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Marathon Oil’s 1Q17 Production Fell, but Still above Guidance

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Production beat

Marathon Oil’s (MRO) 1Q17 production (USO) (UNG) came in above its 1Q17 production guidance of 360.0–380.0 Mboepd (thousand barrels of oil equivalent per day). Its production beat can be attributed to better-than-expected production from North America Exploration and Production (or E&P). Production also rose due to production in Libya.

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Production growth

Sequentially, Marathon Oil’s 1Q17 production is ~3.0% lower than 4Q16. On a year-over-year basis, its 1Q17 production is ~2.0% lower than 1Q16. The year-over-year fall in production can be attributed to reduced capital investments and divestitures in the last year. According to an MRO press release, the fall in production was due to “severe winter weather in North America, as well as scheduled and unscheduled downtime internationally.”

Marathon Oil’s segmental 1Q17 production details

For 1Q17, Marathon Oil reported North America E&P production of 208.0 Mboepd, which is ~13.0% lower than 1Q16 production of 239.0 Mboepd.

For 1Q17, Marathon Oil reported International E&P production of 122.0 Mboepd, which is ~22.0% higher than 1Q16 production of 100.0 Mboepd. International E&P production excludes Libya, which produced 8.0 Mboepd in 1Q17.

For 1Q17, Marathon Oil reported production from oil sands mining of 45.0 Mboepd.

Production guidance

For 2017, Marathon Oil expects E&P production of 340.0–360.0 Mboepd, with a US resource play exit rate of 20.0%–25.0%.

MRO’s peer ConocoPhillips (COP) expects 2017 production guidance of 1,540.0–1,570.0 Mboepd, a midpoint fall of ~7.0 Mboepd (or ~0.45%) from 2016.

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