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Marathon Oil’s Retained Earnings Effectiveness

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Marathon Oil’s retained earnings effectiveness

According to Marathon Oil’s (MRO) 3Q16 balance sheet, its retained earnings had fallen by ~$234 million. When divided by MRO’s 2Q16 stockholder equity of ~$19.2 billion, the result is a retained earnings effectiveness of about -1%.

In other words, due to a net loss in 3Q16, negative changes in Marathon Oil’s retained earnings impacted 1Q16 stockholder equity by about -1%.

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Other upstream players

In 3Q16, almost all the S&P 500 (SPY) upstream companies, including Southwestern Energy (SWN), Devon Energy (DVN), and EOG Resources (EOG), have reported negative changes in their retained earnings. These changes are mainly due to lower realized crude oil and natural gas prices as well as to the impairment of proved reserves.

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