Houston-based Marathon Oil Corp.'s profit surged in 3Q2006, pushed by strong oil prices and wholesale margins. However, worldwide natural gas sales volumes fell to 719 MMcf/d from 807 MMcf/d. In the United States, where more than half of its gas production is located, gas sales fell to 522 MMcf/d from 562 MMcf/d.
Quarterly net income more than doubled from a year earlier to $1.623 billion ($4.52/share) from $770 million ($2.09), which was well ahead of Wall Street expectations of $3.63/share. Adjusted for special items, quarterly profits were $1.544 billion ($4.30/share), versus $797 million ($2.16/share) a year earlier. However, revenue fell to $16.63 billion from $17.15 billion. Total costs and expenses also fell to $13.69 billion from $15.92 billion.
"We had a very strong quarter operationally, as well as financially," said CEO Clarence Cazalot Jr. "Our upstream and downstream businesses both performed exceptionally well, with the downstream business turning in another record setting performance in refinery throughputs while the upstream delivered a strong production performance."
Cazalot said Marathon benefited from higher commodity prices, "particularly realized liquids prices in the upstream, and the refining and wholesale margin in the refining business. This strong performance has allowed us to significantly reinvest in value-creating projects around the world while maintaining a strong balance sheet."
Capital spending rose 38% compared with 3Q2005, and Cazalot noted the company's "major projects are progressing on schedule and will start providing profitable growth in 2007." E&P earnings worldwide rose 53% to $572 million, well ahead of the $373 million reported in 3Q2005.
However, in the United States, E&P profit fell to $218 million from $247 million. Marathon's Integrated Gas segment lost $2 million, versus the $22 million in earned a year ago.
In July, Marathon bought 8,700 net acres of gas-weighted assets in the Piceance Basin of Colorado, and it expects to drill about 700 wells on the leasehold over the next 10 years (see Daily GPI, July 21). Marathon's principal domestic E&P efforts are concentrated in Alaska, New Mexico, Oklahoma, Texas, Wyoming and the Gulf of Mexico.
Average natural gas prices averaged $5.21/Mcf in 3Q2006, down from $5.52 a year earlier. Average oil prices rose to $62.96 from $50.10, and oil sales were up at 242,000 bbl/d from 157,000 bbl/d in 3Q2005.
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