Marathon Oil Hits The Ground Running: Analyst Boosts Forecast Amid Strong Reserve Report

Benchmark analyst Subash Chandra reiterated a Buy rating on the shares of Marathon Oil Corp MRO and raised the price target from $25 to $32.

The company's reserve report, according to the analyst, confirms a lower cost structure, resilient asset base and multi-basin exposure generating one of the highest FCF yields at $80 oil.

Marathon Oil experienced positive performance revisions and extensions that were 140% of production, said the analyst.

The reserve mix was oilier (49% versus 48% last year), and the cost structure declined. 

The analyst noted that 70% of FY24 capital expenditure will go towards the main assets, the EF (40%) and Bakken (30%), with the EF well productivity being resilient for more than five years, helped by the $3 billion acquisition of Ensign in 2022.

The company’s Permian presence remains a blip, with reserves constituting 12% of the total, and the company has been successful at managing multi-basin assets, opined the analyst.

EG reserves slipped 20% ahead of an infill drilling program in '25 that will slow the Alba field decline rate, said the analyst.

The analyst estimates a pre-tax PV10 of $20 billion ($35 per share) less debt of $5.6 billion ($10 per share), or $25 per share ending the year.

Price Action: MRO shares are trading higher by 3.08% at $25.91 on the last check Wednesday.

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