Marathon Oil Corp. (MRO) filed Quarterly Report for the period ended 2009-09-30.
Marathon Oil Corporation is an energy company engaged in the worldwide exploration production and transportation of crude oil and natural gas. The company refines markets and transports petroleum products in the United States through Marathon Ashland Petroleum LLC a joint venture company between Marathon and Ashland Inc. Marathon Oil Corp. has a market cap of $23.8 billion; its shares were traded at around $33.63 with a P/E ratio of 6.9 and P/S ratio of 0.3. The dividend yield of Marathon Oil Corp. stocks is 2.9%. Marathon Oil Corp. had an annual average earning growth of 15.2% over the past 10 years. GuruFocus rated Marathon Oil Corp. the business predictability rank of 4-star.
Highlight of Business Operations:
In June 2009, we closed the sales of a portion of our operated and all of our outside-operated Permian Basin producing assets in New Mexico and west Texas for net proceeds after closing adjustments of $293 million. A $196 million pretax gain on the sale was recorded. Net production from these operations averaged 8,150 barrels of oil equivalent per day (“boepd”) in the first quarter of 2009. Our net proved reserves associated with these assets as of December 31, 2008, were 14 million barrels of oil equivalent (“mmboe”).
In April 2009, we closed the sale of our operated properties in Ireland for net proceeds of $84 million, after adjusting for cash held by the sold subsidiary. A $158 million pretax gain on the sale was recorded. Net production from these operations averaged 5,000 boepd in the first quarter of 2009. Our net proved reserves associated with these assets as of December 31, 2008, were 6 million barrels of oil equivalent (“mmboe”). As a result of this sale, we terminated our pension plan in Ireland, incurring a charge of $18 million which reduced the gain on sale.
In June 2009 we entered into an agreement to sell the subsidiary holding our 19 percent outside-operated interest in the Corrib natural gas development offshore Ireland. Total proceeds will range between $235 million and $400 million, subject to the timing of first commercial gas at Corrib and closing adjustments. The fair value of the consideration for this asset was $311 million, which was less than its book value. A $154 million impairment of the held for sale asset was recognized in discontinued operations in the second quarter of 2009 (see Note 11 and Note 4). At closing on July 30, 2009, the initial $100 million payment plus closing adjustments was received. Additional proceeds of $135 million to $300 million will be received on the earlier of first commercial gas or December 31, 2012.
As of October 31, 2009, the expansion of our Garyville, Louisiana refinery is approximately 98 percent complete with an on-schedule startup expected late in the fourth quarter 2009. This expansion will increase the Garyville refinery s crude oil refining capacity by 180,000 bpd, improving scale efficiencies and feedstock flexibility. We now forecast that the project will cost between $3.8 billion and $3.9 billion. In early January 2010, we plan to commence an extended turnaround at the existing base refinery in Garyville. The entire facility (base and expansion) is expected to reach full refining capacity by the second quarter of 2010.
We continue to invest in the development of new technologies to create value and supply new energy sources. In the first nine months of 2009, we recorded costs of approximately $45 million related to natural gas technology research, including our GTFTM technology. Similar spending in the same period of 2008 was $59 million.
On average, crude oil prices in 2009 were lower than in 2008. Crude oil prices declined rapidly to lows around $40 per barrel in February 2009 from a high of over $140 per barrel in July 2008. By September 2009 prices had increased to near $70 per barrel.
MRO is in the portfolios of Richard Snow of Snow Capital Management, L.P., Richard Snow of Snow Capital Management, L.P., Charles Brandes of Brandes Investment, David Dreman of Dreman Value Management, John Keeley of Keeley Fund Management.
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