Marathon Income, Merchandise Sales Up

HOUSTON -- Marathon Oil Corp.'s first quarter 2010 net income reached $457 million, compared to $282 million in the year-ago quarter. The company's Speedway SuperAmerica retail convenience store chain also posted a positive quarter of increased fuel margins and merchandise sales.

When adjusted for special items, net income was $315 million, up from the $240 million a year ago. Revenue for the first quarter 2010 was $15.8 billion, up from $10.1 billion in the comparable quarter of 2009.

"Marathon delivered a strong operating performance across its businesses and solid financial results in the first quarter despite the largest amount of planned maintenance and turnaround activity in the company's history," Clarence P. Cazalot Jr., Marathon's president and CEO, said in a statement. "With most of that work now behind us, the company is well positioned to benefit from the ongoing global economic recovery and, in particular, from much better oil prices compared to this time last year and improving margins for refined products."

However, the company's refining, marketing and transportation segment saw a loss of $237 million in the first quarter 2010, compared to income of $159 million in the first quarter of 2009.

The company's Speedway SuperAmerica LLC (SSA) retail convenience store chain increased average gasoline and distillate gross margin per gallon to 11.95 cents in the first quarter of 2010, compared to 10.68 cents in the first quarter of 2009. SSA first quarter same-store gasoline sales volumes were substantially unchanged, at 783 million gallons, compared to the first quarter of 2009, but same-store merchandise sales increased approximately 7 percent for the same period, to $731 million, according to the company.

During the first quarter, Speedway was also ranked the nation's top retail gasoline brand for the second consecutive year, according to the 2010 EquiTrend Brand Study conducted by Harris Interactive.

The refining and wholesale marketing gross margin per gallon was a negative 5.69 cents in the first quarter of 2010, compared to a positive 7.92 cents in the first quarter of 2009. The lower margin was attributed to incrementally higher crude oil costs relative to refined product values across comparable quarters and lower wholesale prices relative to applicable spot market values, quarter over quarter, plus other factors.

Marathon's exploration and production (E&P) segment income totaled $502 million in the first quarter of 2010, compared to $83 million in the first quarter of 2009, primarily due to higher liquid hydrocarbon price realizations. E&P sales volumes during the quarter averaged 361,000 barrels of oil equivalent per day (boepd), down from the 393,000 boepd for the same period last year. United States E&P reported income of $109 million for the first quarter of 2010, compared to a loss of $52 million in the first quarter of 2009, mainly related to a 98-percent increase in liquid hydrocarbon realizations, according to the company.

"Looking forward, our goals are unchanged and remain focused on delivering top-quartile financial and shareholder returns. We'll do that by continuing to control expenses, operating our businesses in a reliable and sustainable manner as well as maintaining our disciplined approach to capital investment," Cazalot said.

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