Marathon Oil (MRO)

Moving to Slide 10, domestic upstream income per barrel of oil equivalent increased 10% over the second quarter, reflecting the 18% increase in the average liquids and natural gas realizations, partially offset by the previously discussed increase in the average cost per barrel equivalent.

Moving to international upstream, as shown on Slide No. 11, international income of $230 million was sharply lower than the second quarter, mainly as a result of the timing of international liquids in the United Kingdom, Equatorial Guinea, and Gabon. Slide 12 shows that the underlift in international hydrocarbon sales reduced international upstream income by over $200 million, but this was somewhat offset by lower DD&A of $42 million, again related to those liftings. Higher price realizations increased segment income $20 million, while exploration expense was $34 million higher in the second quarter, primarily a result of writing off the Annapolis well offshore Nova Scotia. All other changes amounted to a positive $31 million for the quarter, mainly a result of lower controllable costs, due to the timing of liftings.

Moving to Slide No. 13, total international upstream sales volumes decreased 32% compared to the second quarter, while liquid hydrocarbon sales volumes decreased 36%, again, primarily a result of our underlift positions. Lower natural gas sales volumes were the result of lower spot gas sales in the United Kingdom and higher injections to storage in Ireland. International upstream expenses excluding — excluding exploration expense increased approximately 10% on a barrel of oil equivalent basis compared to the second quarter, primarily the result of higher Russian production taxes, and increased expenses associated with a start-up of our Equatorial Guinea LPG plant and lower volumes and a change in production mix due to our underlift position.