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Analyzing Marathon Oil’s 4Q16 Revenue Expectations

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4Q16 revenue estimates

For 4Q16, Wall Street analysts expect Marathon Oil (MRO) to report ~20% lower revenue than it did in 4Q15. Marathon Oil’s 4Q16 revenue expectation is~3% lower than it was in 3Q16.

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Marathon’s 3Q16 revenue performance

In its most recent earnings release in October 2016, Marathon Oil beat the revenue estimate of ~$1.1 billion by ~12%. In 3Q16, Marathon reported a fall of ~7% in revenue growth from 3Q15. A steep decline in production (USO) (UNG) volume, coupled with lower realized prices in 3Q16, decreased Marathon’s revenue from oil and gas production sales, which impacted Marathon’s overall revenue growth.

In 3Q16, Marathon Oil’s production fell ~7% to 402 Mboepd (thousand barrels of oil equivalent per day) from 434 Mboepd in 3Q15. We’ll study Marathon’s production guidance in the next part of this series.

In 3Q16, ~79% of Marathon’s revenue came from oil and gas production sales, whereas the remaining ~21% came from its marketing business and other activities. Peers Devon Energy (DVN), ConocoPhillips (COP), and EOG Resources (EOG) have reported revenue of $2.9 billion, $6.5 billion, and $2.1 billion, respectively, in 3Q16.

Fiscal 2016 revenue estimates

For fiscal 2016, Wall Street analysts expect Marathon Oil to report revenue of $4.4 billion, ~25% lower than the ~$5.9 billion reported in 2015. Marathon’s yearly revenue has been falling since 2014. Next, let’s take a look at Marathon’s production guidance for 4Q16.

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