Marathon has provided information on market factors and operating conditions that occurred during the first quarter of 2009 that could impact the Company's quarterly financial results. The market indicators and Company estimates noted below and in the attached schedule may differ significantly from actual results. The Company will report first quarter results on April 30, 2009, and will conduct a conference call and webcast that same day.
Exploration and Production
Liquid hydrocarbon and natural gas production sold during the first quarter is estimated to be approximately 404,000 barrels of oil equivalent per day (boepd). Revenues are reported based on production sold during the period which can vary from production available for sale primarily as a result of the timing of international crude oil liftings and natural gas sales. Liquid hydrocarbon and natural gas production available for sale during the first quarter is expected to be approximately 429,000 boepd, which is 7 percent higher than the fourth quarter 2008 result of 402,000 boepd. The available for sale estimate exceeded the 400,000 to 415,000 boepd first quarter guidance due to improved reliability across production operations, highlighted by outstanding performance at Marathon's Alvheim oil development in Norway and the Equatorial Guinea natural gas complex, as well as approximately 5,000 boepd of production by Marathon Oil Ireland Limited which was not included in the original estimate due to the pending sale of these operations.
As shown in the attached table, Marathon's average liquid hydrocarbon realization for the first two months of the first quarter, as compared to the fourth quarter of 2008, decreased $13.70 per barrel domestically and $15.18 per barrel internationally, reflecting the general market price movements during the first two months of the quarter. For the entire first quarter of 2009, the average West Texas Intermediate (WTI) crude oil market price indicator was $15.77 per barrel lower than the fourth quarter of 2008 while the average Dated Brent indicator decreased $11.02 per barrel.
Marathon's domestic average natural gas price realization for January and February decreased $0.25 per thousand cubic feet (mcf) from the Company's average realized price in the fourth quarter of 2008. The average Henry Hub (HH) prompt natural gas price for the first quarter decreased $1.80 per million British Thermal Units (BTUs) compared to the fourth quarter of 2008, while the average HH bid week natural gas price decreased $2.04 per million BTUs during this same period. International average gas realizations decreased $0.43 per mcf in the first two months of the first quarter compared to the fourth quarter of 2008.
Marathon's actual crude oil and natural gas price realizations vary from market indicators primarily due to product quality and location differentials.
First quarter 2009 exploration expense is now expected to be approximately $65 million, which is within previous guidance.
Oil Sands Mining
For the first quarter 2009, the Company estimates that its share of bitumen production from the Athabasca Oil Sands Project (AOSP) mining operation will be approximately 25,000 barrels per day (bpd), which is within the previous guidance of 22,000 to 27,000 bpd for the first quarter. Marathon's synthetic crude oil sales from AOSP for the first quarter 2009 are estimated to be approximately 32,000 bpd.
Marathon's average synthetic crude oil realization (excluding derivative impacts) for the first two months of the first quarter was $35.14 per barrel, as compared to $48.98 reported for the fourth quarter of 2008. The first quarter realizations reflect the general market price movements during the first two months of the first quarter.
For the first quarter 2009, the Company expects the income effect of crude oil derivative instruments intended to mitigate price risk related to sales of synthetic crude oil will not be significant. During the first quarter 2009, the Company sold derivative instruments at an average exercise price of $50.50 which effectively offset open put positions. All derivative instruments related to the Oil Sands Mining segment expire at year end 2009.
Marathon's liquefied natural gas (LNG) operations in Equatorial Guinea and Alaska are estimated to have sold approximately 6,750 net metric tonnes per day (mtpd) of LNG in the first quarter of 2009, above the previous guidance of 5,700 to 6,700 mtpd due to better than expected reliability.
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