Strong production both internationally and in the U.S. boosted Marathon Oil Corp.'s (MRO) third-quarter earnings 11% to comfortably beat Wall Street estimates.
For the quarter, Marathon Oil reported a profit of $450 million, or 63 cents a share, versus $405 million, or 57 cents a share, a year earlier. Excluding gains on asset sales and other items, earnings were 64 cents from 59 cents. Revenue rose 9.5% to $4.16 billion.
Analysts polled by Thomson Reuters had most recently forecast earnings of 64 cents a share on revenue of $3.5 billion.
Last year, Marathon Oil spun off its downstream and petroleum assets, creating Marathon Petroleum Corp. (MPC), in a bid to focus its drilling efforts on unconventional U.S. oil shales, like the Bakken in North Dakota, Anadarko Woodford in Oklahoma and Eagle Ford in Texas.
During the third quarter, Marathon's exploration and production earnings climbed 47% from a year earlier, driven by a strong performance internationally as well as in the U.S. International operations accounted for about 80% of the company's income during the quarter, though the share of profits generated in the U.S. climbed from the second quarter.
"Marathon Oil's producing assets exceeded expectations in the third quarter, driven by superior execution in our U.S. resource plays and continued strong reliability from our base assets," Chief Executive Clarence P. Cazalot Jr. said Tuesday.
Marathon's production in the Eagle Ford formation in south Texas, an area central to its growth strategy, nearly doubled from the second quarter to the third, reaching 40,000 barrels of oil equivalent per day. Marathon has said it aims to be producing three times that much in the Eagle Ford--120,000 barrels a day--by 2016.
Analysts were encouraged by the results. Simmons analysts wrote in a note that the Eagle Ford production figure was "a better than expected number and solid growth."
The production came as Marathon said it followed through on a plan announced last quarter to cut the number of rigs it has operating in the region by two, to 18.
"It's good to see that they're able to reduce the drilling times and grow volume there with fewer rigs," Morningstar analyst Allen Good said.
Marathon has continued efforts to expand in the Eagle Ford at the same time as it has pared its portfolio down in other areas as part of an ongoing effort to focus on high growth areas. The company aims to sell $1.5 to $3 billion worth of assets by the end of 2013, and has sold $1.1 billion worth of assets so far, including the pending sale of the exploration and production company's Alaska Cook Inlet assets.
Mr. Cazalot said Tuesday that "in the next 15 months, Marathon Oil plans to drill a number of impact wells in emerging and proven oil plays across the Rift Trends in Kenya and Ethiopia, in the Kurdistan region of Iraq, and offshore in the Gabon presalt, Norway and the Gulf of Mexico."
Last week, Marathon Petroleum reported its third-quarter profit rose 8% as the refining-and-pipeline company posted an increase in revenue.
Shares of Marathon Oil closed were trading up 0.88% at $30.78 Tuesday morning. The stock has risen 13% in the past 12 months.
Copyright (c) 2012 Dow Jones & Company, Inc.
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