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Marathon's Earnings Triple, Revenue Up 21%

Reflecting full ownership of its downstream and growth in upstream income, Marathon Oil Corp.'s 4Q2005 profit soared, with net income reaching $1.27 billion ($3.43/share), compared with $429 million, ($1.23) a year ago. Revenue was up 21% to $17.3 billion from $14.3 billion. U.S. natural gas sales grew in the quarter, but they were down overall for the year.

Excluding a loss on UK natural gas contracts and an accounting rule change, earnings were $1.33 billion ($3.61/share) -- well above Thomson First Call estimates of $3.02 -- and triple 4Q2004 earnings of $415 million ($1.19).

Overall, Marathon estimated average daily output available for sale this year at 365,000-395,000 boe/d, excluding the impact of any transactions. In the United States, net sales of gas rose to 599.1 MMcf/d from 585.3 MMcf/d in 4Q2004. However, for the year, gas sales fell to 577.6 MMcf/d from 631.2 MMcf/d in 2004.

In the U.S. upstream, income was $468 million for the quarter and $1.564 billion for the year, compared with $238 million and $1.073 billion in the same periods of 2004. "The higher sales volumes in the fourth quarter of 2005 are a result of weather-related downtime in the Gulf of Mexico in the comparable period of 2004. The year-over-year increase was a result of higher liquid hydrocarbon and natural gas prices partially offset by lower sales volumes as a result of weather-related downtime in the Gulf of Mexico and natural field declines," Marathon noted in a statement.

Marathon's Integrated Gas segment, which is growing in prominence for the company, reported income of $19 million in the final quarter and $31 million for the year, compared with $23 million and $48 million in the same periods of 2004. The year-over-year decrease was a result of increased income taxes for Atlantic Methanol Production Co. LLC (AMPCO), in which Marathon holds a 45% interest.

The Equatorial Guinea [liquefied natural gas] LNG Train 1 project continued to progress last year, Marathon said. As of the end of 4Q, the Train 1 project was approximately 66% complete on an engineering, procurement and construction (EPC) basis and gross expenditures totaled $1.2 billion of the total estimated project cost of $1.4 billion. First shipments of LNG are projected to begin in 3Q2007. Marathon holds a 60% interest in the project.

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