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Marathon Oil’s Q2 2018 Earnings Miss Estimates

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Marathon Oil misses adjusted EPS in the second quarter

Marathon Oil (MRO) announced its second-quarter earnings after the market closed on August 1. The company missed analysts’ adjusted EPS estimate by $0.05 in the quarter. It reported an adjusted profit of $0.15 per share, whereas analysts’ estimate had been $0.20 per share.

On a YoY (year-over-year) basis, Marathon Oil’s second-quarter adjusted EPS was $0.30 higher than its adjusted EPS of -$0.15 in the second quarter of 2017. MRO’s second-quarter adjusted EPS were lower than its EPS of $0.18 in the first quarter.

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Marathon Oil misses revenue in the second quarter

In the second quarter, Marathon Oil reported revenue of ~$1.42 billion, lower than analysts’ consensus estimate of ~$1.47 billion. On a YoY basis, Marathon Oil’s second-quarter revenue was ~34% higher than its revenue of ~$1.06 billion in the second quarter of 2017. However, its second-quarter revenue was ~18% lower than its first-quarter revenue of ~$1.73 billion.

The strong YoY increase of ~16% in Marathon Oil’s second-quarter production from continuing operations coupled with higher realized prices for crude oil, natural gas liquids, and natural gas affected MRO’s revenue positively in the second quarter. Specifically, MRO’s realized price for crude oil in the United States rose ~44% to $66.03 per barrel in the quarter from $45.81 per barrel in the second quarter of 2017.

Marathon Oil second-quarter reported GAAP earnings

Marathon Oil’s adjusted EPS exclude one-time benefits and charges totaling -$0.04 per share, the majority of which are related to gains on dispositions, losses on derivative instruments, and proved property impairments. Adding back these one-time items, MRO’s reported EPS on a GAAP (generally accepted accounting principles) basis were $0.11 in the second quarter. MRO’s reported EPS were -$0.16 in the second quarter of 2017.

MRO’s higher reported EPS in the second quarter can be attributed to its relatively high increase in revenue compared to total costs and expenses. Its revenue rose ~34% YoY in the second quarter. In comparison to its high revenue, MRO’s total costs and expenses saw an increase of only ~12%, which acted positively on its bottom line.

In reaction to its second-quarter earnings, MRO stock fell ~1.0% in after-hours trading on August 1. To read more about upstream stocks this earnings season, check out Market Realist’s Energy and Power page.

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