About Marathon Oil Corporation
In the long-running competition for success in the oil and gas industry Marathon Oil is keeping up a steady pace. It has proved reserves of more than 2.1 billion barrels of oil equivalent, including 692 million barrels of synthetic oil derived from oil sands mining. It major focus of production is the US, in the Gulf of Mexico, Oklahoma, Texas, north Delaware and North Dakota. Its areas of production outside of the US include Europe (the UK); and Africa (Equatorial Guinea, Gabon, and Libya).
Marathon Oil is engaged in oil and gas exploration production worldwide, and LNG and methanol marketing in Equatorial Guinea.
The company operates through two reportable operating segments: North America E&P (over 70% of total revenues), which explores for, produces, and markets crude oil and condensate, NGLs, and natural gas in the US; and International E&P (roughly 30%), which explores for, produces, and markets crude oil and condensate, NGLs, and natural gas outside of the US and produces and markets products manufactured from natural gas, such as LNG and methanol, in Equatorial Guinea.
Marathon Oil has oil and gas assets in Equatorial Guinea, Gabon, Kurdistan (Iraq), Libya, the UK, and the US. 70% of revenue comes from the US.
Sales and Marketing
Marathon Oil's marketing activities include the transportation of oil and gas to market centers, the sale of commodities to third parties, and the storage of hydrocarbon products. In 2017, sales to Vitol and affiliates accounted for approximately 10% of the company's total revenue.
Marathon revenue has fallen from $13 billion in 2010 to just below $5 billion in 2017, mostly from asset sell-offs and divestment. Net Income also declined from a $2 billion average per year to losses from 2015 onwards. In the last three years, the company has had losses of some $10 billion.
Revenue in 2017 rose some 25% to $4.8 billion from the previous year. Volumes increased due to the Delaware acquisition, new wells to sales in other US assets, and better sales in Libya.
Net income for Marathon got worse. From a loss of $2.1 billion in 2016, it registered losses of $5.7 billion in 2017, mostly due to a 10% increase in depreciation and amortization costs ($2.4 billion in 2017), as well as a $248 million increase in impairment charges over 2016 (totaling $638 million for 2017).
Cash holdings declined from $2.5 billion to just over $560 million. Operations generated $2 billion, but financing and investment activities used $2 billion in cash each, mostly in acquisition and debt reduction.
Marathon Oil continues to focus on lower cost/higher return liquid hydrocarbon reserves and production in the US. To accelerate this push, in 2017 the company agreed to sell its 20% stake in the Athabasca Oil Sands Project for $2.5 billion, to pay down debt and reinvest in core projects (it sold assets in 2015-16 period totaling $1.5 billion). In 2017, Marathon also bought 70,000 net acres in the lower-cost Permian Basin from BC Operating for $1.1 billion.
One of Marathon's biggest strengths is its differentiated position in the four most productive low-cost resource plays: Eagle Ford, Bakken, Oklahoma, and north Delaware. In 2018, 90% of its capital allocation budget of $ 2.3 billion will come from the US resource plays (its development budget is self-funded). Excess cash from higher commodity prices and divestiture proceeds is being strategically invested. Since 2017 saw rise in production margins (oil production was 30% higher than last quarter of 2016) , the company predicts a greater percentage of production being sourced from its high quality assets. Marathon expects 410,000 boed of production for 2018, excluding Libya, up some 18% year-over-year, as resource plays grow in the US.
With a somewhat unexpectedly good production results from its unconventional wells in the Eagle Ford and Bakken assets, further aided by strong rates from the nine-well STACK infill assets, Marathon is now focused on increasing corporate-level returns, as the company has had massive losses in the last three years totaling more than $10 billion. In 2017, Marathon was able to achieve cash flow neutrality, including working capital. It also reduced gross debt by $1.8 billion in 2017, lowering its annual interest expense by at least $115 million.
Mergers and Acquisitions
In 2016 the company acquired Payrock Energy Holdings (a portfolio company of EnCap Investments) for $888 million. The deal added to Marathon Oil's position in the STACK play in Oklahoma where the break-even crude price for commercially viable oil production is in the low $40s.
5555 SAN FELIPE ST
Houston, TX 77056-2701
Phone: 1 (713) 629-6600
Employer Type: Publicly Owned
Stock Symbol: MRO
Stock Exchange: , NYSE
EVP, Operations: T. Mitchell Little
Chairman, President and CEO: Lee M. Tillman
EVP and CFO: Dane E. Whitehead
Employees (This Location): 1,300
Employees (All Locations): 2,400
Park Ridge, IL
Stillman Valley, IL
Crown Point, IN
Terre Haute, IN
Battle Creek, MI
Oak Park, MI
New York, NY
Wshngtn Ct Hs, OH
Oklahoma City, OK