Marathon Oil — Q3 2007 Earnings Presentation
27 slides from Marathon Oil's earnings presentation, Nov 5, 2007
Slide 1: Third Quarter 2007 Earnings Conference Call and Web Cast
Third Quarter 2007 Earnings Conference Call and Web Cast November 1, 2007
Slide 2: Forward Looking Statement
Except for historical information, this presentation contains forward-looking information with respect to the timing and levels of the company’s worldwide liquid hydrocarbon and natural gas production available for sale, integrated gas segment sales volumes, mined bitumen, net interest, administrati
Slide 3: Reconciliation Net Income to Adjusted Net Income
Reconciliation Net Income to Adjusted Net Income -74 Foreign currency derivatives 1,548 1 -8 5 1,550 2Q 2007 707 1 -11 717 1Q 2007 19 Change in Accounting -31 -243 -21 Gain On Sale -93 -21 -15 Def Tax Adjustment 62 -139 -58 10 -45 45 48 97 33 UK Gas Contracts 838 22 1,079 4Q 2006 1,016 1,544 1,515 7
Slide 4: Adjusted Net Income
Adjusted Net Income Millions See slide 2 of this presentation for a discussion of the use of the non-GAAP measure adjusted net income and slide 3 for a reconciliation of net income adjusted for special items to net income. 3,238 4,636 3,271 357 739 707 755 1,515 1,548 797 1,544 1,016 1,329 838 $0 $5
Slide 5: Adjusted Net Income Per Diluted Share
Adjusted Net Income Per Diluted Share* Millions 4.51 6.42 See slide 2 of this presentation for a discussion of the use of the non-GAAP measure adjusted net income and slide 3 for a reconciliation of net income adjusted for special items to net income. * All per share data adjusted for 2-for-1 stock
Slide 6: Adjusted Net Income 3Q 2007 vs. 3Q 2006
Adjusted Net Income 3Q 2007 vs. 3Q 2006 Millions 1,544 -102 -54 -938 544 1,016 22 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 3Q 2006 E&P Price Variance (Pre-tax) E&P Volume Variance (Pre-tax) RM&T (Pre-tax) Income Taxes Other (Pre-tax) 3Q 2007
Slide 7: Adjusted Net Income 3Q 2007 vs. 2Q 2007
Adjusted Net Income 3Q 2007 vs. 2Q 2007 Millions 1,548 -1,223 92 495 1,016 12 92 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 2Q 2007 E&P Price Variance (Pre-tax) E&P Volume Variance (Pre-tax) RM&T (Pre-tax) Income Taxes Other (Pre-tax) 3Q 2007
Slide 8: Upstream Segment Income 3Q 2007 vs. 2Q 2007
Upstream Segment Income 3Q 2007 vs. 2Q 2007 Millions 400 92 92 -64 479 27 -68 $0 $100 $200 $300 $400 $500 $600 2Q 2007 Price Variance (Pre-tax) Volume Variance (Pre-tax) Income Taxes Exploration Expense (Pre-tax) Other (Pre-tax) 3Q 2007
Slide 9: Upstream Segment Income and Worldwide Sales Volumes
Upstream Segment Income and Worldwide Sales Volumes 338 834 199 45.70 339 849 198 43.57 357 874 212 43.83 371 1,031 199 46.67 362 719 242 52.46 392 801 259 52.99 348 996 182 45.73 Gas (MMCFD) Total (MBOED) Liquids (MBD) Avg Realizations ($/BOE) Segment Income - Millions Sales Volumes - MBOED 465 659
Slide 10: Domestic Upstream Income 3Q 2007 vs. 2Q 2007
Domestic Upstream Income 3Q 2007 vs. 2Q 2007 Millions 173 5 -5 -6 147 -20 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 2Q 2007 Price Variance (Pre-tax) Volume Variance (Pre-tax) Exploration Expense (Pre-tax) (Pre-tax) 3Q 2007 Other
Slide 11: Domestic Upstream Income and Sales Volumes
Domestic Upstream Income and Sales Volumes 6.76 6.16 55.19 7.55 65.02 6.59 5.91 49.32 6.77 58.23 5.63 5.14 63.53 6.16 75.15 5.91 5.36 48.33 6.56 60.17 6.35 5.62 60.37 6.58 70.54 6.07 5.35 59.80 6.80 70.72 7.96 6.66 49.30 9.01 63.48 NYMEX prompt WTI ($/Bbl) Bid Week Nat Gas ($/MMBTU) Lower 48 Gas ($/
Slide 12: Domestic Upstream Expense and Profitability
Domestic Upstream Expense and Profitability $/BOE 142 460 65 13.44 23.73 27.38 45.34 154 512 69 10.78 22.04 24.71 41.67 $/BOE 161 522 74 11.29 20.45 24.51 39.58 464 522 523 561 Nat Gas (MMCFD) 63 72 79 80 Liquids (MBD) 11.36 14.88 16.15 15.70 Income per BOE 140 159 166 174 Total (MBOED) 25.37 19.61
Slide 13: International Upstream Income 3Q 2007 vs. 2Q 2007
International Upstream Income 3Q 2007 vs. 2Q 2007 Millions 227 123 61 -63 332 33 -49 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 2Q 2007 Price Variance (Pre-tax) Volume Variance (Pre-tax) Exploration Expense (Pre-tax) Income Taxes Other (Pre-tax) 3Q 2007
Slide 14: International Upstream Income and Sales Volumes
International Upstream Income and Sales Volumes 2.27 61.02 68.76 Avg Realizations: 4.91 52.01 57.76 4.90 54.94 59.60 4.10 64.07 69.60 2.38 70.37 74.75 5.19 65.76 69.59 6.16 54.54 61.79 Dated Brent ($/Bbl) Natural Gas ($/MMCF) Liquids ($/Bbl) Sales Volumes - MBOED Income – Millions From continuing op
Slide 15: International Upstream Expense and Profitability
International Upstream Expense and Profitability 196 374 134 12.68 13.88 17.67 45.95 185 337 129 14.19 15.23 16.67 45.16 231 567 136 15.65 12.98 14.63 47.41 197 352 138 7.79 14.32 18.25 47.30 203 197 170 18.99 13.00 16.09 57.68 226 278 180 20.19 13.49 14.68 58.68 174 435 102 14.02 15.40 18.14 47.21
Slide 16: Downstream Segment Income and Refinery Throughputs
Downstream Segment Income and Refinery Throughputs 13.08 13.20 16.61 1,280 1,426 .3925 Market Prices: 12.28 4.91 5.26 1,195 1,343 .1246 12.41 2.47 3.56 1,212 1,389 .1707 11.66 5.91 7.77 1,249 1,434 .3271 9.77 6.01 10.51 1,241 1,440 .1717 12.49 10.35 11.68 1,245 1,461 .2978 13.97 4.72 4.24 1,147 1,41
Slide 17: SSA Gasoline/Distillate Sales and Gross Margins
SSA Gasoline/Distillate Sales and Gross Margins 25.5 182 714 10.29 1,637 24.8 160 644 12.17 1,632 25.4 191 752 11.03 1,637 25.1 170 677 11.21 1,636 24.4 178 729 14.10 1,635 24.8 171 690 10.19 1,637 24.3 148 610 10.55 1,635 24.8 158 637 14.00 1,638 23.5 162 689 12.32 1,638 25.3 163 645 12.11 1,647 10
Slide 18: Net Income
Net Income ($ millions unless otherwise noted) 74 - - - - - - Foreign Currency Derivative 46% 717 (1) - - 11 707 - 707 (11) (19) 72 749 19 345 385 1Q 2007 44% 1,550 (1) - 8 (5) 1,548 - 1,548 34 (20) 96 1,658 12 1,246 400 2Q 42% 1,021 (7) - - (62) 1,016 - 1,016 (70) (19) 86 1,013 52 482 479 3Q 2006 4
Slide 19: Select Balance Sheet/Cash Flow Data
Select Balance Sheet/Cash Flow Data Preliminary ($ billions unless otherwise noted) 1.1 1.0 7% 14.8 1.2 3.5 - 2.3 1Q 2007 3.1 2.4 8% 15.8 1.3 4.6 1.0 2.3 2Q 0.8 - - - - Trusteed funds from revenue bonds 4.6 3.0 11% 16.7 2.0 6.1 3.3 3Q 5.8 5.4 6% 14.6 0.9 3.5 2.6 4Q 2006 4.8 3.7 6% 14.5 0.9 3.7 2.8 3
Slide 20: 2007 Estimates
2007 Estimates Mining Segment Net Sales Volumes: 6 25 2,000-2,500 6,137 1,997 1,163 1,300-1,350 1,421 1,107 1,324 44-46 167-187 207-227 340-380 0-10 ~ 350 Year Est* 46 24 37 72 (19) 339 185 337 129 154 512 69 1QA 2007 44 68 47 96 (20) 338 196 374 134 142 460 65 2QA 42 35 53 86 (19) 371 231 567 136 1
Slide 21: Canadian Oil Sands - Refining Integration
Canadian Oil Sands -Refining Integration November 1, 2007
Slide 22: Midwest Refining vs. Alberta Upgrader Base Assumptions
Midwest Refining vs. Alberta Upgrader Base Assumptions WTI = $60/Bbl Premium Synthetic = WTI = $60/Bbl Diluent = 110% of WTI = $66/Bbl Light/Heavy differential = (0.3 x WTI) + $1 = $19/Bbl Bitumen blend (Dilbit) = WTI – light/heavy differential = $41/Bbl Bitumen = [Dilbit – (0.3 x Diluent)] / 0.7 =
Slide 23: Oil Sands Illustrative Value Chain
Oil Sands Illustrative Value Chain Downstream integration allows capture of entire value chain Blending Cost $10.71 Heavy Diff $19.00 SCO Discount $0.00 Crack Spread $10.00 $30.29 $41.00 $60.00 $60.00 $70.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 Bitumen Bitumen Blend (Dilbit) Premium Synt
Slide 24: Midwest Refining Solution Margin per bbl Bitumen
Midwest Refining Solution Margin per bbl Bitumen Bitumen $30.29 1.0 bbl Value of Products Dilbit Refinery 1.43 70/30 94.5% Yield x $70 x 94.5% 1.43 bbl $94.60 0.43 bbl Transportation + Opex = $10/bbl Feedstock Diluent $28.29 Total cost Operating Margin/Bbl $30.29 + $28.29 + $10 (1.43) = $72.86 $21.7
Slide 25: Alberta Hydrogen Addition Upgrader Margin per bbl Bitumen
Alberta Hydrogen Addition Upgrader Margin per bbl Bitumen Bitumen $30.29 1.0 bbl Alberta Hydrogen Premium AlbianSCO Addition Upgrader LHM VGO 103% Yield Heavy AlbianSCO 1.21 bbls 1.24 bbls 0.21 bbl Other Feed/ Blendstocks Value of Products $63.44 Other Feed/Blendstocks+ Transportation + Overhead + O
Slide 26: Midwest Solution vs. Alberta Solution
Midwest Solution vs. Alberta Solution Margin per bbl of Bitumen Midwest Refining Solution Alberta Hydrogen Addition Upgrader Value of Products $94.60 Value of Products $63.44 Delivered Feedstocks Delivered Feedstocks Bitumen $30.29 Bitumen $30.29 Diluent $28.29 Transportation & Operating Costs $14.2
Slide 27: Slide 27