Marathon earnings jump fourfold

Despite decline in oil production, high prices boost revenues 57%

Allen Baker

Petroleum News Contributing Writer

Marathon Oil Corp. kicked into high gear in the first quarter as net income more than quadrupled to $307 million from $67 million a year ago.

And the results were better than the Houston-based company’s fourth quarter, when profits were $194 million. High prices made the big difference as revenues rose 57 percent to $10.17 billion compared with $6.46 billion the same quarter a year ago.

Sequentially, revenues were up 18 percent from the fourth quarter figure of $8.61 billion. Like many other oil companies. Marathon derived huge benefits from the high prices in the run-up to the war in Iraq.

It’ll be a tough quarter to match. The better profits in the upstream, $535 million against $167 million, came despite a drop in liquids production.

Marathon brought up 191,000 barrels of liquids each day of the first quarter, on average, down 7 percent from the same quarter a year ago and down 9 percent from the 210,000 barrels the company pumped each day in the fourth quarter.

Gas production was up from 2002’s first quarter and from the fourth quarter, at 1,337 million cubic feet daily. That was a gain of 8 percent from 1,238 million cubic feet in the fourth quarter and a slim 2 percent rise from 1,309 million in the same quarter of 2002.

Price gain offset slightly by hedging

Oil brought $30.41 a barrel, up 60 percent from $18.98 a year ago and also up 23 percent from the fourth quarter.

That gain was offset a bit by some hedging that drove the actual average to $29.59 a barrel. The derivative losses cost the company $53 million in the quarter.

Worldwide, gas prices averaged $4.24 per thousand cubic feet, up 60 percent from $2.66 a year ago and up 22 percent from the fourth quarter’s $3.47.

In the downstream, profits came to $67 million, against a loss of $51 million a year earlier. That improvement came despite a ten percent decline in refinery throughput for the Marathon Ashland Petroleum venture to 949,500 barrels a day due to planned and unplanned maintenance. It was a gain of 14 percent from the 830,500 barrels a day that was processed in the fourth quarter, though. Total refining and marketing margin actually slid a bit sequentially to 4.1 cents from 4.6 cents in the fourth quarter. But it sure was better than the 1.6 cents in margins a year ago.

Other related businesses brought in $11 million, about half the $23 million that segment produced a year ago.