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Marathon Oil: Q1 Crude Oil Price Realization Underperformed WTI

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Marathon Oil’s 1Q17 crude oil realized price

Excluding the effect of hedges, Marathon Oil’s (MRO) North America E&P (exploration and production) average realized crude oil (USO) price in 1Q17 was $48.46 per barrel, an increase of ~72% compared with $28.21 per barrel in 1Q16. MRO’s 1Q17 crude oil realized prices were also boosted by gains on crude oil derivatives. We’ll take a look at MRO’s hedges in Part 8 of this series.

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Versus benchmark

In 1Q17, Marathon Oil’s average realized crude oil price from North America underperformed the average WTI (West Texas Intermediate) crude oil price. MRO’s average realized crude oil price in 1Q17 is 7% lower compared with average WTI crude oil prices of $51.78 per barrel for the same period.

Natural gas and natural gas liquids realized prices

For 1Q17, Marathon Oil’s North America E&P average realized price for natural gas (UNG) production rose ~50% to $3.02 per thousand cubic feet compared to $2.02 per thousand cubic feet for the same period in 2016.

For 1Q17, MRO’s North America E&P average realized price for natural gas liquids production rose ~138% to $19.33 per barrel compared to $8.12 for the same period in 2016.

Other upstream players

Other upstream companies from the S&P 500 (SPY), Pioneer Natural Resources (PXD), Devon Energy (DVN), and ConocoPhillips (COP) have lower realized crude oil prices in 1Q17 compared with average WTI crude oil prices during the same quarter. COP reported a negative price differential of $5.94 per barrel in 1Q17 compared with average WTI crude oil prices.

Next, we’ll take a look at an interesting chart related to Marathon Oil’s realized price effectiveness in terms of production costs.

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