Image source: Marathon Oil Corporation.

What: February was a month that Marathon Oil (NYSE:MRO) investors will want to forget after a downdraft of negative news sent its stock reeling by double digits.

So what: Marathon's fourth-quarter earnings report was one of the many things that weighed on the stock last month. That's after the company reported an adjusted loss of $323 million, or $0.48 per share, due to weaker oil and gas prices. That loss came despite the fact that, operationally, the quarter was actually quite strong all things considered, with its production up 8% for the year, while its production costs slumped 28% and its general and administrative costs plunged 40%.

That progress aside, the company spent more money than it brought in last year, which is forcing it to make deep cuts in 2016. The biggest cut is in capex, which is expected to fall 50% in 2016, resulting in its production dropping by 6% to 8%. In other words, all its growth spending in 2015 will be for naught. That said, Marathon is far from the only driller to throw in the towel on growth, with Apache (NASDAQ:APA) likewise cutting its 2016 capex budget so that its production will decline. In fact, Apache's production is expected to drop by an even steeper 7% to 11% this year, largely because it's aiming to invest within cash flow, while Marathon plans to use asset sales to bridge its spending gap.

Marathon's outspending ways hasn't earned it much favor with its credit rating agencies, with both Moody's and S&P downgrading its credit rating last month. Moody's was particularly harsh, cutting its rating by three notches from Baa1 to Ba1, which puts it in junk territory. That was much steeper than the two-notch cut it made on Apache, enabling it to maintain an investment grade rating.

Now what: The oil market downturn is having a big impact on Marathon Oil's financial situation. That was evident in its fourth-quarter report, which showed a steep loss despite higher production and lower costs. Unfortunately, 2016 isn't shaping up to be any better, with the company no longer having the financial resources to grow its production. Suffice it to say, it needs to capture more improvements in order to prevent its financial situation from deteriorating any further.

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