Mar 01, 2016 08:48 AM EST
Marathon Oil Corp, a Texas-based oil and gas company, announced its intention to sell 135 million of common shares through a public offering. With regard to this public offering, the oil company plans to offer the underwriters an option to buy up to 20.25 million more common shares in a period of 30 days.
The US-based oil firm said that it plans to utilize the proceeds from the public offering to improve balance sheet as well as for other corporate purposes that include financing a part of its financial program. In addition, Morgan Stanley & Co. LLC is serving as the book-running manager for this proposed public offering. Marathon Oil noted that it has submitted a registration report, which includes an initial brochure supplement and a prospectus, with the SEC in regard to this offering.
Leonard Capital Management purchased 90 thousand shares of Marathon Oil worth at about $1.13 million. Everence Capital Management boosted its holding in the company to 53,336 common shares worth at $672K. Moreover, Numeric Investors LLC raised its stakeholding in the oil firm by 12.3% during the fourth quarter. Hedge funds like World Asset Management, Flossbach Von Storch AG increased their position in the company by 0.6%, 344.4% respectively during the fourth quarter, Financial Market News reported.
Korea Investment CORP also purchased fresh shares in Marathon Oil worth at about $1.04 million during the fourth quarter. Nomura allotted a "buy" rating and set a target price of $13 on the company's stock. Zacks Investment Research increased the company's shares to "hold" rating from "sell" rating on February 22nd. Meanwhile, RBC Capital lowered their target price on Marathon's shares to $13 from $15.00. Barclays also lowered their target price on the company's shares to $9.00 from $15.00. Moreover, two equity research experts have rated the company's share with a sell rating.
In 2015, the oil firm trimmed its dividend by 76% in order to maintain its cash level. Moreover, the company also reduced its capital spending outlook for 2016 over 50% lower the previous year's plan. The ongoing slump in the global oil industry has led many oil firms to undertake the cost-cutting strategy to keep hold of their cash level. Devon Energy Corp also raised nearly $1.5 billion through share offering previous week. Other oil producers like Hess Corp and Pioneer Natural Resources also joined the rally of raising cash by offering shares, as reported by Bloomberg.
According to Brian Youngberg, a researcher at Edward Jones in St. Louis, this move by Marathon highlights its effort to raise capital to sustain the global financial crisis. He added that the ultimate goal of this public offering is credit and liquidity. The shares of Marathon dropped 4.4% to $7.85 following the close of the trading session in the New York market.
Many oil producers like Marathon Oil are attempting to maintain their capital level in order to withstand the global economic slowdown. The fall in crude prices has negatively impacted these producers, who are implementing various policies to preserve their capital.
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