Morningstar | Marathon Slightly Exceeds 4Q Guidance and Expects 4% Production Growth in 2019
Marathon delivered production of 411 thousand barrels of oil equivalent per day, or mboe/d in the fourth quarter, which was a hair above the midpoint of guidance and more or less flat sequentially, though on a divestiture-adjusted basis, oil volumes were up 17% year over year. The firm’s financial results were slightly better than expected as well, with adjusted EBITDA and adjusted earnings per share coming in at $915 million and $0.15, respectively (beating consensus estimates of $890 million and $0.14).The 2019 capital budget was set at $2.6 billion, including $2.4 billion of development capital. This looks like a slight increase relative to 2018 (development capital for 2018 was reaffirmed at $2.3 billion as recently as the third quarter of 2018). The increase is not a major concern, as the firm is comfortably living within cash flows, has a strong balance sheet, and has a lengthy runway of development opportunities across several shale basins that break even well below current commodity prices. The budget is expected to drive divestiture-adjusted year-on-year production growth of about 4% (oil volumes should grow by 10%).
We plan to incorporate the firm's operating and financial results in our model shortly, but after this first look our fair value estimate and no-moat rating remain unchanged.
Marathon Oil is an independent exploration and production company focused on the United States resource plays. The company also has international operations in Equatorial Guinea (E.G.). The company's segments are: United States, which explores for, produces and markets crude oil and condensate, natural gas liquids (NGLs) and natural gas in the United States; and International, which explores for, produces and markets crude oil and condensate, NGLs and natural gas outside of the United States as well as produces and markets products manufactured from natural gas, such as liquefied natural gas and methanol, in E.G.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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