Marathon Oil Corporation (MRO) Looks Interesting After the Block 31 Divestment

Apache Corporation (NYSE:APA) is also in an ongoing business restructuring process, with around $4 billion asset divestment plan for the full year 2013. The company expected that it would use $2 billion from asset sales to strengthen the balance sheet and repurchase around 30 million shares. If it could complete a $4 billion asset sale, Apache Corporation (NYSE:APA)’s EPS could move higher due to debt reduction and share buybacks.

Exxon Mobil Corporation (NYSE:XOM) is the most expensively valued among the three businesses. It is trading at $95.20 per share, with a total market cap of $423.20 billion, and is valued at 5.9 times its trailing EBITDA. ExxonMobil has its own edge over other smaller oil & gas companies, thanks to its huge resource base. It possesses as much as 25.2 billion BOE in total proved reserves. Moreover, the company had an additional 27 billion BOE of resources in design and development stages and 35 billion BOE in future development, including heavy oil sands and shale gas. ExxonMobil has a lot of growth potential with 31 major project startups in 2012-2017. Exxon Mobil Corporation (NYSE:XOM) might fit well in investors’ income portfolios due to its high dividend yield at 2.7%, with a conservative payout ratio at only 23%.

My Foolish take

Income investors might choose ExxonMobil due to its highest dividend yield, conservative payout ratio, a reasonable valuation and huge resource base with a lot of growth potential. Personally, I prefer Marathon Oil and Apache, due to their low valuations, potential asset sales and future share buybacks, which could return a lot of cash to their shareholders.

The article Marathon Oil Looks Interesting After the Block 31 Divestment originally appeared on Fool.com is written by Anh Hoang.

Anh HOANG has no position in any stocks mentioned. The Motley Fool owns shares of Apache. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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