Is Marathon Oil’s Production Shifting?



Marathon Oil’s production

Marathon Oil’s (MRO) total production has exhibited a downward bias in the past 13 quarters. In 2Q15, Marathon Oil’s total production decreased 10% from 1Q15 to ~411 thousand barrels of oil equivalent per day (or MBoe/d). In comparison, EOG Resources (EOG), one of the largest independent energy producers in the US, saw a 4.9% decrease in 2Q15 production over 1Q15. Gulfport Energy’s (GPOR) 2Q15 production, on the other hand, increased 12% from a quarter ago. Marathon Oil makes up 1.04% of the Energy Select Sector SPDR ETF (XLE) and 0.86% of the Vanguard Energy ETF (VDE).

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Marathon Oil’s 2015 production guidance

Between 2Q12 to 2Q15, MRO’s total production fell 9% from ~451 MBoe/d to ~411 MBoe/d. Year-over-year, its production growth stood at 4% by the end of 2Q15. MRO’s 2015 production growth guidance stands at 5% to 7% compared to the 2014 level.

Marathon Oil is a Texas-based global energy company. It has operations in North America, Europe, and Africa.

MRO’s share of crude oil falls, but natural gas share is steady

Along with a fall in overall production, crude oil’s share in Marathon Oil’s total production has generally been decreasing, barring a few quarters. Between 2Q12 and 2Q15, it went down to ~58% from ~65%. At the same time, natural gas’s share has remained ~30% during the same period. Natural gas liquids (or NGLs) made up ~11% of its 2Q15 production.

From 2Q12 to 2Q15, the WTI crude oil price is down ~42%, while the natural gas price is up ~33%.

Is Marathon Oil relying more on international operations?

In 3Q15, Marathon Oil expects reduced drilling activity across US resource plays. However, on an aggregate basis, including international operations, it expects to achieve 20% year-over-year volume growth in 3Q15. This implies MRO expects healthy production growth from its international operations.

Next, we will discuss Marathon Oil’s debt structure.


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