Net income for the Houston-based company fell to $1.55 billion, or $2.25 per share, from $1.75 billion, or $2.40 per share, last year. However, if you back out one-time items from the quarter and its predecessor, the profit was that same $1.55 billion, versus $1.52 billion, or $2.08 per share, in the June 2006 period.
As with most integrated companies lately, Marathon's results were lower in the upstream sector and strong downstream. Specifically, its upstream income fell 39% to $400 million, from $659 million, largely on the basis of lower volumes, which in turn resulted from "normal production declines and a planned turnaround at the Alaska LNG facility ..." But as has been the case at most producing-refining companies, downstream income increased 36% to $1.25 billion.
And in an anything-but-ho-hum week for the company, Marathon has also announced both a meaningful acquisition and the settlement of a price-manipulation case. The company will acquire Canada's Western Oil Sands for cash, stock, and the assumption of debt with a combined value of $6.2 billion. The purchase will provide the company with the foothold it apparently has been seeking for a couple of years in the Canadian oil sands region of northern Alberta.
The settlement, announced Wednesday, involved a civil action between the Commodity Futures Trading Commission and Marathon.
It appears that Marathon, "without admitting or denying" any wrongdoing, agreed to pay $1 million to settle CFTC charges that it manipulated the price for West Texas intermediate crude back in November 2003. In a statement, Marathon said its decision to settle was "based on a number of factors, including the desire to avoid the expense and distraction of protracted litigation."
So what should we make of Marathon's busy week? My inclination is to focus on the company's production decline and its newly announced acquisition. The former is of some concern, while the latter appears decidedly positive. One out of two isn't terrible, but it's also not terrific. As such, I'd suggest that energy-investing Fools watch Marathon closely, but remain less than voracious in your appetite for its shares.
For related Foolishness:
- Canadian Pacific Hitches Up to Oil Sands
- ConocoPhillips Hammered by Hugo
- Overdoing ExxonMobil's Shortfall