Marathon Oil reported Wednesday a first quarter 2012 net income of $417 million, or $0.59 per diluted share, compared to net income in the fourth quarter of 2011 of $549 million, or $0.78 per diluted share.
For the first quarter of 2012, adjusted net income was $478 million, or $0.67 per diluted share, compared to adjusted net income of $552 million, or $0.78 per diluted share, for the fourth quarter of 2011.
“Marathon Oil had a solid quarter operationally with the Exploration and Production (E&P) segment delivering production available for sale at an average 371,000 barrels of oil equivalent per day (boed) – excluding Libya – which was above our projections,” said Clarence P. Cazalot Jr., Marathon Oil’s chairman, president and CEO. “Our U.S. Lower 48 net sales volumes grew 12 percent over the fourth quarter of 2011, led by increases in the Texas Eagle Ford, North Dakota Bakken and Oklahoma Anadarko Woodford resource plays. Record production performance in Norway and the resumption of sales in Libya generated a 2 percent increase in international E&P sales volumes over fourth quarter of 2011, more than offsetting the impacts of a planned turnaround in Equatorial Guinea, and unscheduled downtime in the U.K. at Foinaven and no liftings at Brae.
“First quarter pre-tax earnings were higher than the fourth quarter, benefitting from the resumption of sales in Libya and higher sales in Norway, along with higher Brent crude and European natural gas prices. This was partially offset by lower U.S. natural gas prices and U.S. and Canadian liquid hydrocarbon price realizations that were negatively impacted by dislocations in the crude markets creating wider differentials and lower crude realizations in the Bakken, across the Rocky Mountain region and from the Oil Sands Mining (OSM) segment. The shift in earnings from lower to higher tax jurisdictions led to a higher tax rate than expected, and lower net income quarter over quarter,” he said.
“Our activity ramp-up in the Eagle Ford is now delivering 16 to 20 well completions a month; and, at the end of April production exceeded 20,000 net boed compared to an average of approximately 15,000 boed over the previous several months. Additionally, we continue to actively manage our portfolio, announcing the sale of our Alaska assets while we build upon our strong position in the profitable liquids-rich core of the Eagle Ford resource play, adding 20,000 net acres through recent and pending acquisitions with current net production of 7,000 boed, nearly all of which is operated. We expect these transactions to be closed by the end of the third quarter and to add two rigs to our 18 rigs currently operating in the play. Our capital, investment and exploration expenditures budget, excluding acquisition costs, will move up slightly from $4.8 billion to $5 billion as a result of this additional activity and other adjustments.
“Our solid operational performance in both our base and growth asset portfolios is indicative of the progress we continue to make in executing our growth strategy. We remain confident that our continued focus on financial discipline and the execution of our business plans for all our assets will drive the delivery of our projected 5-7 percent compound annual production growth rate through 2016 and increase shareholder value,” Cazalot said.