Exploring Marathon Oil’s 4Q16 Free Cash Flow

For 4Q16, Marathon Oil (MRO) reported operating cash flow of $455 million, ~29% lower compared to its cash flow of ~$352 million in 4Q15.

As seen in the chart above, Marathon Oil’s cash flow fell steeply in 1Q15, mainly due to lower realized crude oil (USO) and natural gas (UNG) prices. In 2015 and 2016, Marathon Oil reported much lower cash flows compared to preceding years. In 1Q16, Marathon Oil reported its lowest ever cash flow of $74 million since 1999.

In 4Q16, Marathon Oil spent $262 million in capital expenditure, meaning that its free cash flow was positive at -$320 million, or ~-$0.38 per share.

Due to lower energy prices, most S&P 500 (SPY) (SPX-INDEX) energy companies have reported lower year-over-year cash flows. Southwestern Energy (SWN), EOG Resources (EOG), and Range Resources (RRC) reported $0.36 per share, $1.39 per share, and $0.18 per share, respectively, in cash flows in 3Q16.

Now it’s time to take a look at how Wall Street analysts have changed their recommendations following MRO’s 4Q16 earnings release.