Report
Valens Research

MRO - Embedded Expectations Analysis - 2018 09 26

Marathon Oil Corporation (MRO:USA) currently trades above recent averages relative to Uniform Assets, with a 0.9x Uniform P/B. At these levels, markets are pricing in bullish expectations for the firm, but management is concerned about the sustainability of outperformance in the Bakken, the strength of their balance sheet, and additional share buyback programs

Specifically, management may lack confidence in their ability to sustain strong execution across their four U.S. resource plays, particularly in the Bakken and Eagle Ford. Additionally, they may lack confidence in the sustainability of outperformance in the Bakken due to their enhanced completion design, and in the potential of their trial designs in the region. Furthermore, they may be concerned about regulatory changes in the Bakken, and may lack confidence in their ability to meet expectations for production outperformance for the year. Moreover, they may lack confidence in the strength of their balance sheet, and may be concerned about their capital execution flexibility. Finally, they may be concerned about their ability to sustain free cash flow, and to directly return more capital to shareholders, including the potential for further share buyback programs
Underlying
Marathon Oil Corporation

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.

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Valens Research
Valens Research

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