Marathon Oil Reports Strong Production Growth in First-Quarter 2013, Expects Streak to Continue for Year

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Researched by Industrial Info Resources (Sugar Land, Texas)--Oil and gas giant Marathon Oil Company (NYSE:MRO) (Houston, Texas) reported an eventful first quarter of 2013, as solid growth in the U.S. resource plays boosted production available for sale 19% above that of the same period last year, excluding assets in Libya and Alaska. Net income was reported to be $383 million, an 8.15% decrease from first-quarter 2012.

Total revenues stood at $4.11 billion, a 1.63% increase from the same period last year. North American operations reported higher crude oil and condensate realizations, while rapid growth continued in the Eagle Ford and Bakken shale plays. Average net production in the Eagle Ford Shale was reported to be about 72,000 barrels of oil equivalent per day, about two-thirds of which was crude oil and condensate. Marathon installed about 148 miles of gathering lines in the Eagle Ford Shale during the quarter. The company also drilled 76 gross wells and brought 68 wells to sales.

However, the North American Exploration and Production segment reported a net loss of $59 million for the quarter, as natural gas prices declined and volumes were lower following Marathon's January sale of its Cook Inlet production assets to Hilcorp Energy LLC. Liquid hydrocarbon sales prices and volumes improved in North America.

When excluding Libya, Marathon reported higher global sales volumes increased to 485,000 barrels of oil equivalent per day. (Libya saw a decrease of 26,000 barrels, but Marathon downplayed its numbers in its quarterly earnings report because of "uncertainty around sustained production and sales levels.") In particular, Equatorial Guinea saw solid results as production strengthened and availability stood at 98%. An anticipated production decline in Norway's Alvheim Field was not as steep as had been expected.

Capital expenditures for the quarter were reported to be $1.27 billion, compared with $1.06 billion in first-quarter 2012.

Industrial Info is tracking $141 million in projects involving Marathon Oil, including a planned fluid catalytic cracking unit (FCCU) revamp at a refinery in Catlettsburg, Kentucky. As part of the Vacuum Cut Point project, the revamp of the 98,000-barrel-per-day unit involves replacing the worn regenerator head and internals, and making modifications to process additional gas-oil and increase diesel and gasoline production.

"We continued our solid execution in the U.S. unconventional plays, particularly in the Eagle Ford and the Bakken, and increased our 2013 production guidance from the Bakken to 40,000 barrels of oil equivalent per day, net," said Clarence P. Cazalot, the chairman, president and chief executive officer of Marathon Oil, in a conference call.

Marathon executives said that they are raising the company's production growth target to between 7% and 10%, not including Libya and Alaska, for full-year 2013. By the end of the year, the contiguous "Lower 48" U.S. states are expected to see a 150% increase from third-quarter 2011 in production available for sale. In the Eagle Ford Shale, the company expects to increase its amount of crude and condensate that is transported by pipeline from the current 65% to about 75% by the end of May. In the Oklahoma resource basins, Marathon expects to drill two wells each in the Mississippi Lime and Granite Wash formations by the end of the year.

"The [exploration drilling] program has already resulted in the successful appraisal of the outside-operated Shenandoah prospect in the Gulf of Mexico in the first quarter," Cazalot said in the conference call. "We're currently participating in eight exploration or appraisal wells, and expect to evaluate the potential of this program over the next 12 months."

For more information, visit Industrial Info's North American Petroleum Refining Project Database.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.