Marathon Oil Q4 Profit Misses View; Further Cuts 2015 Capital Budget

(RTTNews) - Oil and gas company Marathon Oil Corp. (MRO) on Wednesday reported a profit for the fourth quarter that more than doubled from last year, as a gain on sale of assets helped offset lower revenues.

However, adjusted earnings per share for the quarter missed analysts' estimates. Looking ahead, Marathon Oil reduced its capital budget for 2015 by a further 20 percent amid lower commodity prices.

The company's net sales volumes from continuing operations for the fourth quarter, excluding Libya, averaged 442,000 net barrels of oil equivalent per day or boed, up 17 percent from 379,000 net boed in the year-ago period.

However, North American price for crude oil decreased 24 percent from the year-ago period to $66.16 per barrel, while natural gas price rose 4 percent from last year to $3.90 per mcf.

Houston, Texas based Marathon Oil's net income for the fourth quarter was $926 million or $1.37 per share, up from $375 million or $0.54 per share in the year-ago period. The latest quarter's results include a net after-tax gain on dispositions of $932 million.

Excluding items, adjusted net income for the quarter was breakeven per share, compared to $0.60 per share in the prior-year period. On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $0.03 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue and other income for the quarter declined 2 percent to $2.50 billion from $2.55 billion in the same period last year. Analysts had a consensus revenue estimate of $2.42 billion for the quarter.

Total costs and expenses for the quarter increased 17 percent from the year-ago period to $2.64 billion.

For 2014, Marathon Oil's net income was $3.05 billion or $4.46 per share, up from $1.75 billion or $2.47 per share last year. Adjusted net income for the year was $2.53 per share, compared to $2.64 per share in the previous year.

Total revenues and other income for the year declined 4 percent to $11.26 billion from $11.78 billion in the prior year.

Street expected the company to earn $2.63 per share for the year on revenues of $11.77 billion.

Looking ahead to the first quarter, Marathon Oil forecasts 375,000 to 395,000 net boed for production available for sale from the combined North America E&P and International E&P segments, excluding Libya.

For fiscal 2015, Marathon Oil announced a capital, investment and exploration budget of $3.5 billion, reflecting a further 20 percent decrease since the company's December capital budget update.

Lee Tillman, President and CEO of Marathon Oil said, "The second half of 2014 brought a rapid correction in commodity prices and our fourth quarter North America crude oil and condensate realizations were down 26 percent sequentially. Though our U.S. resource plays generate competitive returns at current pricing, we're taking action to materially reduce our 2015 capital program relative to 2014 to protect our financial flexibility."

For 2015, the company forecasts 370,000 to 390,000 net boed for production available for sale from the combined North America E&P and International E&P segments, excluding Libya, and 35,000 to 45,000 net barrels per day or bbld of synthetic crude oil for the OSM segment.

Marathon Oil expects its resource plays to achieve production growth of approximately 20 percent in 2015, year over year.

MRO closed Wednesday's trading at $29.02, down $0.61 or 2.06 percent on a volume of 8.28 million shares. In after-hours, the stock further declined $0.16 or 0.55 percent to $28.86.