OREANDA-NEWS. May 15, 2013. Marathon Oil Corporation (NYSE:MRO) today reported first quarter 2013 net income of USD 383 million, or USD 0.54 per diluted share, compared to net income in the fourth quarter of 2012 of USD 322 million, or USD 0.45 per diluted share. For the first quarter of 2013, adjusted net income was USD 361 million, or USD 0.51 per diluted share, compared to adjusted net income of USD 388 million, or USD 0.55 per diluted share, for the fourth quarter of 2012.

"Marathon Oil's first quarter performance was highlighted by continued growth in production available for sale, up 4 percent over the prior quarter and 19 percent over the first quarter of 2012, excluding Libya and Alaska, largely driven by our U.S. resource plays," said Clarence P. Cazalot, Jr., Marathon Oil's chairman, president and CEO. "Net sales volumes, excluding Libya, grew 3 percent over the previous quarter to 485,000 barrels of oil equivalent per day (boed). These higher sales volumes, along with improved cash production costs per barrel of oil equivalent and higher crude oil and condensate realizations in North America, led to a 40 percent increase in cash flow from operations before changes in working capital for the quarter.

"Our strong operational performance was a result of high levels of reliability in our base business along with continued growth in our Eagle Ford and Bakken shale plays. Average net daily production rose approximately 22 percent in the Eagle Ford and nearly 6 percent in the Bakken when compared to the fourth quarter. As a result of continued strong performance, we have increased our Bakken guidance for 2013 to approximately 40,000 net boed, 14 percent higher than our original guidance, and we continue to see higher crude oil realizations in the Bakken driven by our increased utilization of available rail capacity. Production from our lower 48 onshore operations was 72 percent liquids for the first quarter.

"During the quarter we recognized the non-cash impairment of certain unproved leases in the Eagle Ford that either expired or that we do not expect to drill or extend, reducing earnings \\$340 million pre-tax or USD 218 million after-tax. These properties are primarily located in Bee, Dewitt, Lavaca and Wilson counties, and we expect the relinquishment of this acreage to have minimal to no impact on the number of wells we expect to drill or our level of resource.

"Our refocused exploration and appraisal program is well under way, marked by the successful Shenandoah appraisal well drilled in the Gulf of Mexico during the quarter. We're currently drilling or participating in eight exploration or appraisal wells and expect to evaluate the potential of this program over the next 12 months.

"Backed by our continued strong operational results, we are raising our production growth target for 2013 (excluding Libya and Alaska) to 7 to 10 percent compared to 2012 from our previous guidance of 6 to 8 percent. We also remain confident in our ability to grow production (excluding Alaska and any future acquisitions and divestitures) at a 5 to 7 percent compound annual rate from 2012 to 2017, delivering significant value to shareholders," Cazalot added.

Segment Changes

Beginning in 2013, Marathon Oil changed its reportable segments to reflect the growing importance of United States unconventional resource plays to its business. All periods presented have been recast in this new segment view.

The Company has three reportable operating segments, each of which is organized and managed based primarily upon geographic location and the nature of the products and services it offers. The three segments are as follows:

North America Exploration and Production (E&P) - explores for, produces and markets liquid hydrocarbons and natural gas in North America.

International E&P - explores for, produces and markets liquid hydrocarbons and natural gas outside of North America and produces and markets products manufactured from natural gas, such as liquefied natural gas (LNG) and methanol in Equatorial Guinea.

Oil Sands Mining - mines, extracts and transports bitumen from oil sands deposits in Alberta, Canada, and upgrades the bitumen to produce and market synthetic crude oil and vacuum gas oil.

Sales and Production Volumes

Total Company sales volumes (excluding Libya) during the first quarter of 2013 averaged 485,000 net boed, a 3 percent increase compared to 471,000 net boed for the fourth quarter of 2012. This increase was driven by the timing of International E&P liftings, first sales from Angola Block 31 and increased production from the Company's U.S. resource plays, partially offset by the disposition of the Company's Alaska assets during the first quarter of 2013.

Production available for sale from all segments for the first quarter of 2013 averaged 471,000 net boed (excluding Libya), compared to the fourth quarter 2012 average of 463,000 net boed. Production available for sale of 427,000 net boed for the North America E&P and International E&P segments combined (excluding Libya) was at the upper end of the Company's guidance for the quarter (415,000 to 430,000 net boed). The OSM segment had net production in the quarter of 44,000 barrels per day (bbld) (excluding blendstocks) and exceeded the Company's previous guidance of 37,000 to 42,000 bbld.

North America E&P production available for sale in the first quarter of 2013 and the fourth quarter of 2012 both averaged 198,000 net boed. Excluding Alaska production (5,000 boed in the first quarter of 2013 and 15,000 boed in the fourth quarter of 2012), North America E&P production available for sale grew 5 percent.

International E&P production available for sale for the first quarter of 2013 averaged 229,000 net boed (excluding Libya), which was 3 percent higher than the fourth quarter 2012 average of 222,000 net boed. The first quarter of 2013 included a full quarter of production from Angola Block 31.

As per the table above, production available for sale in the second quarter of 2013 is expected to be lower than the first quarter. This anticipated decrease is a result of a planned turnaround in Equatorial Guinea, the disposition of the Company's Alaska assets and anticipated field declines in Norway. Full year 2013 guidance for production available for sale from the North America E&P and International E&P segments combined has been revised upward to a range of 405,000 to 425,000 net boed (excluding Libya), a 2 percent increase from previous guidance at the midpoint.

The difference between production volumes available for sale and recorded sales volumes was primarily due to the timing of International E&P liftings.