Marathon Oil is a major corporation within two (2) industries: • Petroleum Refining (NAICS 324110)• Oil and Gas Extraction (NAICS 211111)
Made up of entities engaged in refining crude petroleum into refined petroleum. Petroleum refining involves one or more of the following activities: Fractionation Straight distillation of crude oil Cracking (IBISWorld, Petroleum Refining)
Main products, services, and activities in the Petroleum Refiningindustry: Gasoline and gasoline production Kerosene production Diesel fuel and diesel fuel production Jet fuel and jet fuel production Residual fuel oil and residual fuel oil production Lubricant production Aliphatic and aromatic chemicals as by-products production Petroleum coke Still gases LPG (IBISWorld, Petroleum Refining)
According to IBISWorld, revenue will continueto grow and the industry will continue tobecome more refined in the next five (5)years.
Involves “operating and/or developing oil andgas field properties and establishmentsprimarily engaged in recovering liquidhydrocarbons from oil and gas field gases.”(IBISWorld – Oil)
Includes: exploration for crude petroleum and natural gas drilling, completing, and equipping wells operation of separators, emulsion breakers, distilling equipment, and field gathering lines for crude petroleum and natural gas all other activities in the preparation of oil and gas up to the point of shipment from the producing property.“This industry includes the production of crudepetroleum, the mining and extraction of oil from oil shaleand oil sands, the production of natural gas, sulfur recoveryfrom natural gas, and the recovery of hydrocarbon liquidsfrom oil and gas field gases. Establishments in this industryoperate oil and gas wells on their own account or for otherson a contract or fee basis.”(IBISWorld – Oil)
Both industries have the most establishments in Texas and Louisiana. Why? Both states have major ports. (IBISWorld – Oil)
Number of establishments and companiesincreasing while number of employeesdecreasing.Why?Economic problems in the U.S. andincrease in companies hiring contractors(IBISWorld – Oil)
Global Operations North America Africa Europe 72 Trillion Dollar Revenue at close of 2010 2.5 Billion Dollars in Annual Net Income 4th largest US based fully integrated energy company 29th largest corporation in US(IBISWorld – Oil)
Major Product/Services Oil and Natural Gas Wells Drilling Exploration Oil Sands Mining Project Integrated Gas Operations Refining, Marketing, and Transportation (IBISWorld – Oil)
November 1st, Marathon purchased Hilcorp Resources for 3.5 billion US dollars Marathon Oil Corp sells 10% stake in the Angolan operation for $800 million to finance Hilcorp purchase November 16th, eight month long strike at Wafa Oil Co. ends in Libya(Hilcorp, 2011)
Principal Business: The exploration for, and production of, crude oil and natural gas. The manufacture of petroleum products. The transportation and sale of crude oil, natural gas and petroleum products.(Mergent Online, Exxon)
Key Financials: (as of 09/30/2011) Revenue: 470,006m Net Income: 40,910m(Mergent Online, Exxon)
Principal Business: Exploring for, developing and producing crude oil and natural gas. Refining crude oil into finished petroleum products. Marketing crude oil, natural gas and the products derived from petroleum. Transporting crude oil, natural gas and petroleum products.(Mergent Online, Chevron)
Key Financials (as of 09/30/2011) Revenue: 247,748m Net Income: 27,067m(Mergent Online, Chevron)
Principal Business: Explores for, produces, transports and markets crude oil, bitumen, natural gas, liquefied natural gas and natural gas liquids on a worldwide basis.(Mergent Online, ConocoPhillips)
Key Financials (as of 09/30/2011) Revenue: 242,054m Net Income: 11,087m(Mergent Online, ConocoPhillips)
Principal Business: Petroleum refining. Wholesale marketing. Product supply and distribution. Transportation operations.(Mergent Online, Valero)
Key Financials: (as of 09/30/2011) Revenue: 109,919m Net Income: 1,607m(Mergent Online, Valero)
A comparison of Marathon’sstrengths, weaknesses, opportunities, a nd threats.
Strengths WeaknessesInvolved in all stages of business Concentration in the USStrong refining operations Partnership ArrangementsOpportunities ThreatsGrowth and Expansion Vast CompetitionInvestments International RisksDemand for Natural Gas isIncreasing
Involved in all stages of business. “Marathon has presence across the entire oil and gas value chain […] from the exploration and production to storage and pipeline, till the end use of operations like refining, marketing, and retail distribution…Marathons presence across the oil and gas value chain provides it with a competitive edge that can be leveraged in the medium to long run.” (Marathon, 24).
Strong refining operations “The company has strong refining operations. It ranks as the fifth largest petroleum refiner in the US. In FY2010, the company owned and operated six refineries with an aggregate refining capacity of 1.142 mmbpd of crude oil. For the same period, the company’s refineries processed 1,173 mbpd of crude oil and 162 mbpd of other charge and blend stocks. The company’s refined products sales volumes totaled 1.59 mmbpd in FY2010.” (Marathon, 25)
Too much concentration in the US Marathon Oil Corporation has primary drilling and production activities in the United States, specifically the Gulf of Mexico (Datamonitor, 2011). This region accounts for the majority of the corporation’s assets and leaves the potential for environmental, political, or other local challenges that could affect the entire region at once (Datamonitor, 2011).
Partnership Arrangements Allowing other corporations to control Marathon’s Assets operationally doesn’t allow Marathon the ability to make changes or adapt to situations that come up (Datamonitor, 2011). A prime example of this is recently with the leadership changes in Lybia. (Datamonitor, 2011)
Growth and Expansion Accordingto an article from Investopedia, “Marathon Oil Corporation has more than 300,000 net acres prospective for the Eagle Ford Shale and estimates that production will be 18,000 BOE per day by the end of 2011” (Fox). The company has some aggressive development plans here and will spend an average of $1.4 billion per year through 2016, achieving production of more than 100,000 BOE per day by that year” (Fox)
Investments Inthe next several years, Marathon Oil will spend between $4.5 billion to $5.5 billion a year with about two-thirds of that in growth (Marathon Oil Corp at Bank of AmericaMerril).
The demand for natural gas is increasing According to Chesapeake Energy Corp. Chief Executive Aubrey McClendon, “the U.S. is beginning a natural-gas "demand revolution" that will serve as an outlet for the tremendous amounts of gas coming out of newly unlocked shale-rock formations” (Exxon Sees Global Shale Boom).
Vast Competition The oil and gas industry has fierce competition. Some of the major players who are in direct competition with Marathon Oil Corporation are Anadarko Petroleum Corporation, BG Group, Chevron Corporation, ConocoPhillips, Exxon Mobil Corporation, Royal Dutch Shell, Valero Energy Corporation, Sunoco Inc., Hess Corp., Murphy Oil, Enterprise Products Partners, Tesoro, and PDV America Inc. among others. (Mergent Online).
International Risks Risks associated with operations conducted outside of the U.S. include foreign governmental policies, political and economic instability, war, acts of terrorism, and civil disturbances; and fluctuating currency values (DataMonitor). Hostilities in the Middle East and the threat of future terrorist attacks could adversely affect the economies of the US (DataMonitor).
These information sources can be used to update this industry profile regularly.
Bloomberg www.bloomberg.com Datamonitor Company Profiles www.datamonitor.com EDGAR Database www.sec.gov EPA www.epa.gov Factiva global.factiva.com Forbes www.forbes.com Fortune money.cnn.com/magazines/fortune/ Google News http://news.google.com Hoover’s Online www.hoovers.com J Stor www.jstor.org
LexisNexis Academic – Business www.lexisnexis.com MacRAE’s Blue Book www.macraesbluebook.com Mergent Online www.mergentonline.com Official Website of Marathon Oil Corp. www.marathonoil.com Reuters www.reuters.com Standard and Poors http://www.standardandpoors.com/home/en/us U.S. Bureau of Census www.census.gov U.S. Business Reporter http://www.activemedia- guide.com/industry_profile_cp.htm U.S. Geological Survey http://minerals.usgs.gov/minerals/pubs/ Westlaw www.westlaw.com
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