In the long-running competition for profits in the oil and gas industry Marathon Oil is keeping up a steady pace. The company explores for and produces oil and gas primarily in Angola, Canada, Equatorial Guinea, Iraq, Libya, Norway, Poland, the UK, and the US. In 2011 it reported proved reserves of 1.8 billion barrels of oil equivalent including 623 million barrels of synthetic oil from oil sands. Seeking stronger financial returns, in 2011 Marathon Oil (formerly a holding company with both upstream and downstream operations) spun off its downstream unit Marathon Petroleum (which had accounted for the bulk of its revenues) and became a pure-play exploration and production company.
Marathon Oil's Houston-based operations retained the exploration, oil sands mining, and natural gas businesses and the company name, while the Findlay, Ohio, operations (Marathon Petroleum) kept the marketing, refining, pipeline, and transportation functions.
The reconfigured exploration and production company saw its revenues and net income grow further in 2011, thanks to higher oil prices, increased production, and ramped up product sales. Revenue was up 25% and net income about 15%.
However, while exploration and production and oil sands mining reported robust revenue growth in 2011, Marathon's natural gas products segment's revenue declined, due to the closing of the company's LNG facility in Alaska to cut costs.
In 2010 a recovering global economy, higher oil prices, and stronger demand lifted Marathon Oil's overall revenues (especially in the refining and marketing and exploration and production segments) and net income.
A key part of Marathon's strategy involves making large divestitures and acquisitions. It plans to make divestitures worth $1.5 billion to $3 billion over the period of 2011 to 2013 in an effort to position the company for profitable growth. Included in this plan is an agreement to divest its exploration and production assets in Alaska for $375 million.
In 2010 the company sold 20% of its 30% stake in its Angola-based oil and gas operations to CNOOC and Sinopec in order to raise about $1.3 billion.
On the acquisition side, Marathon has so far in 2012 acquired or agreed to acquire about $1 billion worth of acreage in the South Texas Eagle Ford resource play, where it has already made significant investments -- namely $3.5 billion in assets already acquired from KKR and Hilcorp Energy in 2011. All told, acquisitions at Eagle Ford are expected to add a number of drilling locations to Marathon's inventory and will boost its position to about 225,000 net acres.
▲ Show Less▼ Show Full Description