Marathon to Hit Upper End of Output

Yesterday, Houston-based integrated oil major Marathon Oil Corporation (MRO) provided an interim update for the third quarter of 2009 (covering the first two months of the quarter). Recovery in crude oil prices is expected to benefit the company's upstream segment, while the downstream business will see higher refinery output and throughputs. The company plans to release its quarterly results on November 3, 2009.

Upstream
Marathon expects third-quarter oil and natural gas production available for sale from continuing operations to average 395,000 oil-equivalent barrels per day (BOE/d), which is within the company's guidance for the quarter. This is below the previous quarter’s output of 411,000 BOE/d but above the year-ago production of 389 BOE/d and closer to the high end of its 380,000–400,000 BOE/d guidance.

Marathon's realized oil price domestically averaged $60.59 per barrel, up 14% sequentially, but down 43% year-over-year. The company's domestic realized price was 10% below the benchmark oil price, primarily reflecting quality and locational variations. International realized oil price was $65.38 per barrel, up 16% sequentially, but was 42% below the year-ago levels.

Domestic realized natural gas price of $3.81 per thousand cubic feet was up 6% from the June 2009 quarter but was approximately 51% below the  price in the earlier-year quarter . International realized natural gas price was down both sequentially as well as year-over-year.

Downstream
Regarding downstream operations, the fifth largest refiner and marketer of petroleum products in the U.S. said that crude oil refined is likely to average approximately 1,015,000 barrels per day (Bbl/d) compared to 955,000 Bbl/d in the corresponding period last year and 959,000 in the second quarter of 2009. Total refinery throughput for the quarter is expected to be about 1,190,000 Bbl/d, up 4% year-over-year and 3% sequentially.

Oil Sands & Integrated Gas Production
The oil sands business is expected to be inline with previous guidance, while Marathon 's Integrated Gas segment's sales are likely to exceed guidance.

We believe Marathon ’s third quarter results will reflect the modest improvement in oil prices from the previous quarter. This is a key positive for the company as more than 60% of its operating income comes from the upstream segment. Marathon has extensive upstream operations in eleven countries and its international asset base is one of the most robust in the group.

However, results will be down from the year-ago period, as commodity-price realizations still remain way below the third quarter 2008 levels.

Read the full analyst report on MRO