Marathon Oil Corporation MRO is set to report second-quarter 2018 financial results on Aug 1 after the closing bell. The Zacks Consensus Estimate for the to-be-reported quarter is pegged at a profit of 21 cents on revenues of $1,495 million.
In the last reported quarter, the company delivered an impressive 20.00% positive earnings surprise on the back of higher crude price realizations and robust production growth at the U.S. E&P segment. The company boasts an encouraging earnings surprise history. It surpassed estimates in three of the last four quarters, with an average positive surprise of 60.36%.
Notably, the Zacks Consensus Estimate for earnings has moved north by two cents over the past month. This signals a turnaround from a loss of 24 cents per share incurred in the year-ago quarter.
Marathon Oil Corporation Price and EPS Surprise
Marathon Oil Corporation Price and EPS Surprise | Marathon Oil Corporation Quote
Why a Likely Positive Surprise?
Our proven model shows that National Oilwell is likely to beat earnings estimates in the to-be-reported quarter, as it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +1.40%. A favorable Earnings ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: National Oilwell currently holds a Zacks Rank #3. A Zacks Rank #3, when combined with a positive ESP, makes us confident of an earnings beat.
We caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
What’s Driving the Better-Than-Expected Earnings?
Marathon Oil’s strong inventories of development projects place it well for growth. The company has been improving the quality of assets, which bodes well for production. The company has successfully established itself in the Delaware Basin and STACK/SCOOP resource plays, while exiting the oil sands and conventional assets with limited upside. Driven by the key low cost-high margin U.S. resource shales like Permian, Eagle Ford and Bakken, Marathon Oil forecasts 25-30% annual growth in 2018 production.
Management had earlier predicted second-quarter 2018 U.S. Exploration & Production (E&P) output available for sale in the range of 270,000-280,000 BOE/d. The Zacks Consensus Estimate for total sales volume at the U.S. (E&P) segment for the first quarter is pegged at 288,000 barrels of oil equivalent per day (BOE/d), above the year-ago quarter’s figure of 222,000 BOE/d.
Along with expanded production volumes, the North American market is likely to benefit from higher commodity price realizations. The oil benchmark in the United States attained its highest settlement since November 2014 in the second quarter, despite record high domestic production. Crude was supported by a variety of catalysts, including a series of buoyant weekly EIA crude inventory numbers, worries about tightening global supplies in the midst of strong demand and doubts regarding OPEC’s ability to boost production.
The Zacks Consensus Estimate for realized prices in the United States is projected to increase year over year, which might boost Marathon Oil’s top line. The Zacks Consensus Estimate for average oil price is expected to jump 37.5% from the prior-year quarter to $63 a barrel.
Other Stocks to Consider
Marathon Oil is not the only energy firm looking up this earnings season. Here are some other companies from the same space, which according to our model also have the right combination of elements to post an earnings beat in the to-be-reported quarter.
Murphy Oil Corp. MUR has an Earnings ESP of +5.99% and a Zacks Rank #2. The company is anticipated to release second-quarter earnings on Aug 8. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Jones Energy, Inc. JONE has an Earnings ESP of +2.47% and a Zacks Rank #3. The firm is expected to report second-quarter earnings on Aug 2.
Canadian Natural Resources Ltd. CNQ has an Earnings ESP of +1.75% and sports a Zacks Rank #1. The firm is expected to announce second-quarter earnings on Aug 2.
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