Marathon Tumbles Most in S&P 500 as Oil Dips Back Below $30by
Marathon Oil Corp. dropped to a 12-year low as oil prices slid back below $30 with Iran getting closer to resuming exports.
Marathon fell as much as 15 percent in New York on Friday. It was down 12 percent to $7.95 at 12:57 p.m., the biggest decliner in the Standard & Poor’s 500 Index.
While all producers are dealing with low prices and a changing market, Marathon is hit especially hard because of its higher oil leverage and cost structure, said Fadel Gheit, an analyst at Oppenheimer & Co. who rates the company at market perform.
"Even the dividend cut didn’t really matter because the financial situation is deteriorating," he said. "The market is beginning to realize that companies with higher leverage prices are the ones that will be hurt the most -- and Marathon is at the front of that."
Marathon is on pace for its steepest weekly drop since October 2008. On Thursday, the company’s $900 million of 3.85 percent notes due 2025 were down 1.01 cents to 77.6 cents on the dollar.
The S&P Oil & Gas Exploration and Production index slid 6.1 percent, as West Texas Intermediate crude futures sank as much as 6.6 percent in New York. International sanctions on Iran may be lifted soon, allowing for a boost in oil shipments from the fifth-biggest member of the Organization of Petroleum Exporting Countries.