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Why Crude Oil Prices Drive Marathon Oil Stock

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Marathon Oil’s operating revenue mix

  • In 2Q17, Marathon Oil’s (MRO) continuing operations’ operating revenue from crude oil (OIL), natural gas (DGAZ), and natural gas liquids sales totaled ~$891.0 million, an increase of ~3.0% when compared with 1Q17.
  • The sequential increase in MRO’s 2Q17 oil and gas revenues was primarily due to higher production despite lower realized prices. We’ll look at MRO’s realized prices in the next part.
  • As you can see in the above chart, for 2Q17, Marathon Oil’s ~79.0% (or ~$705.0 million) of operating revenues came from crude oil sales, ~7.0% (or ~$66.0 million) from NGL (natural gas liquids) sales, and ~13.0% (or ~$112.0 million) from natural gas sales.
  • That means the majority of Marathon Oil’s revenues comes from crude oil and NGL sales. The price of crude oil is thus the key driving factor for MRO stock. To know more about how crude oil prices moved MRO stock, refer to Part 1 of this series.
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Other upstream players

Other upstream companies, including Energen (EGN), EOG Resources (EOG), and ConocoPhillips (COP), also have the majority of their operating revenues from liquids sales. In 2Q17, almost 72.0% of ConocoPhillips’s operating revenues from product sales came from liquids (crude oil, natural gas liquids, and bitumen).

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