Marathon Oil to Spin Off Refining Segment

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Researched by Industrial Info Resources (Sugar Land, Texas)--Marathon Oil Corporation (NYSE:MRO) (Houston, Texas) yesterday announced plans to separate its upstream and downstream segments. The new Marathon Petroleum Corporation (MPC), which will be headquartered in Findlay, Ohio, will operate the company's refining, marketing, terminals and pipelines, as well as the Speedway gasoline and convenience store chain, which has more than 1,300 locations throughout the Midwest. Marathon Oil Corporation (MRO) will continue operating the Exploration & Production, Oil Sands Mining and Integrated Gas business segments. The spin-off is expected to take effect on June 30, 2011. MPC is expected to be traded under the MPC ticker on the New York Stock Exchange.

Speaking at a presentation regarding the spin-off, Marathon President and CEO Clarence Cazalot said: "We believe as two separate companies, each company will have an enhanced flexibility to pursue its own specific and unique strategies and the greater ability to make those decisions, be they business, financial or operational, that are in the best interests of its business and are consistent with its own strategic priorities."

MPC will have a crude refining capacity of 1.14 million barrels per day (BBL/d), making it the fifth-largest refiner in the U.S. The six refineries are located in Louisiana, Kentucky, Illinois, Michigan, Ohio and Texas.

Industrial Info is tracking more than $6.8 billion of Marathon projects, including more than $3 billion in oil sands mining projects that are planned or under way. In June 2008, Marathon began a massive upgrade project at its refinery in Detroit, Michigan, which will add 80,000 BBL/d of heavy oil refining capacity to the 106,000-BBL/d refinery, allowing the company to refine crude produced from Canadian oil sands, which will provide wider profit margins. The project entails the addition of a delayed coker unit, offsite utilities, sulfur recovery complex, hydrotreater unit and hydrogen unit, as well as the expansion of the crude unit and fluid catalytic cracker unit (FCCU). The project, which has a total investment value of $2.2 billion is expected to be completed in June 2012. Information on these and other refining and oil sands mining projects are available in Industrial Info's North American Industrial Database.

Speaking of the project, the future President and CEO of MPC, Gary Heminger, noted that the Detroit upgrade project was about 50% complete. Elaborating on the progress of the project, Heminger said: "The key is that as we go into the spring construction season, we have 100% of the engineering complete and all the major equipment already set on its pedestals are set in place and ready for construction around those pieces of major equipment to be completed this year. We have about 27% of the construction completed to date, and this is going to give us the ability to capitalize on the Canadian oil sands production. ... The project still remains on time and on budget."

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