2Q15 adjusted loss per share was $0.23—compared to the consensus sell side analysts’ loss per share estimate of $0.225. The adjusted earnings exclude various one-time charges including impairment charges. Marathon Oil’s poor North America operations’ earnings led to 2Q15 earnings that were below the expectations.

Between 2Q12 and 2Q15, the adjusted EPS (earnings per share) swung from a positive $0.59 to a $0.23 per share loss. The adjusted EPS stood at $0.89 in 2Q14. The fall in crude oil prices severely crushed earnings from upstream companies.

As noted in the above graph, Marathon Oil’s adjusted EPS exceeded estimates in many quarters in the past. On average, the adjusted EPS has fallen short of the consensus EPS by ~3% in the past 13 quarters.

Share price fell due to earnings

Marathon Oil released its financial information for 2Q15 on August 5, 2015. Its stock reacted negatively after the earnings were released. On the following day, it fell 1.70% to $19.45 from the previous day’s close. Since the beginning of this year, its share price has fallen 33%.

Laredo Petroleum’s (LPI) share price has fallen ~11% since the beginning of the year. SM Energy (SM) has witnessed a 4% share price rally YTD (year-to-date). Continental Resources’ (CLR) share price has fallen by 6% since the beginning of the year. Marathon Oil accounts for 1.06% of the Energy Select Sector SPDR (XLE). XLE has fallen 11% during the same period. Marathon Oil also forms 0.80% of the iShares US Energy ETF (IYE).

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