Lower Oil Prices Could Slash Marathon Oil's Q1 Profit

An aerial view shows pumpjacks in the South Belridge Oil Field.

David McNew / Getty Images

Marathon Oil Corp. (MRO) likely will report net income plunged and revenue declined for the second straight quarter in the first three months of the year as oil and natural gas prices moderated after a whirlwind 2022.

Key Takeaways

  • Marathon Oil is expected to report adjusted EPS in the first quarter of $0.61 vs. $1.78 in the year-ago quarter.
  • Revenue could fall for a second consecutive quarter to $1.7 billion.
  • Marathon is expected to have increased production, but gains were probably offset by lower oil prices compared with 2022.

Marathon's net income may fall by more than 70% to about $384 million, for adjusted earnings per share (EPS) of $0.61, compared with $1.3 billion, or $1.78 a share, in the prior-year quarter, according to analyst estimates compiled by Visible Alpha. Revenue may drop by almost 5% year-over-year to $1.7 billion, its lowest point since mid-2021. Marathon reports earnings after markets close on Wednesday.

Major oil companies' annual profits doubled last year to $219 billion amid extreme price volatility and the war in Ukraine. However, weakening demand for fuel in Asia and Europe late in the year lowered prices, and oil and gas companies enter 2023 with less favorable conditions.

Despite the challenging environment, Marathon is expected to have upped its production last quarter. Analysts forecast total crude oil and condensate volume of more than 186 million barrels per day in the first quarter, up from 166 million a year earlier. Natural gas production is expected to grow as well, to over 727 million cubic feet per day from 626 million last year.

Shares of Marathon Oil are down about 4% in the last year, while the benchmark S&P 500 Energy Sector Index is up roughly 11%.

One-Year Trailing Total Return for S&P 500 Energy Sector Index and Marathon Oil
Source: TradingView.
Marathon Oil Key Stats
  Estimate for Q1 FY 2023 Actual for Q1 FY 2022 Actual for Q1 FY 2021
Adjusted Earnings Per Share ($) 0.61 1.78 0.12
Revenue ($B) 1.7 1.8 1.1

Source: Visible Alpha

Article Sources
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  1. Visible Alpha. "Financial Data."

  2. Marathon Oil Corp. "Marathon Oil Schedules First Quarter 2023 Earnings Release and Conference Call."

  3. Reuters. "Big Oil doubles profits in blockbuster 2022."

  4. New York Times. "Exxon and Chevron Report More Modest Profits as Oil and Gas Prices Ease."

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