Marathon Oil Corp. has completed drilling all four development wells on the deepwater Gulf of Mexico (GOM) Droshky project, but onshore spending has been curtailed because of lower natural gas prices, the producer said. Well completions at the Droshky project are under way and production is on track to begin in 2010, with peak net output estimated at 43 MMcf/d of natural gas and 45,000 b/d of oil (see NGI, Nov. 3, 2008). Marathon earned $413 million net (58 cents/share) in 2Q2009, compared with $774 million ($1.08) in 2Q2008. The producer's average realized U.S. gas price was $3.60/Mcf in 2Q2009, compared with $8.66 a year earlier. U.S. E&P operations lost $41 million in the quarter versus earnings of $359 million in 2Q2008, as revenues plunged 60% on lower commodity prices. Marathon's net U.S. gas sales fell quarter/quarter to 365 MMcf/d from 431 MMcf/d, and U.S. hydrocarbon liquids sales rose slightly to 64,000 boe/d from 63,000 boe/d. The company's integrated gas segment, which includes liquefied natural gas, reported profits plunging to $13 million in 2Q2009 from $102 million in 2Q2008, mostly on lower price realizations.
MDU Resources Group reported 2Q2008 earnings of $55.1 million (30 cents/share), down 52% from $115.3 million (63 cents) in 2Q2008, due primarily to substantially lower natural gas and oil prices. Average realized natural gas prices were 43% lower than in the same period a year ago. Lower gas and oil prices also prompted the company to reduce its 2009 capital expenditures to $415 million from a previously announced $602 million. Despite the lower quarterly earnings numbers, MDU continues to experience strong cash flow and a healthy balance sheet, according to CEO Terry D. Hildestad, who credited the company's diversified business strategy and aggressive cost management efforts. MDU reaffirmed its 2009 earnings guidance of $1.05-1.30/share excluding a first quarter noncash charge of $2.09/share. Operating revenues from natural gas declined to $69.2 million in 2Q2009 compared with $140.5 million in 2Q2008, reflecting a reduction in drilling activity and gas prices "that have declined significantly from last year's record highs," Hildestad said.
Increased volumes from the Overland Pass Pipeline and the Guardian Pipeline extension helped Tulsa-based ONEOK Inc. keep its earnings at 39 cents/share on net income of $41.7 million in 2Q2009, compared with 39 cents/share on net income of $41.9 million in 2Q2008. The Federal Energy Regulatory Commission granted Guardian Pipeline LLC's request to commence service on the 119-mile Guardian Expansion and Extension Project in Wisconsin late last year (see NGI, Jan. 5). Guardian, which is owned by ONEOK Partners LP, has executed precedent agreements with three local distribution companies for an initial term of 15 years. ONEOK narrowed its 2009 earnings guidance to $2.40-2.70/share from the previously announced $2.25-2.75 Subsidiary ONEOK Partners LP reported 2Q2009 operating income of $124.8 million, compared with $163.7 million in 2Q2008, due primarily to a $34 million decrease from lower realized commodity prices in the natural gas gathering and processing business. ONEOK Partners narrowed its 2009 earnings guidance to $3.25-3.65 from the previously announced $3.15-3.75. ONEOK Partners last week added four additional directors to its board of directors. Julie H. Edwards, Jim W. Mogg, Shelby E. Odell and Craig F. Strehl were elected to the board effective immediately, the company said. Edwards and Mogg currently also serve, and will continue to serve, on the board of directors of ONEOK.
Despite increased throughput in its Barnett Shale gathering and transmission and in its Haynesville Shale transmission, Dallas-based Crosstex Energy LP recorded a net loss of $10.32 million (minus 19 cents/share) in 2Q2009, compared with net income of $21.74 million (21 cents/share) in 2Q2008, the company said. Crosstex Energy Inc. reported a net loss of $3.1 million (minus 7 cents) in 2Q2009, compared with net income of $17.5 million (37 cents) in 2Q2008. Weighted average natural gas liquids prices were less than half the levels attained in 2Q2008, and processing volumes at the company's South Louisiana plants were 50% less than those achieved in 2Q2008, Crosstex said. The most significant event for Crosstex during the second quarter was announcement that it would sell its natural gas gathering assets in Mississippi, Alabama and South Texas for $220 million to Southcross Energy LLC (see NGI, June 15) according to Crosstex CEO Barry E. Davis said. The Mississippi and Alabama systems consist of approximately 780 miles of intrastate gathering and transmission pipelines with throughput capacity of about 185,000 MMBtu/d. The South Texas system consists of approximately 1,400 miles of intrastate gathering and transmission pipelines with throughput capacity of about 600,000 MMBtu/d and two processing facilities with a total capacity of approximately 195,000 MMBtu/d. Crosstex said it will use the net proceeds from the transaction to repay approximately $212 million of its outstanding debt, which will satisfy the targets for debt reductions in September and December established in the partnership's recent amendments to its debt facilities.
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