Marathon Oil (NYSE: MRO) has become the latest of the large oil and gas companies to tell us about its quarter. In essence, its overall picture is less compelling than those set out earlier by the likes of ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX), and ConocoPhillips (NYSE: COP).

For the quarter, the company's net income increased to $706 million, or $0.99 per share, up from the $355 million, or $0.50 a share, for the comparable quarter of 2009. Without a pension item and the cost of asset sales, the company earned $1.09 a share. It therefore joins the group that comfortably beat the analysts, who expected $0.97 a share.

Upstream, the company earned $496 million, versus $439 million in the year-ago quarter. The slight improvement was tied to higher liquids and natural gas realizations, which were partially offset by increased depreciation, depletion, and amortization costs, along with higher exploration expenses. In the U.S., exploration and production earnings plunged to $17 million, from last year's $116 million, as costs rose for the Droshky well in the Gulf of Mexico.

Sales volumes were essentially flat for the quarter, although for the full year they dipped about 2%. The decrease resulted from a turnaround at the company's Equatorial Guinea production facilities -- which was completed in the second quarter -- along with normal field declines and asset sales.

Reserve replacement fell short of the industry's 100% target, coming in at 75% for the year.

The company announced earlier this month that it would spin off its refining and marketing operations, thereby creating two "pure-play" companies. The restructuring is targeted to be completed by the end of June.

Unlike its international peers, Marathon expects production to be largely flat in 2011. Its production currently occurs in the U.S., Canada, Europe, and West Africa. Management expects its 2011 capital expenditure budget to increase about 9% year on year to $5.27 billion, with increased outlays targeted for unconventional plays, such as the Bakken, the Anadarko Woodford, and the Eagle Ford.

In this connection, David Roberts, the company's executive vice president for upstream operations, said on the company's call, "Despite significant challenges in 2010, the upstream business continued on the path to create sustainable profitable growth operations for the company."

Marathon is clearly a company effecting substantial changes. On that basis, while I'm convinced that energy should be well-represented in Foolish portfolios, my preference would lie in the direction of the major companies mentioned above, or perhaps Occidental Petroleum (NYSE: OXY), a company that I believe offers compelling prospects.