North American exploration and production
In August 2016, Marathon Oil (MRO) reduced its fiscal 2016 LOE (lease operating expenses) guidance for its North American E&P (exploration and production) operations by $1 per boe (barrel of oil equivalent) to $6–$7 per boe.
In the first nine months of 2016, Marathon Oil’s LOE for North American E&P stood at $6.05 per boe. In 3Q16, Marathon reported North American LOE of $5.70 per boe, which is ~23% lower than 3Q15’s figure. LOE (also referred to as production operating expenses) are the costs to operate wells after drilling is complete.
Peers Denbury Resources (DNR) and Diamondback Energy (FANG) reported LOE of $18.82 per boe and $5.37 per boe, respectively, in 3Q16. The Energy Select Sector SPDR ETF (XLE) invests at least 95% of its total assets in oil and gas companies. Next, let’s take a look at Marathon’s cash flow.