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Will Marathon Oil Report Positive Free Cash Flow in 1Q18?

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Marathon Oil’s 1Q18 operating cash flow estimates

Wall Street analysts expect Marathon Oil (MRO) to report ~51% higher year-over-year operating cash flow of ~$759 million in 1Q18, up from ~$501 million in 1Q17. On a sequential basis, MRO’s estimated 1Q18 operating cash flow is ~51% higher than its ~$501 million in 4Q17. MRO’s higher estimated 1Q18 operating cash flow could be due to higher crude oil prices in 1Q18.

Wall Street analysts expect MRO’s 1Q18 capital expenditures to be around ~$577 million, which means MRO’s 1Q18 free cash flow would be positive.

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Marathon Oil’s 2018 capital expenditure guidance

For fiscal 2018, Marathon Oil expects capital expenditures of ~$2.3 billion—which is higher than MRO’s full-year 2017 capital expenditure of ~$2.0 billion. For 2018, MRO plans to direct more than 90% of its capital budget to the four US resource plays. Commenting on the 2018 capital budget, MRO’s president and chief executive officer, Lee Tillman, said, “In 2018, we expect to improve corporate-level returns from our disciplined development capital program that’s self-funding at $50 and will generate meaningful free cash flow at $60 average WTI, including the dividend.”

MRO’s peer Encana (ECA) expects capital expenditure in a range of $1.8 billion–$1.9 billion, which is slightly higher than ECA’s fiscal 2017 capital expenditure of ~$1.8 billion. ECA’s 2018 capital budget is to be fully funded by its cash from operations.

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