How Is The Needle Moving on This American Oil Company: Marathon Oil Corporation (NYSE: MRO)
Marathon Oil Corporation is an independent exploration and production company primarily focusing on unconventional resources in the United States. At the end of 2020, the company reported net proved reserves of 972 million barrels of oil equivalent. Net production averaged 383 thousand barrels of oil equivalent per day in 2020 at a ratio of 67% oil and NGLs and 33% natural gas.
Highlights:
- Marathon Oil Corporation has seen its shares rise rapidly over the last year. That was driven by fundamental improvements, not by speculation.
- Strong financial performance highlighted by third quarter free cash flow generation of $478 million; over $1.3 billion of free cash flow generation through third quarter, third quarter oil-equivalent production of 345,000 net boed, including oil production of 168,000 net bopd, no change to midpoint of 2021 total Company oil or oil-equivalent production guidance
- Total 2021 gross debt reduction of $1.4 billion, including full redemption of $900 million 2025 maturity during third quarter, contributing to $50 million of annualized cash interest expense savings.
- Raised quarterly base dividend for third consecutive quarter to $0.06 per share representing cumulative 100% increase since year-end 2020
- Executed $200 million of share repurchases since October 1st and targeting approximately $500 million of total share repurchases during fourth quarter, Board of Directors approved share repurchase authorization increase to $2.5 billion
EPS Projection For 2022
The company is now beginning to shift its capital returns focus to equity owners. There will still be debt reduction in the future, but at a more measured level, and only when existing debt matures. In the meantime, MRO plans to pay out at least 40% of its operating cash flow to shareholders via dividends and buybacks.
Quick Look at Important Numbers
Marathon Oil Corporation has risen significantly over the last year, and in recent weeks. This naturally means that shares were a better buy when they traded at lower prices. Still, since these gains were driven by fundamental improvements and not by speculation, MRO does not look expensive today. Shares trade for 11x next year’s earnings, and current earnings per share estimates for 2022 could turn out to be too low – further upside revisions to these estimates would shrink the forward earnings multiple, all else equal
Last 1 Year Chart
Stock Recommendation: company predicted Earnings estimated to increase 211.20% this year, an additional 50.40% next year and continue to compound at an annual rate of 13.00% for the next 5 year. With that growth perspective MarketFacts gives a “Buy” rating on the stock at the closing Price of $17.50 as on January 4th, 2022.
| CMP (USD) (4th January 2022) | $17.50 |
| Target Price (CAD) | $24.75 |
| Recommendation | Buy |
