Marathon Oil's Q4 Earnings Exceed Expectations: Analyst Highlights Promising 2024 Cash Flow Forecast

Marathon Oil MRO stock has been trading higher since the company reported a 9.52% surprise on EPS and a 2.15% surprise on revenue estimates on Feb. 21.

The company surpassed analyst expectations, reporting quarterly earnings of 69 cents per share, exceeding the estimated 63 cents. Quarterly sales stood at $1.69 billion, outperforming the estimated $1.66 billion.

Also Read: Marathon Oil Q4 2023 Adj EPS $0.69 Beats $0.63 Estimate, Sales $1.69B Beat $1.65B Estimate

The Marathon Oil Analyst: JPMorgan analyst Arun Jayaram rates the stock Overweight. Jayaram didn’t assign a price target on the stock.

The Marathon Oil Thesis: Marathon Oil’s fourth-quarter earnings missed estimates, but the market response is expected to be neutral.

Despite facing challenges such as diminished natural gas liftings and heightened LOE costs, several positive indicators contribute to a favorable outlook. Jayaram highlighted positive factors such as:

• Marathon Oil’s 2024 guidance stands out for its capital efficiency, with a robust Free Cash Flow (FCF) outlook that exceeds initial estimates.
• an improved Free Cash Flow (FCF) outlook, and
• the company presents an improved E.G. projection, mitigating concerns related to global LNG price reductions.

While 4Q23 faced setbacks like lower E.G. liftings and increased LOE costs due to intensified workover activities, Marathon Oil’s 2024 guidance aligns with market expectations. The company anticipates a reversal of E.G. timing impacts in 1Q24, reflecting resilience in navigating challenges.

Despite challenges like lower Equatorial Guinea (E.G.) liftings and increased LOE costs, Marathon Oil’s 2024 guidance aligns with expectations.

The company anticipates reversing E.G. timing impacts in 1Q24. Despite 1Q24 weather-related shut-ins, MRO forecasts flat YoY oil volumes, with slightly fewer wells to sales.

The projection includes a $1.9 billion FCF in 2024, surpassing estimates and supporting a $1.6 billion cash return, demonstrating resilience despite volatile oil and gas prices.

MRO Price Action: Marathon Oil stock closed 1.4% higher at $23.98 on Thursday. Over the past year, Marathon Oil’s stock has largely remained range-bound between $22 and $27 a share, down 5% over the year.

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