Marathon Oil (NYSE: MRO) on Tuesday became
the latest large U.S. oil company to report sour results for
the third quarter of 2009 when compared to a year earlier.
But the company continues to maintain a global portfolio of
promising exploration and production prospects that
deserves your attention.
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 discoveryin Angola. Its partners in the
last-mentioned effort included operator
BP (NYSE: BP), along with
Statoil (NYSE: STO), and
Total (NYSE: TOT).
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 (NYSE: CHK) and
XTO (NYSE: XTO), having
just spudits first well this quarter. With just 70,000
net acres, Marathon is
late to the gamecompared to
Range Resources ' (NYSE: RRC) position in
just the fairway of the play where Range has 77 horizontal
wells on a leasehold of 900,000 acres of prime real
estate
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.
Motley Fool CAPS players have placed
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This article was originally published as
Marathon Runs Into a Slow Quarteron
Fool.com
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