Marathon Oil Corporation (NYSE:MRO) posted adjusted net loss of $0.23 per share compared to analysts’ projections of $0.25 per share. The CEO, Lee Tillman, said that within six weeks of reporting acquisition of premium properties in the STACK oil window, they have closed the deal. They will speed up work on an additional rig on this property in 3Q2016.
This contract expands company’s inventory and positions them for growth in Oklahoma at an economical valuation. Along with non-core divestitures, the company is delivering on its plan to further concentrate capital resources to the higher margin, lower cost U.S. resource plays. Coupled with robust portfolio management, Marathon Oil continues to focus on enhancing durable operational efficiencies and reducing costs while delivering remarkable new well results in the U.S. resource plays.
The outlook
Marathon Oil anticipates 3Q2016 E&P production in North America to average 200,000 – 210,000 net boed. It showcase the divestment of certain Wyoming assets, the addition of the STACK properties in Oklahoma, and drop from the Eagle Ford pads drilled last year. International E&P production that will be available for sale is estimated to come between 125,000 and 135,000 net boed. This figure doesn’t not include the production of Libya region.
Considerable uncertainty lingers around the sales levels and future productions from Libya. Marathon Oil continues to discount Libya capacities from its production estimates.
What has changed?
The company has closed a number of divestitures in this year to minimize its risk exposure to declining crude oil prices. As capital expenditures have declined over the last few quarters, Marathon Oil liquidity performance has improved gradually. With a possibility of oil prices moving up and better liquidity, the analysts believe the company is well positioned to gain from this point with comparatively fewer threats on the downside. With the acquisition deal of PayRock Energy Holdings expected to close in 3Q2016, the company is projected to reap over 60% IRR at $50 per barrel crude oil from the acquired asset.
