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The Houston, Texas-based company posted net income of $413 million or $0.58 per share for the third quarter, much lower than $2.06 billion or $2.90 per share in the prior year quarter.
Result for the latest quarter included non-cash after-tax mark-to-market loss of $7 million on two natural gas sales contracts in the United Kingdom, compared to a gain of $101 million last year.
Excluding items, adjusted net income plunged to $436 million or $0.61 per share from $1.963 billion or $2.76 per share in the previous year quarter. On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of $0.57 per share for the third quarter. Analysts' estimates typically exclude special items.
Third quarter total revenues and other income declined to $14.48 billion from $23.30 billion in the same quarter last year. Four Wall Street analysts expected the company to record a revenue of $13.70 billion for the third quarter.
Exploration and Production or E&P segment income dropped to $491 million in the third quarter from $869 million in the year-ago quarter, due to lower liquid hydrocarbon and natural gas price realizations, partially offset by lower operating expenses.
U.S E&P income plunged to $32 million from $285 million, hurt by lower price realizations - 43% lower for liquid hydrocarbons and 53% lower for natural gas.
International E&P income fell to $459 million from $584 million in the third quarter of 2008, as a result of lower price realizations - 42% lower for liquid hydrocarbons and 55% lower for natural gas.
Third quarter 2009 sales volumes, which exclude the company's Gabonese operations now reported as discontinued operations, averaged 366,000 barrels of oil equivalent per day or boepd.
Production available for sale improved 5% to 393,000 boepd from 375,000 boepd in the prior year quarter. The company noted that the primary difference between recorded sales volumes and production volumes available for sale is due to the timing of international oil lifting.
Including production from Gabon, total volumes available for sale were 399,000 boepd in the third quarter 2009, which came at the top end of the company's previous guidance of 380,000 to 400,000 boepd.
Oil Sands Mining or OSM segment income fell to $25 million in the third quarter from $288 million over a year ago, hurt by a 45% drop in average synthetic crude oil realizations, partially offset by lower blendstock and energy costs. Result included an after-tax gain of $190 million on derivative instruments.
Refining, Marketing and Transportation or RM&T segment income dropped to $158 million from $771 million in the third quarter of 2008.
During the third quarter, crude oil refined averaged 1.019 million bpd, up from 955,000 bpd in the third quarter of 2008. Total refinery throughputs rose 4% to 1.19 million bpd from 1.14 million bpd over a year earlier.
Integrated Gas segment income slipped to $13 million from $65 million in the prior year quarter, due to lower liquefied natural gas (LNG | Quote | Chart | News | PowerRating) price realizations.
Worldwide price realization for liquid hydrocarbons dropped to $64.27 per bbl from $111.33 per bbl over a year earlier. Worldwide price realization for natural gas fell to $2.20 per mcf from $5.11 per mcf last year.
Total costs and expenses for the third quarter eased to $13.46 billion from $19.66 billion in the previous year quarter.
During the third quarter of 2009, Marathon agreed to sell its unit, Marathon Oil Gabon Ltd., to Perenco S.A. for $282 million, excluding any purchase price adjustments at closing.
The companies expect to close the transaction, subject to consultation with the Gabonese Government, during the fourth quarter of 2009 with an effective date of Jan. 1, 2009.
Marathon's net production available for sale from Gabon averaged approximately 6,000 boepd for the third quarter 2009.
With the pending transaction, Marathon plans to exit its existing Gabon business, and the activities of this business have been included as discontinued operations and excluded from E&P segment income.
For the nine-month period of 2009, Marathon reported net income of $1.11 billion or $1.56 per share, compared to $3.57 billion or $5.00 per share in the previous year period.
Total revenues and other income decreased to $38.07 billion from $63.43 billion in the prior year period.
For the full year 2009, Marathon narrowed its outlook for production available for sale to be between 405,000 boepd and 410,000 boepd from its previous expectation of 390,000 boepd to 410,000 boepd. Both the current and the previous guidance include almost 6,000 boepd of production from Gabon.
With the economic crisis curtailing demand for oil, companies operating in the oil sector have had a tough time. Lower commodity prices and a decline in margins have hurt the bottom line of many of them.
Among others in the industry, Chevron Corp. (CVX | Quote | Chart | News | PowerRating) reported a 51% slide in profit for the third quarter, reflecting sharp declines in earnings from both upstream and downstream businesses. Lower prices for crude oil and natural gas affected the upstream business, while the downstream business was hurt by weak margins on the sale of gasoline and other refined products. The company, however, reported an 11% increase in net oil-equivalent production during the quarter compared to a year ago.
Another peer, Exxon Mobil Corp. (XOM | Quote | Chart | News | PowerRating) reported that its third quarter profit plunged from last year, hurt by lower commodity prices and weak product margins. Revenue dropped nearly 40% year-over-year.
Marathon is currently trading at $32.31, up 34 cents or 1.06% on a volume of 2.05 million shares. The stock has been moving in a range of $19.34 - $35.71 for the past 52 weeks, with an average daily volume of about 5.74 million shares for the past three months.
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