uploads///MRO Q Pre Production

Marathon Oil’s Production to Fall to Two-Year Low in 4Q16

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Feb. 13 2017, Updated 9:07 a.m. ET

4Q16 production guidance

For 4Q16, Marathon Oil (MRO) expects total production of 365 Mboepd[1.thousand barrels of oil equivalent per day]–390 Mboepd. The midpoint of Marathon Oil’s 4Q16 production guidance is ~12% lower than it was in 4Q15. Marathon Oil’s year-over-year fall in production can be attributed to reduced capital investments and divestitures in the last year.

Marathon Oil’s 4Q16 production guidance is ~6% lower than it was in 3Q16. In its 3Q16 earnings conference call, Marathon attributed the sequentially lower production to planned maintenance activities in 4Q16.

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For 4Q16, Marathon expects North America E&P (exploration and production) of 205 Mboepd–215 Mboepd, a midpoint decrease of ~3% from its 2Q16 production of 216 Mboepd. Marathon expects international E&P production of 120 Mboepd–130 Mboepd, a midpoint decrease of ~2% from its 2Q16 production of 128 Mboepd. Marathon expects synthetic crude oil production of 40 Mboepd–45 Mboepd in 4Q16.

Fiscal 2016 production guidance

Due to the divestment of the majority of its Wyoming assets, acquisition of PayRock Energy, and decline of Eagle Ford Shale high-density pads drilled in 2015, Marathon Oil has updated its fiscal 2016 production guidance.

For 2016, Marathon Oil expects fiscal production of 380 Mboepd–395 Mboepd, a midpoint increase of ~5 Mboepd (or ~1%) from its previous guidance of ~382.5 Mboepd. Despite increasing its 2016 production guidance, Marathon maintained its capital expenditure and operating cost guidance. We’ll take a look at lease operating expenses in part five.

Other upstream players

Recently, many S&P 500 (SPY) (SPX-INDEX) upstream companies, such as ConocoPhillips (COP), Southwestern Energy (SWN), and Pioneer Natural Resources (PXD), have also increased their fiscal 2016 production guidance. Next, let’s have a look at Marathon’s Wall Street ratings.

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