NEW YORK, March 27 /PRNewswire-FirstCall/ -- Marathon Oil Corporation
(NYSE: MRO) today provided investors with a comprehensive report on the
Company's global operations, including a review of strategic plans that
will enable Marathon to deliver growth across each of its segments.
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"We have in hand today the assets and plans through our integrated
business model to fulfill our mission of providing shareholders with
long-term sustainable value growth," said Clarence P. Cazalot, Jr.,
Marathon President and CEO.
Cazalot highlighted a number of factors that will contribute to
Marathon's future success:
-- A resource base of 6.6 billion barrels of oil equivalent (BOE) - the
largest in company history
-- Top-quartile production growth, including upstream and oil sands
mining, through 2012*
-- Year-end 2012 proved reserves, including oil sands, projected to be
approximately 15 percent higher than year-end 2007*
-- A growing portfolio of upstream growth opportunities beyond 2012
-- Strengthened refining and midstream asset base
-- Integrated long-lived asset base
-- Sound financial position to fund growth
-- Global asset portfolio review which is underway to enhance shareholder
value.
*Excluding acquisitions and divestitures.
At year-end 2001, Marathon had a resource base of 2.1 billion BOE and
by year-end 2007, the Company had more than tripled this to 6.6 billion
BOE, which includes liquid hydrocarbons, natural gas and bitumen.
"Resource growth drives future reserve additions," Cazalot said, "and
we intend to further increase our resource base and convert barrels into
proved reserves and production. A major contributor will be our oil sands
mining business, which will be ramping up production significantly in the
coming years. We're also making strategic investments in our downstream
business that will lower feedstock costs as well as increase efficiency and
flexibility, so we can continue providing competitive returns in an
increasingly challenging market. And, importantly, we will continue to
maintain financial discipline and flexibility to fund our profitable
growth.
"Across all of our business segments, we will access and deploy
critical technologies to differentiate Marathon from our competition. We
will strive to attain top-quartile execution on major projects and employ
operational excellence to ensure safe, environmentally responsible and
highly reliable operations.
"Further enhancing our ability to execute our plans, we have contracts
in place for most of our major projects and we have and will continue to
increase technical human resources in order to meet future needs," he said.
Projecting forward to 2012, the Company detailed its five-year
operational and financial targets for upstream and oil sands mining,
excluding acquisitions and divestitures, which include:
-- Maintaining competitive cash and income per BOE
-- Compound average production growth, upstream plus oil sands mining, of
7 percent (2007 - 2012)
-- Capital and exploration spending of about $18.5 billion (2008 - 2012)
-- Average annual reserve replacement, including oil sands, of more than
150 percent (2008 - 2012)
-- Drilling 8 - 13 significant exploration wells per year with average
annual resource additions of 150 million BOE at a finding cost of less
than $3 per BOE.
For 2008, the Company said it expects worldwide net upstream production
will be in the range of 380,000 - 420,000 BOE per day, excluding sales and
acquisitions. Additionally, net bitumen production from the Canadian oil
sands is expected to be about 30,000 barrels per day.
First production from three major development projects is targeted for
2008. Those include Neptune in the Gulf of Mexico, and Alvheim and Vilje in
Norway. Two projects slated for sanction in 2008 are: the Droshky
development project in the Gulf of Mexico, with first production targeted
for the 2010 - 2011 timeframe; and the Angola Block 31 Northeast
development, with first production targeted for 2012.
Marathon said its 2007 - 2012 upstream production growth is driven by
high confidence in its base asset performance, greater certainty in the
contributions from U.S. resource plays, and major development projects that
are either already producing or will commence production in 2008.
Marathon's refining, marketing and transportation segment achieved
record crude and total refinery throughputs in 2007; and the Company said
it is positioned for strong performance across industry cycles. Key
strategies outlined for the downstream businesses are:
-- Feedstock flexibility
-- Scale efficiency
-- Operational excellence
-- Commercial advantage.
Pointing to an example of increasing scale and feedstock flexibility,
Marathon said its projected $3.2 billion Garyville, La. refinery expansion
project is progressing on time and on budget. With 700 tons of structural
steel erected and more than 20,000 cubic yards of concrete poured, the
refinery expansion is about 38 percent complete.
Additionally, Marathon expects to more than double its coking capacity
by 2011, which will lead to lower feedstock costs and increased margins.
There is also emphasis on growing distillate production which will increase
by more than 50 percent by 2011, expanding E-10 ethanol market penetration,
and leveraging the Company's midstream infrastructure.
The strategic value of the Company's integrated business model is
illustrated in the potential sourcing of Canadian bitumen production to the
Company's U.S. refineries, in particular the Detroit refinery. The Detroit
heavy oil upgrading project will provide a valuable commercial solution for
the growing volumes of Canadian production.
Technology was highlighted as a critical element of value creation for
Marathon. The Company's three-pronged technology strategy is to:
-- Deliver technology solutions to maximize the value of existing assets
-- Create technology differentiation in key areas important for access to
new resources
-- Monitor and selectively invest in emerging technologies such as:
renewable/alternative fuels, energy efficiency, and carbon capture and
storage.
Offered as an example of technology differentiation, Marathon's
proprietary Gas-to-Fuels(TM) technology would convert natural gas directly
into clean transportation fuels such as high-octane gasoline and diesel,
and could potentially be used to monetize stranded natural gas resources
around the world. The Company has proven the technology in the laboratory,
and a 10- barrel-per-day demonstration plant is currently under
construction in Texas. A commerciality decision is expected to be made in
2008.
Marathon highlighted its priorities around financial discipline which
include funding value-accretive growth projects that yield the highest
rates of return. Marathon is also active in optimizing its portfolio,
controlling costs and maintaining financial flexibility while paying
competitive dividends and providing shareholders with long-term sustainable
value growth.
For additional detail regarding the Company's strategy and plans, the
complete Analyst Meeting webcast and associated presentations can be found
on Marathon's website at http://www.marathon.com, by clicking on the 2008 Analyst
Meeting. Replays of the webcast will be available on the Marathon website
through Sept. 1, 2008.
Unlike capital expenditures reported under generally accepted
accounting principles, the forecasted costs for the Garyville refinery
expansion project discussed in this release do not include capitalized
interest. Capitalized interest is budgeted at the corporate level.
This release contains forward-looking statements with respect to, the
timing and levels of the Company's worldwide liquid hydrocarbon and natural
gas production, bitumen production, the Alvheim/Vilje development, the
Neptune development, the Droshky development, the Angola Block 31
development, exploration and drilling plans, proved reserves, proved
bitumen reserves, the Garyville expansion project, the Detroit heavy oil
upgrading project, expected capital and exploration spending, and the
gas-to-fuels technology. Factors that could affect the timing and levels of
liquid hydrocarbon and natural gas production, bitumen production, the
Alvehim/Vilje, Neptune, Droshky and Angola developments, and future
exploration and drilling plans include pricing, supply and demand for
petroleum products, the amount of a capital available for exploration
development, regulatory constraints, timing of commencing production from
new wells, drilling rig availability, unforeseen hazards such as weather
conditions, acts of war or terrorists acts and the governmental or military
response thereto, and other geological, operating and economic
considerations. The forward-looking statements related to proved reserves
of liquid hydrocarbons and natural gas are based upon certain assumptions,
including, among others, presently known physical data concerning size and
character of reservoirs, economic recoverability, technology development,
future drilling success, production experience, industry economic
conditions, levels of cash flow from operations and operating conditions.
The forward- looking statements regarding proved bitumen reserves are based
on presently known physical data, economic recoverability and operating
conditions. Factors that could affect the Garyville expansion project and
the Detroit heavy oil upgrading project include transportation logistics,
availability of materials and labor, unforeseen hazards such as weather
conditions, delays in obtaining or conditions imposed by necessary
government and third-party approvals, and other risks associated with
construction projects. The expected capital and exploration spending is
based on current expectations, estimates and projections and is not a
guarantee of future performance. Factors that could affect the gas-to-fuels
technology include commerciality of the process, successful completion and
performance of the demonstration plant, and the successful negotiation of
commercial agreements. The foregoing factors (among others) could cause
actual results to differ materially from those set forth in the
forward-looking statements. In accordance with the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995, Marathon Oil
Corporation has included in its Annual Report on Form 10-K for the year
ended December 31, 2007, and subsequent Forms 8-K, cautionary language
identifying other important factors, though not necessarily all such
factors, that could cause future outcomes to differ materially from those
set forth in the forward-looking statements.
Cautionary Note to U.S. Investors - The United States Securities and
Exchange Commission (SEC) permits oil and gas companies, in their filings
with the SEC, to disclose only proved oil and gas reserves that have
demonstrated by actual production or conclusive formation tests to be
economically and legally producible under existing economic and operating
conditions. Marathon Oil Corporation uses certain terms in this press
release, such as resource base that the SEC's guidelines strictly prohibit
us from including in filings with the SEC. U.S. Investors are urged to
consider closely the disclosures in Marathon's periodic filings with the
SEC, available from us at 5555 San Felipe, Houston, Texas 77056 and the
Company's Web site at http://www.Marathon.com. You can also obtain this
information from the SEC by calling 1-800-SEC-0330.
Media Relations Lee Warren 713-296-4103
Contacts: Scott Scheffler 713-296-4102
Investor Relations Howard Thill 713-296-4140
Contacts: Chris Phillips 713-296-3213
Michol Ecklund 713-296-3919
SOURCE Marathon Oil Corporation
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Related links:
http://www.marathon.com/
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CONTACT:
Media, Lee Warren, +1-713-296-4103, or Scott
Scheffler, +1-713- 296-4102, or Investor Relations, Howard Thill,
+1-713-296-4140, or Chris Phillips, +1-713-296-3213, or Michol
Ecklund, +1-713-296-3919, all of Marathon Oil Corporation
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