The average sales price for crude oil and other liquids for continuing operations was $95.58 per barrel in 2012 compared to $94.18 per barrel in 2011. North American natural gas was sold at an average price of $2.65 per MCF in 2012, significantly below the 2011 average of $4.08 per MCF. However, natural gas volumes produced offshore Sarawak were sold for $7.50 per MCF in 2012, up from $7.10 per MCF in the prior year.

Refining and Marketing (R&M)

The Company’s refining and marketing continuing operations generated a profit of $157.6 million in the year of 2012 compared to a profit of $190.3 million in 2011. U.S. R&M profits from continuing operations were $105.4 million in 2012 compared to $223.6 million in 2011. Operating results in 2012 for the U.S. R&M business were lower than 2011 due to weaker retail marketing margins and significantly lower margins for ethanol production operations. Per gallon margins for U.S. retail operations averaged 12.9 cents in 2012 compared to 15.6 cents in 2011. Ethanol production operating results were adversely affected by both weaker crush spreads and a $39.6 million after-tax asset impairment charge related to the Hereford, Texas plant. The U.K. R&M business produced a net profit of $52.2 million in 2012 compared to a net loss of $33.3 million in 2011. The improvement in U.K. operating results was attributable to more than a $2.60 per barrel increase in unit margins in the current year.


Corporate after-tax costs were $98.5 million in the year of 2012 compared to costs of $75.0 million in 2011. The significant unfavorable variance in 2012 compared to the prior year was mostly associated with foreign currency effects. Although after-tax effects from transactions denominated in foreign currencies were minimal in 2012, the prior year benefited from an after-tax gain of $20.7 million. The 2012 period also had higher administrative costs compared to 2011, primarily associated with more employee compensation and professional service expenses in the later period. However, net interest expense was lower in 2012 than 2011 essentially due to higher levels of interest capitalized to oil development projects in the current year.

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