Marathon is providing information on market factors and operating conditions that occurred during the second 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 second quarter results on Aug. 3, 2009, and will conduct a conference call and webcast that same day.
Exploration and Production
Liquid hydrocarbon and natural gas production sold from continuing operations during the second quarter is estimated to be approximately 436,000 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 crude oil liftings and natural gas sales. Liquid hydrocarbon and natural gas production available for sale from continuing operations during the second quarter is expected to be approximately 411,000 boepd, which is above the 385,000 to 405,000 boepd second quarter guidance.
As shown in the attached table, Marathon's average liquid hydrocarbon realization for the first two months of the second quarter, as compared to the first quarter of 2009, increased $12.12 per barrel domestically and $6.63 per barrel internationally, reflecting the general market price movements during the first two months of the quarter. For the entire second quarter of 2009, the average West Texas Intermediate (WTI) crude oil market price indicator was $16.48 per barrel higher than the first quarter of 2009 while the average Dated Brent indicator increased $14.67 per barrel.
Marathon's domestic average natural gas price realization for April and May of 2009 decreased $0.69 per thousand cubic feet (mcf) from the Company's average realized price in the first quarter of 2009. The average Henry Hub (HH) prompt natural gas price for the second quarter decreased $0.89 per million British Thermal Units (BTUs) compared to the first quarter of 2009, while the average HH bid week natural gas price decreased $1.40 per million BTUs during the same period. International average natural gas realizations for continuing operations decreased $0.34 per mcf in the first two months of the second quarter compared to the first quarter of 2009.
Marathon's actual crude oil and natural gas price realizations vary from market indicators primarily due to product quality and location differentials.
Second quarter 2009 exploration expense is expected to be approximately $65 million, which is within previous guidance.
Oil Sands Mining
For the second quarter 2009, the Company estimates that its share of bitumen production from the Athabasca Oil Sands Project (AOSP) mining operation will be approximately 26,000 barrels per day (bpd), which is within the previous guidance of 23,000 to 28,000 bpd for the second quarter. Marathon's synthetic crude oil sales from AOSP for the second quarter 2009 are estimated to be approximately 30,000 bpd. Marathon's average synthetic crude oil realization for the first two months of the second quarter was $49.08 per barrel, as compared to $38.49 per barrel for the first quarter of 2009, reflecting the general market price movements during the first two months of the second quarter.
For the second quarter 2009, the Company expects the income effect of crude oil derivative instruments will not be significant. All derivative instruments related to the Oil Sands Mining segment expire at year end 2009.
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