OilVoice - Marathon Oil Corporation Provides Fourth Quarter 2009 Interim Update

Marathon Oil Corporation Provides Fourth Quarter 2009 Interim Update

Thursday, January 14, 2010

Marathon Oil Corporation is providing information on market factors and operating conditions that occurred during the fourth quarter of 2009 that could impact the Company's quarterly financial results. The market indicators and Company estimates noted below and in the attached schedule may differ significantly from actual results. The Company will report fourth quarter results on Feb. 2, 2010.

Exploration and Production
Liquid hydrocarbon and natural gas production sold during the fourth quarter is estimated to be approximately 410,000 barrels of oil equivalent per day (boepd) from continuing operations. There were no sales volumes from the Company's Gabonese assets, which were sold during the fourth quarter. Revenues are reported based on production sold during the period, which can vary from production available for sale primarily as a result of the timing of crude oil liftings and natural gas sales. Liquid hydrocarbon and natural gas production available for sale during the fourth quarter is expected to be approximately 400,000 boepd, at the high end of previous fourth quarter guidance for continuing operations of 385,000 to 405,000 boepd. Both the estimated production available for sale and the previous guidance exclude any production from Gabon.

Marathon's average liquid hydrocarbon realization for the first two months of the fourth quarter increased $8.30 per barrel domestically and $5.50 per barrel internationally compared to the third quarter of 2009, reflecting the general market price movements during the first two months of the quarter. For the entire fourth quarter of 2009, the average West Texas Intermediate (WTI) crude oil market price indicator was $7.89 per barrel higher than the third quarter of 2009 while the average Dated Brent indicator increased $6.45 per barrel.

Marathon's domestic average natural gas price realization for October and November of 2009 increased $0.90 per thousand cubic feet (mcf) from the Company's average realized price in the third quarter of 2009. The average Henry Hub (HH) prompt natural gas price for the fourth quarter increased $1.11 per million British Thermal Units (BTUs) compared to the third quarter of 2009, while the average HH bid week natural gas price increased $0.77 per million BTUs during the same period. International average natural gas realizations for continuing operations decreased $0.03 per mcf in the first two months of the fourth quarter compared to the third quarter of 2009.

Marathon's actual crude oil and natural gas price realizations vary from market indicators primarily due to product quality and location differentials.

Fourth quarter 2009 exploration expense is expected to be approximately $140 million, which is within previous guidance.

Oil Sands Mining
For the fourth quarter 2009, the Company estimates that its share of bitumen production from the Athabasca Oil Sands Project (AOSP) mining operation will be approximately 25,000 barrels per day (bpd), which is within the previous guidance of 24,000 to 29,000 bpd for the fourth quarter. Marathon's synthetic crude oil sales from AOSP for the fourth quarter of 2009 are estimated to be approximately 34,000 bpd. Marathon's average synthetic crude oil realization for the first two months of the fourth quarter was $68.73 per barrel, compared to $62.08 per barrel for the third quarter of 2009, reflecting the general market price movements during the first two months of the fourth quarter.

Refining, Marketing and Transportation
Crude oil refined is expected to average approximately 998,000 bpd for the fourth quarter of 2009, compared to 952,000 bpd in the final three months of 2008. Total refinery throughputs for the fourth quarter of 2009 are expected to be about 1,190,000 bpd compared to 1,177,000 bpd in the fourth quarter of 2008.

The Company currently projects its refined products sales volumes will average approximately 1,450,000 bpd in the fourth quarter of 2009 compared to 1,404,000 bpd in the fourth quarter of 2008.

The Company estimates its fourth quarter 2009 refining and wholesale marketing gross margin will be approximately $0.01 per gallon as compared to $0.1248 per gallon earned in the fourth quarter of 2008. The primary factor contributing to the margin decline is lower fourth quarter 2009 wholesale price realizations compared to the relevant spot market indicators, due to crude oil prices increasing about $10 per barrel during the fourth quarter of 2009 compared to the significant drop in crude oil prices of about $55 per barrel during the fourth quarter of 2008.

Speedway SuperAmerica LLC's (SSA) gasoline and distillate gross margin averaged approximately $0.10 per gallon during October and November 2009 and is expected to average approximately the same for the fourth quarter of 2009. The Company projects that SSA's fourth quarter same store gasoline sales volume will decrease about 2 percent compared to the same quarter of last year.

Integrated Gas
Marathon's liquefied natural gas (LNG) operations in Equatorial Guinea and Alaska are estimated to have sold approximately 6,800 net metric tonnes per day (mtpd) of LNG in the fourth quarter of 2009, above the previous guidance of 6,000 to 6,700 mtpd.