Marathon Oil will cut capital expenditures by about $1 billion in 2010, the company said Thursday, with a larger percentage of funds going toward exploration and production and a smaller percentage toward its hard-hit refining business.
Investors had expected the company, based in Houston, to focus even more on the exploration of new finds off Angola and huge natural gas plays in North America, said BMO Capital Markets analyst Jim Byrne.
Shares of Marathon Oil Corp. 4 percent. The Dow Jones industrial average fell by 94 points Thursday during a broad sell off and shares of most large energy companies retreated with oil futures tumbling nearly 3 percent.
At its investor day meeting in New York, the company said 2010 capital expenditures would be about $5 billion, compared with the $6 billion it expects to invest by the end of 2009.
Marathon is the fourth-largest U.S. integrated oil company, meaning it's involved in exploration and production as well as refining and marketing.
Margins for refining oil have been under severe pressure this year. While crude prices have more than doubled to around $80 per barrel since December, demand for gasoline, diesel and jet fuel remains weak. Companies have been forced to spend more to buy oil, which hasn't translated into larger profits when that crude is processed into fuel.
Marathon reported earlier this month that third-quarter income from refining, marketing and transportation operations fell to $158 million from $771 million a year ago.
Most major oil companies have maintained capital spending even during the economic downturn. However, ConocoPhillips, the third-largest U.S. oil company, said recently it would cut spending by 12 percent.
Marathon shares fell $1.37 to close at $33.33 Thursday.