Marathon Oil Corporation Reports Second Quarter 2013 Results

HOUSTON, Aug. 6, 2013 (GLOBE NEWSWIRE) -- Marathon Oil Corporation (NYSE:MRO) today reported secondquarter 2013 net income of $426 million, or $0.60 per dilutedshare, compared to net income in the first quarter of 2013 of $383million, or $0.54 per diluted share. For the second quarter of2013, adjusted net income was $478 million, or $0.67 per dilutedshare, compared to adjusted net income of $361 million, or $0.51per diluted share, for the first quarter of 2013.
  Three MonthsEnded
  June 30 Mar. 31
(In millions, except per dilutedshare data) 2013 2013
Adjusted net income (a) $478 $361
Adjustments for special items (net oftaxes):    
Unrealized gain (loss) on crude oilderivative instruments 32 (32)
Impairments -- (10)
Net gain (loss) on dispositions (73) 64
Pension settlement (11) --
Net income $426 $383
Adjusted net income - per diluted share(a) $0.67 $0.51
Net income - per diluted share $0.60 $0.54
Revenues and other income $3,898 $4,106
Weighted average shares - diluted 714 712
Exploration expenses    
Unproved property impairments $40 $383
Dry well costs 50 21
Geological and geophysical 12 27
Other 31 34
Total exploration expenses $133 $465
Cash flow    
Cash flow from operations before changes inworking capital (b) $1,445 $1,601
Changes in working capital (577) (73)
Cash flow from operations $868 $1,528

(a)  Adjusted net income is a non-GAAP financialmeasure and should not be considered a substitute for net income asdetermined in accordance with accounting principles generallyaccepted in the United States. See below for further discussion ofadjusted net income.

(b)  Cash flow from operations before changes inworking capital is a non-GAAP financial measure and should not beconsidered a substitute for cash flow from operations as determinedin accordance with accounting principles generally accepted in theUnited States. See below for further discussion of cash flow fromoperations before changes in working capital.

"Marathon Oil continued to execute well operationally and hadstrong second quarter operating cash flows of $1.445 billion,before changes in working capital, in spite of lower internationalliquid hydrocarbon realizations compared to the first quarter. Thelarge increase in the second quarter usage of cash for workingcapital was primarily a result of two tax installment payments forNorway, versus one in the first quarter, and our annual tax paymentto Equatorial Guinea," said Clarence P. Cazalot, Jr., MarathonOil's executive chairman.

"Second quarter production available for sale in both E&Psegments was at or above the Company's guidance. In the U.S., Lower48 onshore production grew to 182,000 barrels of oil equivalent perday (boed), a nearly 6 percent increase over the first quarter,highlighted by 11 percent growth in the Company's Eagle Fordoperations and more than 5 percent growth in the Bakken. In theInternational E&P segment, we again had strong reliability andthe Equatorial Guinea turnaround was completed in 22 days, 8 daysahead of schedule and under budget. The Company's non-operated OilSands Mining production decreased compared to the first quarter asa result of unplanned mine downtime and a planned turnaround at theAOSP in Canada.

"During the quarter we advanced our portfolio optimizationthrough an agreement to sell our 10 percent working interest inAngola Block 31 for approximately $1.5 billion. This brings ourtotal completed or agreed divestitures to $2.9 billion for theperiod 2011 to date, at the top end of our targeted $1.5 to $3billion.

"In addition, we raised our quarterly dividend 12 percent,further demonstrating our commitment to delivering competitivevalue to our shareholders.

"In June we announced my retirement at year end and theappointment of Lee M. Tillman who succeeded me as president and CEOeffective Aug. 1. Lee's strong leadership skills and extensiveexperience in global operations, project execution and leading edgetechnology make him ideally suited to lead our Company and effortsto create sustainable value for our shareholders," Cazalotsaid.

Sales and Production Volumes

Total Company sales volumes (excluding Libya) during the secondquarter of 2013 averaged 457,000 net boed compared to 485,000 netboed for the first quarter of 2013. This decrease was driven by aplanned turnaround in Equatorial Guinea, unplanned mine downtimeand a planned turnaround at the non-operated Athabasca Oil SandsProject (AOSP) in Canada, fewer liftings at the non-operatedFoinaven field in the U.K., as well as the first quarterdisposition of the Company's Alaska assets.
  Three MonthsEnded
  June 30 Mar. 31
(mboed) 2013 2013
Net Sales Volumes    
North America E&P excluding Alaska 201   193
Alaska --   5
International E&P excluding Libya(a) 213   236
Oil Sands Mining (b) 43   51
Total excluding Libya 457   485
Libya 49   38
Total 506   523

(a) Libya is excluded because of uncertainty around sustainedproduction and sales levels.

(b) Includes blendstocks.

  Three MonthsEnded Guidance (a)
  June 30 Mar. 31 Q3
(mboed) 2013 2013 2013
Net Production Available forSale      
North America E&P excluding Alaska 201   193   196-207
Alaska --   5    
International E&P excluding Libya(b) 217   229   199-208
Oil Sands Mining (c) 37   44   40-45
Total excluding Libya 455   471    
Libya 45   46    
Total 500   517    

(a) This guidance excludes the effect of acquisitions ordispositions not previously announced.

(b) Libya is excluded because of uncertainty around sustainedproduction and sales levels.

(c) Upgraded bitumen excluding blendstocks.

The difference between production volumes available for sale andrecorded sales volumes was primarily due to the timing ofInternational E&P liftings.

Production available for sale from all segments (excludingLibya) for the second quarter of 2013 averaged 455,000 net boed, anexpected decrease compared to the first quarter of 2013 average of471,000 net boed as a result of impacts in Equatorial Guinea,Canada and the disposition of Alaskan assets, as detailed above.Production available for sale of 418,000 net boed for the NorthAmerica E&P and International E&P segments combined(excluding Libya) was at the upper end of the Company's guidancefor the quarter (403,000 to 420,000 net boed). The OSM segment hadnet production in the quarter of 37,000 barrels per day (bbld)(excluding blendstocks), below the Company's previous guidance of40,000 to 44,000 bbld as a result of the AOSP unplanned minedowntime.

North America E&P production available for sale, excludingAlaska, averaged 201,000 net boed in the second quarter, a 4percent increase compared to the first quarter of 2013 average of193,000 net boed.

International E&P production available for sale for thesecond quarter of 2013 averaged 217,000 net boed (excluding Libya),which was lower than the first quarter of 2013 average of 229,000net boed as a result of the turnaround in Equatorial Guinea anddeclines in Norway and U.K. production.

As per the table above, production available for sale in thethird quarter of 2013 is expected to be lower than the secondquarter. This anticipated decrease is a result of a plannedturnaround in Norway, planned pipeline curtailments and turnaroundat Brae in the U.K. North Sea, as well as compression and subseaequipment issues at non-operated Foinaven in the U.K. Production atFoinaven was shut-in in mid-July and is expected to resume atpartial rates in mid-August. Full year 2013 guidance for productionavailable for sale from the combined North America E&P andInternational E&P segments (excluding Libya) has been narrowedto a range of 410,000 to 425,000 net boed, from the previousguidance of 405,000 to 425,000 net boed. Full year 2013 productionguidance for the OSM segment has been narrowed to 40,000 to 44,000net bbld of synthetic crude oil, from the previous guidance of40,000 to 45,000 net bbld.

Segment Results

Total segment income was $623 million in the second quarter of2013, compared to $432 million in the first quarter of 2013.
  Three MonthsEnded
  June 30 Mar. 31
(In millions) 2013 2013
Segment Income (Loss)    
North America E&P $221 $(59)
International E&P 382 453
Oil Sands Mining 20 38
Segment Income(a) $623 $432

(a)   See Supplemental Statistics below for areconciliation of segment income to net income as reported undergenerally accepted accounting principles.

North America E&P

The North America E&P segment reported income of $221million in the second quarter of 2013, compared to a loss of $59million in the first quarter of 2013. The improvement was primarilydue to higher liquid hydrocarbon sales volumes and lower unprovedproperty impairments related to cancelled or expiring leases.

EAGLE FORD: Marathon Oil's average net production in the EagleFord shale grew approximately 11 percent from the first quarter of2013 to approximately 80,000 boed in the second quarter.Approximately 62 percent of second quarter net production was crudeoil/condensate, 17 percent was natural gas liquids (NGLs) and 21percent was natural gas. During the second quarter, Marathon Oilreached total depth on 82 gross Company operated wells and brought70 gross operated wells to sales, compared to 76 and 68 gross wellsrespectively in the first quarter. With approximately 85 percentpad drilling, which continues to improve efficiencies and reducecosts, the Company's second quarter spud-to-total depth averaged 12days and 18 days spud-to-spud.

The Company continues to evaluate the potential of downspacingto 40- and 60-acre units, with results of the downspacing pilotsexpected to be released in December. It also continues to evaluatethe Austin Chalk and Pearsall formations across its acreageposition. To date the Company has completed four Austin Chalk wellswith average lateral length of 4,075 feet yielding average 24-hourinitial production (IP) rates of 980 gross boed (485 bbld of crudeoil/condensate, 220 bbld of NGLs and 1.65 million cubic feet perday of natural gas) on chokes ranging from 12/64-inch to16/64-inch. Early Austin Chalk production results suggest the mixof crude oil/condensate, NGLs and natural gas to be similar toEagle Ford condensate wells. Also in the second quarter onePearsall well was completed with a 24-hour IP rate of 580 grossboed on a maximum choke of 18/64-inch. 

BAKKEN: Marathon Oil averaged production of approximately 39,000net boed during the second quarter compared to 37,000 net boed inthe previous quarter. The Company reached total depth on 22 grosswells during the second quarter and brought 16 gross wells tosales, compared to 18 and 22 gross wells respectively in the firstquarter. In the second quarter Marathon Oil's average time to drilla well continued to improve, averaging 15 days spud-to-total depth,or 22 days spud-to-spud, a top-quartile performance in the areas inwhich Marathon Oil operates. Marathon Oil's Bakken productionaverages approximately 90 percent crude oil, 5 percent NGLs and 5percent natural gas.

OKLAHOMA RESOURCE BASINS: The Company's unconventionalproduction averaged 13,000 net boed during the second quarter,which is flat compared to the previous quarter. During the secondquarter, the Company reached total depth on two gross wells andbrought three gross wells to sales. Marathon Oil anticipatesspudding two wells each in the Mississippi Lime in central Oklahomaand Granite Wash in northwestern Oklahoma during the second half of2013.

GULF OF MEXICO: Marathon Oil participated in an appraisal wellon the Gunflint prospect on Mississippi Canyon Block 992, in whichit holds an 18 percent outside-operated working interest. Theappraisal well successfully encountered 109 feet of net pay withinthe primary reservoir targets. After penetrating the initialappraisal targets, the well was deepened to a previously untestedLower Miocene interval with a total depth of 32,835 feet.Commercial hydrocarbons were not encountered in the deeperexploration objective. Additional exploration potential remains inan adjacent three-way structure to the north, a candidate forfuture exploration following development of the confirmedresources.

Marathon Oil expects to spud its first exploration well on theMadagascar prospect (De Soto Canyon Block 757) late in the thirdquarter. The Company has reduced its working interest in theMadagascar prospect from 100 percent to 70 percent as a result of afarm-down in the second quarter with no up-front cash proceeds. Asstated previously, the Company anticipates further reducing itsinterest to a target of 40 - 50 percent working interest by thetime of spud.

International E&P

The International E&P segment reported income of $382million in the second quarter of 2013, compared to segment incomeof $453 million in the first quarter of 2013. The decrease isprimarily a result of lower volumes and price realizations, as wellas less income from equity method investments due to the plannedturnaround in Equatorial Guinea in the second quarter.

EQUATORIAL GUINEA: Net production available for sale averagedapproximately 101,000 boed in the second quarter, compared toapproximately 110,000 boed in the first quarter of 2013. Theplanned turnaround that occurred in April was safely completed in22 days, eight days ahead of schedule and below budget.

NORWAY: The production decline that has been projected andpreviously disclosed in the Alvheim area continues to be less thanexpected. Net production available for sale averaged 85,000 boedfor the second quarter, slightly lower than the 86,500 boedproduced in the first quarter of 2013. The better-than-expectedresults were achieved through continued strong operationalperformance that delivered availability of 96 percent; productionoptimization from well management; and reservoir and wellperformance at the upper end of expectations, resulting primarilyfrom a delay in anticipated water breakthrough at the Volundfield.

The Sverdrup exploration well on PL 330 in the Norwegian Sea wasspud on June 6. A total depth of 18,150 feet is expected to bereached in early September. The Company holds a 30 percentnon-operated working interest in the license.

KURDISTAN REGION OF IRAQ: The Company spud the Mirawaexploration well on its operated Harir Block on March 19 and theSafen exploration well on its operated Safen Block on April 18. TheMirawa well reached total depth of 13,975 feet in July and iscurrently testing multiple zones of interest. The Safen well isexpected to reach a projected total depth of 12,100 feet in August,with a testing program to follow. Marathon Oil holds a 45 percentworking interest in each block.

On the outside-operated Sarsang Block, two exploration wells,Mangesh and Gara, were spud in the second half of 2012 and havereached total depth, with testing programs ongoing. Also on theSarsang Block, the East Swara Tika exploration well was spud July15 with a projected total depth of 11,150 feet. The well will testadditional resource potential to the northeast of the previouslyannounced Swara Tika discovery. On the outside-operated AtrushBlock, following a successful appraisal program and a declarationof commerciality, a plan for field development was filed with theKurdistan Ministry of Natural Resources (MNR) on May 6. Thedevelopment plan is currently under review with final approvalexpected in the third quarter. First production is anticipatedin 2015. The Atrush-3 appraisal well, approximately 6 milesfrom the discovery well, was spud on March 25, reached total depthof 5,925 feet and is currently testing. Marathon Oil holds a 25percent working interest in the Sarsang Block and a 15 percentworking interest in the Atrush Block.

ETHIOPIA: The Sabisa-1 well, on the onshore South Omo Block in afrontier rift basin, encountered reservoir quality sands, oil andheavy gas shows and a thick shale section. The presence of oilprone source rocks, reservoir sands and good seals is encouragingfor the numerous fault bounded traps identified in the basin.Because of mechanical issues, the well was abandoned before a fullevaluation could be completed. The rig will mobilize to the nearbyTultule prospect, approximately two miles from the Sabisa-1.Marathon Oil holds a 20 percent non-operated working interest inthe South Omo Block.

GABON: Exploration drilling began in the second quarter on theDiaman well in the Diaba License G4-223, offshore Gabon, to testthe deepwater presalt play. The well reached the projected totaldepth of 18,300 feet in the third quarter. Logging and evaluationare under way. Marathon Oil holds a 21.25 percent non-operatedworking interest in the Diaba License.

Oil Sands Mining (OSM)

The OSM segment reported income of $20 million for the secondquarter of 2013, compared to $38 million in the first quarter of2013. The decrease in income was primarily a result of lower secondquarter sales volumes due to unplanned mine downtime and theplanned turnaround at the non-operated AOSP in Canada. The decreasein revenue from lower volumes was partially offset by higher pricerealizations. Second quarter operating costs were higher than thefirst quarter of 2013, primarily as a result of the turnaround. Thetotal cost to date of the turnaround is approximately $25 million(net), of which $16 million (net) occurred in the secondquarter.

Corporate and Other

The change in working capital in the second quarter of 2013includes two tax installment payments for Norway, versus one in thefirst quarter, as well as an annual tax payment to EquatorialGuinea.

Marathon Oil announced in June that it entered into an agreementto sell its 10 percent working interest in the Production SharingContract and Joint Operating Agreement in Block 31 offshore Angola.The transaction has a total value of approximately $1.5 billion,excluding any purchase price adjustments at closing. The companiesanticipate closing the transaction in the fourth quarter of 2013,subject to government, regulatory and third-party approvals.Marathon Oil expects to use the proceeds from this sale torepurchase shares, strengthen the balance sheet and for generalcorporate purposes.

As of Aug. 6, 2013, the Company has agreed upon or closed onnearly $2.9 billion in divestitures over the period of 2011 todate, at the upper end of its targeted $1.5 billion to $3 billionof divestitures.

On July 31, Moody's Investors Service upgraded Marathon Oil'ssenior unsecured debt rating to Baa1 from Baa2 based on expectedconsistent production and reserves growth with conservativefinancial policies. Moody's also affirmed Marathon Oil's Prime-2commercial paper rating and the outlook is stable.

Special Items

In August 2012, Marathon Oil entered into crude oil derivativeinstruments related to a portion of its forecast North AmericaE&P crude oil sales. For the second quarter of 2013, anafter-tax unrealized gain of $32 million ($50 million pre-tax) wasrecorded related to these crude oil derivative instruments.

In the second quarter of 2013, Marathon Oil recorded anafter-tax loss of $73 million ($114 million pre-tax) on thedisposition of its interests in the D.J. Basin.

Marathon Oil recorded an after-tax settlement charge of $11million ($17 million pre-tax) in the second quarter of 2013 inconnection with the Company's U.S. pension plans.

The Company will conduct a conference call with questions andanswers only on Wednesday, Aug. 7 at 8:00 a.m. EDT, during which itwill discuss second quarter 2013 results and will includeforward-looking information. The webcast slides and associatedcommentary, as well as the Quarterly Investor Packet, will beposted to the Company's website at http:ir.marathonoil.com and toits mobile app as soon as practical following this release today,Aug. 6. To listen to the Aug. 7 live webcast, visit the MarathonOil website at http://www.marathonoil.com. Replays of the webcastwill be available through Sept. 7.

# # #

In addition to net income determined in accordance withgenerally accepted accounting principles (GAAP), Marathon Oil hasprovided supplementally " adjusted netincome, " a non-GAAP financial measure whichfacilitates comparisons to earnings forecasts prepared by stockanalysts and other third parties. Such forecasts generally excludethe effects of items that are considered non-recurring, aredifficult to predict or to measure in advance or that are notdirectly related to Marathon Oil's ongoing operations. Areconciliation between GAAP net income and " adjusted net income " is provided ina table on page 1 of this release. " Adjusted netincome " should not be considered a substitute fornet income as reported in accordance with GAAP. Management, as wellas certain investors, uses " adjusted netincome " to evaluate Marathon Oil's financialperformance between periods. Management also uses " adjusted net income " to compareMarathon Oil's performance to certain competitors.

In addition to cash flow from operations determined inaccordance with GAAP, Marathon Oil has provided supplementally"cash flow from operations before changes in working capital," anon-GAAP financial measure, which management believes demonstratesthe Company's ability to internally fund capital expenditures, paydividends and service debt. A reconciliation between GAAP cash flowfrom operations and "cash flow from operations before changes inworking capital" is provided in a table on page 1 of this release."Cash flow from operations before changes in working capital"should not be considered a substitute for cash flow from operationsas reported in accordance with GAAP. Management, as well as certaininvestors, uses "cash flow from operations before changes inworking capital" to evaluate Marathon Oil's financial performancebetween periods. Management also uses "cash flow from operationsbefore changes in working capital" to compare Marathon Oil'sperformance to certain competitors.

This release contains forward-looking statements withrespect to the timing and levels of the Company's worldwide liquidhydrocarbon, natural gas and synthetic crude oil production,anticipated drilling activity, a planned turnaround in Norway andplanned pipeline curtailments and turnaround at Brae in the U.K.North Sea, expected timing and rate of production returning atFoinaven, possible increased recoverable resources from optimizedwell spacing in the Eagle Ford resource play, additional farm-downof the Company's working interest in the Madagascar prospect in theGulf of Mexico, anticipated exploration drilling activity in theGulf of Mexico, Ethiopia, Gabon, the Kurdistan Region of Iraq andNorway, the timing of approval of a plan of development and firstproduction for the Atrush Block, the timing of closing the sale ofthe Company's 10 percent working interest in Block 31 offshoreAngola, including the use of proceeds, and projected assetdispositions through 2013. The average times to drill a wellreferenced in the release may not be indicative of future drillingtimes. The initial production rates referenced in this release maynot be indicative of future production rates. Factors that couldpotentially affect the timing and levels of the Company's worldwideliquid hydrocarbon, natural gas and synthetic crude oil production,anticipated drilling activity, a planned turnaround in Norway andplanned pipeline curtailments and turnaround at Brae in the U.K.North Sea, possible increased recoverable resources from optimizedwell spacing in the Eagle Ford resource play, and anticipatedexploration drilling activity in the Gulf of Mexico, Ethiopia,Gabon, the Kurdistan Region of Iraq and Norway include pricing,supply and demand for liquid hydrocarbons and natural gas, theamount of capital available for exploration and development,regulatory constraints, timing of commencing production from newwells, drilling rig availability, availability of materials andlabor, the inability to obtain or delay in obtaining necessarygovernment or third-party approvals and permits, unforeseen hazardssuch as weather conditions, acts of war or terrorist acts and thegovernmental or military response thereto, and other geological,operating and economic considerations. The expected timing and rateof production returning at Foinaven, additional farm-down of theCompany's working interest in the Madagascar prospect in the Gulfof Mexico, the timing of approval of a plan of development andfirst production for the Atrush Block and the projected assetdispositions through 2013 are based on current expectations, goodfaith estimates and projections and are not guarantees of futureperformance. The timing of closing the sale of the Company's 10percent working interest in Block 31 offshore Angola is subject tothe satisfaction of customary closing conditions and obtainingnecessary government, regulatory and third-party approvals. Theexpectations with respect to the use of proceeds from the sale ofour 10 percent working interest in Block 31 offshore Angola couldbe affected by changes in the prices and demand for liquidhydrocarbons and natural gas, actions of competitors, disruptionsor interruptions of the Company's exploration or productionoperations, unforeseen hazards such as weather conditions or actsof war or terrorist acts and other operating and economicconsiderations. Actual results may differ materially from theseexpectations, estimates and projections and are subject to certainrisks, uncertainties and other factors, some of which are beyondthe Company's control and difficult to predict. The foregoingfactors (among others) could cause actual results to differmaterially from those set forth in the forward-looking statements.In accordance with the "safe harbor" provisions of the PrivateSecurities Litigation Reform Act of 1995, Marathon Oil Corporationhas included in its Annual Report on Form 10-K for the year endedDecember 31, 2012, and subsequent Forms 10-Q and 8-K, cautionarylanguage identifying other important factors, though notnecessarily all such factors, that could cause future outcomes todiffer materially from those set forth in the forward-lookingstatements.

Media Relations Contacts:

Lee Warren: 713-296-4103

John Porretto: 713-296-4102

Investor Relations Contacts:

Howard Thill: 713-296-4140

Chris Phillips: 713-296-3213
Consolidated Statements of Income(Unaudited) Three MonthsEnded
  June 30 Mar. 31 June 30
(In millions, except per sharedata) 2013 2013 2012
Revenues and otherincome:      
Sales and other operating revenues, includingrelated party $3,419 $3,440 $2,975
Marketing revenues 499 430 757
Income from equity method investments 77 118 60
   Net gain (loss) on disposal ofassets (107) 109 (28)
   Other income 10 9 20
Total revenues and other income 3,898 4,106 3,784
Costs and expenses:      
Production 614 578 485
Marketing, including purchases from relatedparties 495 429 755
Other operating 86 111 107
Exploration 133 465 172
Depreciation, depletion and amortization 738 747 580
Impairments -- 38 1
Taxes other than income 93 84 55
General and administrative 164 174 154
Total costs and expenses 2,323 2,626 2,309
Income from operations 1,575 1,480 1,475
Net interest and other (71) (72) (57)
Income from operations before incometaxes 1,504 1,408 1,418
Provision for income taxes 1,078 1,025 1,025
Net income $426 $383 $393
Adjusted net income (a) $478 $361 $416
Adjustments for special items (net oftaxes):      
Unrealized gain (loss) on crude oilderivative instruments 32 (32) --
Impairments -- (10) --
Net gain (loss) on dispositions (73) 64 (23)
Pension settlement (11) -- --
Net income $426 $383 $393
Per Share Data      
Basic:      
Net income $0.60 $0.54 $0.56
Diluted:      
Adjusted net income (a) $0.67 $0.51 $0.59
Net income $0.60 $0.54 $0.56
Weighted AverageShares:      
Basic 710 708 706
Diluted 714 712 709

(a) Adjusted net income is a non-GAAP financial measure andshould not be considered a substitute for net income as determinedin accordance with accounting principles generally accepted in theUnited States. See above for further discussion of adjusted netincome.
Supplemental Statistics(Unaudited) Three MonthsEnded  
  June 30 Mar. 31 June 30
(in millions) 2013 2013 2012
Segment Income (Loss)      
North America E&P $221 ($59) $70
International E&P 382 453 373
Oil Sands Mining 20 38 50
Segment income 623 432 493
Items not allocated to segments, net ofincome taxes:      
Corporate and unallocated (145) (71) (77)
Unrealized gain (loss)  on crude oilderivative instruments 32 (32) --
Impairments -- (10) --
Net gain (loss) on dispositions (73) 64 (23)
Pension settlement (11) -- --
Net  income $426 $383 $393
Capital Expenditures(b)      
North America E&P $904 $970 $1,013
International E&P 241 225 202
Oil Sands Mining 97 45 43
Corporate 15 30 19
Total $1,257 $1,270 $1,277
Exploration Expenses      
North America E&P $76 $435 $147
International E&P 57 30 25
Total $133 $465 $172
Provision for IncomeTaxes      
Current income taxes $1,009 $981 $928
Deferred income taxes 69 44 97
Total $1,078 $1,025 $1,025
         

 (b)  Capital expenditures include changes inaccruals.
Supplemental Statistics(Unaudited) Three MonthsEnded  
  June 30 Mar. 31 June 30
  2013 2013 2012
North America E&P - Net SalesVolumes      
Liquid Hydrocarbons(mbbld) 148   141   93  
Bakken 37   35   25  
Eagle Ford 64   58   18  
Anadarko Woodford 5   4   2  
Other North America 42   44   48  
Crude Oil and Condensate(mbbld) 126   121   85  
Bakken 35   33   24  
Eagle Ford 50   46   16  
Anadarko Woodford 1   1   1  
Other North America 40   41   44  
Natural Gas Liquids(mbbld) 22   20   8  
Bakken 2   2   1  
Eagle Ford 14   12   2  
Anadarko Woodford 4   3   1  
Other North America 2   3   4  
Natural Gas (mmcfd) 316   340   319  
Bakken 12   13   8  
Eagle Ford 99   83   18  
Anadarko Woodford 49   51   23  
Alaska --   31   82  
Other North America 156   162   188  
International E&P - Net SalesVolumes      
Liquid Hydrocarbons(mbbld) 177   180   177  
Equatorial Guinea 30   37   35  
Norway 79   79   77  
United Kingdom 14   21   22  
Libya 45   34   43  
Other International 9   9   --  
Natural Gas (mmcfd) 514   568   501  
Equatorial Guinea 401   447   394  
Norway 53   54   53  
United Kingdom (c) 36   41   49  
Libya 24   26   5  
Oil Sands Mining - Net SalesVolumes      
Synthetic Crude Oil (mbbld) (d) 43   51   44  
       
Total Company - Net SalesVolumes (mboed) 506   523   451  
Net Sales Volumes of Equity MethodInvestees (mtd)      
LNG 5,820   6,787   5,467  
Methanol 973   1,410   1,268  

(c)  Includes natural gas acquired for injection andsubsequent resale of 8 mmcfd, 11 mmcfd and 17 mmcfd in the secondand first quarters of 2013 and the second quarter of 2012,respectively.

(d)  Includes blendstocks.

Supplemental Statistics(Unaudited) Three MonthsEnded
  June 30 Mar. 31 June 30
  2013 2013 2012
North America E&P - AverageRealizations (e)      
Liquid Hydrocarbons ($ per bbl)(f) $84.51 $86.14 $84.72
Bakken 85.96 88.60 77.26
Eagle Ford 83.90 88.06 90.82
Anadarko Woodford 50.61 51.05 51.69
Crude Oil and Condensate ($ perbbl) $93.75 $94.68 $89.04
Bakken 88.65 91.22 78.99
Eagle Ford 99.40 103.78 99.22
Anadarko Woodford 90.08 90.52 97.05
Natural Gas Liquids ($ perbbl) $31.72 $35.48 $40.54
Bakken 35.92 41.05 43.27
Eagle Ford 28.09 28.16 33.91
Anadarko Woodford 33.61 37.94 31.50
Natural Gas ($ per mcf) $4.19 $3.86 $3.42
Bakken 4.47 3.61 2.89
Eagle Ford 4.17 3.35 2.13
Anadarko Woodford 4.15 3.67 2.66
Alaska -- 7.90 6.59
International E&P- AverageRealizations (e)      
Liquid Hydrocarbons ($ perbbl) $100.00 $107.68 $104.82
Equatorial Guinea 54.09 65.89 64.48
Norway 107.21 117.13 111.40
United Kingdom 101.85 112.25 110.16
Libya 117.55 129.56 122.30
Other International 100.30 105.95 --
Natural Gas ($ per mcf) $2.37 $2.57 $2.25
Equatorial Guinea (g) 0.24 0.24 0.24
Norway 12.13 14.00 10.54
United Kingdom 10.23 11.27 9.53
Libya 4.65 5.04 0.70
Oil Sands Mining - AverageRealizations (e)      
Synthetic Crude Oil ($ perbbl) $89.39 $79.98 $79.31

(e)  Excludes gains or losses on derivativeinstruments.

(f)  Inclusion of realized gains (losses) on crude oilderivative instruments would have increased (decreased) NorthAmerica E&P average liquid hydrocarbon realizations by $1.22per bbl for the second quarter of 2013 and ($0.37) per bbl for thefirst quarterof 2013.  There were no realized gains (losses)on crude oil derivative instruments in the second quarterof2012.

(g)  Primarily represents fixed prices under long-termcontracts with Alba Plant LLC, Atlantic Methanol Production CompanyLLC and Equatorial Guinea LNG Holdings Limited, which are equitymethod investees. Marathon Oil includes its share of income fromeach of these equity method investees in the International E&Psegment.