NEW YORK (TheStreet) -- Marathon Oil's (MRO_) revenue fell in the second quarter, but a deeper look inside its earnings report reveals that the company is on track to post double-digit growth from its core assets in the U.S.
In announcing its second-quarter results on Monday, Marathon said revenue fell 1.6% to $2.94 billion, partly because of asset sales. But earnings from continuing rose almost 50% to $360 million on a 9.1% increase in sales volume from continuing operations, excluding Libya, and on higher oil prices in the U.S.
Furthermore, Commerce Department has recently allowed Pioneer Natural Resources (PXD_)and Enterprise Product Partners (EPD_) to export condensates, a type of ultra-light crude oil. The government had banned all exports of crude oil since the 1970s.
Marathon could benefit from the government's move, because exports may push the U.S. condensate prices higher. That may boost Marathon's earnings, because the company is one of the top condensate producers in the Eagle Ford shale in south Texas.
On a post-earnings conference call, Marathon CEO Lee Tillman has said Marathon will attempt to capitalize on the positive regulatory changes. Although Tillman didn't say that the company has applied for an export license, I believe that will be the next step.
Shares of Marathon have risen 8.5% year to date, compared with a 4.2% gain for the Standard and Poor's 500 Index. The stock was down 1% to $38.48 on Thursday morning.
It trades at 15.5 times last year's earnings, much lower than than the average price-to-earnings ratio of 22.5 of Marathon's peers EOG Resources (EOG_), Continental Resources (CLR_),Murphy Oil (MUR_), ConocoPhillips (COP_) and Whiting Petroleum (WLL_).
Like other energy companies such as ConocoPhillips, Apache (APA_), Devon Energy (DVN_)and Hess Corp. (HESS), Marathon has been reducing its exposure to international markets, where it derived 30% of its segment income in the second quarter, in order to focus more on North America.
In June, Marathon Oil announced the sale of its Norwegian assets for $2.1 billion in cash. So far this year, the company has collected $2.2 billion as proceeds from sale of other non-core assets, including oil fields in Angola.
The asset sales should help Marathon boost growth from its domestic . The company gets most of its production from three oil and gas areas in the U.S. -- Eagle Ford, Bakken shale formation in North Dakota and the Oklahoma resource basins.
In the second quarter, Marathon Oil produced 170,000 barrels of oil equivalents per day, or roughly half of its total production excluding Libya and discontinued operations, from the three U.S. areas.
The three regions have driven Marathon Oil's production growth during the last two years. Since the first quarter of 2012, the company's output from Eagle Ford, Bakken and Oklahoma resource basins has increased by more than 3.5 times, or 124,000 barrels of oil equivalents per day.
The growth in the U.S. is unlikely to stop any time soon. At Eagle Ford and Bakken, Marathon has been working to improve its pace of turning wells into sales. For instance, in the second quarter, Marathon Oil brought 55% more Eagle Ford wells to sales than it did in the first quarter.
Marathon reported a 29% increase in second-quarter production from Eagle Ford, Bakken and Oklahoma resource basins. For 2014, the company has predicted more than 30% increase in production from this region.
At the time of publication, the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.