Highlights of Elliott Management’s 4Q14 positions (Part 5 of 10)
(Continued from Part 4)
Elliott Management and Marathon Oil
Elliott Management has started a new position in Marathon Oil Corporation (MRO). The investment represents 0.35% of the overall hedge fund portfolio. The fund bought shares worth $33 million according to its latest 13F filings for 4Q14.
Overview of the company
Marathon Oil (MRO) is one of the leading exploration and production names in the oil and gas industry. Marathon Oil seeks to create value by responsibly producing oil and natural gas that are vital to the world’s growing energy needs. The company operates primarily out of the Eagle Ford Shale and the Bakken Shale. In the Eagle Ford, the company has ~225,000 acres.
High crude inventory levels negatively impact oil producing companies
Data regarding inventory levels of crude were released earlier this month by the EIA (U.S. Energy Information Administration). Inventories increased by 7.7 million barrels, or MMbbls, in the week ending February 13. Analysts had been expecting an increase of 3 MMbbls.
The total US commercial crude inventory now stands at 425.6 MMbbls, setting another all-time high record. Inventories surpassed the previous record of 417.9 MMbbls set last week.
Changes in inventories drive WTI (West Texas Intermediate) prices. This impacts the profitability of companies that produce oil, such as Anadarko Petroleum (APC), Chevron (CVX), ExxonMobil (XOM), and Marathon Oil (MRO). These companies make up ~5% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).
MRO announces 4Q14, misses estimates
On February 18, 2015, Marathon Oil reported net income of $ 926 million for 4Q14.The firm reported a net income of $1.37 on a per-share basis. Meanwhile, there were losses of 13 cents per share, adjusted in order to account for operations that were discontinued. As a result, the firm missed Wall Street estimates.
The company posted revenues of $2.5 billion in the fourth quarter of 2014, higher than the Wall Street forecast of $2.29 billion. For fiscal 2014, MRO reported revenues of $11.26 billion with a net profit of $3.05 billion, or $4.46 per share.
Marathon Oil capital expenditure plans
MRO recently announced that it’s planning to cut its capital expenditures in 2015. It expects capex to be around $4.3 billion to $4.5 billion, which is a reduction of about 20% compared to fiscal 2014.
Continue to Part 6
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