(Mark One) | |
[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended June 30, 2013 |
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____ to _____ |
Delaware | 25-0996816 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer þ | Accelerated filer o |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
INDEX | ||
Page | ||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(In millions, except per share data) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Revenues and other income: | |||||||||||||||
Sales and other operating revenues, including related party | $ | 3,419 | $ | 2,975 | $ | 6,859 | $ | 5,919 | |||||||
Marketing revenues | 499 | 757 | 929 | 1,606 | |||||||||||
Income from equity method investments | 77 | 60 | 195 | 138 | |||||||||||
Net gain (loss) on disposal of assets | (107 | ) | (28 | ) | 2 | 138 | |||||||||
Other income | 10 | 20 | 19 | 23 | |||||||||||
Total revenues and other income | 3,898 | 3,784 | 8,004 | 7,824 | |||||||||||
Costs and expenses: | |||||||||||||||
Production | 614 | 485 | 1,192 | 987 | |||||||||||
Marketing, including purchases from related parties | 495 | 755 | 924 | 1,609 | |||||||||||
Other operating | 86 | 107 | 197 | 199 | |||||||||||
Exploration | 133 | 172 | 598 | 307 | |||||||||||
Depreciation, depletion and amortization | 738 | 580 | 1,485 | 1,154 | |||||||||||
Impairments | — | 1 | 38 | 263 | |||||||||||
Taxes other than income | 93 | 55 | 177 | 123 | |||||||||||
General and administrative | 164 | 154 | 338 | 313 | |||||||||||
Total costs and expenses | 2,323 | 2,309 | 4,949 | 4,955 | |||||||||||
Income from operations | 1,575 | 1,475 | 3,055 | 2,869 | |||||||||||
Net interest and other | (71 | ) | (57 | ) | (143 | ) | (107 | ) | |||||||
Income before income taxes | 1,504 | 1,418 | 2,912 | 2,762 | |||||||||||
Provision for income taxes | 1,078 | 1,025 | 2,103 | 1,952 | |||||||||||
Net income | $ | 426 | $ | 393 | $ | 809 | $ | 810 | |||||||
Per Share Data | |||||||||||||||
Net Income: | |||||||||||||||
Basic | $ | 0.60 | $ | 0.56 | $ | 1.14 | $ | 1.15 | |||||||
Diluted | $ | 0.60 | $ | 0.56 | $ | 1.14 | $ | 1.14 | |||||||
Dividends paid | $ | 0.17 | $ | 0.17 | $ | 0.34 | $ | 0.34 | |||||||
Weighted average shares: | |||||||||||||||
Basic | 710 | 706 | 709 | 705 | |||||||||||
Diluted | 714 | 709 | 713 | 709 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Net income | $ | 426 | $ | 393 | $ | 809 | $ | 810 | |||||||
Other comprehensive income (loss) | |||||||||||||||
Postretirement and postemployment plans | |||||||||||||||
Change in actuarial loss and other | 133 | (3 | ) | 146 | 10 | ||||||||||
Income tax (provision) benefit on postretirement and | |||||||||||||||
postemployment plans | (49 | ) | 1 | (54 | ) | (4 | ) | ||||||||
Postretirement and postemployment plans, net of tax | 84 | (2 | ) | 92 | 6 | ||||||||||
Foreign currency translation and other | |||||||||||||||
Unrealized loss | (3 | ) | (1 | ) | (4 | ) | — | ||||||||
Income tax benefit on foreign currency translation and other | 1 | — | 1 | — | |||||||||||
Foreign currency translation and other, net of tax | (2 | ) | (1 | ) | (3 | ) | — | ||||||||
Other comprehensive income (loss) | 82 | (3 | ) | 89 | 6 | ||||||||||
Comprehensive income | $ | 508 | $ | 390 | $ | 898 | $ | 816 |
June 30, | December 31, | ||||||
(In millions, except per share data) | 2013 | 2012 | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 246 | $ | 684 | |||
Receivables | 2,443 | 2,418 | |||||
Inventories | 368 | 361 | |||||
Other current assets | 224 | 299 | |||||
Total current assets | 3,281 | 3,762 | |||||
Equity method investments | 1,244 | 1,279 | |||||
Property, plant and equipment, less accumulated depreciation, | |||||||
depletion and amortization of $20,639 and $19,266 | 27,457 | 28,272 | |||||
Goodwill | 499 | 525 | |||||
Other noncurrent assets | 2,567 | 1,468 | |||||
Total assets | $ | 35,048 | $ | 35,306 | |||
Liabilities | |||||||
Current liabilities: | |||||||
Commercial paper | $ | — | $ | 200 | |||
Accounts payable | 2,152 | 2,324 | |||||
Payroll and benefits payable | 137 | 217 | |||||
Accrued taxes | 1,397 | 1,983 | |||||
Other current liabilities | 254 | 173 | |||||
Long-term debt due within one year | 68 | 184 | |||||
Total current liabilities | 4,008 | 5,081 | |||||
Long-term debt | 6,428 | 6,512 | |||||
Deferred tax liabilities | 2,406 | 2,432 | |||||
Defined benefit postretirement plan obligations | 739 | 856 | |||||
Asset retirement obligations | 2,039 | 1,749 | |||||
Deferred credits and other liabilities | 407 | 393 | |||||
Total liabilities | 16,027 | 17,023 | |||||
Commitments and contingencies | |||||||
Stockholders’ Equity | |||||||
Preferred stock – no shares issued or outstanding (no par value, | |||||||
26 million shares authorized) | — | — | |||||
Common stock: | |||||||
Issued – 770 million and 770 million shares (par value $1 per share, | |||||||
1.1 billion shares authorized) | 770 | 770 | |||||
Securities exchangeable into common stock – no shares issued or | |||||||
outstanding (no par value, 29 million shares authorized) | — | — | |||||
Held in treasury, at cost – 61 million and 63 million shares | (2,477 | ) | (2,560 | ) | |||
Additional paid-in capital | 6,614 | 6,616 | |||||
Retained earnings | 14,458 | 13,890 | |||||
Accumulated other comprehensive loss | (344 | ) | (433 | ) | |||
Total equity | 19,021 | 18,283 | |||||
Total liabilities and stockholders' equity | $ | 35,048 | $ | 35,306 |
Six Months Ended | |||||||
June 30, | |||||||
(In millions) | 2013 | 2012 | |||||
Increase (decrease) in cash and cash equivalents | |||||||
Operating activities: | |||||||
Net income | $ | 809 | $ | 810 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Deferred income taxes | 113 | 75 | |||||
Depreciation, depletion and amortization | 1,485 | 1,154 | |||||
Impairments | 38 | 263 | |||||
Pension and other postretirement benefits, net | 34 | (22 | ) | ||||
Exploratory dry well costs and unproved property impairments | 494 | 174 | |||||
Net gain on disposal of assets | (2 | ) | (138 | ) | |||
Equity method investments, net | — | 7 | |||||
Changes in: | |||||||
Current receivables | 17 | (107 | ) | ||||
Inventories | (16 | ) | (18 | ) | |||
Current accounts payable and accrued liabilities | (651 | ) | (450 | ) | |||
All other operating, net | 75 | (6 | ) | ||||
Net cash provided by operating activities | 2,396 | 1,742 | |||||
Investing activities: | |||||||
Additions to property, plant and equipment | (2,676 | ) | (2,181 | ) | |||
Disposal of assets | 333 | 218 | |||||
Investments - return of capital | 29 | 21 | |||||
All other investing, net | 15 | (59 | ) | ||||
Net cash used in investing activities | (2,299 | ) | (2,001 | ) | |||
Financing activities: | |||||||
Commercial paper, net | (200 | ) | 550 | ||||
Debt issuance costs | — | (9 | ) | ||||
Debt repayments | (148 | ) | (111 | ) | |||
Dividends paid | (241 | ) | (240 | ) | |||
All other financing, net | 46 | 20 | |||||
Net cash (used in) provided by financing activities | (543 | ) | 210 | ||||
Effect of exchange rate changes on cash | 8 | 8 | |||||
Net decrease in cash and cash equivalents | (438 | ) | (41 | ) | |||
Cash and cash equivalents at beginning of period | 684 | 493 | |||||
Cash and cash equivalents at end of period | $ | 246 | $ | 452 |
Three Months Ended June 30, | |||||||||||||||
2013 | 2012 | ||||||||||||||
(In millions, except per share data) | Basic | Diluted | Basic | Diluted | |||||||||||
Net income | $ | 426 | $ | 426 | $ | 393 | $ | 393 | |||||||
Weighted average common shares outstanding | 710 | 710 | 706 | 706 | |||||||||||
Effect of dilutive securities | — | 4 | — | 3 | |||||||||||
Weighted average common shares, including | |||||||||||||||
dilutive effect | 710 | 714 | 706 | 709 | |||||||||||
Per share: | |||||||||||||||
Net income | $0.60 | $0.60 | $0.56 | $0.56 |
Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | ||||||||||||||
(In millions, except per share data) | Basic | Diluted | Basic | Diluted | |||||||||||
Net income | $ | 809 | $ | 809 | $ | 810 | $ | 810 | |||||||
Weighted average common shares outstanding | 709 | 709 | 705 | 705 | |||||||||||
Effect of dilutive securities | — | 4 | — | 4 | |||||||||||
Weighted average common shares, including | |||||||||||||||
dilutive effect | 709 | 713 | 705 | 709 | |||||||||||
Per share: | |||||||||||||||
Net income | $1.14 | $1.14 | $1.15 | $1.14 |
(In millions) | |||
Other noncurrent assets | $ | 1,550 | |
Total assets | 1,550 | ||
Other current liabilities | 58 | ||
Deferred credits and other liabilities | 39 | ||
Total liabilities | $ | 97 |
• | North America E&P ("N.A. E&P") – explores for, produces and markets liquid hydrocarbons and natural gas in North America; |
• | International E&P ("Int'l E&P") – explores for, produces and markets liquid hydrocarbons and natural gas outside of North America and produces and markets products manufactured from natural gas, such as liquefied natural gas ("LNG")and methanol, in Equatorial Guinea; and |
• | Oil Sands Mining (“OSM”) – mines, extracts and transports bitumen from oil sands deposits in Alberta, Canada, and upgrades the bitumen to produce and market synthetic crude oil and vacuum gas oil. |
Three Months Ended June 30, 2013 | |||||||||||||||
(In millions) | N.A. E&P | Int'l E&P | OSM | Total | |||||||||||
Revenues: | |||||||||||||||
Sales and other operating revenues | $ | 1,284 | $ | 1,732 | $ | 353 | $ | 3,369 | |||||||
Marketing revenues | 439 | 51 | 9 | 499 | |||||||||||
Segment revenues | $ | 1,723 | $ | 1,783 | $ | 362 | 3,868 | ||||||||
Unrealized gain on crude oil derivative instruments | 50 | ||||||||||||||
Total revenues | $ | 3,918 | |||||||||||||
Segment income | $ | 221 | $ | 382 | $ | 20 | $ | 623 | |||||||
Income from equity method investments | — | 77 | — | 77 | |||||||||||
Depreciation, depletion and amortization | 490 | 189 | 48 | 727 | |||||||||||
Income tax provision | 129 | 1,004 | 7 | 1,140 | |||||||||||
Capital expenditures | 904 | 241 | 97 | 1,242 |
Three Months Ended June 30, 2012 | |||||||||||||||
(In millions) | N.A. E&P | Int'l E&P | OSM | Total | |||||||||||
Revenues: | |||||||||||||||
Sales and other operating revenues | $ | 833 | $ | 1,813 | $ | 329 | $ | 2,975 | |||||||
Marketing revenues | 696 | 56 | 5 | 757 | |||||||||||
Total revenues | $ | 1,529 | $ | 1,869 | $ | 334 | $ | 3,732 | |||||||
Segment income | $ | 70 | $ | 373 | $ | 50 | $ | 493 | |||||||
Income from equity method investments | — | 60 | — | 60 | |||||||||||
Depreciation, depletion and amortization | 290 | 228 | 50 | 568 | |||||||||||
Income tax provision | 39 | 1,070 | 17 | 1,126 | |||||||||||
Capital expenditures | 1,013 | 202 | 43 | 1,258 |
Six Months Ended June 30, 2013 | |||||||||||||||
(In millions) | N.A. E&P | Int'l E&P | OSM | Total | |||||||||||
Revenues: | |||||||||||||||
Sales and other operating revenues | $ | 2,499 | $ | 3,619 | $ | 741 | $ | 6,859 | |||||||
Marketing revenues | 784 | 136 | 9 | 929 | |||||||||||
Segment revenues | $ | 3,283 | $ | 3,755 | $ | 750 | 7,788 | ||||||||
Unrealized loss on crude oil derivative instruments | — | ||||||||||||||
Total revenues | $ | 7,788 | |||||||||||||
Segment income | $ | 162 | $ | 835 | $ | 58 | $ | 1,055 | |||||||
Income from equity method investments | — | 195 | — | 195 | |||||||||||
Depreciation, depletion and amortization | 968 | 396 | 100 | 1,464 | |||||||||||
Income tax provision | 99 | 2,146 | 20 | 2,265 | |||||||||||
Capital expenditures | 1,874 | 466 | 142 | 2,482 |
Six Months Ended June 30, 2012 | |||||||||||||||
(In millions) | N.A. E&P | Int'l E&P | OSM | Total | |||||||||||
Revenues: | |||||||||||||||
Sales and other operating revenues | $ | 1,745 | $ | 3,476 | $ | 698 | $ | 5,919 | |||||||
Marketing revenues | 1,471 | 120 | 15 | 1,606 | |||||||||||
Total revenues | $ | 3,216 | $ | 3,596 | $ | 713 | $ | 7,525 | |||||||
Segment income | $ | 174 | $ | 780 | $ | 88 | $ | 1,042 | |||||||
Income from equity method investments | 1 | 137 | — | 138 | |||||||||||
Depreciation, depletion and amortization | 604 | 428 | 99 | 1,131 | |||||||||||
Income tax provision | 100 | 2,041 | 30 | 2,171 | |||||||||||
Capital expenditures | 1,842 | 340 | 95 | 2,277 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | ||||||||
Total revenues | $ | 3,918 | $ | 3,732 | $ | 7,788 | $ | 7,525 | ||||
Less: Marketing revenues | 499 | 757 | 929 | 1,606 | ||||||||
Sales and other operating revenues, including related party | $ | 3,419 | $ | 2,975 | $ | 6,859 | $ | 5,919 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | ||||||||
Segment income | $ | 623 | $ | 493 | $ | 1,055 | $ | 1,042 | ||||
Items not allocated to segments, net of income taxes: | ||||||||||||
Corporate and other unallocated items | (156 | ) | (77 | ) | (227 | ) | (148 | ) | ||||
Unrealized gain (loss) on crude oil derivative instruments | 32 | — | — | — | ||||||||
Net gain (loss) on dispositions | (73 | ) | (23 | ) | (9 | ) | 83 | |||||
Impairments | — | — | (10 | ) | (167 | ) | ||||||
Net income | $ | 426 | $ | 393 | $ | 809 | $ | 810 |
Three Months Ended June 30, | |||||||||||||||
Pension Benefits | Other Benefits | ||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Service cost | $ | 14 | $ | 13 | $ | 1 | $ | 1 | |||||||
Interest cost | 16 | 16 | 3 | 3 | |||||||||||
Expected return on plan assets | (16 | ) | (16 | ) | — | — | |||||||||
Amortization: | |||||||||||||||
– prior service cost (credit) | 1 | 2 | (1 | ) | (1 | ) | |||||||||
– actuarial loss | 16 | 13 | — | — | |||||||||||
Net settlement loss(a) | 17 | — | — | — | |||||||||||
Net periodic benefit cost | $ | 48 | $ | 28 | $ | 3 | $ | 3 |
Six Months Ended June 30, | |||||||||||||||
Pension Benefits | Other Benefits | ||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Service cost | $ | 28 | $ | 25 | $ | 2 | $ | 2 | |||||||
Interest cost | 31 | 32 | 6 | 7 | |||||||||||
Expected return on plan assets | (33 | ) | (32 | ) | — | — | |||||||||
Amortization: | |||||||||||||||
– prior service cost (credit) | 3 | 4 | (3 | ) | (3 | ) | |||||||||
– actuarial loss | 29 | 25 | — | — | |||||||||||
Net settlement loss(a) | 17 | — | — | — | |||||||||||
Net periodic benefit cost | $ | 75 | $ | 54 | $ | 5 | $ | 6 |
June 30, | December 31, | ||||||
(In millions) | 2013 | 2012 | |||||
Liquid hydrocarbons, natural gas and bitumen | $ | 48 | $ | 73 | |||
Supplies and other items | 320 | 288 | |||||
Inventories, at cost | $ | 368 | $ | 361 |
June 30, | December 31, | ||||||
(In millions) | 2013 | 2012 | |||||
North America E&P | $ | 25,129 | $ | 23,748 | |||
International E&P | 12,213 | 13,214 | |||||
Oil Sands Mining | 10,270 | 10,127 | |||||
Corporate | 484 | 449 | |||||
Total property, plant and equipment | 48,096 | 47,538 | |||||
Less accumulated depreciation, depletion and amortization | (20,639 | ) | (19,266 | ) | |||
Net property, plant and equipment | $ | 27,457 | $ | 28,272 |
(In millions) | |||
Beginning balance | $ | 1,783 | |
Incurred, including acquisitions | 8 | ||
Settled, including dispositions | (27 | ) | |
Accretion expense (included in depreciation, depletion and amortization) | 48 | ||
Revisions to previous estimates | 306 | ||
Held for sale | (39 | ) | |
Ending balance(a) | $ | 2,079 |
June 30, 2013 | |||||||||||||||||||
(In millions) | Level 1 | Level 2 | Level 3 | Collateral | Total | ||||||||||||||
Derivative instruments, assets | |||||||||||||||||||
Commodity | $ | — | $ | 52 | $ | — | $ | — | $ | 52 | |||||||||
Interest rate | — | 6 | — | — | 6 | ||||||||||||||
Derivative instruments, assets | $ | — | $ | 58 | $ | — | $ | — | $ | 58 | |||||||||
Derivative instruments, liabilities | |||||||||||||||||||
Foreign currency | $ | — | $ | 30 | $ | — | $ | — | $ | 30 | |||||||||
Derivative instruments, liabilities | $ | — | $ | 30 | $ | — | $ | — | $ | 30 |
December 31, 2012 | |||||||||||||||||||
(In millions) | Level 1 | Level 2 | Level 3 | Collateral | Total | ||||||||||||||
Derivative instruments, assets | |||||||||||||||||||
Commodity | $ | — | $ | 52 | $ | — | $ | 1 | $ | 53 | |||||||||
Interest rate | — | 21 | — | — | 21 | ||||||||||||||
Foreign currency | — | 18 | — | — | 18 | ||||||||||||||
Derivative instruments, assets | $ | — | $ | 91 | $ | — | $ | 1 | $ | 92 |
Three Months Ended June 30, | |||||||||||||||
2013 | 2012 | ||||||||||||||
(In millions) | Fair Value | Impairment | Fair Value | Impairment | |||||||||||
Long-lived assets held for use | $ | — | $ | — | $ | — | $ | 1 |
Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | ||||||||||||||
(In millions) | Fair Value | Impairment | Fair Value | Impairment | |||||||||||
Long-lived assets held for use | $ | — | $ | 38 | $ | 75 | $ | 263 |
June 30, 2013 | December 31, 2012 | ||||||||||||||
Fair | Carrying | Fair | Carrying | ||||||||||||
(In millions) | Value | Amount | Value | Amount | |||||||||||
Financial assets | |||||||||||||||
Other noncurrent assets | $ | 165 | $ | 164 | $ | 189 | $ | 186 | |||||||
Total financial assets | 165 | 164 | 189 | 186 | |||||||||||
Financial liabilities | |||||||||||||||
Other current liabilities | 13 | 13 | 13 | 13 | |||||||||||
Long-term debt, including current portion(a) | 6,991 | 6,460 | 7,610 | 6,642 | |||||||||||
Deferred credits and other liabilities | 141 | 140 | 94 | 94 | |||||||||||
Total financial liabilities | $ | 7,145 | $ | 6,613 | $ | 7,717 | $ | 6,749 |
June 30, 2013 | |||||||||||||
(In millions) | Asset | Liability | Net Asset | Balance Sheet Location | |||||||||
Fair Value Hedges | |||||||||||||
Interest rate | $ | 6 | $ | — | $ | 6 | Other noncurrent assets | ||||||
Total Designated Hedges | 6 | — | 6 | ||||||||||
Not Designated as Hedges | |||||||||||||
Commodity | 52 | — | 52 | Other current assets | |||||||||
Total Not Designated as Hedges | 52 | — | 52 | ||||||||||
Total | $ | 58 | $ | — | $ | 58 |
June 30, 2013 | |||||||||||||
(In millions) | Asset | Liability | Net Liability | Balance Sheet Location | |||||||||
Fair Value Hedges | |||||||||||||
Foreign currency | $ | — | $ | 30 | $ | 30 | Other current liabilities | ||||||
Total Designated Hedges | — | 30 | 30 | ||||||||||
Total | $ | — | $ | 30 | $ | 30 |
December 31, 2012 | |||||||||||||
(In millions) | Asset | Liability | Net Asset | Balance Sheet Location | |||||||||
Fair Value Hedges | |||||||||||||
Foreign currency | $ | 18 | $ | — | $ | 18 | Other current assets | ||||||
Interest rate | 21 | — | 21 | Other noncurrent assets | |||||||||
Total Designated Hedges | 39 | — | 39 | ||||||||||
Not Designated as Hedges | |||||||||||||
Commodity | 52 | — | 52 | Other current assets | |||||||||
Total Not Designated as Hedges | 52 | — | 52 | ||||||||||
Total | $ | 91 | $ | — | $ | 91 |
Gain (Loss) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(In millions) | Income Statement Location | 2013 | 2012 | 2013 | 2012 | |||||||||||
Derivative | ||||||||||||||||
Interest rate | Net interest and other | $ | (12 | ) | $ | 12 | $ | (15 | ) | $ | 12 | |||||
Foreign currency | Provision for income taxes | $ | (21 | ) | $ | (32 | ) | $ | (46 | ) | $ | (40 | ) | |||
Hedged Item | ||||||||||||||||
Long-term debt | Net interest and other | $ | 12 | $ | (12 | ) | $ | 15 | $ | (12 | ) | |||||
Accrued taxes | Provision for income taxes | $ | 21 | $ | 32 | $ | 46 | $ | 40 |
Remaining Term | Bbls per Day | Weighted Average Price per Bbl | Benchmark |
Swaps | |||
July 2013 - December 2013 | 20,000 | $96.29 | West Texas Intermediate |
July 2013 - December 2013 | 25,000 | $109.19 | Brent |
Option Collars | |||
July 2013 - December 2013 | 15,000 | $90.00 floor / $101.17 ceiling | West Texas Intermediate |
July 2013 - December 2013 | 15,000 | $100.00 floor / $116.30 ceiling | Brent |
Gain (Loss) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(In millions) | Income Statement Location | 2013 | 2012 | 2013 | 2012 | |||||||||||
Commodity | Sales and other operating revenues, including related party | $ | 67 | $ | (1 | ) | $ | 13 | $ | 2 |
Stock Options | Restricted Stock | ||||||||||||
Number of Shares | Weighted Average Exercise Price | Awards | Weighted Average Grant Date Fair Value | ||||||||||
Outstanding at December 31, 2012 | 19,536,965 | $26.19 | 4,177,884 | $29.02 | |||||||||
Granted | 1,381,321 | (a) | $32.85 | 1,087,731 | $32.38 | ||||||||
Options Exercised/Stock Vested | (1,422,488 | ) | $21.53 | (605,209 | ) | $29.73 | |||||||
Cancelled | (386,186 | ) | $34.54 | (182,958 | ) | $29.35 | |||||||
Outstanding at June 30, 2013 | 19,109,612 | $26.85 | 4,477,448 | $29.79 |
Three Months Ended June 30, 2013 | Six Months Ended June 30, 2013 | |||||||
(In millions) | Income Statement Line | |||||||
Accumulated Other Comprehensive Loss Components | ||||||||
Income (Expense) | ||||||||
Amortization of postretirement and postemployment plans | ||||||||
Actuarial loss | $ | (16 | ) | $ | (29 | ) | General and administrative | |
Net settlement loss | (17 | ) | (17 | ) | General and administrative | |||
12 | 17 | Provision for income taxes | ||||||
Total reclassifications for the period | $ | (21 | ) | $ | (29 | ) | Net income |
Six Months Ended June 30, | |||||||
(In millions) | 2013 | 2012 | |||||
Net cash provided from operating activities: | |||||||
Interest paid (net of amounts capitalized) | $ | 160 | $ | 113 | |||
Income taxes paid to taxing authorities | 2,474 | 2,317 | |||||
Commercial paper, net: | |||||||
Commercial paper - issuances | $ | 2,075 | $ | 4,252 | |||
- repayments | (2,275 | ) | (3,702 | ) | |||
Noncash investing activities: | |||||||
Asset retirement costs capitalized | $ | 314 | $ | 34 | |||
Debt payments made by United States Steel | — | 14 | |||||
Change in capital expenditure accrual | (149 | ) | 159 | ||||
Asset retirement obligations assumed by buyer | 92 | 7 | |||||
Receivable for disposal of assets | 50 | — |
• | North America Exploration and Production ("E&P") – explores for, produces and markets liquid hydrocarbons and natural gas in North America; |
• | International E&P – explores for, produces and markets liquid hydrocarbons and natural gas outside of North America and produces and markets products manufactured from natural gas, such as LNG and methanol, in Equatorial Guinea; and |
• | Oil Sands Mining – mines, extracts and transports bitumen from oil sands deposits in Alberta, Canada, and upgrades the bitumen to produce and market synthetic crude oil and vacuum gas oil. |
• | Total net sales volumes averaged 506 thousand barrels of oil equivalent per day (“mboed”), a 12 percent increase over the same quarter of last year |
• | North America E&P net sales volumes increased 38 percent over the same quarter of last year |
• | Eagle Ford shale averaged net sales volumes of 80 mboed, a 286 percent increase |
• | Bakken shale averaged net sales volumes of 39 mboed, a 49 percent increase |
• | Turnaround in Equatorial Guinea started and safely completed in April, eight days ahead of schedule and below budget |
• | Successful appraisal well on non-operated Gunflint prospect in the Gulf of Mexico announced by operator |
• | Two Gulf of Mexico leases from Lease Sale 227 awarded to us |
• | Entered into agreement to sell our working interest in Angola Block 31 in a transaction valued at $1.5 billion before closing adjustments |
• | Concluded exploration activities in Poland |
• | Closed sale of interests in DJ Basin and recorded a $114 million loss on sale |
• | Increased dividend 12 percent to 19 cents per share |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
Benchmark | 2013 | 2012 | 2013 | 2012 | |||||||
West Texas Intermediate ("WTI") crude oil (Dollars per barrel) | $94.17 | $93.35 | $94.26 | $98.15 | |||||||
Brent (Europe) crude oil (Dollars per barrel) | $102.58 | $108.42 | $107.54 | $113.45 | |||||||
Henry Hub natural gas (Dollars per million British thermal units ("mmbtu"))(a) | $4.09 | $2.22 | $3.71 | $2.48 |
(a) | Settlement date average. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
Benchmark | 2013 | 2012 | 2013 | 2012 | |||||||||
WTI crude oil (Dollars per barrel) | $94.17 | $93.35 | $94.26 | $98.15 | |||||||||
WCS crude oil (Dollars per barrel)(a) | $75.06 | $70.63 | $68.74 | $76.07 | |||||||||
AECO natural gas sales index (Dollars per mmbtu)(b) | $3.45 | $1.84 | $3.31 | $2.04 |
(a) | Monthly pricing based upon average WTI adjusted for differentials unique to western Canada. |
(b) | Monthly average AECO day ahead index. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | ||||||||
Sales and other operating revenues, including related party: | ||||||||||||
North America E&P | $ | 1,284 | $ | 833 | $ | 2,499 | $ | 1,745 | ||||
International E&P | 1,732 | 1,813 | 3,619 | 3,476 | ||||||||
Oil Sands Mining | 353 | 329 | 741 | 698 | ||||||||
Segment sales and other operating revenues, including related party | $ | 3,369 | $ | 2,975 | $ | 6,859 | $ | 5,919 | ||||
Unrealized gain (loss) on crude oil derivative instruments | 50 | — | — | — | ||||||||
Total sales and other operating revenues, including related party | $ | 3,419 | $ | 2,975 | $ | 6,859 | $ | 5,919 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2013 | 2012 | 2013 | 2012 | |||||
North America E&P Operating Statistics | ||||||||
Net liquid hydrocarbon sales volumes (mbbld) (a) | 148 | 93 | 145 | 91 | ||||
Liquid hydrocarbon average realizations (per bbl) (b) (c) | $84.51 | $84.72 | $85.30 | $89.23 | ||||
Net crude oil and condensate sales volumes (mbbld) | 126 | 85 | 124 | 83 | ||||
Crude oil and condensate average realizations (per bbl) (b) | $93.75 | $89.04 | $94.20 | $93.25 | ||||
Net natural gas liquids sales volumes (mbbld) | 22 | 8 | 21 | 8 | ||||
Natural gas liquids average realizations (per bbl) (b) | $31.72 | $40.54 | $33.51 | $45.65 | ||||
Net natural gas sales volumes (mmcfd) | 316 | 319 | 328 | 331 | ||||
Natural gas average realizations (per mcf)(b) | $4.19 | $3.42 | $4.02 | $3.79 |
(a) | Includes crude oil, condensate and natural gas liquids. |
(b) | Excludes gains and losses on derivative instruments |
(c) | Inclusion of realized gains (losses) on crude oil derivative instruments would have increased average liquid hydrocarbon realizations by $1.22 per bbl and $0.45 per bbl for the second quarter and first six months of 2013. There were no realized gains (losses) on crude oil derivative instruments in the second quarter and first six months of 2012. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2013 | 2012 | 2013 | 2012 | |||||
International E&P Operating Statistics | ||||||||
Net liquid hydrocarbon sales volumes (mbbld)(a) | ||||||||
Europe | 93 | 99 | 96 | 98 | ||||
Africa | 84 | 78 | 82 | 65 | ||||
Total International E&P | 177 | 177 | 178 | 163 | ||||
Liquid hydrocarbon average realizations (per bbl)(b) | ||||||||
Europe | $106.41 | $111.12 | $111.43 | $117.37 | ||||
Africa | $92.92 | $96.84 | $94.96 | $95.87 | ||||
Total International E&P | $100.00 | $104.82 | $103.86 | $108.80 | ||||
Net natural gas sales volumes (mmcfd) | ||||||||
Europe(c) | 89 | 102 | 92 | 103 | ||||
Africa | 425 | 399 | 449 | 409 | ||||
Total International E&P | 514 | 501 | 541 | 512 | ||||
Natural gas average realizations (per mcf)(b) | ||||||||
Europe | $11.37 | $10.05 | $12.12 | $10.02 | ||||
Africa | $0.49 | $0.25 | $0.50 | $0.25 | ||||
Total International E&P | $2.37 | $2.25 | $2.47 | $2.22 |
(a) | Includes crude oil, condensate and natural gas liquids. The amounts correspond with the basis for fiscal settlements with governments, representing equity tanker liftings and direct deliveries of liquid hydrocarbons. |
(b) | Excludes gains and losses on derivative instruments. |
(c) | Includes natural gas acquired for injection and subsequent resale of 8 mmcfd and 17 mmcfd for the second quarters of 2013 and 2012, and 10 mmcfd and 15 mmcfd for the first six months of 2013 and 2012. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||
Oil Sands Mining Operating Statistics | |||||||||||
Net synthetic crude oil sales volumes (mbbld) (a) | 43 | 44 | 47 | 44 | |||||||
Synthetic crude oil average realizations (per bbl) | $89.39 | $79.31 | $84.31 | $85.07 |
(a) | Includes blendstocks. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | ||||||||
Unproved property impairments | $ | 40 | $ | 35 | $ | 423 | $ | 70 | ||||
Dry well costs | 50 | 81 | 71 | 104 | ||||||||
Geological and geophysical | 12 | 29 | 39 | 74 | ||||||||
Other | 31 | 27 | 65 | 59 | ||||||||
Total exploration expenses | $ | 133 | $ | 172 | $ | 598 | $ | 307 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
($ per boe) | 2013 | 2012 | 2013 | 2012 | ||||||||
DD&A rate | ||||||||||||
North America E&P | $27 | $22 | $27 | $23 | ||||||||
International E&P | $8 | $10 | $8 | $9 | ||||||||
Oil Sands Mining | $12 | $13 | $12 | $13 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
North America E&P | $ | 221 | $ | 70 | $ | 162 | $ | 174 | |||||||
International E&P | 382 | 373 | 835 | 780 | |||||||||||
Oil Sands Mining | 20 | 50 | 58 | 88 | |||||||||||
Segment income | 623 | 493 | 1,055 | 1,042 | |||||||||||
Items not allocated to segments, net of income taxes: | |||||||||||||||
Corporate and other unallocated items | (156 | ) | (77 | ) | (227 | ) | (148 | ) | |||||||
Unrealized gain (loss) on crude oil derivative instruments | 32 | — | — | — | |||||||||||
Net gain (loss) on dispositions | (73 | ) | (23 | ) | (9 | ) | 83 | ||||||||
Impairments | — | — | (10 | ) | (167 | ) | |||||||||
Net income | $ | 426 | $ | 393 | $ | 809 | $ | 810 |
June 30, | December 31, | ||||||
(In millions) | 2013 | 2012 | |||||
Commercial paper | $ | — | $ | 200 | |||
Long-term debt due within one year | 68 | 184 | |||||
Long-term debt | 6,428 | 6,512 | |||||
Total debt | $ | 6,496 | $ | 6,896 | |||
Cash | $ | 246 | $ | 684 | |||
Equity | $ | 19,021 | $ | 18,283 | |||
Calculation: | |||||||
Total debt | $ | 6,496 | $ | 6,896 | |||
Minus cash | 246 | 684 | |||||
Total debt minus cash | 6,250 | 6,212 | |||||
Total debt | 6,496 | 6,896 | |||||
Plus equity | 19,021 | 18,283 | |||||
Minus cash | 246 | 684 | |||||
Total debt plus equity minus cash | $ | 25,271 | $ | 24,495 | |||
Cash-adjusted debt-to-capital ratio | 25 | % | 25 | % |
Incremental Change in IFO from a Hypothetical Price Increase of | Incremental Change in IFO from a Hypothetical Price Decrease of | ||||||||||||||
10% | 25% | 10% | 25% | ||||||||||||
Crude oil | |||||||||||||||
Swaps | $ | (81 | ) | $ | (203 | ) | $ | 81 | $ | 203 | |||||
Option Collars | (30 | ) | (92 | ) | 34 | 109 | |||||||||
Total crude oil | $ | (111 | ) | $ | (295 | ) | $ | 115 | $ | 312 |
Incremental | |||||||
Change in | |||||||
(In millions) | Fair Value | Fair Value | |||||
Financial assets (liabilities): (a) | |||||||
Interest rate swap agreements | $ | 6 | (b) | $ | 3 | ||
Long-term debt, including amounts due within one year | $ | (6,991 | ) | (b) | $ | (241 | ) |
(a) | Fair values of cash and cash equivalents, receivables, accounts payable and accrued interest approximate carrying value and are relatively insensitive to changes in interest rates due to the short-term maturity of the instruments. Accordingly, these instruments are excluded from the table. |
(b) | Fair value was based on market prices where available, or current borrowing rates for financings with similar terms and maturities. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Segment Income | |||||||||||||||
North America E&P | $ | 221 | $ | 70 | $ | 162 | $ | 174 | |||||||
International E&P | 382 | 373 | 835 | 780 | |||||||||||
Oil Sands Mining | 20 | 50 | 58 | 88 | |||||||||||
Segment income | 623 | 493 | 1,055 | 1,042 | |||||||||||
Items not allocated to segments, net of income taxes | (197 | ) | (100 | ) | (246 | ) | (232 | ) | |||||||
Net income | $ | 426 | $ | 393 | $ | 809 | $ | 810 | |||||||
Capital Expenditures(a) | |||||||||||||||
North America E&P | $ | 904 | $ | 1,013 | $ | 1,874 | $ | 1,842 | |||||||
International E&P | 241 | 202 | 466 | 340 | |||||||||||
Oil Sands Mining | 97 | 43 | 142 | 95 | |||||||||||
Corporate | 15 | 19 | 45 | 63 | |||||||||||
Total | $ | 1,257 | $ | 1,277 | $ | 2,527 | $ | 2,340 | |||||||
Exploration Expenses | |||||||||||||||
North America E&P | $ | 76 | $ | 147 | $ | 511 | $ | 253 | |||||||
International E&P | 57 | 25 | 87 | 54 | |||||||||||
Total | $ | 133 | $ | 172 | $ | 598 | $ | 307 |
(a) | Capital expenditures include changes in accruals. |
Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
Net Sales Volumes | 2013 | 2012 | 2013 | 2012 | |||||||
North America E&P | |||||||||||
Crude Oil and Condensate (mbbld) | 126 | 85 | 124 | 83 | |||||||
Natural Gas Liquids (mbbld) | 22 | 8 | 21 | 8 | |||||||
Total Liquid Hydrocarbons | 148 | 93 | 145 | 91 | |||||||
Natural Gas (mmcfd) | 316 | 319 | 328 | 331 | |||||||
Total North America E&P (mboed) | 201 | 146 | 200 | 146 | |||||||
International E&P | |||||||||||
Liquid Hydrocarbons (mbbld) | |||||||||||
Europe | 93 | 99 | 96 | 98 | |||||||
Africa | 84 | 78 | 82 | 65 | |||||||
Total Liquid Hydrocarbons | 177 | 177 | 178 | 163 | |||||||
Natural Gas (mmcfd) | |||||||||||
Europe(b) | 89 | 102 | 92 | 103 | |||||||
Africa | 425 | 399 | 449 | 409 | |||||||
Total Natural Gas | 514 | 501 | 541 | 512 | |||||||
Total International E&P (mboed) | 262 | 261 | 268 | 249 | |||||||
Oil Sands Mining | |||||||||||
Synthetic Crude Oil (mbbld)(c) | 43 | 44 | 47 | 44 | |||||||
Total Company (mboed) | 506 | 451 | 515 | 439 | |||||||
Net Sales Volumes of Equity Method Investees | |||||||||||
LNG (mtd) | 5,820 | 5,467 | 6,301 | 5,879 | |||||||
Methanol (mtd) | 973 | 1,268 | 1,191 | 1,290 |
(b) | Includes natural gas acquired for injection and subsequent resale of 8 mmcfd and 17 mmcfd for the second quarters of 2013 and 2012, and 10 mmcfd and 15 mmcfd for the first six months of 2013 and 2012. |
(c) | Includes blendstocks. |
Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
Average Realizations(d) | 2013 | 2012 | 2013 | 2012 | |||||||
North America E&P | |||||||||||
Crude Oil and Condensate (per bbl) | $93.75 | $89.04 | $94.20 | $93.25 | |||||||
Natural Gas Liquids (per bbl) | $31.72 | $40.54 | $33.51 | $45.65 | |||||||
Total Liquid Hydrocarbons(e) | $84.51 | $84.72 | $85.30 | $89.23 | |||||||
Natural Gas (per mcf) | $4.19 | $3.42 | $4.02 | $3.79 | |||||||
International E&P | |||||||||||
Liquid Hydrocarbons (per bbl) | |||||||||||
Europe | $106.41 | $111.12 | $111.43 | $117.37 | |||||||
Africa | $92.92 | $96.84 | $94.96 | $95.87 | |||||||
Total Liquid Hydrocarbons | $100.00 | $104.82 | $103.86 | $108.80 | |||||||
Natural Gas (per mcf) | |||||||||||
Europe | $11.37 | $10.05 | $12.12 | $10.02 | |||||||
Africa(f) | $0.49 | $0.25 | $0.50 | $0.25 | |||||||
Total Natural Gas | $2.37 | $2.25 | $2.47 | $2.22 | |||||||
Oil Sands Mining | |||||||||||
Synthetic Crude Oil (per bbl) | $89.39 | $79.31 | $84.31 | $85.07 |
(d) | Excludes gains and losses on derivative instruments. |
(e) | Inclusion of realized gains (losses) on crude oil derivative instruments would have increased average liquid hydrocarbon realizations by $1.22 per bbl and $0.45 per bbl for the second quarter and first six months of 2013. There were no realized gains (losses) on crude oil derivative instruments in the same periods of 2012. |
(f) | Primarily represents fixed prices under long-term contracts with Alba Plant LLC, Atlantic Methanol Production Company LLC and Equatorial Guinea LNG Holdings Limited, which are equity method investees. We include our share of income from each of these equity method investees in our International E&P segment. |
Column (a) | Column (b) | Column (c) | Column (d) | ||||||
Total Number of | Average Price | Total Number of Shares Purchased as Part of Publicly Announced | Approximate Dollar Value of Shares that May Yet Be Purchased Under the | ||||||
Period | Shares Purchased (a)(b) | Paid per Share | Plans or Programs(c) | Plans or Programs(c) | |||||
04/01/13 - 04/30/13 | 12,135 | $33.64 | — | $1,780,609,536 | |||||
05/01/13 - 05/31/13 | 3,795 | $32.05 | — | $1,780,609,536 | |||||
06/01/13 - 06/30/13 | 36,664 | $34.84 | — | $1,780,609,536 | |||||
Total | 52,594 | $34.36 | — |
(a) | 27,051 shares of restricted stock were delivered by employees to Marathon Oil, upon vesting, to satisfy tax withholding requirements. |
(b) | In June 2013, 25,543 shares were repurchased in open-market transactions to satisfy the requirements for dividend reinvestment under the Marathon Oil Corporation Dividend Reinvestment and Direct Stock Purchase Plan (the “Dividend Reinvestment Plan”) by the administrator of the Dividend Reinvestment Plan. Shares needed to meet the requirements of the Dividend Reinvestment Plan are either purchased in the open market or issued directly by Marathon Oil. |
(c) | We announced a share repurchase program in January 2006, and amended it several times in 2007 for a total authorized program of $5 billion. As of June 30, 2013, 78 million split-adjusted common shares had been acquired at a cost of $3,222 million, which includes transaction fees and commissions that are not reported in the table above. Of this total, 66 million shares had been acquired at a cost of $2,922 million prior to the spin-off of the downstream business. |
Incorporated by Reference | ||||||||||||||
Exhibit Number | Exhibit Description | Form | Exhibit | Filing Date | SEC File No. | Filed Herewith | Furnished Herewith | |||||||
3.1 | Restated Certificate of Incorporation of Marathon Oil Corporation. | X | ||||||||||||
3.2 | Amended By-laws of Marathon Oil Corporation effective May 29, 2013. | X | ||||||||||||
3.3 | Amended By-Laws of Marathon Oil Corporation effective August 1, 2013. | X | ||||||||||||
10.1 | Marathon Oil Corporation 2011 Officer Change in Control Severance Benefits Plan (For Officers Hired or Promoted after October 26, 2011). | 10-Q | 10.4 | 5/4/2012 | 001-05153 | |||||||||
12.1 | Computation of Ratio of Earnings to Fixed Charges. | X | ||||||||||||
31.1 | Certification of President and Chief Executive Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934. | X | ||||||||||||
31.2 | Certification of Executive Vice President and Chief Financial Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934. | X | ||||||||||||
32.1 | Certification of President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350. | X | ||||||||||||
32.2 | Certification of Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350. | X | ||||||||||||
101.INS | XBRL Instance Document. | X | ||||||||||||
101.SCH | XBRL Taxonomy Extension Schema. | X | ||||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase. | X | ||||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase. | X | ||||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase. | X | ||||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase. | X |
August 8, 2013 | MARATHON OIL CORPORATION | |
By: | /s/ Michael K. Stewart | |
Michael K. Stewart | ||
Vice President, Finance and Accounting, Controller and Treasurer |
Incorporated by Reference | ||||||||||||||
Exhibit Number | Exhibit Description | Form | Exhibit | Filing Date | SEC File No. | Filed Herewith | Furnished Herewith | |||||||
3.1 | Restated Certificate of Incorporation of Marathon Oil Corporation. | X | ||||||||||||
3.2 | Amended By-laws of Marathon Oil Corporation effective May 29, 2013. | X | ||||||||||||
3.3 | Amended By-Laws of Marathon Oil Corporation effective August 1, 2013. | X | ||||||||||||
10.1 | Marathon Oil Corporation 2011 Officer Change in Control Severance Benefits Plan (For Officers Hired or Promoted after October 26, 2011). | 10-Q | 10.4 | 5/4/2012 | 001-05153 | |||||||||
12.1 | Computation of Ratio of Earnings to Fixed Charges. | X | ||||||||||||
31.1 | Certification of President and Chief Executive Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934. | X | ||||||||||||
31.2 | Certification of Executive Vice President and Chief Financial Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934. | X | ||||||||||||
32.1 | Certification of President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350. | X | ||||||||||||
32.2 | Certification of Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350. | X | ||||||||||||
101.INS | XBRL Instance Document. | X | ||||||||||||
101.SCH | XBRL Taxonomy Extension Schema. | X | ||||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase. | X | ||||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase. | X | ||||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase. | X | ||||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase. | X |
Six Months Ended | ||||||||||
(In millions) | June 30, | |||||||||
2013 | 2012 | |||||||||
Portion of rentals representing interest, | ||||||||||
including discontinued operations | $ | 13 | $ | 11 | ||||||
Capitalized interest, | ||||||||||
including discontinued operations | 12 | 37 | ||||||||
Other interest and fixed charges, | ||||||||||
including discontinued operations | 150 | 111 | ||||||||
Total fixed charges (A) | $ | 175 | $ | 159 | ||||||
Earnings-pretax income with | ||||||||||
applicable adjustments (B) | $ | 3,085 | $ | 2,920 | ||||||
Ratio of (B) to (A) | 17.63 | 18.36 |
1. | I have reviewed this report on Form 10-Q of Marathon Oil Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 8, 2013 | /s/ Lee M. Tillman | |
Lee M. Tillman | |||
President and Chief Executive Officer |
1. | I have reviewed this report on Form 10-Q of Marathon Oil Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 8, 2013 | /s/ Janet F. Clark | |
Janet F. Clark | |||
Executive Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
August 8, 2013 | |
/s/ Lee M. Tillman | |
Lee M. Tillman | |
President and Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
August 8, 2013 | |
/s/ Janet F. Clark | |
Janet F. Clark | |
Executive Vice President and Chief Financial Officer |
Asset Retirement Obligations Asset Retirement Obligations
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Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Asset Retirement Obligation Disclosure [Text Block] | Asset Retirement Obligations The following summarizes the changes in asset retirement obligations during the first six months of 2013:
(a) Includes asset retirement obligations of $40 million classified as a short-term at June 30, 2013. |
Income per Common Share
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Income Per Common Share Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income per Common Share [Text Block] | Income per Common Share Basic income per share is based on the weighted average number of common shares outstanding. Diluted income per share assumes exercise of stock options and stock appreciation rights, provided the effect is not antidilutive.
The per share calculations above exclude 6 million stock options and stock appreciation rights for the second quarter and first six months of 2013. Excluded for the second quarter and first six months of 2012 were 10 million and 9 million stock options and stock appreciation rights. |
Basis of Presentation (Policies)
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Jun. 30, 2013
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Accounting Policies [Abstract] | |
Basis of Accounting | These consolidated financial statements are unaudited; however, in the opinion of management, these statements reflect all adjustments necessary for a fair statement of the results for the periods reported. All such adjustments are of a normal recurring nature unless disclosed otherwise. These consolidated financial statements, including notes, have been prepared in accordance with the applicable rules of the Securities and Exchange Commission ("SEC") and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. |
Reclassification, Policy [Policy Text Block] | Beginning in the first quarter of 2013, we changed the presentation of our consolidated statements of income, primarily to present additional details of revenues and expenses and to classify certain expenses more consistently with our peer group of independent exploration and production companies. To effect these changes, reclassifications of previously reported amounts were made and are reflected in these consolidated financial statements. As a result of the reclassifications, general and administrative expenses for the second quarter and first six months of 2012 increased by $24 million and $63 million which primarily includes certain costs associated with operations support and operations management. Offsetting reductions are reflected in production, other operating and exploration expenses and taxes other than income. |
Fair Value Measurements
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements [Text Block] | Fair Value Measurements Fair Values - Recurring The following tables present assets and liabilities accounted for at fair value on a recurring basis as of June 30, 2013 and December 31, 2012 by fair value hierarchy level.
Commodity swaps in Level 2 are measured at fair value with a market approach using prices obtained from exchanges or pricing services, which have been corroborated with data from active markets for similar assets or liabilities. Commodity options in Level 2 are valued using the Black-Scholes Model. Inputs to this model include prices as noted above, discount factors, and implied market volatility. The inputs to this fair value measurement are categorized as Level 2 because predominantly all assumptions and inputs are observable in active markets throughout the term of the instruments. Collateral deposits related to commodity derivatives are in broker accounts covered by master netting agreements. Interest rate swaps are measured at fair value with a market approach using actionable broker quotes which are Level 2 inputs. Foreign currency forwards are measured at fair value with a market approach using third-party pricing services, such as Bloomberg L.P., which have been corroborated with data from active markets for similar assets or liabilities, and are Level 2 inputs. Fair Values - Nonrecurring The following table shows the values of assets, by major category, measured at fair value on a nonrecurring basis in periods subsequent to their initial recognition.
All long-lived assets held for use that were impaired in the first six months of 2013 and 2012 were held by our North America E&P segment. The fair values of each discussed below were measured using an income approach based upon internal estimates of future production levels, prices and discount rate, all of which are Level 3 inputs. Inputs to the fair value measurement included reserve and production estimates made by our reservoir engineers, estimated commodity prices adjusted for quality and location differentials, and forecasted operating expenses for the remaining estimated life of the reservoir. In the first quarter of 2013, as a result of our decision to wind down operations in the Powder River Basin due to poor economics, an impairment of $15 million was recorded. In early 2012, production rates from the Ozona development in the Gulf of Mexico declined significantly. Accordingly, our reserve engineers prepared evaluations of our future production as well as our reserves and an impairment of $261 million was recorded in the first quarter of 2012. As the development produced towards abandonment pressures, further downward revisions of reserves were taken, resulting in an additional impairment recorded in the fourth quarter of 2012. Ozona production ceased in the first quarter of 2013 and an additional $21 million impairment was recorded. Other impairments of long-lived assets held for use by our North America E&P segment in the first six months of 2013 and 2012 were a result of reduced drilling expectations, reductions of estimated reserves or declining natural gas prices. Fair Values – Financial Instruments Our current assets and liabilities include financial instruments, the most significant of which are receivables, commercial paper and payables. We believe the carrying values of our receivables, commercial paper and payables approximate fair value. Our fair value assessment incorporates a variety of considerations, including (1) the short-term duration of the instruments, (2) our investment-grade credit rating, and (3) our historical incurrence of and expected future insignificance of bad debt expense, which includes an evaluation of counterparty credit risk. The following table summarizes financial instruments, excluding receivables, commercial paper, payables and derivative financial instruments, and their reported fair value by individual balance sheet line item at June 30, 2013 and December 31, 2012.
(a) Excludes capital leases. Fair values of our financial assets included in other noncurrent assets, and of our financial liabilities included in other current liabilities and deferred credits and other liabilities are measured using an income approach and most inputs are internally generated, which results in a Level 3 classification. Estimated future cash flows are discounted using a rate deemed appropriate to obtain the fair value. Most of our long-term debt instruments are publicly-traded. A market approach, based upon quotes from major financial institutions, is used to measure the fair value of such debt. Because these quotes cannot be independently verified to an active market they are considered Level 3 inputs. The fair value of our debt that is not publicly-traded is measured using an income approach. The future debt service payments are discounted using the rate at which we currently expect to borrow. All inputs to this calculation are Level 3. |
Property, Plant and Equipment Property, Plant and Equipment (Details 3) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
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Total Deferred Exploratory Well Costs [Abstract] | |
Amounts capitalized greater than one year after completion of drilling | $ 220 |
Derivatives Derivatives (Details 5-Non Hedges) (Details) (Not Designated as Hedging Instrument [Member], Sales and other operating revenues [Member], Commodity [Member], USD $)
In Millions, unless otherwise specified |
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Derivative Instruments not Designated as Hedges Gain (Loss) by Hedging Relationship, by Income Statement Location, by Derivative Instrument Risk [Line Items] | ||||
Derivative Instruments, Gain (Loss) Recognized in Income, Net | $ 67 | $ (1) | $ 13 | $ 2 |
Variable Interest Entity (Details) (Variable Interest Entity, Not Primary Beneficiary [Member], USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
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Variable Interest Entity, Not Primary Beneficiary [Member]
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Variable Interest Entity [Line Items] | |
Recorded liability related to unconsolidated VIE | $ 3 |
Maximum exposure to loss related to unconsolidated VIE | $ 728 |
Segment Information (Tables)
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Segment Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] |
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Reconciliation of Revenue from Segments to Consolidated [Table Text Block] | The following reconciles total revenues to sales and other operating revenues as reported in the consolidated statements of income:
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Reconciliation of Segment Income to Net Income [Table Text Block] | The following reconciles segment income to net income as reported in the consolidated statements of income:
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Dispositions Dispositions (Tables)
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Jun. 30, 2013
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Dispositions Disclosure [Abstract] | |||||||||||||||||||||||||||||||||
Disclosure of Long Lived Assets Held-for-sale [Table Text Block] | Angola Block 31 is reflected as held for sale in the June 30, 2013 consolidated balance sheet as follows:
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Inventories (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Inventory Disclosure [Abstract] | ||
Liquid hydrocarbons natural gas and bitumen | $ 48 | $ 73 |
Supplies and other items | 320 | 288 |
Total inventories, at cost | $ 368 | $ 361 |
Incentive Based Compensation Plans (Tables)
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Jun. 30, 2013
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Incentive Based Compensation Plans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Table of Incentive based compensation activity [Table Text Block] | The following table presents a summary of stock option and restricted stock award activity for the first six months of 2013:
(a) The weighted average grant date fair value of stock option awards granted was $10.25 per share. |
Dispositions (Details) (USD $)
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6 Months Ended | 1 Months Ended | 1 Months Ended | |||||||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
DJ Basin [Member]
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Jan. 31, 2013
Alaska EP [Member]
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Feb. 28, 2013
Marcellus Shale [Member]
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Feb. 28, 2013
Neptune Gas Plant [Member]
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Jan. 31, 2012
GOM Pipelines [Member]
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May 31, 2012
Indonesia [Member]
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Jun. 30, 2013
Angola [Member]
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Jun. 15, 2013
Angola [Member]
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Dispositions Detail [Line Items] | ||||||||||
Pretax gain/loss on sale | $ (114,000,000) | $ 55,000,000 | $ (43,000,000) | $ 98,000,000 | $ 166,000,000 | $ (36,000,000) | ||||
Interest Percentage | 10.00% | |||||||||
Proceeds from Sale of Oil and Gas Property and Equipment | 333,000,000 | 218,000,000 | 19,000,000 | 195,000,000 | 166,000,000 | 206,000,000 | ||||
Proceeds from Sale of Oil and Gas Property and Equipment, Six Month Escrow | 50,000,000 | 0 | 50,000,000 | |||||||
Transaction Value, Disposition | $ 1,500,000,000 |
Asset Retirement Obligations Asset Retirement Obligations (Details) (USD $)
In Millions, unless otherwise specified |
6 Months Ended | |||
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Jun. 30, 2013
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Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||||
Asset Retirement Obligation Begining Balance | $ 1,783 | |||
Asset Retirement Obligation, Liabilities Incurred | 8 | |||
Asset Retirement Obligation, Liabilities Settled | (27) | |||
Asset Retirement Obligation, Accretion Expense | 48 | |||
Asset Retirement Obligation, Revision of Estimate | 306 | |||
Asset Retirement Obligation, Held for Sale | (39) | |||
Asset Retirement Obligation Ending Balance | 2,079 | [1] | ||
Asset Retirement Obligation, Current | $ 40 | |||
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Asset Retirement Obligations Asset Retirement Obligations (Tables)
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Jun. 30, 2013
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Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of Change in Asset Retirement Obligation [Table Text Block] | The following summarizes the changes in asset retirement obligations during the first six months of 2013:
(a) Includes asset retirement obligations of $40 million classified as a short-term at June 30, 2013. |
Commitments and Contingencies (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments to acquire property, plant and equipment | $ 1,122 |
Segment Information (Details 2) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Reconciliation Of Segment Revenues To Revenues As Presented On Income Statement [Abstract] | ||||
Marketing revenues | $ 499 | $ 757 | $ 929 | $ 1,606 |
Sales and other operating revenues, including related party | 3,419 | 2,975 | 6,859 | 5,919 |
Reconciliation from Segment Totals to Consolidated [Abstract] | ||||
Segment income | 623 | 493 | 1,055 | 1,042 |
Items not allocated to segments, net of income taxes: | ||||
Corporate and other unallocated items | (156) | (77) | (227) | (148) |
Unrealized Loss On Derivatives Net Of Tax | 32 | 0 | 0 | 0 |
Gain (loss) on dispositions, not allocated to segments | (73) | (23) | (9) | 83 |
Impairments, not allocated to segments | 0 | 0 | (10) | (167) |
Net income | $ 426 | $ 393 | $ 809 | $ 810 |
Income per Common Share (Tables)
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] |
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Accounting Standards
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6 Months Ended |
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Jun. 30, 2013
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Accounting Standards Disclosure [Abstract] | |
Accounting Standards [Text Block] | Accounting Standards Not Yet Adopted In June 2013, the Financial Accounting Standards Board ("FASB") ratified the Emerging Issues Task Force consensus on Issue 13-C, which requires that an unrecognized tax benefit or a portion of an unrecognized tax benefit be presented as a reduction to a deferred tax asset for an available net operating loss carryforward, a similar tax loss or tax credit carryforward. This accounting standards update is effective for us beginning in the first quarter of 2014 and should be applied prospectively to unrecognized tax benefits that exist as of the effective date. Early adoption and retrospective application are permitted. We do not expect this accounting standards update to have a significant impact on our consolidated results of operations, financial position or cash flows. In February 2013, an accounting standards update was issued to provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, except for obligations such as asset retirement and environmental obligations, contingencies, guarantees, income taxes and retirement benefits, which are separately addressed within United States generally accepted accounting principles ("U.S. GAAP"). An entity is required to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date as the sum of 1) the amount the entity agreed to pay on the basis of its arrangement among its co-obligors and 2) any amount the entity expects to pay on behalf of its co-obligors. Disclosure of the nature of the obligation, including how the liability arose, the relationship with other co-obligors and the terms and conditions of the arrangement is required. In addition, the total outstanding amount under the arrangement, not reduced by the effect of any amounts that may be recoverable from other entities, plus the carrying amount of any liability or receivable recognized must be disclosed. This accounting standards update is effective for us beginning in the first quarter of 2014 and should be applied retrospectively for those in-scope obligations resulting from joint and several liability arrangements that exist at the beginning of 2014. Early adoption is permitted. We do not expect this accounting standards update to have a significant impact on our consolidated results of operations, financial position or cash flows. Recently Adopted In February 2013, an accounting standards update was issued to improve the reporting of reclassifications out of accumulated other comprehensive income. This standard requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. This accounting standards update was effective for us beginning the first quarter of 2013 and we present the required disclosures in Note 15. Adoption of this standard did not have a significant impact on our consolidated results of operations, financial position or cash flows. In December 2011, an accounting standards update designed to enhance disclosures about offsetting assets and liabilities was issued. Further clarification limiting the scope of these disclosures to derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions was issued in January 2013. The disclosures are intended to enable financial statement users to evaluate the effect or potential effect of netting arrangements on an entity’s financial position. Entities are required to disclose both gross information and net information about in-scope financial instruments that are either offset in the statement of financial position or subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset. The accounting standards update was effective for us beginning the first quarter of 2013 and we include the required disclosures in Note 13. Adoption of this standard did not have a significant impact on our consolidated results of operations, financial position or cash flows. |
Dispositions
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Jun. 30, 2013
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Dispositions Disclosure [Abstract] | |||||||||||||||||||||||||||||||||
Dispositions [Text Block] | Dispositions 2013 - North America Exploration and Production ("E&P") Segment In June 2013, we closed the sale of our interests in the DJ Basin for proceeds of $19 million. A loss of $114 million was recorded in the second quarter of 2013. In February 2013, we conveyed our interests in the Marcellus natural gas shale play to the operator. A $43 million loss on this transaction was recorded in the first quarter of 2013. In February 2013, we closed the sale of our interest in the Neptune gas plant, located onshore Louisiana, for proceeds of $166 million. A $98 million gain was recorded in the first quarter of 2013. In January 2013, we closed the sale of our remaining assets in Alaska, for proceeds of $195 million, subject to a six-month escrow of $50 million which was collected in July 2013. After closing adjustments made in the second quarter of 2013, the gain on this sale was $55 million. 2013 - International E&P Segment In June 2013, we entered into an agreement to sell our non-operated 10 percent working interest in the Production Sharing Contract and Joint Operating Agreement in Block 31 offshore Angola. This transaction, valued at $1.5 billion before closing adjustments, is expected to close in the fourth quarter of 2013, subject to government, regulatory and third-party approvals. Angola Block 31 is reflected as held for sale in the June 30, 2013 consolidated balance sheet as follows:
2012 - North America E&P Segment In January 2012, we closed on the sale of our interests in several Gulf of Mexico crude oil pipeline systems for proceeds of $206 million. This included our equity method interests in Poseidon Oil Pipeline Company, L.L.C. and Odyssey Pipeline L.L.C., as well as certain other oil pipeline interests, including the Eugene Island pipeline system. A gain of $166 million was recorded in the first quarter of 2012. 2012 - International E&P Segment In May 2012, we reached an agreement to relinquish our operatorship of and interests in the Bone Bay and Kumawa exploration licenses in Indonesia. A $36 million payment to settle all of our obligations related to these licenses, including well commitments, was accrued and reported as a loss on disposal of assets in the second quarter of 2012. |
Variable Interest Entity
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6 Months Ended |
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Jun. 30, 2013
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Variable Interest Entities Disclosure [Abstract] | |
Variable Interest Entity [Text Block] | Variable Interest Entity The owners of the Athabasca Oil Sands Project (“AOSP”), in which we hold a 20 percent undivided interest, contracted with a wholly-owned subsidiary of a publicly traded Canadian limited partnership (“Corridor Pipeline”) to provide materials transportation capabilities among the Muskeg River and Jackpine mines, the Scotford upgrader and markets in Edmonton. The contract, originally signed in 1999 by a company we acquired, allows each holder of an undivided interest in the AOSP to ship materials in accordance with its undivided interest. Costs under this contract are accrued and recorded on a monthly basis, with current liabilities of $3 million recorded at June 30, 2013, consistent with December 31, 2012. Under this agreement, the AOSP absorbs all of the operating and capital costs of the pipeline. Currently, no third-party shippers use the pipeline. Should shipments be suspended, by choice or due to force majeure, we remain responsible for the portion of the payments related to our undivided interest for all remaining periods. The contract expires in 2029; however, the shippers can extend its term perpetually. This contract qualifies as a variable interest contractual arrangement and the Corridor Pipeline qualifies as a variable interest entity (“VIE”). We hold a variable interest but are not the primary beneficiary because our shipments are only 20 percent of the total; therefore the Corridor Pipeline is not consolidated by us. Our maximum exposure to loss as a result of our involvement with this VIE is the amount we expect to pay over the contract term, which was $728 million as of June 30, 2013. The liability on our books related to this contract at any given time will reflect amounts due for the immediately previous month’s activity, which is substantially less than the maximum exposure over the contract term. We have not provided financial assistance to Corridor Pipeline and we do not have any guarantees of such assistance in the future. |
Dispositions Dispositions 2 (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
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Long Lived Assets Held-for-sale [Line Items] | |
Assets Held-for-sale, at Carrying Value | $ 1,550 |
Liabilities of Disposal Group, Including Discontinued Operation, Current | 58 |
Liabilities of Disposal Group, Including Discontinued Operation, Noncurrent | 39 |
Liabilities of Disposal Group, Including Discontinued Operation | 97 |
Angola [Member]
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Long Lived Assets Held-for-sale [Line Items] | |
Disposal Group, Including Discontinued Operation, Other Noncurrent Assets | $ 1,550 |
Defined Benefit Postretirement Plans (Tables)
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Defined Benefit Postretirement Plans Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Defined Benefit Plans Disclosures [Table Text Block] | The following summarizes the components of net periodic benefit cost:
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Fair Value Measurements Fair Value Measurements (Tables)
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | The following tables present assets and liabilities accounted for at fair value on a recurring basis as of June 30, 2013 and December 31, 2012 by fair value hierarchy level.
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Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Table Text Block] | The following table shows the values of assets, by major category, measured at fair value on a nonrecurring basis in periods subsequent to their initial recognition.
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Fair Value, by Balance Sheet Grouping [Table Text Block] | The following table summarizes financial instruments, excluding receivables, commercial paper, payables and derivative financial instruments, and their reported fair value by individual balance sheet line item at June 30, 2013 and December 31, 2012.
(a) Excludes capital leases. |
Basis of Presentation Reclassifications (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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General and administrative | $ 164 | $ 154 | $ 338 | $ 313 |
Reclassifications [Member]
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General and administrative | $ 24 | $ 63 |
Derivatives (Details 3-IS & OCI) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Net interest and other [Member] | Interest rate [Member]
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Gain (Loss) on Derivative Instruments [Line Items] | ||||
Gain (loss) on derivative instruments recognized in income | $ (12) | $ 12 | $ (15) | $ 12 |
Net interest and other [Member] | Long-term Debt [Member]
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Gain (Loss) on Derivative Instruments [Line Items] | ||||
Change in unrealized gain (loss) on hedged item in fair value hedge | 12 | (12) | 15 | (12) |
Provision For Income Taxes [Member] | Foreign Exchange Contract [Member]
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Gain (Loss) on Derivative Instruments [Line Items] | ||||
Gain (loss) on derivative instruments recognized in income | (21) | (32) | (46) | (40) |
Provision For Income Taxes [Member] | Accrued Taxes [Member]
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Gain (Loss) on Derivative Instruments [Line Items] | ||||
Change in unrealized gain (loss) on hedged item in fair value hedge | $ 21 | $ 32 | $ 46 | $ 40 |