Marathon Oil's Decision to Separate on Hold

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Marathon Oil's Decision to Separate on Hold

HOUSTON – Marathon Oil Corp.’s decision on whether to separate into two independent public companies was put on hold by its board of directors, which will continue to evaluate the separation to fully assess the impact of recent changes in the global economic environment and financial markets, the company stated.

The decision was expected to come by the end of 2008, and in its third-quarter earnings conference call, Marathon President and CEO Clarence P. Cazalot Jr. told investors "We also are continuing the process of evaluating a potential separation of Marathon's businesses, and we're on course for a decision by the end of this year."

The evaluation process was first announced in July 2008. CSNews Online reported at the time of the announcement, one entity would consist of Marathon's Exploration and Production, Integrated Gas and Oil Sands Mining businesses, while the other would center on the company's Refining, Marketing and Transportation business. The initiative saw the hiring of financial advisor Morgan Stanley and the law firms of Baker Botts LLP and McKee Nelson LLP as advisors.

"Our review thus far indicates that a separation of the businesses may enhance shareholder value, however, the recent extreme volatility in the capital and commodity markets requires further evaluation before a decision can be reached," Cazalot said in a statement released yesterday. "Concluding this evaluation remains a high priority with timing of a decision largely dependent on external market factors."

He continued: "Our primary focus through this challenging economic environment is delivering value to our shareholders through disciplined investment in profitable growth and a solid, competitive dividend. Marathon is in a strong financial and operational position and we will maintain flexibility in our spending plans to adjust to market conditions."