Marathon Oil (NYSE:MRO) revealed a worse-than-expected year-over-year drop in first-quarter earnings on Wednesday, as output fell from the June spinoff of its refining business and higher sales could not fully offset rising costs.
The Houston-based energy giant reported net income of $417 million, or 59 cents a share, down sharply from $996 million a year ago, or 64 cents. Excluding one-time tax costs, Marathon earned 67 cents, below average analyst estimates of 87 cents in a Thomson Reuters poll.
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The year-over-year comparison is largely a reflection of last summer's spinoff of the refining business, which created Marathon Petroleum that focuses on drilling efforts on unconventional U.S. oil shales.
From the fourth quarter, adjusted income was down about 15% from $552 million, but sales grew 5% to $4 billion compared with $3.8 billion the prior quarter and topped the Street's view of $3.36 billion.
The sequential sales gains reflect a better-than-expected improvement in its exploration and production segment, which delivered production available for sale at an average 371,000 barrels of oil equivalent a day, excluding Libya.
However, earnings in exploration and production fell from the fourth quarter in both the U.S. and in international markets, further weighed down by declines in both its oil sands mining and integrated gas groups.
Total pre-tax earnings ticked higher from the prior period as operations in Libya resumed and sales improved in Norway on an increase in natural gas prices.