Marathon Oil 4Q Net Falls 41% on Lower Exploration, Production Income

Marathon Oil Corp.'s fourth-quarter earnings fell 41%, partly due to write-downs and other charges, and the company fell short of analysts' expectations as high taxes and exploration costs offset increased oil and gas sales.

Marathon Oil spun off its downstream and petroleum assets in 2011, creating Marathon Petroleum Corp., in order to focus its drilling efforts on oil-rich unconventional fields in the U.S. The company's profits from oil and gas operations have risen in recent quarters as its production has exceeded expectations.

In the fourth quarter, the company reported a profit of $322 million, or 45 cents a share, down from $549 million, or 78 cents, a year earlier. Taking out items such as impairment, pension settlement and unrealized gains on crude-oil derivative instruments, earnings from continuing operations fell to 55 cents from 78 cents. Revenue jumped 11% to $4.24 billion. Marathon's fourth-quarter results came in 12 cents under the 67 cents per-share forecast of analysts polled by Thomson Reuters, who had anticipated revenue of $3.93 billion.

The company reported that its exploration-and production segment's income fell 10% to $501 million from the year-before period, as higher costs offset increased production volumes. Since last year, Marathon has seen a more-than-four-fold increase in average net production in the south Texas Eagle Ford formation, from about 15,000 barrels of oil equivalent per day in December 2011 to more than 65,000 BOE/D in December 2012. Output in the oil-rich Bakken formation increased by 45% in the same period. However, higher costs have accompanied the production ramp-up in those areas, the company said.

The fourth quarter also included an $85 million in expenses associated with the Innsbruck well in the Gulf of Mexico, a dry hole, and the company reported another well in Iraq's Kurdistan is being plugged and abandoned.

Raymond James analyst Stacey Hudson said Marathon's production came in ahead of expectations and prices held up well. In a note, Raymond James analysts wrote that the rate at which Marathon's reserves are being replaced through organic growth is "solid." But taxes were also higher than Ms. Hudson anticipated.

"It's taxes eating up the upside," she said. Late last year, Marathon resumed production in Libya, where the company has reported a statutory tax rate of 93%.

Marathon said in December it would bump up this year's capital, investment and exploration budget to $5.2 billion from $5 billion in 2012 and spend most of it in oil-bearing shale formations such as the Bakken in North Dakota, the Anadarko Woodford in Oklahoma and the Eagle Ford in South Texas. The company expects the effort to give it a 6% to 8% production boost this year.

Oil and mining income dropped 70% to $19 million while integrated-gas income climbed 75% to $35 million.

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Marathon Oil 4Q Net Falls 41% on Lower Exploration, Production Income

Marathon Oil Corp.'s fourth-quarter earnings fell 41%, partly due to write-downs and other charges, and the company fell short of analysts' expectations as high taxes and exploration costs offset increased oil and gas sales.

Marathon Oil spun off its downstream and petroleum assets in 2011, creating Marathon Petroleum Corp., in order to focus its drilling efforts on oil-rich unconventional fields in the U.S. The company's profits from oil and gas operations have risen in recent quarters as its production has exceeded expectations.

In the fourth quarter, the company reported a profit of $322 million, or 45 cents a share, down from $549 million, or 78 cents, a year earlier. Taking out items such as impairment, pension settlement and unrealized gains on crude-oil derivative instruments, earnings from continuing operations fell to 55 cents from 78 cents. Revenue jumped 11% to $4.24 billion. Marathon's fourth-quarter results came in 12 cents under the 67 cents per-share forecast of analysts polled by Thomson Reuters, who had anticipated revenue of $3.93 billion.

The company reported that its exploration-and production segment's income fell 10% to $501 million from the year-before period, as higher costs offset increased production volumes. Since last year, Marathon has seen a more-than-four-fold increase in average net production in the south Texas Eagle Ford formation, from about 15,000 barrels of oil equivalent per day in December 2011 to more than 65,000 BOE/D in December 2012. Output in the oil-rich Bakken formation increased by 45% in the same period. However, higher costs have accompanied the production ramp-up in those areas, the company said.

The fourth quarter also included an $85 million in expenses associated with the Innsbruck well in the Gulf of Mexico, a dry hole, and the company reported another well in Iraq's Kurdistan is being plugged and abandoned.

Raymond James analyst Stacey Hudson said Marathon's production came in ahead of expectations and prices held up well. In a note, Raymond James analysts wrote that the rate at which Marathon's reserves are being replaced through organic growth is "solid." But taxes were also higher than Ms. Hudson anticipated.

"It's taxes eating up the upside," she said. Late last year, Marathon resumed production in Libya, where the company has reported a statutory tax rate of 93%.

Marathon said in December it would bump up this year's capital, investment and exploration budget to $5.2 billion from $5 billion in 2012 and spend most of it in oil-bearing shale formations such as the Bakken in North Dakota, the Anadarko Woodford in Oklahoma and the Eagle Ford in South Texas. The company expects the effort to give it a 6% to 8% production boost this year.

Oil and mining income dropped 70% to $19 million while integrated-gas income climbed 75% to $35 million.

Copyright (c) 2012 Dow Jones & Company, Inc.

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Marathon Names Stover to New VP Role

Marathon Oil Corporation (MRO) announced Tuesday that Michael J. Stover, currently manager of the company's mid-continent production operations, has been appointed to the newly established position of vice president, Operations Services effective Feb. 1, 2013. In this role, Stover will have oversight responsibility for Marathon Oil's Upstream Development, Technology, Technical Excellence, Global Procurement, Land and Commercial Services, and Drilling and Completions activities. Stover will be based in Houston and report to Marathon Oil Corporation chairman, president and CEO Clarence P. Cazalot Jr.

"Establishing this new position and capturing the increased organizational alignment associated with it is consistent with our ongoing drive to achieve greater efficiencies throughout Marathon Oil," said Cazalot. "Mike possesses a strong blend of operations, technical and planning experience and expertise that will play an important role in our ability to further optimize the contributions of these key services to our continued success."

Stover earned a Bachelor of Science degree in petroleum and natural gas engineering from Pennsylvania State University in 1986. He joined Marathon Oil that same year, initially as a roustabout, followed by operations and reservoir engineering assignments for the Yates Field located in West Texas. In 1991, he transferred to the Company's international group in Houston and was responsible for reservoir and economic studies for fields in Ireland, Tunisia, and Norway. From 1995 thru 2000, Stover was located in Anchorage, Alaska, where he worked both development and exploration projects associated with Marathon Oil's operations on the Kenai Peninsula.

In 2000, he joined Marathon Oil's Corporate Strategic Planning group in Houston. In this assignment, his responsibilities included business planning and corporate portfolio modeling to support the reorganization of USX Corporation that lead to the establishment of Marathon Oil Corporation as a standalone company.

Following that assignment Stover relocated to Aberdeen, Scotland, where he held the position of European Business Unit Subsurface and Business Planning Manager. In 2005, he relocated to Houston where assumed the role of East Texas/North Louisiana Asset Manager. In 2006, his area of responsibility was expanded to include Marathon Oil's Oklahoma oil and gas properties.

In 2009, he assumed the position of Director of Central Evaluation and Financial Planning. In this role, Stover was responsible for providing financial and portfolio analysis across the business enterprise. In late 2011, he assumed his current role of Mid-Continent Asset Manager with responsibility for Marathon Oil's assets and operations in Oklahoma, East Texas, North Louisiana and Colorado.

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Marathon Names Stover to New VP Role

Marathon Oil Corporation (MRO) announced Tuesday that Michael J. Stover, currently manager of the company's mid-continent production operations, has been appointed to the newly established position of vice president, Operations Services effective Feb. 1, 2013. In this role, Stover will have oversight responsibility for Marathon Oil's Upstream Development, Technology, Technical Excellence, Global Procurement, Land and Commercial Services, and Drilling and Completions activities. Stover will be based in Houston and report to Marathon Oil Corporation chairman, president and CEO Clarence P. Cazalot Jr.

"Establishing this new position and capturing the increased organizational alignment associated with it is consistent with our ongoing drive to achieve greater efficiencies throughout Marathon Oil," said Cazalot. "Mike possesses a strong blend of operations, technical and planning experience and expertise that will play an important role in our ability to further optimize the contributions of these key services to our continued success."

Stover earned a Bachelor of Science degree in petroleum and natural gas engineering from Pennsylvania State University in 1986. He joined Marathon Oil that same year, initially as a roustabout, followed by operations and reservoir engineering assignments for the Yates Field located in West Texas. In 1991, he transferred to the Company's international group in Houston and was responsible for reservoir and economic studies for fields in Ireland, Tunisia, and Norway. From 1995 thru 2000, Stover was located in Anchorage, Alaska, where he worked both development and exploration projects associated with Marathon Oil's operations on the Kenai Peninsula.

In 2000, he joined Marathon Oil's Corporate Strategic Planning group in Houston. In this assignment, his responsibilities included business planning and corporate portfolio modeling to support the reorganization of USX Corporation that lead to the establishment of Marathon Oil Corporation as a standalone company.

Following that assignment Stover relocated to Aberdeen, Scotland, where he held the position of European Business Unit Subsurface and Business Planning Manager. In 2005, he relocated to Houston where assumed the role of East Texas/North Louisiana Asset Manager. In 2006, his area of responsibility was expanded to include Marathon Oil's Oklahoma oil and gas properties.

In 2009, he assumed the position of Director of Central Evaluation and Financial Planning. In this role, Stover was responsible for providing financial and portfolio analysis across the business enterprise. In late 2011, he assumed his current role of Mid-Continent Asset Manager with responsibility for Marathon Oil's assets and operations in Oklahoma, East Texas, North Louisiana and Colorado.

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