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Chart in Focus: Marathon Oil’s Cash Flow Estimates

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Marathon Oil’s cash flow estimates

Wall Street analysts expect Marathon Oil (MRO) to report cash flow of ~$412 million in 4Q16, higher than the ~$352 million reported in 4Q15. Marathon’s estimated 4Q16 cash flow is also higher than the ~$366 million reported in 3Q16.

Marathon expects its 4Q16 capital expenditure to be ~$454 million, meaning that its 4Q16 free cash flow will be negative.

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How Marathon’s cash flow is trending

As shown in the above chart, Marathon Oil’s cash flow fell steeply in 1Q15, mainly due to lower realized crude oil (USO) and natural gas (UNG) prices. In 2015, Marathon Oil reported lower cash flow than it has in previous years. In 1Q16, Marathon Oil reported cash flow of $74 million, its lowest since 1999.

Other upstream players

Due to a steep downward trend in energy prices, most S&P 500 (SPY) (SPX-INDEX) energy companies have reported lower year-over-year cash flow. Southwestern Energy (SWN), EOG Resources (EOG), and Range Resources (RRC) reported cash flow of $0.36 per share, $1.39 per share, and $0.18 per share, respectively, in 3Q16. In the next and final part of this series, we’ll take a look at how Marathon stock has reacted to past earnings results.

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