February 3, 2009 / 1:42 PM / 9 years ago

UPDATE 3-Marathon posts loss; 2009 spending to fall 24 pct

* Abandons plans to split company in two

* Q4 profit excluding items beats Street view

* Shares fractionally lower (Adds byline, analyst comment, updates share price)

By Anna Driver

HOUSTON, Feb 3 (Reuters) - Marathon Oil Corp (MRO.N) reported a fourth-quarter loss and said it would slash spending by 24 percent this year as it cuts refinery expenditures and delays development of some Canadian oil sands projects.

Excluding one-time items, such as a charge of $1.4 billion to write down the value of its oil sands business, quarterly profit topped Wall Street expectations, boosted by refinery operations.

Many energy companies, hit hard by a steep declines in oil and gas prices and slumping global demand, have cut back on exploration and production spending and delayed or canceled expensive projects.

Crude oil peaked near $150 per barrel last July and is now trading at around $40 per barrel.

Citing market volatility, Marathon also said on Tuesday that it has abandoned plans to split its refining and exploration businesses into separate companies. Some analysts had said a split would unlock value in the exploration business.

Deutsche Bank analyst Paul Sankey expressed disappointment with the company’s decision not to split.

“We were supporters based on our belief that the released upstream segment would trade as a takeover candidate; that the earnings power of the downstream would make it the leading U.S. independent refiner,” the analyst said in a note to clients.

Marathon said it plans capital, investment and exploration spending of $5.7 billion this year, down from $7.6 billion in 2008.

The Houston-based company said it would spend $2.5 billion on exploration and production in 2009, including $887 million for its oil sands developments in Canada.

It said it would spend $1.1 billion to fund drilling in the Bakken Shale and Piceance Basin in the United States to grow production in the short term.

Spending on refinery operations and projects will drop to $1.9 billion from $2.9 billion in 2008 as the company defers the start-up of a heavy oil upgrading project at its Detroit refinery.

Marathon said its total oil and gas available for sale in 2009 is projected at 390,000 to 410,000 barrels of oil equivalent per day, up 5 percent to 10 percent from 2008.

The fourth-quarter net loss was $41 million, or 6 cents share, compared with net income of $668 million, or 94 cents per share, a year earlier.

Excluding one-time items, Marathon had a profit of $1.44 per share, compared with 70 cents a year earlier. On that basis, analysts on average had expected 84 cents a share, according to Reuters Estimates.

Oil and gas production averaged 417,000 barrels of oil equivalent per day for the quarter, up 18 percent.

Marathon shares were down 7 cents at $26.81 in midday trading on the New York Stock Exchange. (Additional reporting by Matt Daily in New York, editing by Dave Zimmerman and John Wallace)

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