Marathon: Let's stay together

That whole idea of Marathon Oil splitting its refining and marketing business into a separate company? Never mind.
Today Clarence Cazalot, Marathon’s president and CEO, nixed the idea first floated last July when triple-digit oil prices had hammered refining margins for months. The sharp fall in crude prices since October has reversed refining’s fortunes, at least at the Houston-based oil company.


Analysts said Marathon’s refining-heavy asset base had dimmed the company’s ability to fully capture earnings potential from those high crude prices. When prices are high, refining margins — or the difference between what companies pay for crude and the selling price of products made with it, such as gasoline — are compressed.
By December, when Marathon said it would announce a decision either way, Cazalot postponed the final word because prices had plummeted and market deterioration and uncertainty warranted further study.
But he indicated in December that Marathon was leaning toward a split when he said its review “thus far indicates that a separation of the businesses may enhance shareholder value.”
Today, in Marathon’s release of fourth-quarter and year-end 2008 results, Cazalot said the company “concluded it is in the best interests of our shareholders to remain a fully integrated energy company” given the unprecedented financial and commodity market uncertainty.
Plus, Marathon’s refining results improved with the fall in oil prices. That segment earned $325 million in the fourth quarter, a dramatic leap from $4 million in the fourth quarter of 2007.