Marathon reaffirms company strategy and outlines plans to achieve
sustainable value growth
Posted: 4 November 2003
Marathon Oil Corporation is making substantial progress in implementing
key strategies and business plans, outlined nearly two years ago,
which have created a solid foundation for sustainable value growth.
This and other key elements of Marathon's business operations were
presented today during a meeting here with security analysts and
the media. In his comments, Marathon President and CEO, Clarence
P. Cazalot, Jr., noted that the company's vision, strategy and business
model announced in early 2002, remain unchanged. "Our vision
continues to be for Marathon to be a pacesetter in creating sustainable
value growth through innovative energy solutions and unique partnerships."
Cazalot noted that Marathon is well positioned to effectively compete
in an energy industry environment characterized by volatile commodity
prices, a shifting emphasis to natural gas as a global market commodity,
the emergence of national oil companies as a new competitive force,
and production declines in traditional oil and gas basins.
"While all of these factors are having a profound influence
on the competitive landscape of our industry, access to profitable
new oil and gas resources is perhaps the most critical issue facing
international energy companies," said Cazalot. "We believe
Marathon's strong exploration and production business, coupled with
our best-in-class refining and marketing operations and our rapidly
evolving integrated gas activities, form the nucleus of a differentiated
competitive business model. We see Marathon competing in this challenging
global arena using our size as an advantage -- linking our technical
strengths, commercial skills, international stature and ability
to form unique partnerships with a willingness to do things differently,
and to do so with speed and agility."
Cazalot noted that Marathon has transformed the company's exploration
and production business between 2001 and 2003, adding assets at
a competitive cost with total net risked resources of more than
two billion barrels. "We have divested of assets that no longer
provide the strategic fit we need to achieve our objectives,"
added Cazalot. "We are investing in new core areas like West
Africa, Russia and Norway that have significant current value, as
well as high future growth potential." Marathon projects 2004
average daily production to total approximately 365,000 barrels
of oil equivalent per day (boepd), which includes the effects of
recent acquisitions and dispositions. The company's new core areas,
however, are providing the basis for defined production growth that
will allow it to achieve an estimated 3 percent annual production
growth beginning in 2005.
In the refining and marketing segment of its business, Marathon
is taking the necessary steps to ensure Marathon Ashland Petroleum
LLC (MAP), in which Marathon owns a 62 percent interest, continues
to be strong and focused in the key Midwest market of the United
States.
"MAP is focused on maintaining its top quartile, niche refiner/marketer
position in the U.S. refining business," noted Cazalot. "The
company is expanding and enhancing its downstream asset base to
seize profitable growth opportunities." Since its creation
in January 1998, MAP has ranked in the top quartile every year in
terms of income per barrel of refinery throughput. This year is
no exception with MAP ranking number one among competitors in this
measure in the third quarter and third year-to-date.
An example of MAP's approach to enhance its asset base is the recently
announced plan to expand the company's Detroit refinery. This nearly
$300 million project will increase the crude oil processing capacity
by 35 percent to 100,000 barrels per day. Other elements of the
expansion will enable the refinery to produce new clean fuels and
further control air emissions. MAP expects to complete the expansion
in 2005.
Marathon's integrated gas business rounds out the company's business
model by providing a framework under which the company is linking
the world's substantial stranded gas reserves with the growing markets
for this premium energy source. Current examples of how the company
is pursuing this strategy include the proposed liquefied natural
gas (LNG) project in Equatorial Guinea, where Marathon and its partners
are planning to construct a liquefaction plant on Bioko Island with
a capacity of 3.4 million metric tonnes per year.
Plant design and commercial discussions continue, and the company
expects the plant will begin operations in late 2007. In Qatar,
Marathon, Qatar Petroleum and a group of partners are pursuing technical
and commercial discussions that could lead to a gas-to-liquids project
capable of converting natural gas into ultra- clean diesel and other
liquid hydrocarbon products for export to world markets.
Cazalot continued by saying, "While our plans are ambitious,
we have the financial flexibility necessary to profitably grow the
company. Our 2003 asset rationalization program has contributed
to this flexibility by generating more than $1.2 billion in proceeds.
These proceeds, along with continued strong cash flow from operations,
are projected to reduce our net debt-to-capital ratio to the low
to mid-30 percent range by year end.
"The plans and strategies we have in place are building a
new Marathon," added Cazalot. "Our business approach and
strategic intents are clear. We will remain a fully integrated company
focused on executing our plans. We will continue to pursue high
value growth opportunities that will position us to achieve significant
earnings per share growth on a mid-cycle flat price basis. Our financial
flexibility will allow us to pursue this growth while maintaining
a strong balance sheet with a net debt-to-capital ratio of approximately
40 percent."
Cazalot concluded by commenting on Marathon's core values, driven
by accountability and strong corporate governance. "Underpinning
all of Marathon's plans and strategies is an unwavering commitment
to our values, which include the safety of our employees and neighbors,
protection and preservation of the environment, and respect for
the individual. We also are committed to accountability at every
level within the organization to ensure everyone knows their role
in contributing to Marathon's success.
"Marathon considers its reputation for business integrity
and ethical conduct to be among the most important assets of the
company. Our commitment to strong corporate governance is an essential
element of our success, and we are pleased to report that Marathon
outperforms 94 percent of the energy group as measured by the Institutional
Shareholder Services (ISS) Corporate Governance Quotient."
Replays of Marathon's analyst meeting will be available on the
company's Web site at www.Marathon.com through November 18, 2003.
Interested parties can access the replay by clicking on the 2003
Annual Analyst Meeting webcast link on the company's home page.
For more information see http://www.marathon.com.
Posted by Richard Price,
Editor Pipeline Magazine
Information supplied by companies
or PR agencies who are responsible for content. Send press releases
to info@pipelinedubai.com |
