Marathon profit off 37 pct on refining
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HOUSTON (Reuters) - Oil producer and refiner Marathon Oil Corp said on Thursday its third-quarter earnings fell 37 percent on sharply lower margins from gasoline production, but still beat Wall Street Expectations.The Houston-based company said net income in the quarter dropped to $1.021 billion, or $1.49 a diluted share, from $1.623 billion, or $2.26 a share, a year earlier.Excluding one-time items, the company earned $1.48 a share. Analysts, on average, were expecting $1.37 a share, according to Reuters Estimates.Margins to produce gasoline and other refined products fell sharply during the quarter, dragging down earnings at most integrated oil companies that both drill for and refine the fuel.Revenue rose 2 percent $16.95 billion."While our upstream business benefited from the increase in crude oil prices, it was a challenging third quarter for the downstream segment as the significant increase in crude costs compressed margins," Clarence Cazalot, Marathon's chief executive officer, said in a statement.Income from exploration and production fell to $479 million in the 2007 third quarter from $572 million a year ago.Sales volumes in the quarter averaged 371,000 barrels of oil equivalent per day (boepd) and production available for sale averaged 373,000 boepd.Refining, marketing and transportation income was $482 million in the 2007 third quarter, down sharply from $1.026 billion a year earlier. The decrease was primarily a result of a decline in the refining and wholesale marketing gross margin to 17.17 cents from 32.71 a year ago, Marathon said.Refining margins plummeted by as much as 90 percent from record highs reached in May as the summer driving season ended, oil prices surged and gasoline prices did not keep up with the price increases.Marathon is "so leveraged to refining margins, which were really bad this quarter. For them to beat numbers was a pretty good deal -- I think they are a solid company," said Chris MacDonald a portfolio manager at WHG Funds, which owns some Marathon shares.Exxon Mobil Corp , the largest U.S. oil company, posted disappointing results on Thursday due to the lower refining margins in the quarter.Marathon shares fell $1.46, or 2.5 percent, to $57.67 along with other energy companies on the New York Stock Exchange on Thursday.(Reporting by Anna Driver in Houston and Michael Erman in New York)
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