A month has gone by since the last earnings report for Marathon Oil (MRO). Shares have lost about 0.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Marathon Oil due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Marathon Oil Reports Lower-Than-Expected Q2 Earnings

Marathon Oil Corporation reported second-quarter 2024 adjusted net income per share of 63 cents, missing the Zacks Consensus Estimate of 67 cents. The underperformance reflects higher costs and tepid production numbers.

However, the company’s bottom line rose from the year-ago adjusted profit of 48 cents due to higher commodity price realizations.

The company reported revenues of $1.7 billion, which came $15 million above the consensus mark and rose 12.8% from the year-ago sales.

Investors should know that on May 29, U.S. upstream behemoth ConocoPhillips (COP Quick QuoteCOP - Research Report) announced a definitive agreement to acquire Marathon Oil in an all-stock transaction valued at $22.5 billion. Completion of the transaction is expected by the fourth quarter of 2024.

Segmental Performance

This Texas-based energy explorer’s total net production (from U.S. and International units) in the quarter under review came in at 393,000 barrels of oil equivalent per day (BOE/d) compared with 399,000 BOE/d in the year-ago period.

U.S. E&P: This U.S. upstream unit reported an income of $379 million, up from $365 million in the year-ago period due to an uptick in oil and gas realizations, partly offset by higher costs. We modeled the segment income at $434 million.

Marathon Oil’s average realized liquids price (crude oil and condensate) of $79.12 per barrel was 9.1% higher than the year-earlier level of $72.49 but narrowly missed our projection of $80.48. Meanwhile, natural gas liquids’ average price realizations increased 13.1% to $21.18 a barrel. Finally, average realized natural gas prices plunged 24.9% year over year to $1.42 per thousand cubic feet and underperformed our estimate of $1.44.

As far as production costs are concerned, they averaged $6.21 per BOE, or a 5.6% year-over-year increase.

Net production of 351,000 BOE/d was down 1.4% from second-quarter 2023. Total U.S. output, which came over our projection of 345,000 BOE/d, comprised approximately 52% oil, or 183,000 barrels per day (bpd).

The Eagle Ford region recorded an average production of 153,000 BOE/d, while output from Bakken was 107,000 BOE/d. The Oklahoma output came in at 42,000 BOE/d. In the Permian Basin, MRO produced 47,000 BOE/d.

International E&P: The segment, which explores and produces oil and gas in Equatorial Guinea, reported earnings of $79 million compared with $30 million in the year-ago period and our projection of $45.8 million. The significantly improved results could be primarily attributed to higher natural gas sales prices.

Marathon reported production available for sale of 42,000 BOE/d, essentially in line with our projection as well as the second-quarter 2023 level of 43,000 Boe/d.

Marathon’s average realized liquids prices (crude oil and condensate) of $57.31 per barrel reflected a 6.8% improvement from the year-earlier quarter. Natural gas and natural gas liquids’ average price realizations came in at $4.96 per thousand cubic feet and $1 a barrel, respectively, compared to 24 cents and $1 in the corresponding period of 2023.