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Trade Alert: Marathon NYSE:MRO

MRO, EOG, RRC, BHP

Marathon Oil has allocated $1.9-B of it’s $5.2-B CAPEX for Y 2013 to Eagle Ford, a South Texas shale play.

Eagle Ford is about 7,500 total acres, with 5 producing wells, 2 being drilled, and the potential for 100 wells. Eagle Ford is probably the most active shale plays now, and drilling results are a bit better than in the Bakken.

After faring well in Bakken shale in North Dakota, and in Oklahoma, Marathon Oil has turned its attention to South Texas, where it hopes to reach production levels of 85,000 net bbls of Oil equivalent per day in Y 2013.

During the last Quarter of this year production from Eagle Ford almost double, so MRO is on the right track, production now is at about 40,000 BPD.

The Houston-based company is crediting its Eagle Ford operations with an 11% rise in profits for Q-3 of Y 2012.

Crude Oil production was up 500,000 BPD from September 2011 to September 2012 largely because of the Eagle Ford shale play. As things stand, Eagle Ford, which borders Mexico could soon out-produce West Texas’ Permian Basin.

Most of Eagle Ford’s Crude Oil is found in the area’s northernmost tip, while elsewhere the play offers condensate and dry Nat Gas.

Last year , according to Texas authorities, Eagle Ford produced 914 million cubic feet of Nat Gas per day and 119,353 BPD of Crude Oil. For Nat Gas, those figures are slightly lower for Y 2012, but for Crude Oil, they have increased to nearly 300,000 BPD through August.

Right now, the top producer is EOG Resources NYSE:EOG, which is pumping out around 110,000 bbls of Oil equivalent per day and owns about 1.6-B BOE of reserves in Eagle Ford.

Marathon is not far behind, and they should not have too much trouble reaching their Y 2013 production target of 85,000 BPD.

I expect to see some buyouts in the Eagle Ford, the majors are not likely to idly watch EOG and Range Resources NYSE:RRC hold a sizable portion of Eagle Ford acreage.

Remember, Petrohawk Energy Corp. got in there 1st with drilling success in Y 2008. But it was bought out last year for $15.1-B by BHP Billiton NYSE:BHP, LN: BLT.

MROs shares are trading above their 50 and 200-Day MAs

52 wk Trading Range: 23.17 – 35.49

PE: 10.90

EPS: 2.25

Div Yield: 0.68/shr 2.20%

Next Earnings Date: 4 February 2013

Analysts Recommendation: Buy

1 Yr Price Target Estimate: 39.43

Performance Metrics

Week Month Quarter Half Year Year

+0.23% +3.79% +9.96% +25.13% +11.14%

MRO Analysis Overall Short Intermediate Long
Neutral (0.02) Bearish (-0.28) Neutral (-0.04) Bullish (0.38)

Recent CandleStick Analysis Very Bearish
Date Candle
10 Dec 2012 Bearish Engulfing
7 Dec 2012 DOJI
Open Gaps
Direction Date Range
up 7 Aug 2012 26.79 to 26.9

Support and Resistance
Type Value Conf.
resist. 33.26 1
resist. 31.93 2
resist. 30.84 18
supp 29.29 7
supp 27.95 5
supp 26.98 11
supp 26.01 2
supp 25.73 2
supp 25.34 2
supp 24.85 2
supp 24.09 2

Technical Indicators
Ind. Short Inter Long
EMA VBe Bu VBu
MACD VBe Bu VBe
RSI VBe
TDD Be
Fibs Be Be VBu
Highs N Bu Bu
Lows VBu VBu VBu
Trends N N Bu
Stoch. Bu
VBu=Very Bullish, Bu=Bullish
N=Neutral
Be=Bearish, VBe=Very Bearish

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