Marathon Oil Corporation Provides Fourth Quarter 2009 Interim Update

Jan 13, 2010, 08:32 ET from Marathon Oil Corporation

HOUSTON, Jan. 13 /PRNewswire-FirstCall/ -- Marathon Oil Corporation (NYSE: MRO) today is providing information on market factors and operating conditions that occurred during the fourth quarter of 2009 that could impact the Company’s quarterly financial results. The market indicators and Company estimates noted below and in the attached schedule may differ significantly from actual results. The Company will report fourth quarter results on Feb. 2, 2010, and will conduct a conference call and webcast that same day. Details of the earnings conference call and webcast are noted at the end of this release.

Exploration and Production

Liquid hydrocarbon and natural gas production sold during the fourth quarter is estimated to be approximately 410,000 barrels of oil equivalent per day (boepd) from continuing operations. There were no sales volumes from the Company’s Gabonese assets, which were sold during the fourth quarter. Revenues are reported based on production sold during the period, which can vary from production available for sale primarily as a result of the timing of crude oil liftings and natural gas sales. Liquid hydrocarbon and natural gas production available for sale during the fourth quarter is expected to be approximately 400,000 boepd, at the high end of previous fourth quarter guidance for continuing operations of 385,000 to 405,000 boepd. Both the estimated production available for sale and the previous guidance exclude any production from Gabon.

As shown in the attached table, Marathon's average liquid hydrocarbon realization for the first two months of the fourth quarter increased $8.30 per barrel domestically and $5.50 per barrel internationally compared to the third quarter of 2009, reflecting the general market price movements during the first two months of the quarter. For the entire fourth quarter of 2009, the average West Texas Intermediate (WTI) crude oil market price indicator was $7.89 per barrel higher than the third quarter of 2009 while the average Dated Brent indicator increased $6.45 per barrel.

Marathon's domestic average natural gas price realization for October and November of 2009 increased $0.90 per thousand cubic feet (mcf) from the Company's average realized price in the third quarter of 2009. The average Henry Hub (HH) prompt natural gas price for the fourth quarter increased $1.11 per million British Thermal Units (BTUs) compared to the third quarter of 2009, while the average HH bid week natural gas price increased $0.77 per million BTUs during the same period. International average natural gas realizations for continuing operations decreased $0.03 per mcf in the first two months of the fourth quarter compared to the third quarter of 2009.

Marathon's actual crude oil and natural gas price realizations vary from market indicators primarily due to product quality and location differentials.

Fourth quarter 2009 exploration expense is expected to be approximately $140 million, which is within previous guidance.

Oil Sands Mining

For the fourth quarter 2009, the Company estimates that its share of bitumen production from the Athabasca Oil Sands Project (AOSP) mining operation will be approximately 25,000 barrels per day (bpd), which is within the previous guidance of 24,000 to 29,000 bpd for the fourth quarter. Marathon’s synthetic crude oil sales from AOSP for the fourth quarter of 2009 are estimated to be approximately 34,000 bpd. Marathon's average synthetic crude oil realization for the first two months of the fourth quarter was $68.73 per barrel, compared to $62.08 per barrel for the third quarter of 2009, reflecting the general market price movements during the first two months of the fourth quarter.

Refining, Marketing and Transportation

Crude oil refined is expected to average approximately 998,000 bpd for the fourth quarter of 2009, compared to 952,000 bpd in the final three months of 2008. Total refinery throughputs for the fourth quarter of 2009 are expected to be about 1,190,000 bpd compared to 1,177,000 bpd in the fourth quarter of 2008.  

The Company currently projects its refined products sales volumes will average approximately 1,450,000 bpd in the fourth quarter of 2009 compared to 1,404,000 bpd in the fourth quarter of 2008.

The Company estimates its fourth quarter 2009 refining and wholesale marketing gross margin will be approximately $0.01 per gallon as compared to $0.1248 per gallon earned in the fourth quarter of 2008.  The primary factor contributing to the margin decline is lower fourth quarter 2009 wholesale price realizations compared to the relevant spot market indicators, due to crude oil prices increasing about $10 per barrel during the fourth quarter of 2009 compared to the significant drop in crude oil prices of about $55 per barrel during the fourth quarter of 2008.

Speedway SuperAmerica LLC’s (SSA) gasoline and distillate gross margin averaged approximately $0.10 per gallon during October and November 2009 and is expected to average approximately the same for the fourth quarter of 2009. The Company projects that SSA’s fourth quarter same store gasoline sales volume will decrease about 2 percent compared to the same quarter of last year.

Integrated Gas

Marathon's liquefied natural gas (LNG) operations in Equatorial Guinea and Alaska are estimated to have sold approximately 6,800 net metric tonnes per day (mtpd) of LNG in the fourth quarter of 2009, above the previous guidance of 6,000 to 6,700 mtpd.

Other Information

The overall corporate effective income tax rate for 2009, excluding special items and foreign currency related items, is expected to be between 55 and 60 percent. The effective tax rate is influenced by a variety of factors including the geographic and functional sources of income and the relative magnitude of these sources of income.

Earnings Release Date and Conference Call Information

Marathon will report its fourth quarter 2009 results on Feb. 2, 2010. The Company will also conduct a conference call and webcast that same day at 2 p.m. EST. The call will cover fourth quarter and full year 2009 financial results and will include forward-looking information. Interested parties can listen to this call and view associated slides by accessing the Marathon Oil Corporation Web site at http://www.marathon.com and clicking on the Fourth Quarter 2009 Financial Results link. Replays of the conference call will be available on the Web site through Feb. 16, 2010. Financial information, including earnings releases and other investor-related material, is also available online.

This release contains forward-looking statements with respect to estimates of the Company's worldwide liquid hydrocarbon and natural gas production, exploration expenses, mined bitumen production, synthetic crude oil sales, refined products sales volumes, refining and wholesale marketing gross margin per gallon, crude oil and total refinery throughputs, Speedway SuperAmerica LLC gasoline and distillate gross margin and gasoline sales volumes, LNG sales volumes, and the corporate effective income tax rate for 2009.  These are preliminary estimates and are therefore subject to change.  Actual results may differ materially from the estimates given in this update. In accordance with the "safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, Marathon Oil Corporation has included in its Annual Report on Form 10-K for the year ended December 31, 2008, and subsequent Forms 10-Q and 8-K, cautionary language identifying important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements.


    Media Relations Contacts:
    Lee Warren          713-296-4103
    John Porretto       713-296-4102

    Investor Relations Contacts:
    Howard Thill        713-296-4140
    Chris Phillips      713-296-3213

Select Operating and Financial Data (unaudited)

4Q

3Q

Oct - Nov

4Q

2008

2009

2009

2009

Actual

Actual

Actual

Estimates

Exploration and Production

   Net Sales

     Domestic – Liquid Hydrocarbons (MBPD)

64

63

            62

--

     Domestic – Natural Gas (MMCFD)

454

339

          360

--

     International – Liquid Hydrocarbons (MBPD)

180

159

          204

--

     International – Natural Gas (MMCFD) (1)

495

528

          572

--

        Worldwide Continuing Operations (MBOEPD)

402

366

         421

410

     Discontinued operations (MBOEPD) (2)

15

10

--

--

        Worldwide (MBOEPD)

417

376

         421

410

   Market Prices

     NYMEX prompt WTI oil price ($/BBL)

59.08

68.24

       76.93

76.13

     Dated Brent oil price ($/BBL)

55.48

68.08

       74.66

74.53

     HH prompt natural gas price ($/MMBTU)

6.38

3.15

         3.72

4.26

     HH bid week natural gas price ($/MMBTU)

6.95

3.39

         4.00

4.16

  Average Realizations (3)

     Liquid Hydrocarbons:

        Domestic ($/BBL)

47.06

61.07

69.37

--

        International ($/BBL)

56.40

65.32

70.82

--

        Discontinued operations ($/BBL) (2)

32.24

67.77

--

--

     Natural Gas:

        Domestic ($/MCF)

5.00

         3.63

4.53

--

        International ($/MCF)

2.28

1.29

1.26

--

        Discontinued operations ($/MCF) (2)

10.66

--

--

--

Oil Sands Mining

  Net bitumen production (MBPD)

25

27

            27

            25

  Net synthetic crude sales (MBPD)

32

33

            35

            34

  Synthetic crude average realization ($/BBL) (3)

48.98

62.08

       68.73

--

Refining, Marketing and Transportation

  Chicago LLS  6-3-2-1 crack spread ($/BBL)

2.31

         3.93

         1.86

         1.48

  Gulf Coast LLS 6-3-2-1 crack spread ($/BBL)

(0.01)

         2.50

         1.09

         1.18

  Chicago LLS 3-2-1 crack spread ($/BBL)

5.30

         6.25

         3.86

         3.34

  Gulf Coast LLS 3-2-1 crack spread ($/BBL)

2.45

         4.36

         2.93

         2.98

  Sweet/sour differential ($/BBL) (4)

10.03

         5.64

         5.76

         6.43

  Refinery Runs:

     Crude oil refined (MBPD)

          952

       1,019

       1,003

          998

     Other charge & blend stocks (MBPD)

          225

          171

206

          192

        Total (MBPD)

       1,177

       1,190

       1,209

       1,190

  Crude oil capacity utilization (%)

            94

          100

            99

            98

  Refined products sales volumes (MBPD) (5)

       1,404

       1,400

       1,483

       1,450

  Refining & wholesale marketing gross margin ($/gal) (6)

     0.1248

     0.0762

--

         0.01

  SSA gasoline and distillate sales (MMGal)

          839

          818

          544

--

  SSA gasoline and distillate gross margin ($/gal)

     0.1821

     0.1399

     0.1038

         0.10

  SSA merchandise gross margin ($million)

          175

          207

          125

--

Integrated Gas

  Net Sales (MTPD) (7)

     LNG

       5,786

       6,372

       6,794

       6,800

     Methanol

          837

       1,145

       1,151

--

BBL – barrel

gal – gallons

MBOEPD – thousand barrels of oil equivalent per day

MBPD – thousand barrels per day

MCF – thousand cubic feet

MMBTU – million British Thermal Units

MMCFD – million cubic feet per day

MMGal – million gallons

MTPD – metric tonnes per day

(1)

Includes natural gas acquired for injection and subsequent resale.

(2)

Marathon's oil and gas businesses in Ireland (natural gas) and Gabon (liquid hydrocarbons) are treated as discontinued operations in all periods presented.

(3)

Excludes gains and losses on derivative instruments and the unrealized effects of U.K. natural gas contracts that are accounted for as derivatives.

(4)

15% Arab Light, 20% Kuwait, 10% Maya, 15% Western Canadian Select, 40% Mars.

(5)

Total average daily volumes of all refined product sales to wholesale, branded and retail (SSA) customers.

(6)

Sales revenue less cost of refinery inputs, purchased products and manufacturing expenses, including depreciation.

(7)

LNG sales volumes include both consolidated sales and Marathon's share of the sales volumes of an equity method investee.

SOURCE Marathon Oil Corporation



RELATED LINKS

http://www.marathon.com