What happened

Shares of Marathon Oil Corporation (MRO -1.85%) fell 10.3% in November, according to data provided by S&P Global Market Intelligence. Weighing on the oil stock was the price of crude, which plunged last month, overshadowing the company's solid third-quarter results.

So what

Crude prices tumbled 22% due to a complete reversal of the market's view on the oil supply picture. Instead of worrying that there might not be enough oil to meet demand as the U.S. reimposed sanctions on Iran, the market is now concerned that there may be too much after the U.S. granted waivers so that most of Iran's customers could continue buying its oil. That slump in crude caused most oil stocks to sell off last month, since lower prices will impact their cash flows. In Marathon's case, it had generated $630 million in excess cash this year due to higher-than-expected oil prices, the bulk of which it used to buy back stock.

An oil pump next to some storage tanks.

Image source: Getty Images.

That slump in oil prices caused investors to quickly forget about Marathon Oil's strong third-quarter results. The company earned an adjusted $0.24 per share for the quarter, which beat the consensus estimate by $0.04 per share. Further, thanks to its strong drilling results this year, Marathon now expects to grow its production from shale by 30% to 34%, which is up from its prior range of 28% to 32%. What makes that even more impressive is that Marathon is growing at a faster pace without increasing capital spending.

Now what

While the slump in oil prices will cut into Marathon's cash flow, the company remains well positioned to handle lower oil prices. That's because it built its business to thrive on $50 oil and also has a cash-rich balance sheet to help cushion the blow. That's why last month's sell-off looks like a good buying opportunity for those who are bullish on oil over the long term.