- MRO has been rising as it maintains the capital discipline/cash return focus, but the stock still trails oil prices.
- I analyze several years of data and show that in mid-2019 a "regime change" seems to have occurred in how the market values the company.
- On average, oil had to be $20 higher after 2019 for MRO to achieve the same valuation as before 2019.
- Either (1) the market expects oil prices to fall; or (2) institutional investors can't allocate capital to the oil sector due to policy constraints.
- I believe the institutional constraints are more relevant; overall, MRO should continue higher, but the lag behind oil prices may persist too.
For further details see:
Marathon Is Still Priced For $70 Oil