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Marathon Oil’s Crude Oil Percentage Decline in Production Mix

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Marathon Oil’s production mix

As seen in the below chart, Marathon Oil’s 3Q16 production mix was ~38% crude oil and condensate, ~16% synthetic crude oil (oil sands mining), ~13% natural gas liquids, and ~33% natural gas. This indicates that Marathon Oil (MRO) is more tilted toward liquids production, which stands at ~67%. Typically, upstream companies with more liquids production have better operating margins.

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Production mix trend

Marathon Oil’s (MRO) quarterly crude oil, condensate, and synthetic crude oil percentage in its production mix fell from ~65% in 1Q11 to ~54% in 3Q16. MRO’s average rate of decrease was ~0.5% quarter-over-quarter.

In 3Q16, MRO’s crude oil, condensate, and synthetic crude oil percentage in its production mix fell from ~55% to ~54% in 2Q16.

Segment-wise production mix

For 3Q16, Marathon Oil’s North America E&P (exploration and production) operations reported production mix figures of ~57% crude oil and condensate, ~19% natural gas liquids, and ~24% natural gas. Marathon Oil’s 3Q16 production from North America E&P operations contains ~76% liquids and is tilted toward liquids production.

Within Marathon Oil’s US Resource plays, its 3Q16 production from the Bakken Shale reported the highest crude oil and condensate level of ~81% in its production mix.

For 3Q16, Marathon Oil’s International E&P operations reported production mix figures of ~25% crude oil, ~10% natural gas liquids, and ~65% natural gas. Marathon Oil’s production from International E&P operations is tilted toward natural gas production.

Marathon Oil’s OSM (oil sands mining) operations produce 100% synthetic crude oil.

Other oil and gas producers

Other upstream companies that have a higher liquids percentage in their production mixes are Diamondback Energy (FANG), Occidental Petroleum (OXY), Devon Energy (DVN), and Murphy Oil (MUR). These companies contained ~89%, ~76%, ~62%, and ~63% liquids in their 3Q16 production mix, respectively.

The volatility in oil prices also impacts ETFs and ETNs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the Vanguard Energy ETF (VDE), and the VelocityShares 3x Long Crude Oil ETN (UWTI).

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