"Operationally, we had an excellent quarter," said Dave O'Reilly, [image-nocss] chairman and CEO of the San Ramon, Calif.-based oil company. "With oil production and refinery inputs both higher than a year ago and operating expenses lower; however, upstream earnings declined sharply on lower prices for crude oil and natural gas. Downstream profits improved mainly on gains from asset sales, while margins on the sale of refined products recovered only slightly from a depressed level in last year's first quarter."
U.S. downstream earnings of $133 million in the first quarter 2009 increased $129 million on a slight improvement in refined-product margins from the depressed level a year ago.
Refinery crude-input of 938,000 barrels per day (bpd) was up 44,000 from the first quarter 2008. Refined-product sales volumes were 1.40 million barrels per day in the first-quarter 2009, down 2% from the year-ago period. Branded gasoline sales were up 2% between quarters to 613,000 bpd.
Separately, Houston-based Marathon Oil Corp. reported first-quarter 2009 net income of $282 million, or 40 cents per diluted share. Net income in first-quarter 2008 was $731 million, or $1.02 per diluted share. For first-quarter 2009, net income adjusted for special items was $240 million, or 34 cents per diluted share, compared to net income adjusted for special items of $767 million, or $1.07 per diluted share, for first-quarter 2008.
"In the first quarter of 2009, Marathon's Exploration & Production segment delivered improved reliability, contributing to strong production growth, while our Refining, Marketing & Transportation segment had a solid financial performance, resulting from high operational reliability in our refineries along with strong refining margins and improved same store retail gasoline sales volume and merchandise sales," said Clarence P. Cazalot, Jr., president and CEO of Marathon.
Total segment income was $262 million in first-quarter 2009, compared to $735 million in first-quarter 2008.
E&P segment income totaled $100 million in first-quarter 2009, compared to $684 million in first-quarter 2008. U.S. E&P reported a loss of $52 million in first-quarter 2009, compared to income of $244 million in first-quarter 2008. Revenues decreased 50% as a result of lower product price realizations.
RM&T segment income was $159 million in first-quarter 2009 compared to a loss of $75 million in first-quarter 2008. The increase was primarily the result of a higher refining and wholesale marketing gross margin, which increased to 7.92 cents per gallon in first-quarter 2009 from a negative 26 cents in first-quarter 2008.
Marathon's first-quarter 2009 refining and wholesale marketing gross margin included pretax derivative losses of $60 million, primarily resulting from mitigation of crude oil inventory price risk exposure. The first-quarter 2008 gross margin included pretax derivative losses of $120 million including the impact of using derivatives to mitigate domestic crude oil acquisition price risk, a practice that the company discontinued during second-quarter 2008.
Speedway SuperAmerica LLC (SSA) gasoline and distillate gross margin per gallon averaged 10.68 cents in first-quarter 2009, compared to 11.47 cents in first-quarter 2008. SSA first-quarter 2009 same-store gasoline sales volume increased by approximately 1% over first-quarter 2008 while same-store merchandise sales increased by approximately 11% for the same period.
Also, New York City-based Hess Corp. reported a net loss of $59 million for first-quarter 2009 compared with net income of $759 million for first-quarter 2008.
E&P generated a loss of $64 million in first-quarter 2009 compared with income of $824 million in first-quarter 2008.
Marketing & Refining earnings were $102 million in first-quarter 2009, an increase of $86 million from first-quarter 2008, primarily reflecting higher energy marketing margins and improved trading results. Refining operations generated a loss of $18 million in first-quarter 2009 compared with a loss of $3 million in first-quarter 2008, reflecting lower refining margins. Marketing earnings were $101 million in first-quarter 2009, an increase of $69 million from first-quarter 2008.
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