Marathon Oil Corporation MRO is set to release first-quarter results on May 4. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 98 cents per share on revenues of $1.8 billion.

Let’s delve into the factors that might have influenced the independent oil and gas producer’s results in the March quarter. But it’s worth taking a look at MRO’s previous-quarter performance first.

Highlights of Q4 Earnings & Surprise History

In the last-reported quarter, the Houston, TX-based upstream player handily beat the consensus mark on stronger liquid realizations and better-than-expected domestic production. MRO had reported adjusted earnings per share of 77 cents, well above the Zacks Consensus Estimate of 55 cents. Revenues of $1.8 billion generated by the firm also came in above the Zacks Consensus Estimate by 14.5%.

Marathon beat the Zacks Consensus Estimate for earnings in each of the last four quarters, resulting in an earnings surprise of 37.4%, on average. This is depicted in the graph below:

Marathon Oil Corporation Price and EPS Surprise

Marathon Oil Corporation price-eps-surprise | Marathon Oil Corporation Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for the first-quarter bottom line has been revised 4.3% upward in the past seven days. The estimated figure indicates a 366.7% jump year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 68.9% increase from the year-ago period.

Factors to Consider

Marathon is likely to have cashed in on the surge in hydrocarbon realizations. In the previous three-month period, MRO’s key U.S. E&P segment realized average liquids prices (crude oil and condensate) of $77.03 per barrel — significantly above the year-earlier level of $39.71. Additionally, average realized natural gas prices were up 126.8% year over year to $5.24 per thousand cubic feet. The increase in price is most likely to have continued in the to-be-reported quarter, with oil and gas revisiting their multi-year highs following geopolitical tensions and the ongoing macroeconomic recovery. This price boost is likely to have buoyed the first-quarter revenues and cash flows of Marathon.

MRO is also expected to have benefited from higher production during the March period. In the fourth quarter of 2021, the company’s net production from the domestic unit averaged 304,000 barrels of oil equivalent per day (BOE/d), increasing from 280,000 BOE/d a year ago. The uptick is most likely to have continued in the to-be-reported quarter, thanks to MRO’s impressive production profile from its high-margin U.S. resource plays (Eagle Ford, Bakken, Oklahoma and Permian).

On a somewhat bearish note, the increase in Marathon’s costs might have dented the company’s to-be-reported bottom-line numbers. MRO’s production costs in the fourth quarter increased around 14% year over year to $156 million. The upward cost trajectory is likely to have continued in the first quarter due to cost inflation and higher energy prices.