Marathon Oil Corp.: Snow Complements Profitability Efforts

Oct. 18, 2006
Houston-based energy company welcomes back old friend.

For Marathon Oil Corp., electing former U.S. Treasury Secretary John W. Snow to the board of directors probably seemed natural. After all, both Marathon and Snow were born in northwestern Ohio (1887 and 1939 respectively). And Snow previously served as a board member of USX Corp., formerly known as United States Steel Corp. (and ironically again known as U.S. Steel Corp.) of which Marathon Oil Co. was a wholly owned subsidiary. In 2002 the remaining energy businesses of USX and Marathon Oil Co. became Marathon Oil Corp. -- an IndustryWeek IW 50 Best Manufacturer for 2006.

"Marathon is very pleased to welcome back John Snow to the company's board of directors," said Thomas J. Usher, non-executive chairman of Marathon's board of directors in a Sept. 27 statement. "His knowledge of Marathon and of our industry gained while a former USX Corp. board member, coupled with his extensive experience in both the public and private sector and his keen global insights, will be highly complementary to our ongoing efforts to profitably grow Marathon."

In terms of growth, Marathon released its third-quarter 2006 interim update on Oct. 5 (the company will report third-quarter results on Oct. 31). According to the release, oil and natural gas production available for sale during the third quarter is expected to be approximately 350,000 barrels of oil equivalent per day. According to the company's Web site, refining capacity is 974,000 barrels per day.

Marathon Oil Corp.
At A Glance
Marathon Oil Corp.Houston, TexasPrimary Industry: Petroleum and coal productsNumber of employees: 11,5002005 In ReviewRevenue: $63.3 billionProfit Margin: 4.79%Sales Turnover: 1.08Inventory Turnover: 2.22Revenue Growth: 27.47%Return On Assets: 12.94%Return On Equity: 37.38%

The interim update also estimated third-quarter exploration expense to be between $75 million and $110 million, with U.S. exploration estimated between $35 million and $45 million and international exploration expense estimated to be between $40 million and $65 million.

It will be interesting to see if third-quarter numbers will be able to top second-quarter results. On Aug. 1 Marathon reported second quarter 2006 net income of $1.748 billion, or $4.80 per diluted share. Net income in the second quarter 2005 was $673 million, or $1.92 per diluted share.

"During the second quarter 2006, Marathon continued to benefit from strong operational performances in both our upstream and downstream businesses, while maintaining our focus on key safety and environmental goals. Our strong operational performance was complemented by substantial investments in all segments of our company," said Clarence P. Cazalot Jr., Marathon president and CEO. "Since January 2005, Marathon has invested more than $9 billion across all segments of the company, which is significantly in excess of Marathon's net income of approximately $5.6 billion over this same 18-month period. During this time, we have continued to advance our major projects around the world. These projects and future investments will help Marathon meet the energy needs of our customers while adding long-term shareholder value."

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