HOUSTON, Oct. 7 /PRNewswire-FirstCall/ -- Marathon Oil Corporation (NYSE: MRO) today is providing information on market factors and operating conditions that occurred during the third 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 third quarter results on Nov. 3, 2009, 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 third quarter is estimated to be approximately 380,000 barrels of oil equivalent per day (boepd). 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 third quarter is expected to be approximately 395,000 boepd, which is within the previous third quarter guidance of 380,000 to 400,000 boepd.
As shown in the attached table, Marathon's average liquid hydrocarbon realization for the first two months of the third quarter increased $7.34 per barrel domestically and $9.22 per barrel internationally compared to the second quarter of 2009, reflecting the general market price movements during the first two months of the third quarter. For the entire third quarter of 2009, the average West Texas Intermediate (WTI) crude oil market price indicator was $8.45 per barrel higher than the second quarter of 2009 while the average Dated Brent indicator increased $8.95 per barrel.
Marathon's domestic average natural gas price realization for July and August of 2009 increased $0.21 per thousand cubic feet (mcf) from the Company's average realized price in the second quarter of 2009. The average Henry Hub (HH) prompt natural gas price for the third quarter decreased $0.54 per million British Thermal Units (BTUs) compared to the second quarter of 2009, while the average HH bid week natural gas price decreased $0.12 per million BTUs during the same period. International average natural gas realizations for continuing operations decreased $0.02 per mcf in the first two months of the third quarter compared to the second 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.
Third quarter 2009 exploration expense is expected to be at or below $80 million, which is at the low end of previous guidance.
Oil Sands Mining
For the third quarter 2009, the Company estimates that its share of bitumen production from the Athabasca Oil Sands Project (AOSP) mining operation will be approximately 27,000 barrels per day (bpd), which is within the previous guidance of 23,000 to 28,000 bpd for the third quarter. Marathon's synthetic crude oil sales from AOSP for the third quarter 2009 are estimated to be approximately 31,000 bpd. Marathon's average synthetic crude oil realization for the first two months of the third quarter was $61.37 per barrel, as compared to $55.02 per barrel for the second quarter of 2009, reflecting the general market price movements during the first two months of the third quarter.
For the third quarter 2009, the Company expects the income effect of crude oil derivative instruments will not be significant. All derivative instruments related to the Oil Sands Mining segment expire at year end 2009.
Refining, Marketing and Transportation
The Company estimates its refined products sales volumes will average approximately 1,400,000 bpd in the third quarter of 2009 compared to 1,357,000 bpd in the third quarter of 2008.
The third quarter 2009 refining and wholesale marketing gross margin is expected to be approximately $0.07 per gallon compared to $0.2519 per gallon earned in the third quarter of 2008, primarily due to weaker market-based indicators in the Midwest (Chicago) and Gulf Coast markets, as illustrated by the Light Louisiana Sweet (LLS) 6-3-2-1 crack spreads on the attached table, and a substantial narrowing of the sweet-sour differential.
Crude oil refined is expected to average approximately 1,015,000 bpd for the third quarter 2009, compared to 955,000 bpd in the third quarter 2008. Total refinery throughputs for the third quarter 2009 are expected to be about 1,190,000 bpd compared to 1,144,000 bpd in the third quarter of 2008.
Speedway SuperAmerica LLC's (SSA) gasoline and distillate gross margin averaged $0.1398 per gallon during July and August 2009 and is expected to average approximately $0.13 per gallon for the third quarter of 2009. The Company projects that SSA's third quarter same store gasoline sales volume will increase about 3 percent compared to the same quarter last year.
Integrated Gas
Marathon's liquefied natural gas (LNG) operations in Equatorial Guinea and Alaska are estimated to have sold approximately 6,300 net metric tonnes per day (mtpd) of LNG in the third quarter of 2009, above the previous guidance of 5,000 to 6,000 mtpd.
Other Information
The overall corporate effective income tax rate for 2009, excluding special items and foreign currency remeasurement effects, is expected to be between 54 and 59 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 third quarter 2009 results on Nov. 3, 2009. The Company will also conduct a conference call and webcast that same day at 2 p.m. EST. The call will cover third quarter 2009 financial results and may include forward-looking information. Interested parties can listen to this call and view associated slides by accessing the Marathon Oil Corporation Web site at www.marathon.com and clicking on the Third Quarter 2009 Financial Results Conference Call link. Replays of the conference call will be available on the Web site through Nov. 17, 2009. 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, oil sands mining derivative gains and losses, 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.
Select Operating and Financial Data (unaudited)
3Q 2Q Jul - Aug 3Q
2008 2009 2009 2009
Actual Actual Actual Estimates
Exploration and Production
Net Sales
Domestic - Liquid Hydrocarbons
(MBPD) 63 64 63 --
Domestic - Natural Gas (MMCFD) 426 365 338 --
International - Liquid Hydrocarbons
(MBPD) 161 213 168 --
International - Natural Gas
(MMCFD)(1) 499 590 519 --
Worldwide Continuing Operations
(MBOEPD) 378 436 374 380
Discontinued operations
(MBOEPD) (2) 1 1 -- --
Worldwide (MBOEPD) 379 437 374 380
Market Prices
NYMEX prompt WTI oil price
($/BBL) 118.22 59.79 67.64 68.24
Dated Brent oil price ($/BBL) 115.09 59.13 68.43 68.08
HH prompt natural gas price
($/MMBTU) 9.13 3.69 3.27 3.15
HH bid week natural gas price
($/MMBTU) 10.25 3.51 3.67 3.39
Average Realizations (3)
Liquid Hydrocarbons:
Domestic ($/BBL) 106.81 53.25 60.59 --
International ($/BBL) 113.10 56.16 65.38 --
Natural Gas:
Domestic ($/MCF) 7.70 3.60 3.81 --
International ($/MCF) 2.86 1.32 1.30 --
Discontinued operations
($/MCF) (2) 13.79 7.49 -- --
Oil Sands Mining
Net bitumen production (MBPD) 28 26 29 27
Net synthetic crude sales (MBPD) 32 30 34 31
Synthetic crude average realization
($/BBL) (3) 113.42 55.02 61.37 --
Refining, Marketing and Transportation
Chicago LLS 6-3-2-1 crack spread
($/BBL) 7.81 5.73 4.12 3.93
Gulf Coast LLS 6-3-2-1 crack spread
($/BBL) 6.32 3.59 2.85 2.50
Chicago LLS 3-2-1 crack spread
($/BBL) 13.75 9.26 6.66 6.25
Gulf Coast LLS 3-2-1 crack spread
($/BBL) 11.88 6.42 4.92 4.36
Sweet/sour differential
($/BBL) (4) 11.38 3.98 6.69 5.64
Refinery Runs:
Crude oil refined (MBPD) 955 959 1,021 1,015
Other charge & blend stocks (MBPD) 189 199 170 175
------ ----- ------ ------
Total (MBPD) 1,144 1,158 1,191 1,190
Crude oil capacity utilization (%) 94 94 100 100
Refined products sales volumes
(MBPD) (5) 1,357 1,371 1,389 1,400
Refining & wholesale marketing gross
margin ($/gal) (6) 0.2519 0.0871 -- 0.0700
SSA gasoline and distillate sales
(MMGal) 796 806 548 --
SSA gasoline and distillate gross
margin ($/gal) 0.1690 0.1051 0.1398 0.1300
SSA merchandise gross margin
($million) 197 192 139 --
Integrated Gas
Net Sales (MTPD) (7)
LNG 6,048 6,611 6,205 6,300
Methanol 757 1,362 1,079 --
(1) Includes natural gas acquired for injection and subsequent resale.
(2) Exploration and production operations in Ireland are reported as
discontinued operations in all periods presented. Daily volume for
Ireland for the second quarter 2009 represents activity through the April
17 production operations closing date divided by the total number of days
in the period.
(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.
Media Relations Contacts:
Paul Weeditz
713-296-3910
Lee Warren
713-296-4103
Investor Relations Contacts:
Howard Thill
713-296-4140
Chris Phillips
713-296-3213
