Marathon Oil's Third-Quarter 2013 Earnings Rise with Strong Eagle Ford Shale Production

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Researched by Industrial Info Resources (Sugar Land, Texas)--Independent energy company Marathon Oil Corporation (NYSE:MRO) (Houston, Texas) reported net third-quarter 2013 earnings of $569 million, up significantly from $450 million in third-quarter 2012. The oil & gas company attributed the growth to a doubling in production at the Eagle Ford Shale.

Industrial Info is tracking $120 million in projects from Marathon Oil, including the Phase III expansion at the Cut Off Salt Dome Crude Oil Terminal in Cut Off, Louisiana. The $30 million project consists of three 600,000-barrel tanks to increase the storage capacity of crude oil products. The market analysis should be complete in the first quarter of 2014, and the project's completion is set for March 2017.

"Marathon Oil achieved strong financial results in the third quarter, delivering $1.44 billion in operating cash flows before working capital changes, and adjusted net income of $617 million, 29% higher than the second quarter," said Lee M. Tillman, president and CEO. "All three business segments performed well, capturing the higher liquid hydrocarbon realizations both domestically and internationally, compared to the second quarter."

Excluding Libya, third-quarter sales volumes were an average of 459,000 barrels per day, up 3,000 from the third quarter of 2012. Libya was excluded due to the uncertainty of sustained production levels. Labor strikes have prevented oil liftings since August. Production is expected to grow in the fourth quarter.

The North American E&P segment grew in the third quarter to $242 million from higher liquid hydrocarbon realizations and lower exploration expenses. This was offset partially by a realized loss on crude oil derivative instruments. Eagle Ford and the Oklahoma Resource Basins rose slightly in the quarter, producing 81,000 and 15,000 barrels per day, respectively. The Bakken stayed on track with 38,000 barrels per day. The exploration well in the Gulf of Mexico is expected to reach total depth close to the end of the year.

The International E&P segment saw lower-than-expected numbers due to the strikes in Libya and higher exploration expenses. Equatorial Guinea increased production by 11,000 barrels per day, but this did not offset the lower production. Total segment income was $321 million, down from $405 in the third quarter of 2012. The Harir Block Mirawa-1A saw a constrained flow rate of 11,000 barrels per day; however, the well will be suspended for future use due to stacked oil and natural gas-producing zones.

The Oil Sands Mining segment experienced a tremendous increase from $66 million in third-quarter 2012 to $106 million in third-quarter 2013. Higher price realizations and sales volumes were the primary drivers of the increase. Operating costs also have dropped.

"Marathon Oil is well-placed to grow our production volumes at a 5% to 7% compound annual rate from 2012 to 2017, and we expect reserve replacement in 2013 to exceed 140%, excluding any acquisitions or divestitures," Tillman said.

For more information, visit Industrial Info's Oil & Gas Production Database and Oil & Gas Terminals Database.

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Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, 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.