Marathon Oil Earnings: An Early Look

Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Let's turn to Marathon Oil (NYSE: MRO  ) and take an early look at what's been happening with the company over the past quarter, and what we're likely to see in its quarterly report on Wednesday.

Stats on Marathon Oil

Analyst EPS Estimate

$0.67

Change from Year-Ago EPS

(14.0%)

Revenue Estimate

$3.93 billion

Change from Year-Ago Revenue

3.1%

Earnings Beats in Past 4 Quarters

1

Source: Yahoo Finance.

Will Marathon Oil dig up strong profits?
Marathon has had analysts taking the same conservative approach as they've taken with several other energy companies, pulling in their earnings-per-share estimates by not quite a dime over the past three months. But that hasn't held the stock back, which has risen almost 15% since early November.

Unlike many producers, Marathon Oil is in an enviable position. After spinning off its Marathon Petroleum (NYSE: MPC  ) downstream operations, the company was left with an oil-heavy portfolio of assets. As a result, Marathon Oil doesn't have to worry about low natural gas prices hurting its overall profitability. In fact, Marathon saw 93% growth between the third quarter of 2011 and the third quarter of 2012, even as Devon Energy (NYSE: DVN  ) and EOG Resources (NYSE: EOG  ) have gone to great effort in order to get more oil- and liquids-rich production into their respective asset portfoliios.

Looking forward, Marathon expects to use a two-part strategy to bolster global growth. Domestically, it anticipates building up its stakes in the promising Bakken and Eagle Ford areas. Internationally, it's pushing into areas of Africa as well as Norway and Iraq. Thanks to easy credit markets, Marathon has also been able to raise capital for expansion and capital expenditure, tapping the bond market for $2 billion in late October to refinance existing debt and add a bit of extra cash on top.

The long-term threat to Marathon is that other oil companies have followed its example by splitting off their refinery operations into separate companies, allowing them to mimic Marathon's strategy of concentrating on production. With ConocoPhillips, and more recently Hess (NYSE: HES  ) , having moved out the refining business and reaped the appropriate rewards, Marathon's honeymoon is pretty much over.

In Marathon's coming report, watch closely for news about existing and future potential production activity. With a big land grab going on across the world, it's important for every player to get its fair share, and Marathon got a head-start on bolstering its prospect for the future.

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