Marathon Oil’s Cash Flow Could Increase in 3Q17



Marathon Oil’s cash flow estimates

Wall Street analysts expect Marathon Oil (MRO) to report a higher cash flow of ~$490 million YoY (year-over-year) in 3Q17 from ~$366 million in 3Q16. On a sequential basis, Marathon Oil’s estimated 3Q17 cash flow is higher—compared to ~$422 million in 2Q17.

Marathon Oil has reported much lower cash flows from 1Q15, mainly due to lower realized prices for crude oil (USL) (OIL), natural gas (UGAZ), (DGAZ), and natural gas liquids. In 1Q16, Marathon Oil reported its lowest cash flow ever of ~$74 million. Since then, Marathon Oil’s cash flows have been rising steadily.

Analysts expect Marathon Oil’s 3Q17 capital expenditures to be ~$618 million. As a result, Marathon Oil’ 3Q17 free cash flow would be negative.

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Capital expenditures guidance 

Due to the exit from its Canadian OSM (oil sands mining) business in 1H17, Marathon Oil reduced its 2017 capital expenditures guidance by $250 million to $2.1 billion–$2.2 billion. Marathon Oil’s fiscal 2017 capital expenditure guidance is almost 100% higher—compared to its fiscal 2016 capital expenditure of $1.1 billion.

Marathon Oil’s peer Encana (ECA) expects its 2017 capital expenditures to be $1.6 billion–$1.8 billion, which represents a mid-point increase of ~55%—compared to capital expenditures of ~$1.1 billion in 2016. Just like Marathon Oil, Encana is increasing its focus on unconventional assets in the US.


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