|
Marathon may downgrade oil and gas reserves
Associated Press
Marathon Oil Co. is reviewing its oil and gas reserves for a possible downgrade, according to a regulatory filing Nov. 10.
“During the fourth quarter of 2004, Marathon expects to complete several reserve audits,” the Securities and Exchange Commission filing said. “These reviews could result in the recognition of impairment loses in the fourth quarter of 2004.”
The reviews include Marathon’s holdings in the Powder River Basin, a gas-rich area in the Western United States that hasn’t performed as expected.
Poor results in the basin contributed to Marathon’s move in October to slash its production projections for 2004. New reserves will offset Marathon spokesman Paul Weeditz said the review isn’t done. “We just feel it’s necessary to disclose this sort of information because it’s a process that’s under way,” he said.
The Houston-based company still expects new reserve additions for 2004 to more than offset the year’s production.
Investors have been more focused on oil reserves in the wake of large writedowns this year by Royal Dutch/Shell and a number of smaller companies. Reserves are a key industry benchmark, measuring how much oil and gas a company controls, and a top investor parameter.
The disclosure sent shares of Shell’s two parent companies plunging and set off industrywide scrutiny over the way reserves are accounted for. The problems continue to plague Shell, which recently said it may have to further reduce its reserves tally.
Marathon, which had 2003 revenue of $41.23 billion, tried to sell the Powder River Basin assets earlier this year, but couldn’t locate a buyer.
In October, Marathon Senior Vice President Steve Hinchman called the basin “a growth profile for us for the long-term.” One problem has been that government permits have been slow in coming, he said in an October conference call.
| 