An Industry Overview

INDUSTRY OVERVIEW

Marathon Oil is a major corporation within two (2) industries:

• Petroleum Refining (NAICS 324110)

• Oil and Gas Extraction (NAICS 211111)

PETROLEUM REFINING Made up of entities engaged in refining

crude petroleum into refined petroleum.

Petroleum refining involves one or more of the following activities:

Fractionation Straight distillation of crude oil Cracking

(IBISWorld, Petroleum Refining)

PETROLEUM REFININGMain products, services, and activities in the Petroleum Refining industry:

Gasoline and gasoline production Kerosene production Diesel fuel and diesel fuel production Jet fuel and jet fuel production Residual fuel oil and residual fuel oil production Lubricant production Aliphatic and aromatic chemicals as by-products

production Petroleum coke Still gases LPG

(IBISWorld, Petroleum Refining)

PETROLEUM REFININGAccording to IBISWorld, revenue will continue to grow and the industry will continue to become more refined in the next five (5) years.

OIL AND GAS EXTRACTIONInvolves “operating and/or developing oil and gas field properties and establishments primarily engaged in recovering liquid hydrocarbons from oil and gas field gases.” (IBISWorld – Oil)

OIL AND GAS EXTRACTIONIncludes:

exploration for crude petroleum and natural gas drilling, completing, and equipping wells operation of separators, emulsion breakers, distilling

equipment, and field gathering lines for crude petroleum and natural gas

all other activities in the preparation of oil and gas up to the point of shipment from the producing property.

“This industry includes the production of crude petroleum, the mining and extraction of oil from oil shale and oil sands, the production of natural gas, sulfur recovery from natural gas, and the recovery of hydrocarbon liquids from oil and gas field gases. Establishments in this industry operate oil and gas wells on their own account or for others on a contract or fee basis.”(IBISWorld – Oil)

Both industries have the most establishments in Texas and Louisiana.

Why?Both states have major ports.

(IBISWorld – Oil)

PETROLEUM REFINING AND

OIL AND GAS EXTRACTION

Number of establishments and companies increasing while number of employees decreasing.

Why? Economic problems in the U.S. and increase in companies hiring contractors

(IBISWorld – Oil)

PETROLEUM REFINING AND

OIL AND GAS EXTRACTION

ABOUT MARATHON

Who is Marathon as a company?

COMPANY INFORMATION

Global Operations North America Africa Europe

72 Trillion Dollar Revenue at close of 2010 2.5 Billion Dollars in Annual Net Income 4th largest US based fully integrated energy

company 29th largest corporation in US

(IBISWorld – Oil)

COMPANY INFORMATION

Major Product/ServicesOil and Natural Gas WellsDrilling ExplorationOil Sands Mining Project Integrated Gas OperationsRefining, Marketing, and Transportation

(IBISWorld – Oil)

CURRENT EVENTS November 1st, Marathon purchased

Hilcorp Resources for 3.5 billion US dollars

Marathon Oil Corp sells 10% stake in the Angolan operation for $800 million to finance Hilcorp purchase

November 16th, eight month long strike at Wafa Oil Co. ends in Libya

(Hilcorp, 2011)

TOP FOUR COMPETITORS OF

MARATHON OIL CORP.

EXXON MOBILE CORP.Principal Business:

The exploration for, and production of, crude oil and natural gas.

The manufacture of petroleum products. The transportation and sale of crude oil,

natural gas and petroleum products.

(Mergent Online, Exxon)

Key Financials: (as of 09/30/2011)

Revenue: 470,006m Net Income: 40,910m

(Mergent Online, Exxon)

EXXON MOBILE CORP.

CHEVRON CORPORATION

Principal Business: Exploring for, developing and producing

crude oil and natural gas. Refining crude oil into finished

petroleum products. Marketing crude oil, natural gas and the

products derived from petroleum. Transporting crude oil, natural gas and

petroleum products.

(Mergent Online, Chevron)

Key Financials (as of 09/30/2011)

Revenue: 247,748m Net Income: 27,067m

(Mergent Online, Chevron)

CHEVRON CORPORATION

CONOCOPHILLIPS

Principal Business: Explores for, produces, transports and

markets crude oil, bitumen, natural gas, liquefied natural gas and natural gas liquids on a worldwide basis.

(Mergent Online, ConocoPhillips)

Key Financials (as of 09/30/2011)

Revenue: 242,054m Net Income: 11,087m

(Mergent Online, ConocoPhillips)

CONOCOPHILLIPS

VALERO ENERGY

Principal Business: Petroleum refining. Wholesale marketing. Product supply and distribution. Transportation operations.

(Mergent Online, Valero)

Key Financials: (as of 09/30/2011)

Revenue: 109,919m Net Income: 1,607m

(Mergent Online, Valero)

VALERO ENERGY

SWOT ANALYSIS

A comparison of Marathon’s strengths, weaknesses,

opportunities, and threats.

SWOT ANALYSIS

Strengths Weaknesses

Involved in all stages of business

Strong refining operations

Concentration in the US

Partnership Arrangements

Opportunities ThreatsGrowth and Expansion

Investments

Demand for Natural Gas is Increasing

Vast Competition

International Risks

STRENGTHSInvolved in all stages of business. “Marathon has presence across the

entire oil and gas value chain […] from the exploration and production to storage and pipeline, till the end use of operations like refining, marketing, and retail distribution…Marathon's presence across the oil and gas value chain provides it with a competitive edge that can be leveraged in the medium to long run.” (Marathon, 24).

STRENGTHSStrong refining operations “The company has strong refining

operations. It ranks as the fifth largest petroleum refiner in the US. In FY2010, the company owned and operated six refineries with an aggregate refining capacity of 1.142 mmbpd of crude oil. For the same period, the company’s refineries processed 1,173 mbpd of crude oil and 162 mbpd of other charge and blend stocks. The company’s refined products sales volumes totaled 1.59 mmbpd in FY2010.” (Marathon, 25)

WEAKNESSESToo much concentration in the US  Marathon Oil Corporation has primary

drilling and production activities in the United States, specifically the Gulf of Mexico (Datamonitor, 2011). This region accounts for the majority of the corporation’s assets and leaves the potential for environmental, political, or other local challenges that could affect the entire region at once (Datamonitor, 2011).

WEAKNESSESPartnership Arrangements

Allowing other corporations to control Marathon’s Assets operationally doesn’t allow Marathon the ability to make changes or adapt to situations that come up (Datamonitor, 2011). A prime example of this is recently with the leadership changes in Lybia. (Datamonitor, 2011)

OPPORTUNITIESGrowth and Expansion

According to an article from Investopedia, “Marathon Oil Corporation has more than 300,000 net acres prospective for the Eagle Ford Shale and estimates that production will be 18,000 BOE per day by the end of 2011” (Fox). The company has some aggressive development plans here and will spend an average of $1.4 billion per year through 2016, achieving production of more than 100,000 BOE per day by that year” (Fox)

OPPORTUNITIESInvestments

In the next several years, Marathon Oil will spend between $4.5 billion to $5.5 billion a year with about two-thirds of that in growth (Marathon Oil Corp at Bank of AmericaMerril).

OPPORTUNITIESThe demand for natural gas is increasing

According to Chesapeake Energy Corp. Chief Executive Aubrey McClendon, “the U.S. is beginning a natural-gas "demand revolution" that will serve as an outlet for the tremendous amounts of gas coming out of newly unlocked shale-rock formations” (Exxon Sees Global Shale Boom).

THREATSVast Competition The oil and gas industry has fierce

competition. Some of the major players who are in direct competition with Marathon Oil Corporation are Anadarko Petroleum Corporation, BG Group, Chevron Corporation, ConocoPhillips, Exxon Mobil Corporation, Royal Dutch Shell, Valero Energy Corporation, Sunoco Inc., Hess Corp., Murphy Oil, Enterprise Products Partners, Tesoro, and PDV America Inc. among others. (Mergent Online).

THREATSInternational Risks Risks associated with operations

conducted outside of the U.S. include foreign governmental policies, political and economic instability, war, acts of terrorism, and civil disturbances; and fluctuating currency values (DataMonitor). Hostilities in the Middle East and the threat of future terrorist attacks could adversely affect the economies of the US (DataMonitor).

INFORMATION SOURCES

These information sources can be used to update this industry profile

regularly.

INFORMATION SOURCES Bloomberg www.bloomberg.com Datamonitor Company Profiles

www.datamonitor.com EDGAR Database www.sec.gov EPA www.epa.gov Factiva global.factiva.com Forbes www.forbes.com Fortune money.cnn.com/magazines/fortune/ Google News http://news.google.com Hoover’s Online www.hoovers.com J Stor www.jstor.org

INFORMATION SOURCES LexisNexis Academic – Business www.lexisnexis.com MacRAE’s Blue Book www.macraesbluebook.com Mergent Online www.mergentonline.com Official Website of Marathon Oil Corp.

www.marathonoil.com Reuters www.reuters.com Standard and Poors

http://www.standardandpoors.com/home/en/us U.S. Bureau of Census www.census.gov U.S. Business Reporter

http://www.activemedia-guide.com/industry_profile_cp.htm

U.S. Geological Survey http://minerals.usgs.gov/minerals/pubs/

Westlaw www.westlaw.com

WORKS CITED Abels, Eileen G. and Klein, Deborah P. Business Information: Needs

and Strategies. Bingley: Academic Press, 2008. Print. Aldridge, James. “Dow, San Antonio stocks lose steam on

Monday”. San Antonio Business Journal Online. 15 November 2011. Web Nov. 21, 2011. www.factivia.com

Barr, Diana. “ConocoPhillips names new spinoff Phillips 66”. St. Louis Business Journal. November 11, 2011. Web Nov.21, 2011. www.factivia.com

Bergin, Tom and Farge, Emma. “WRAPUP 1-Kurd, Baghdad oil officials meet on Exxon spat”. Reuters News. 17 November 2011. Web Nov. 21, 2011. www.factivia.com

“Brazilian federal police investigate Chevron oil spill off coast of Rio de Janeiro”Associated Press Newswires. 17 November 2011. Web Nov.21, 2011. www.factivia.com

“ConocoPhillips selling U.S. pipeline business for $2 billion”. St. Louis Business Journal Online. 17 November 2011. Web Nov.21, 2011. www.factivia.com

“Exxon Sees Global Shale Boom.” The Wall Street Journal Online. 8 November 2011. Web. Nov. 30, 2011. www.factiva.com

WORKS CITED McCormack, Caron Howard James. “Regional Report: Middle East and

North Africa”. World Oil, October 2011. Web Nov.12, 2011. http://www.lexisnexis.com

"Marathon Oil Corporation." (n.d.): Datamonitor/Life Science Analytics Company Profiles. Web. 3 Dec. 2011.

“Marathon Oil Corporation.” Nov. 30, 2011: Online. LexisNexis Academic. 30 Nov. 2011 www.lexisnexis.com

“Marathon Oil Corp at Bank of AmericaMerrill Lynch Global Energy Conference - Final”. CQ FD Disclosure. 15 November 2011. Web Nov.29, 2011. www.factiva.com

DataMonitor. Marathon Oil Corporation Company Profile, 18 Aug. 2011.Web. Nov.12, 2011.

http://web.ebscohost.com Dreier, Hannah. “Richmond asks Chevron to give up tax refund case.”

McClatchy-Tribune Regional News, 16 November 2011. Web Nov.21, 2011. www.factivia.com

Fox, Eric. “Plains Exploration Loves the Eagle Ford Shale” Investopedia. 29 November 2011. http://stocks.investopedia.com/stock-analysis/2011/Plains-Exploration-Loves-The-Eagle-Ford-Shale-PXP-MRO-EOG-MUR1129.aspx?partner=YahooSA#axzz1f8ROtr7u

WORKS CITED Gross, Jenny. “Exxon Refinery Shutdown Could Pressure Brent Crude”. The

Wall Street Journal Online. 17 November 2011. Web Nov.21, 2011. www.factivia.com

“Hilcorp Resources LLC.” FactSet Mergerstat, LLC Nov. 2, 2011: Online. LexisNexis Academic. 30 Nov. 2011

IBISWorld. (2011, October). IBISWorld Industry Report 32411 Petroleum Refining in the US. Retrieved from IBISWorld Industry Market Research database.

Lefebvre, Ben. “ConocoPhillips Reports Unit Outage At Louisiana Refinery”. Dow Jones Newswires October 11, 2011. Web Nov. 21, 2011. www.factivia.com

Mergent Online. Chevron Corporation Company Detail. Web. Nov. 21, 2011. www.mergentonline.com

Mergent Online. ConocoPhillips Corporation Company Detail. Web. Nov. 21, 2011. www.mergentonline.com

Mergent Online. Exxon Mobile Corporation Company Detail. Web. Nov. 21, 2011. www.mergentonline.com

MergentOnline. Marathon Oil Corporation Company Detail. Web. Nov. 12, 2011. www.mergentonline.com

Mergent Online. Valero Energy Corporation Company Detail. Web. Nov. 21, 2011. www.mergentonline.com

WORKS CITED “Research and Markets; Top 10 Global Petrochemical Companies

- Exxon Mobil Benefiting From Large Scale of Operations to Reach Top Ranking”. Investment Weekly News .19 November 2011. Web Nov.21, 2011. www.factivia.com

United States Census Bureau’s American FactFinder. http://factfinder.census.gov/home/saff/main.html?_lang=en

“Valero reports equipment failure at McKee refinery”. Reuters News. 21 November 2011. Web Nov. 21, 2011. www.factivia.com

“Valero Reports Flaring At Port Arthur Refinery – Filing”. Dow Jones Business News. 13 November 2011. Web Nov. 21, 2011. www.factivia.com

“Wafa Oil Co. Set to Resume Full Production Under New Management.” The Tripoli Post Nov.

16, 2011: p.4 Online. LexisNexis Academic. 30 Nov. 2011 17 November 2011. Web Nov. 21, 2011. www.factivia.com Zagorsky, Jay L. Business Information: Finding and Using Data in

the Digital Age. Boston: McGraw-Hill, 2003. Print.