At the end of the 2011 second quarter, integrated oil company Marathon Oil (MRO) became significantly less integrated when the upstream operations of the company were spun off to shareholders and a new company, Marathon Petroleum (MPC), came into existence.
The now slimmer Marathon Oil is focused on oil and gas exploration and production in several locations around the globe plus extensive oil sands operations in Canada.
The spun-off Marathon Petroleum received the refinery, pipeline, and retail sales assets of the company. MRO shareholders received one share of MPC for every two shares of MRO owned on June 30.
The second-quarter earnings report included results for the company as a whole, before the spinoff, and the results from continuing operations.
For the second quarter, the adjusted income from continuing operations was $689 million, or 96 cents per share. Include the adjustments, much of which was due to the costs of the spinoff, and the net income was $298 million, or 42 cents per share. The adjusted and non-adjusted income per share from continuing operations for the same quarter in 2010 were 62 cents and 53 cents per share, respectively.
The higher levels of sales and adjusted net income for the second quarter can be primarily attributed to higher oil prices. A stated goal of the separation of Marathon into two companies is to focus on the future growth of production by Marathon Oil.
In the earnings release, Chairman and CEO Clarence P. Cazalot Jr. reiterated the company goal of 5 percent to 7 percent compound production growth through the year 2016. An interesting note in the production numbers was the reported positive $69 million in income from oil sands mining compared to a $60 million loss a year earlier. Total exploration and production income for the quarter was $713 million.
Analysts have issued mixed results for MRO since the spinoff. The analysts at UBS confirmed their buy rating on the stock. The Benchmark Company analysts have the stock on a sell rating and Barclays Capital analysts rate MRO as an equal weight. The company next reports on Nov. 2.
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