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North America E&P Led Decline in Marathon Oil’s 3Q16 Revenues

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Revenues

Marathon Oil (MRO) reported adjusted revenues of ~$1.18 billion in 3Q16, which represents a fall from its ~$1.42 billion in 3Q15—a ~17% decline on a YoY (year-over-year) basis. But when compared sequentially with its 2Q16 adjusted revenues of ~$1 billion, Marathon Oil’s 3Q16 revenues were ~17% higher.

For 3Q16, adjusted revenues of ~$1.18 billion exclude the one-time gains of $47 million on asset disposals. Including these gains, MRO’s reported revenues totaled ~$1.23 billion in 3Q16.

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North America E&P

The majority of MRO’s YoY decline in 3Q16 revenues came from its North America E&P (exploration and production) segment. The segment reported revenues of ~$604 million in 3Q16, down from ~$796 million in 3Q15. That’s a decline of ~$192 million out of ~$250 million in overall revenues.

This steep decline in production volume coupled with lower realized prices for crude oil (USO) and natural gas (UNG) production in 3Q16 negatively impacted MRO’s North America E&P segment revenues. Marathon Oil’s North America E&P production volumes fell to 216 Mboe (thousand barrels of oil equivalent) per day in 3Q16 from 261 Mboe per day in 3Q15.

International E&P

MRO’s international E&P reported lower revenues of ~$152 million in 3Q16 from ~$182 million in 3Q15. Despite higher production, average price realization dropped to $12.48 per boe (barrel of oil equivalent) in 3Q16 from $15.93 boe in 3Q15, which negatively impacted MRO’s international E&P segment’s revenues in 3Q15.

Oil sands mining

While its other two segments reported double-digit YoY (year-over-year) falls in revenues, MRO’s OSM (oil sands mining) segment reported marginally lower revenues of ~$239 million in 3Q16 from ~$242 million in 3Q15. The relatively better performance from the Oil Sands segment can be attributed to fairly stable production coupled with stable synthetic crude oil, which saw an average price realization of $39.59 per barrel.

Peers ConocoPhillips (COP), Devon Energy (DVN), and Occidental Petroleum (OXY) have reported sequentially higher revenues of ~$6.5 billion, ~$2.9 billion and ~$2.7 billion, respectively, in 3Q16.

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