MARATHON OIL CORP - FORM 8-K - EX-99.1 - EXHIBIT 99-1 PROFORMA FINANCIAL STATEMENTS - October 20, 2014

Attached files

file filename
EX-99.2 - EXHIBIT 99-2 PRESS RELEASE - MARATHON OIL CORPexhibit99-2form8k2014octno.htm
8-K - 8-K - MARATHON OIL CORPmro-form8k2014octnorwaypro.htm


Exhibit 99.1
MARATHON OIL CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
 
On October 15, 2014, Marathon Oil Corporation (“Marathon”) completed the sale to Det norske oljeselskap ASA of our subsidiary, Marathon Oil Norge AS ("MONAS"), for proceeds of approximately $2.1 billion, after adjustment for debt, net working capital and interest on the net purchase price. The effective date of the transaction is January 1, 2014. The sale includes the operated Alvheim floating production, storage and offloading vessel, 10 operated licenses and a number of non-operated licenses on the Norwegian Continental Shelf in the North Sea. Full-year 2013 net production in Norway averaged approximately 80,000 barrels of oil equivalent per day.
Marathon's Form 10-Q for the quarterly period ended June 30, 2014, reflected our Norway business as discontinued operations in the consolidated statements of income for all periods and presented our Norway assets and liabilities as held for sale in the June 30, 2014 consolidated balance sheet.
The unaudited pro forma consolidated financial data of Marathon was derived from our historical consolidated financial statements. The unaudited pro forma consolidated balance sheet assumes the disposition of MONAS occurred on June 30, 2014. The unaudited pro forma consolidated statements of income give effect to the disposition of MONAS as if the disposition occurred on January 1, 2011. The following unaudited pro forma consolidated financial information should be read in conjunction with our historical financial statements and accompanying notes.
The pro forma adjustments are based on the best information available and assumptions that management believes are factually supportable and reasonable; however, such adjustments are subject to change. In addition, such adjustments are estimates. The unaudited pro forma consolidated information is for illustrative and informational purposes only and is not intended to reflect what our consolidated financial position and results of operations would have been had the disposition occurred on the dates indicated and is not necessarily indicative of our future consolidated financial position and results of operations.
The pro forma adjustments remove all of MONAS’ assets, liabilities and results of operations, and give effect to the following items:
•
An adjustment to interest expense associated with amounts capitalized to Norway long-term capital projects;
•
An adjustment to reflect the net cash proceeds and gain from the sale of MONAS;
•
An adjustment to remove the U.S. deferred tax asset associated with Norway operations upon the disposition of MONAS;
•
An adjustment to reflect accrued liabilities for estimated professional fees and closing costs related to the sale of MONAS;
•
An adjustment to remove the losses in accumulated other comprehensive income related to Norway.
 Our unaudited pro forma consolidated statements of income do not include adjustments for all of the costs of operating after the disposition of MONAS, since they are not factually supportable and recurring.





MARATHON OIL CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF INCOME (Unaudited)
For the Year ended December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
Pro Forma
 
 
(In millions, except per share data)
Historical
 
Disposition
 
Adjustments
 
Pro Forma
Revenues and other income:
 
 
 
 
 
 
 
   Sales and other operating revenues, including related party
$
12,419

 
$
(3,172
)
 
$
—

 
$
9,247

   Marketing revenues
2,082

 
(4
)
 
—

 
2,078

   Income from equity method investments
423

 
—

 
—

 
423

   Net loss on disposal of assets
(29
)
 
—

 
—

 
(29
)
   Other income
64

 
—

 
—

 
64

             Total revenues and other income
14,959

 
(3,176
)
 
—

 
11,783

Costs and expenses:
 

 
 

 
 

 
 

   Production
2,331

 
(174
)
 
—

 
2,157

   Marketing, including purchases from related parties
2,072

 
3

 
—

 
2,075

   Other operating
439

 
(51
)
 
—

 
388

   Exploration
988

 
(97
)
 
—

 
891

   Depreciation, depletion and amortization
2,790

 
(289
)
 
—

 
2,501

   Impairments
96

 
—

 
—

 
96

   Taxes other than income
352

 
(7
)
 
—

 
345

   General and administrative
687

 
(28
)
 
 
 
659

            Total costs and expenses
9,755

 
(643
)
 
—

 
9,112

 
 

 
 

 
 

 
 

Income from operations
5,204

 
(2,533
)
 
—

 
2,671

   Net interest and other
(274
)
 
(4
)
 
(9
)
(a)
(287
)
Income from continuing operations before income taxes
4,930

 
(2,537
)
 
(9
)
 
2,384

   Provision for income taxes
3,337

 
(1,875
)
 
(3
)
(b)
1,459

Income from continuing operations
$
1,593

 
$
(662
)
 
$
(6
)
 
$
925

 
 

 
 

 
 

 
 

Per Share Data
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Income from continuing operations
 

 
 

 
 

 
 

         Basic
$
2.26

 
 

 
 

 
$
1.31

         Diluted
$
2.24

 
 

 
 

 
$
1.30

 
 
 
 
 
 
 
 
Shares outstanding
 
 
 
 
 
 
 
         Basic
705

 
 

 
 

 
705

         Diluted
709

 
 

 
 

 
709

See accompanying notes to the unaudited pro forma consolidated financial statements.
 
 

 
 






MARATHON OIL CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF INCOME (Unaudited)
For the Year ended December 31, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
Pro Forma
 
 
(In millions, except per share data)
Historical
 
Disposition
 
Adjustments
 
Pro Forma
Revenues and other income:
 
 
 
 
 
 
 
   Sales and other operating revenues, including related party
$
12,963

 
$
(3,726
)
 
$
—

 
$
9,237

   Marketing revenues
2,729

 
—

 
—

 
2,729

   Income from equity method investments
370

 
—

 
—

 
370

   Net gain on disposal of assets
127

 
—

 
—

 
127

   Other income
32

 
(9
)
 
—

 
23

             Total revenues and other income
16,221

 
(3,735
)
 
—

 
12,486

Costs and expenses:
 

 
 

 
 

 
 

   Production
2,202

 
(123
)
 
—

 
2,079

   Marketing, including purchases from related parties
2,744

 
(10
)
 
—

 
2,734

   Other operating
425

 
(61
)
 
—

 
364

   Exploration
706

 
(21
)
 
—

 
685

   Depreciation, depletion and amortization
2,477

 
(468
)
 
—

 
2,009

   Impairments
371

 
—

 
—

 
371

   Taxes other than income
248

 
(5
)
 
—

 
243

   General and administrative
699

 
(24
)
 
 
 
675

            Total costs and expenses
9,872

 
(712
)
 
—

 
9,160

 
 

 
 

 
 

 
 

Income from operations
6,349

 
(3,023
)
 
—

 
3,326

   Net interest and other
(219
)
 
(3
)
 
(3
)
(a)
(225
)
Income from continuing operations before income taxes
6,130

 
(3,026
)
 
(3
)
 
3,101

   Provision for income taxes
4,517

 
(2,269
)
 
(1
)
(b)
2,247

Income from continuing operations
$
1,613

 
$
(757
)
 
$
(2
)
 
$
854

 
 

 
 

 
 

 
 

Per Share Data
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Income from continuing operations
 

 
 

 
 

 
 

         Basic
$
2.28

 
 

 
 

 
$
1.21

         Diluted
$
2.27

 
 

 
 
 
$
1.20

 
 

 
 

 
 

 
 

Shares outstanding
 
 
 
 
 
 
 
         Basic
706

 
 

 
 

 
706

         Diluted
710

 
 

 
 

 
710

See accompanying notes to the unaudited pro forma consolidated financial statements.
 
 

 
 







MARATHON OIL CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF INCOME (Unaudited)
For the Year ended December 31, 2011
 
 
 
 
 
 
 
 
 
 
 
 
 
Pro Forma
 
 
(In millions, except per share data)
Historical
 
Disposition
 
Adjustments
 
Pro Forma
Revenues and other income:
 
 
 
 
 
 
 
   Sales and other operating revenues, including related party
$
10,750

 
$
(3,576
)
 
$
—

 
$
7,174

   Marketing revenues
3,919

 
—

 
—

 
3,919

   Income from equity method investments
462

 
—

 
—

 
462

   Net gain on disposal of assets
103

 
(3
)
 
—

 
100

   Other income
48

 
(10
)
 
—

 
38

             Total revenues and other income
15,282

 
(3,589
)
 
—

 
11,693

Costs and expenses:
 

 
 

 
 

 
 

   Production
1,951

 
(117
)
 
—

 
1,834

   Marketing, including purchases from related parties
3,898

 
—

 
—

 
3,898

   Other operating
533

 
(67
)
 
—

 
466

   Exploration
641

 
(76
)
 
—

 
565

   Depreciation, depletion and amortization
2,263

 
(502
)
 
—

 
1,761

   Impairments
310

 
—

 
—

 
310

   Taxes other than income
193

 
(5
)
 
—

 
188

   General and administrative
663

 
(21
)
 
 
 
642

            Total costs and expenses
10,452

 
(788
)
 
—

 
9,664

 
 

 
 

 
 

 
 

Income from operations
4,830

 
(2,801
)
 
—

 
2,029

   Net interest and other
(386
)
 
(28
)
 
(2
)
(a)
(416
)
Income from continuing operations before income taxes
4,444

 
(2,829
)
 
(2
)
 
1,613

   Provision for income taxes
2,726

 
(1,578
)
 
(1
)
(b)
1,147

Income from continuing operations
$
1,718

 
$
(1,251
)
 
$
(1
)
 
$
466

 
 

 
 

 
 

 
 

Per Share Data
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Income from continuing operations
 

 
 

 
 

 
 

         Basic
$
2.42

 
 
 
 
 
$
0.66

         Diluted
$
2.41

 
 
 
 
 
$
0.65

 
 
 
 
 
 
 
 
Shares outstanding
 
 
 
 
 
 
 
         Basic
710

 
 

 
 

 
710

         Diluted
714

 
 

 
 

 
714

See accompanying notes to the unaudited pro forma consolidated financial statements.
 
 

 
 







MARATHON OIL CORPORATION

PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
As of June 30, 2014
 
 
 
 
 
 
(In millions, except per share data)
Historical
 
Disposition
 
Pro Forma
Assets
 
 
 
 
 
Current Assets:
 
 
 
 
 
     Cash and cash equivalents
$
1,169

 
$
2,079

(c)
$
3,248

     Receivables
2,042

 
—

 
2,042

     Inventories
404

 
—

 
404

     Other current assets
211

 
—

 
211

     Current assets held for sale
392

 
(392
)
(d)
—

          Total current assets
4,218

 
1,687

 
5,905

Equity method investments
1,184

 
—

 
1,184

Property, plant and equipment less accumulated depreciation, depletion and amortization of $20,207
27,824

 
—

 
27,824

Goodwill
457

 
—

 
457

Other noncurrent assets
1,088

 
(462
)
(e)
626

Noncurrent assets held for sale
1,164

 
(1,164
)
(d)
—

          Total assets
$
35,935

 
$
61

 
$
35,996

Liabilities
 

 
 
 
 

Current Liabilities:
 

 
 
 
 

     Accounts payable
$
2,439

 
$
—

 
$
2,439

     Accrued taxes
193

 
—

 
193

     Other current liabilities
268

 
7

(f)
275

     Long-term debt due within one year
68

 
—

 
68

     Current liabilities held for sale
1,006

 
(1,006
)
(d)
—

          Total current liabilities
3,974

 
(999
)
 
2,975

Long-term debt
6,362

 
—

 
6,362

Deferred tax liabilities
2,525

 
—

 
2,525

Defined benefit postretirement plan obligations
668

 
—

 
668

Asset retirement obligations
1,804

 
—

 
1,804

Deferred credits and other liabilities
392

 
—

 
392

Noncurrent liabilities held for sale
342

 
(342
)
(d)
—

          Total liabilities
16,067

 
(1,341
)
 
14,726

Commitments and contingencies
 

 
 
 
 

Stockholders' Equity
 

 
 
 
 

Preferred Stock - no shares issued and outstanding (no par value, 26 million shares authorized)
—

 
—

 
—

Common stock:
 
 
 
 
—

Issued - 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 - 97 million shares
(3,718
)
 
—

 
(3,718
)
Additional paid-in-capital
6,530

 
—

 
6,530

Retained earnings
16,564

 
1,386

(g)
17,950

Accumulated other comprehensive loss
(278
)
 
16

(h)
(262
)
          Total stockholders' equity
19,868

 
1,402

 
21,270

          Total liabilities and stockholders' equity
$
35,935

 
$
61

 
$
35,996

 
 

 
 
 
 

See accompanying notes to the unaudited pro forma consolidated financial statements.






MARATHON OIL CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 
(a)  
Represents the adjustment to interest expense for amounts capitalized to Norway long-term capital projects.
(b)  
Represents the tax effect of the pro forma adjustment to income using a statutory rate of 36% for all periods.
 
(c)  
Represents net cash proceeds from the sale of MONAS.
 
(d)
Represents the removal of the assets and liabilities held for sale from the balance sheet.
(e)
Represents the removal of the U.S. deferred tax asset associated with Norway operations upon the sale of MONAS.
(f)
Represents accrued liabilities for estimated professional fees and closing costs related to the sale of MONAS.
(g)
Represents the gain on sale that would have been recorded as of June 30, 2014. We will utilize foreign tax credits and therefore not pay cash taxes on the gain from the sale of MONAS.
(h)
Represents an adjustment to the loss on foreign currency cash flow hedges on the Norwegian Kroner and the actuarial loss on a pension plan for our Norway employees.



Stock widget

Investing forum

MARATHON OIL CORP Reports