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MRO’s 3Q16 Crude Oil Price Realization Underperformed WTI Crude Oil

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Marathon Oil’s 3Q16 crude oil realized prices

Excluding the effect of hedges, MRO’s North America E&P (exploration and production) average realized crude oil price in 3Q16 was $41.35 per barrel—almost flat when compared with $41.37 per barrel in 3Q15.

MRO’s year-over-year flat crude oil realized prices were compensated partially by its gains on crude oil derivatives. We’ll study MRO’s hedges in Part 9.

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MRO versus the benchmark

Marathon Oil’s (MRO) North America E&P average realized crude oil price in 3Q16 underperformed the average WTI crude oil price during the same period. MRO’s average realized crude oil price in 3Q16 is ~8% lower when compared with the average WTI crude oil price of $44.94 per barrel for the same period.

Natural gas and natural gas liquids realized prices

For 3Q16, Marathon Oil’s North America E&P average realized price for natural gas production decreased ~3% to $2.67 per thousand cubic feet compared to $2.75 per thousand cubic feet for the same period in 2015.

For 3Q16, MRO’s North America E&P average realized price for natural gas liquids production increased ~5% to $12.44 per barrel compared to $11.88 for the same period in 2015.

Other upstream players

Among the upstream companies from the S&P 500 (SPY), Southwestern Energy (SWN), Pioneer Natural Resources (PXD), and Devon Energy (DVN) have lower realized crude oil prices in 3Q16 when compared with the average WTI crude oil price during the same quarter.

In the next article, we’ll take a look at an interesting chart that is related to Marathon Oil’s realized price effectiveness in terms of production costs.

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