Marathon Oil
For the quarter, Marathon reported net income of $413 million, or $0.58 per share. These numbers compared to $2.06 billion, or $2.90 per share, a year ago when commodities prices were considerably higher. But the company's earnings reduction put it right in line with the rest of the energy earnings parade.
Nevertheless, as CEO Clarence P. Cazalot, Jr. noted: "In our Exploration and Production segment, production available for sale rose 5 percent from the year ago quarter, and the company made progress on development projects in Norway, the Gulf of Mexico and elsewhere."
The E&P segment checked in with income of $491 million, versus $869 million a year earlier. As indicated, a couple of the company's major projects were in Norway, while the company participated in the Tebe deepwater discovery off Angola. Its partners in the last-mentioned effort included operator BP
In the U.S., Marathon plans to soon add a fourth rig to its 335,000-acre Bakken program, where production is already up 50% over last year. Marathon is just getting started in the Marcellus, where it shares space with the likes of Chesapeake
In Canada, the company's oil sands mining segment saw its income reduced by more than 10 times, to $25 million, from $288 million a year ago. It is appropriate to point out, however, that the prior period included a $190 after-tax gain on derivative instruments. And in the refining and marketing area, with margins shrinking, Marathon's income slid to $158 million, from $771 million last year.
Finally, the integrated gas segment brought in income of just $13 million, compared to $65 million a year earlier, thanks primarily due to reduced liquefied natural gas realizations. For example, the company has an LNG contract in Equatorial Guinea that was hit by a 67% decline in the Henry Hub index that became a major a negative effect on LNG profitability.
Bottom line, Marathon's results are likely to rebound as crude prices slowly head north. In my opinion, you'd be wise to keep your eyes on this active, well-managed company.
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