Marathon Oil Pares Down Debt; Bumps Up Dividend By Over 30%


Energy exploration and production company Marathon Oil Corp (MRO) has redeemed its $500 million senior notes that were due in 2022. These notes had a 2.8% coupon rate. The move reduces Marathon’s annual interest expense by $14 million.

Additionally, the company raised its quarterly dividend by about 30% to $0.04 per share. The dividend is payable on June 10 to investors of record on May 19.

Marathon Oil Chairman, President, and CEO, Lee Tillman said, “We have swiftly followed through on our commitment to reduce our gross debt by at least $500 million in 2021, fully addressing our next significant debt maturity, and have also raised our quarterly base dividend by over 30%.”

Tillman added, “These actions are fully consistent with our objective to both further enhance our investment-grade balance sheet and return an increasing amount of capital to shareholders.” (See Marathon Oil stock analysis on TipRanks)

On April 20, Raymond James analyst John Freeman reiterated a Buy rating on the stock but did not assign any price target.

Marathon Oil announced preliminary CFO expectations of $610 million to $630 million for 1Q. This was higher than consensus estimates of $540 million.

Freeman commented, “The CFO beat on the quarter was largely due to strong price realizations in the U.S.”

Overall consensus among analysts is that Marathon Oil is a Hold based on 4 Buys, 6 Holds, and 3 Sells. The average analyst price target of $12.24 implies 4.4% upside potential. Shares have gained about 100.5% over the past year.

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