HOUSTON -- Marathon Oil Corp. has reported fourth-quarter 2005 net income of $1.265 billion, or $3.43 per diluted share. Net income in fourth-quarter 2004 was $429 million, or $1.23 per diluted share. Marathon reported fourth-quarter 2005 net income adjusted for special items of $1.329 billion, or $3.61 per diluted share, compared to net income adjusted for special items of $415 million, or $1.19 per diluted share, for fourth-quarter 2004.
Marathon reported 2005 net income of $3.032 billion, or $8.44 per diluted share. Net income in 2004 was $1.261 billion, [image-nocss] or $3.73 per diluted share. Marathon reported 2005 net income adjusted for special items of $3.238 billion, or $9.02 per diluted share, compared to net income adjusted for special items of $1.369 billion, or $4.05 per diluted share for 2004.
As we look back on 2005, we take note of a year of outstanding operational performance, new beginnings and a promising future, said Clarence P. Cazalot, Jr., Marathon president and CEO. During the year we significantly increased our downstream presence by acquiring full ownership of our refining, marketing and transportation operations. This approximately $4 billion acquisition has already had a substantial positive impact on the company's 2005 financial results. Marathon also advanced plans for the future, which included announcing a proposed $2.2 billion expansion of the Garyville, La.
Total segment income was $2.215 billion in fourth-quarter 2005 and $6.032 billion for full-year 2005, compared with $855 million and $3.15 billion in the same periods in 2004.
U.S. upstream income was $468 million in fourth-quarter 2005 and $1.564 billion for the year, compared to $238 million and $1.073 billion in the same periods of 2004.
Downstream segment income was $1.166 billion in fourth-quarter 2005 and $3.013 billion for the year versus segment income of $389 million and $1.406 billion in the comparable periods of 2004. The improvement in fourth-quarter earnings was primarily due to a significantly better refining and wholesale marketing margin, which averaged 21.86 cents per gallon in fourth-quarter 2005 versus 9.59 cents in the comparable 2004 quarter.
While the energy markets showed an increase in crude prices during the fourth quarter compared to the same quarter last year, crack spreads remained at high levels throughout the quarter resulting in strong earnings for Marathon. The company also benefited from strong operations and record total refinery throughputs for the quarter and year, and record refined product sales volumes last quarter. Operationally, Marathon's refining system ran extremely well during the quarter averaging 979,400 barrels of crude oil throughput per day or 102% of average system capacity.
Marathon also set gasoline and distillate production records in the fourth quarter and for the full year. The company produced approximately 703,000 bpd of gasoline in the fourth quarter, up from its previous record of 658,000 bpd in third-quarter 2005, while year-over-year, gasoline production increased by approximately 6% to almost 644,000 bpd. Marathon's fourth quarter distillate production was approximately 329,000 bpd exceeding the company's previous record set in fourth-quarter 2004 with 328,000 bpd. Year-over-year, Marathon's distillate production set a record with approximately 318,000 bpd, exceeding its previous record of almost 300,000 bpd set in 2004.
The year-over-year increase in segment income primarily reflects a higher refining and wholesale marketing margin, which averaged 15.82 cents per gallon versus 8.77 cents in 2004. Margins improved initially due to wider sweet/sour crude differentials in general and, more recently, due to the temporary impact that Hurricanes Katrina and Rita had on refined product margins and concerns about the adequacy of distillate supplies heading into winter. For the full-year 2005, Marathon averaged 973,400 barrels of crude oil throughput per day or 102% of average system capacity.
During the quarter, Speedway SuperAmerica continued to achieve strong same-store merchandise sales growth of 11.5% compared to fourth-quarter 2004. This was the 12th consecutive quarter of greater than 9% same-store merchandise sales growth for SSA. In addition, SSA increased its same-store gasoline sales volume during the fourth quarter by 4.5% compared to the same quarter last year.
One of Marathon's most significant achievements in 2005 was the acquisition of Ashland Inc.'s 38% minority interest in Marathon Ashland Petroleum LLC, as well as two complementary businesses. These businesses included Ashland's maleic anhydride plant located in Neal, W.Va., adjacent to Marathon's Catlettsburg, Ky., refinery, as well as a portion of its Valvoline Instant Oil Change business, consisting of 60 retail outlets located in Michigan and Ohio.
The company's $300-million, 26,000-bpd Detroit refinery expansion and Tier II low-sulfur fuels project was completed during the fourth quarter and ramped up to full capacity of 100,000 bpd in mid-November. The expansion has added much needed capacity to help meet market demand, primarily for transportation fuels, in the upper Midwest. The expansion also enables the Detroit refinery to produce the low-sulfur gasoline and ultra-low sulfur diesel fuel required by the U.S. Environmental Protection Agency (EPA) beginning in 2006.
During the fourth quarter, Marathon also announced plans to pursue a 180,000-bpd expansion of the 245,000-bpd Garyville, La., refinery. The initial phase of the potential expansion includes FEED work which began in December and could lead to the start of construction in 2007. The project, currently estimated to cost more than $2.2 billion, could be completed as early as fourth-quarter 2009.
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