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Update – Marathon post $41MM loss, Delays some OS projects; Abandons Upstream/Downstream split

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This topic contains 1 reply, has 1 voice, and was last updated by  Charles Randall 11 years, 9 months ago.

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  • #3191

    Charles Randall
    Participant

    Marathon posts loss; delays some oil sands projects
    Anna Driver, Reuters  Published: Tuesday, February 03, 2009

    HOUSTON — Marathon Oil Corp reported a fourth-quarter loss and said it would slash spending by 24% this year as it cuts refinery expenditures and delays development of some Canadian oil sands projects.

    Excluding one-time items, such as a charge of US$1.4-billion to write down the value of its oil sands business, quarterly profit topped Wall Street expectations, boosted by refinery operations.
    Many energy companies, hit hard by steep declines in oil and gas prices and slumping global demand, have cut back on exploration and production spending and delayed or cancelled expensive projects. 
    Crude oil peaked near US$150 per barrel last July and is now trading at around US$40 per barrel.
    Citing market volatility, Marathon also said on Tuesday that it has abandoned plans to split its refining and exploration businesses into separate companies. Some analysts had said a split would unlock value in the exploration business.
    Deutsche Bank analyst Paul Sankey expressed disappointment with the company’s decision not to split.   “We were supporters based on our belief that the released upstream segment would trade as a takeover candidate; that the earnings power of the downstream would make it the leading U.S. independent refiner,” the analyst said in a note to clients.
    Marathon said it plans capital, investment and exploration spending of US$5.7-billion this year, down from US$7.6-billion in 2008.
    The Houston-based company said it would spend US$2.5-billion on exploration and production in 2009, including US$887-million for its oil sands developments in Canada.  It said it would spend US$1.1-billion to fund drilling in the Bakken Shale and Piceance Basin in the United States to grow production in the short term.
    Spending on refinery operations and projects will drop to US$1.9-billion from US$2.9-billion in 2008 as the company defers the start-up of a heavy oil upgrading project at its Detroit refinery.
    Marathon said its total oil and gas available for sale in 2009 is projected at 390,000 to 410,000 barrels of oil equivalent per day, up 5% to 10% from 2008.   The fourth-quarter net loss was US$41 million, or 6 cents share, compared with net income of US$668 million, or 94 cents per share, a year earlier.
    Excluding one-time items, Marathon had a profit of US$1.44 per share, compared with 70 cents a year earlier. On that basis, analysts on average had expected 84 cents a share, according to Reuters Estimates.
    Oil and gas production averaged 417,000 barrels of oil equivalent per day for the quarter, up 18%.  Marathon shares were down 7 cents at US$26.81 in midday trading on the New York Stock Exchange.
    Thomson Reuters 2009

  • #6261

    Charles Randall
    Participant

    Here is MAP update – 4Q08 loss was $41 MM and, as reported earlier, will defer start-up Detroit Hvy Crude Expansion, & slashed spending by 24% for 2009.
     
    And MAP has abandoned plans to split its refining & exploration to separate companies that analysts were pushing it to do & unlock value in exploration business. 
     
    Analysts always have their head up their butt pushing integrated refineries on E&P and dumping on Refining their assets – stupid desk jockies never understand upstream becomes useless without a downstream to give floor value for crude (all difference doing paper hedge & one with physical barrels attached……one is just wild gambling the other is calculated insurance play) – so looks like MAP dogged the bullet on this one.
    Regards

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