Marathon has provided investors with a comprehensive report on the Company's global operations, including a review of strategic plans to achieve profitable growth and competitive returns for shareholders.
"Marathon continues to deliver on our strategic commitments. We have achieved consistent production growth, executed on major projects, significantly improved operational reliability, reduced controllable costs, operated a top-tier Downstream business with superior profitability, and generated significant value through a successful portfolio optimization program," said Marathon President and CEO Clarence P. Cazalot, Jr.
"We have a very high level of investment largely behind us -- including the Alvheim/Vilje and Volund developments offshore Norway, oil sands mining in Canada, and the Garyville Major Expansion project in Louisiana -- and now it's time to realize the benefits of those projects," Cazalot said. "Marathon's Upstream margins are very competitive and should remain so as production increases and we focus on reducing costs per barrel. Our Downstream business has performed well throughout this challenging economic environment and we expect this to continue and strengthen as the Garyville refinery expansion comes online."
David E. Roberts, Jr., executive vice president, Upstream, highlighted Marathon's strategy to continue to generate production and resource growth, developing projects that create value beyond 2012. He said the focus is on three key growth areas: deepwater, unconventional oil and gas, and oil sands.
"Our Upstream business is, in essence, the simple calculus of adding resources that can be converted to profitable production or monetized in an efficient manner," Roberts said. "Through a combination of well-executed exploration and selective acquisitions, Marathon has tripled the Company's resource base since 2001, with a resource life approaching 40 years."
Through the first nine months of 2009, the Company has demonstrated strong Upstream production growth and expects the full year to be approximately 6 percent above 2008 levels. For the period 2008-2011, the Company continues to expect an Upstream production compound annual growth rate (CAGR) of approximately 4 percent, including Oil Sands Mining, despite already announced asset sales estimated to reduce previously reported 2011 production projections by about 12,000 barrels of oil equivalent per day. These estimates exclude future potential asset acquisitions or divestitures and any contribution from future exploration successes.
Marathon outlined its focused exploration drilling program for 2010, including three to four significant wells in the Gulf of Mexico, two high-risk, high-potential wells in Indonesia, as well as activity in Norway, Libya, Angola and the onshore resource plays of the United States.
Gary R. Heminger, executive vice president, Downstream, said Marathon's Downstream business has consistently performed at the top of its peer group in the domestic market and, through the first nine months of 2009, ranked first in profitability per barrel of crude throughput among this group.
"Marathon has benefitted from a flexible, strategically located Downstream business," Heminger said. "We have the capability to source and run a wide variety of feedstocks, shift product yields depending on market needs and move products to the highest netback market. We also have the commercial skills to act quickly."
Janet F. Clark, executive vice president and CFO, reiterated the Company's focus on financial discipline. As part of that strategy, Clark said the Company's capital investment focus will increasingly shift away from Downstream toward Upstream opportunities, in part due to the completion of the Garyville refinery expansion. Additionally, the 2010/2011 completion of the Athabasca Oil Sands Project Expansion 1 will further contribute to capital availability.
Clark also summarized the successful portfolio optimization effort that includes announced asset sales amounting to $3.5 billion in pre-tax transaction value.
"As a normal course of business, we will continue to scrutinize our portfolio, seeking opportunities to create greater shareholder value," Clark said.
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