Marathon Oil has provided information on market factors and operating conditions that occurred during the third quarter of 2009 that could impact the Company's quarterly financial results. The market indicators and Company estimates noted below may differ significantly from actual results. The Company will report third quarter results on Nov. 3, 2009, and will conduct a conference call and webcast that same day.
Exploration and Production
Liquid hydrocarbon and natural gas production sold during the third quarter is estimated to be approximately 380,000 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 during the third quarter is expected to be approximately 395,000 boepd, which is within the previous third quarter guidance of 380,000 to 400,000 boepd.
Marathon's average liquid hydrocarbon realization for the first two months of the third quarter increased $7.34 per barrel domestically and $9.22 per barrel internationally compared to the second quarter of 2009, reflecting the general market price movements during the first two months of the third quarter. For the entire third quarter of 2009, the average West Texas Intermediate (WTI) crude oil market price indicator was $8.45 per barrel higher than the second quarter of 2009 while the average Dated Brent indicator increased $8.95 per barrel.
Marathon's domestic average natural gas price realization for July and August of 2009 increased $0.21 per thousand cubic feet (mcf) from the Company's average realized price in the second quarter of 2009. The average Henry Hub (HH) prompt natural gas price for the third quarter decreased $0.54 per million British Thermal Units (BTUs) compared to the second quarter of 2009, while the average HH bid week natural gas price decreased $0.12 per million BTUs during the same period. International average natural gas realizations for continuing operations decreased $0.02 per mcf in the first two months of the third quarter compared to the second 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.
Third quarter 2009 exploration expense is expected to be at or below $80 million, which is at the low end of previous guidance.
Oil Sands Mining
For the third quarter 2009, the Company estimates that its share of bitumen production from the Athabasca Oil Sands Project (AOSP) mining operation will be approximately 27,000 barrels per day (bpd), which is within the previous guidance of 23,000 to 28,000 bpd for the third quarter. Marathon's synthetic crude oil sales from AOSP for the third quarter 2009 are estimated to be approximately 31,000 bpd. Marathon's average synthetic crude oil realization for the first two months of the third quarter was $61.37 per barrel, as compared to $55.02 per barrel for the second quarter of 2009, reflecting the general market price movements during the first two months of the third quarter.
For the third 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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