The Zacks Analyst Blog Highlights: Marathon Oil, China Petroleum, TransAtlantic Petroleum, PostRock Energy and International Paper

Sep 12, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Sept. 12, 2013 /PRNewswire/ -- announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Marathon Oil Corp. (NYSE: MRO-Free Report), China Petroleum and Chemical Corp, orSinopec (NYSE: SNP-Free Report), TransAtlantic Petroleum Ltd. (AMEX: TAT-Free Report), PostRock Energy Corp. (Nasdaq: PSTR-Free Report) and International Paper Company (NYSE: IP-Free Report).


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Here are highlights from Wednesday's Analyst Blog:

Marathon Oil Focuses on Buyback

Leading integrated oil and gas firm, Marathon Oil Corp. (NYSE: MRO-Free Report) is pursuing its plan to buyback common shares worth $1 billion. The company has also provided an update relating to its asset sale and purchase activities.

Marathon Oil expects its share repurchase program to be executed in two stages. In the first phase, a substantial part of the $500 million stock buyback is complete. However, the second phase will comprise the repurchase of the remaining $500 million worth of shares, after completion of the previously declared divestment of the company's 10% ownership in offshore Angola-based Block 31. 

On June 2013, Marathon Oil entered into a deal with Sonangal Sinopec International Ltd – a subsidiary of crude oil and natural gas producer China Petroleum and Chemical Corp, orSinopec (NYSE: SNP-Free Report), to divest its interest in Block 31 for roughly $1.5 billion.

Moreover, after the $1 billion share repurchase, Marathon Oil is expected to have $800 million buyback remaining under its authorized share repurchase program. Management believes that the share repurchases will create long term value for the shareholders.

Additionally, Marathon Oil announced that it has inked a production sharing and joint agreement contract with Sonangol EP. Per the contract, Marathon Oil will divest its 10% ownership in Block 32, based off the coast of Angola, for a consideration of roughly $590 million.

The deal will be closed by the fourth quarter of 2013, subject to approvals from the government. Marathon Oil added that including the divestment of Block 32, its present agreed or completed selling of assets is at $3.5 billion, which is ahead of the company's three-year target range.

Additionally, Marathon Oil plans to buy roughly 4,800 acres of land in the Texas-based Eagle Ford shale field. The company is expected to invest $97 million for the asset acquisition.

Houston, Texas-based Marathon Oil currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile one can look at TransAtlantic Petroleum Ltd. (AMEX: TAT-Free Report) and PostRock Energy Corp. (Nasdaq: PSTR-Free Report) that add value. TransAtlantic Petroleum holds a Zacks Rank #1 (Strong Buy) while PostRock Energy sports a Zacks Rank #2 (Buy).

International Paper Hikes Dividend

Leading packaging and paper manufacturer International Paper Company (NYSE: IP-Free Report) increased its quarterly dividend by 17% year over year to 35 cents per share. The fourth quarter 2013 dividend is payable in cash on Dec 16 to shareholders of record at the close of business on Nov 15.

Based on the closing price of $38.56 on Sep 6, 2013, the proposed dividend offers a yield of 2.84%. A steady dividend payout is part of the long-term strategy of International Paper to provide attractive risk-adjusted returns to its stockholders. In addition, decent dividend increases at periodic intervals have been one of the company's most attractive features.

At the same time, management authorized a share repurchase program to purchase common shares worth $1.5 billion over a period of 2-3 years in open market transactions. Historically, International Paper has consistently returned significant cash to its shareholders through dividends and share repurchases.

The current dividend increase and share repurchase authorization further reflects the inherent strength of International Paper's business and due diligence of management to generate long-term profitability and sustainable free cash flow.

Headquartered in Memphis, TN, International Paper has manufacturing operations in North America, Europe, Latin America, Russia, Asia and North Africa. The company employs approximately 70,000 people and is strategically located in more than 24 countries serving customers worldwide.

International Paper is currently working toward transforming and improving the profitability of its distribution business, xpedx. Improvements are expected in procurement, replenishment orders, reduced stock keeping Units (SKU), and supply chain (including fewer/larger warehouses). The company is also mulling to integrate the entire platform into a single operating system.

All these initiatives are expected to double profits. Started in 2011, the company is at the initial stages of this multi-year program. We believe that these initiatives will boost results and be accretive to earnings going forward.

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