uploads/2018/02/OXY-4Q17-Post-Image1-1.png

How Marathon Oil Turned Losses into Profits in 4Q17

By

Updated

Marathon Oil’s 4Q17 adjusted net income

Marathon Oil (MRO) announced its 4Q17 earnings on February 14 after the market closed. Per its earnings press release, MRO reported a better-than-expected profit of ~$56 million in 4Q17. Wall Street analysts were expecting a lower profit of ~$3 million. On a year-over-year basis, MRO turned profitable after 4Q16’s loss of ~$83 million. Excluding one-time items, MRO’s net income increased substantially compared with a loss of ~$68 million in 3Q17.

Article continues below advertisement

MRO’s adjusted net income turnaround from a loss in 4Q16 to a profit in 4Q17 could be due to the steep decrease in total costs and expenses. MRO’s revenues saw a decline of ~1% in 4Q17 compared with 4Q16. However, MRO’s 4Q17 total costs and expenses saw a much steeper year-over-year decline of ~12%, which acted positively on the bottom line. We’ll look at MRO’s revenues in the next part of this series.

Marathon Oil’s 4Q17 reported net income

Marathon Oil’s 4Q17 adjusted net income excludes one-time benefits and charges totaling -$84 million, the majority of which relates to an unrealized loss on derivative instruments and proved property impairments. Adding back these one-time items, MRO’s reported net income on a GAAP (generally accepted accounting principles) basis was at about -$28 million, or -$0.03 per share, in 4Q17. MRO’s reported net income was -$1.4 billion, or -$1.62 per share, in 4Q16.

MRO’s peer ConocoPhillips (COP) reported a better-than-expected profit of ~$540 million in 4Q17. Wall Street analysts were expecting a lower profit of ~$495 million. Just like MRO, COP turned its losses a year ago into profits in 4Q17.

For 2017 as a whole, excluding any one-time items, Marathon Oil reported adjusted net income of ~$214 million or -$0.25 per share from ~-$693 million or -$0.85 per share in 2016.

In the next part of this series, we’ll take a look at MRO’s revenues.

Advertisement

More From Market Realist