Marathon Oil (NYSE: MRO) and EOG Resources (NYSE: EOG) are each down about 20% so far this year. Does that mean the stocks are equal? Certainly not. And holding either stock has been difficult for long-term shareholders who now face Marathon and EOG near three-year lows.
Despite the stock-price drops, both companies have attractive upstream asset portfolios. With earnings reports coming up for both companies next week, now's a great time to take a look at how these companies compare.
2019 has been a pivotal year for Marathon Oil. The company's credit rating was upgraded to investment grade by Moody's on April 24, and from BBB- to BBB by S&P on June 19. The rationale for the former upgrade is "supported by Moody's expectation of good cash flow based leverage metrics as the company invests in its four core US shale assets to grow production and reserves, while its international assets decline." Moody's rationale assumes "range-bound commodity prices" but notes that "Marathon Oil's capital efficiency could lag some of its other oil-weighted peers" as " the company develops its less mature STACK and Delaware Basin assets." Investment-grade credit ratings signal to bondholders and shareholders that the company has a low risk of defaulting. Due to the high amounts of debt financing associated with exploration and production (E&P) companies, investment-grade ratings are extra important to the business.
Source Fool.com