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Overview Of Marathon Oil Prior To Split

|Includes: Marathon Oil Corporation (MRO)

Marathon is an integrated international energy company that operates in more than ten countries. Headquartered in Houston, Texas, Marathon is the second largest company in Houston and the 23rd in the U.S. in terms of revenue. Marathon is the fourth-largest U.S. oil company behind ExxonMobil, Chevron, and ConocoPhillips. Marathon began as the Ohio Oil Company in 1887 and in 1962 changed its name to the Marathon Oil Company. In 1982, the company was acquired by the U.S. Steel Corporation (NYSE:USX), and later formed a joint venture with Ashland (Marathon Ashland Petroleum) in 1998. Since the company did not have refining operations prior to 1998, only the last 12 years of financial data are relevant to this topic. In 2001, it separated from USX, and in 2005, it acquired Ashland's stake in the joint venture to become a fully integrated oil company.

Marathon reported revenues of $54.1 billion in 2009, compared to $78.1 billion in 2008, $64.8 billion in 2007, and $65.4 billion in 2006. The gross profit reported on these revenues was $7.5 billion in 2009, $11.3 billion in 2008, $9.4 billion in 2007, and $11.9 billion in 2006.

Marathon's largest segment in terms of revenue is the RMT segment (Refining, Marketing, and Transportation). Marathon sells 1.4 million barrels of refined products every year. The average sales price was $70.86 per barrel in 2009 and $109.49 per barrel in 2008. In 2009, the RMT segment accounted for $45.5 billion in revenue, compared to $8.6 billion for the other three segments combined. In 2008, these values were $64.5 billion and $13.3 billion, respectively.

The net income from the RMT segment was $464 million in 2009, $1.18 billion in 2008, and $2.08 billion in 2007. The net income from all other segments was $1.36 billion in 2009, $3.12 billion in 2008, and $1.62 billion in 2007.

Total assets were $47.1 billion in 2009, compared to $42.7 billion in both 2008 and 2007, and $30.8 billion in 2006. The RMT segment accounted for anywhere between 30 and 33 percent of these assets depending on the year.

For "Petroleum Refiners" (NAICS code 324110), the average benchmark ratio of "profit before taxes to total assets" is 11.6. For "Crude Petroleum and Natural Gas Extraction (NAICS code 211111), this ratio is 23.2. For Marathon, this value was 15.9 in 2009, compared to 26.5 in 2008, 22.0 in 2007, and 38.6 in 2006.

Although gasoline sales are a fragmented market, Marathon still has a sizeable share of U.S. refining capacity.

Disclosure: I am/we are long MRO.