Lower Commodity Prices To Hurt Marathon Oil's 2Q Amid Sluggishness At Equatorial Guinea Unit: Analyst

Benchmark analyst Subash Chandra reiterated a Buy rating on Marathon Oil Corporation MRO, lowering the price target to $28 from $32, reflecting the decline in commodity prices.

MRO plans to issue its second quarter 2023 earnings release on Aug. 2, after the close of U.S. financial markets.

As operations recover from the noise of the first quarter, the analyst expects another quarter of organic solid FCF generation ($253 million before the base dividend).

The analyst noted that Delaware production should remain strong, more than 2x year-ago levels.

However, the analyst reduced the 2Q EPS estimate to $0.44 from $0.55, while lowering the EBITDA forecast to $942 million from $978 million on unfavorable commodity prices, mainly natural gas and NGLs. 

The analyst reduced the realized gas and NGL estimate to $1.30/$14.75 from $1.55/$18.75.

The analyst thinks MRO may reserve $131 million for a debt maturity on July 15. The company will use the balance to buy back stock and chip away at the $1.5 billion term loan.

Equity income from Equatorial Guinea will likely be lower than guidance on the decline in oil and LNG prices during the quarter.

For the quarter to be reported, the analyst expects revenues of $1.44 billion compared with $2.10 billion a year ago.

The analyst expects EPS, excl. non-recurring (diluted) of $0.44, lower than $1.32 in the year-ago period.

Price Action: MRO shares are trading lower by 3.6% to $24.20 on the last check Friday.