3rd UPDATE: Marathon Oil 1Q Profit Falls In Spin-Off's Wake
May 02 2012 - 8:35PM
Dow Jones News
Marathon Oil Corp.'s (MRO) first-quarter earnings fell 58% from
the year-ago period that included contributions from its former
refining and marketing business, missing analysts expectations.
Marathon reported a profit of $417 million, or 59 cents a share,
down from $996 million, or $1.39 a share, a year earlier, when it
still had large refining operations. Excluding write-downs,
asset-sale gains and other items, adjusted earnings were 67 cents a
share, down from 88 cents a year earlier, and below analysts'
expectation of 87 cents. The results were also lower than in the
fourth quarter, in which the company, now dedicated to exploration
and production of oil and natural gas resources, reported adjusted
net income of 78 cents per share.
The miss was driven mainly by a higher-than-expected
international tax rate, said Fadel Gheit, an analyst at Oppenheimer
& Co.
Shares rose 2 cents to $28.90 in after-hours trading Wednesday
after ending the regular session down 4.3%.
Last June, Marathon spun off its refining business--creating
Marathon Petroleum Corp. (MPC)--to focus its drilling efforts on
unconventional U.S. oil shales, such as the Bakken field in North
Dakota, Anadarko Woodford in Oklahoma and Eagle Ford in Texas.
Marathon Oil's production in the first quarter, excluding Libya,
was 371,000 barrels of oil equivalent a day, which was above the
company's previous guidance but 1% below its production in the
fourth quarter.
The decrease in production versus the fourth quarter was a
result of a planned turnaround in Equatorial Guinea and unplanned
downtime at the Foinaven field in the U.K., the company said.
Partially offsetting these declines were increased production in
the Eagle Ford and Bakken shale plays in the U.S.
The company reiterated its full-year production guidance of
360,000 barrels to 380,000 barrels of oil equivalent per day and
increased its forecast for 2012 capital investment and exploration
spending to $5 billion from its prior estimate of $4.8 billion, due
mainly to recent acquisitions in Eagle Ford.
Revenue increased 6.1% to $4.04 billion.
Speaking to analysts in an earnings conference call, Marathon
Oil executives said results from a shale-gas well the company
drilled in Poland were below expectations. The company added it
continues exploratory activity there and that it is about to
conclude drilling of a third well.
Marathon Oil said production from its operations in Libya, which
were suspended in the first quarter of 2011 amid that country's
political unrest, resumed with limited production but no sales in
the fourth quarter. In the first quarter, net sales volumes
averaged 17,000 barrels of oil equivalent a day. As of the end of
April, Libya net production available for sale was about 43,000
barrels of oil equivalent a day.
"The timing of the return to pre-conflict production levels in
Libya is unknown at this time," the company said.
Marathon Oil is a partner at Waha Oil Co., Libya's largest
operation with foreign energy companies. Pre-war production at Waha
Oil, whose partners also include ConocoPhillips (COP) and Hess
Corp. (HES), was 350,000 barrels a day.
Marathon had an unusually higher effective income-tax rate in
the first quarter of 66% because most of its production came from
higher tax areas such as Libya, Gheit said.
In the Eagle Ford shale, Marathon added 20,000 acres through
recent and pending acquisitions. The company expects these
transactions to be closed by the end of the third quarter and to
add two rigs to its 18 rigs currently operating in the region. At
the end of April, production in Eagle Ford exceeded 20,000 barrels
of oil equivalent a day compared with an average of about 15,000
barrels of oil equivalent a day over the previous several months,
the company said.
Marathon Petroleum Corp. on Tuesday reported that first-quarter
earnings rose 13% as the refining-and-pipeline company benefited
from differentials between crude oils and stronger merchandising
margins at its Speedway gasoline stations.
-By Isabel Ordonez, Dow Jones Newswires, 713-314-6090;
isabel.ordonez@dowjones.com
-Tess Stynes and Angel Gonzalez contributed to this article.
Ecopetrol (NYSE:EC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Ecopetrol (NYSE:EC)
Historical Stock Chart
From Apr 2023 to Apr 2024