EX-99.1
2
exhibit99-1proformaform8xk.htm
EXHIBIT 99.1
Exhibit
Exhibit 99.1
MARATHON OIL CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On July 1, 2019, Marathon Oil Corporation ("Marathon") completed the sale of its U.K. business to RockRose Energy PLC for proceeds of approximately $95 million, which reflects the assumption by the buyer of the U.K. business' working capital and cash equivalent balances of approximately $345 million on December 31, 2018. The effective date of the transaction is January 1, 2019.
The unaudited pro forma consolidated financial data was derived from Marathon's historical consolidated financial statements. The unaudited pro forma consolidated balance sheet assumes the disposition of the U.K. business occurred on March 31, 2019. The unaudited pro forma consolidated statements of income give effect to the disposition of the U.K. business as if the disposition occurred on January 1, 2018. The following unaudited pro forma consolidated financial information should be read in conjunction with the Company's historical financial statements and 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 estimates and subject to change. The unaudited pro forma consolidated information is not intended to reflect what Marathon's 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 the assets, liabilities and results of operations of the U.K. business, and give effect to various adjustments including cash proceeds and gain from the sale of the U.K. business.
MARATHON OIL CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF INCOME (Unaudited)
For the Three Months Ended March 31, 2019
(In millions, except per share data)
Historical
Pro Forma Adjustments
Pro Forma
Revenues and other income:
Revenues from contracts with customers
$
1,200
$
(73
)
(a)
$
1,127
Net loss on commodity derivatives
(91
)
-
(91
)
Income from equity method investments
11
-
11
Net gain (loss) on disposal of assets
42
-
42
Other income
35
11
(b)
46
Total revenues and other income
1,197
(62
)
1,135
Costs and expenses:
Production
187
(28
)
(a)
159
Shipping, handling and other operating
154
(11
)
(a)
143
Exploration
59
-
59
Depreciation, depletion and amortization
554
(14
)
(a)
540
Impairments
6
-
6
Taxes other than income
72
-
72
General and administrative
94
(1
)
(a)(c)
93
Total costs and expenses
1,126
(54
)
1,072
Income (loss) from operations
71
(8
)
63
Net interest and other
(49
)
-
(49
)
Other net periodic benefit costs
5
(2
)
(d)
3
Income (loss) before income taxes
27
(10
)
17
Provision (benefit) for income taxes
(147
)
20
(a)(e)
(127
)
Net income (loss)
$
174
$
(30
)
$
144
Net income (loss) per share:
Basic
$
0.21
$
0.18
Diluted
$
0.21
$
0.18
Weighted average common shares outstanding:
Basic
819
819
Diluted
820
820
MARATHON OIL CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF INCOME (Unaudited)
For the Year Ended December 31, 2018
(In millions, except per share data)
Historical
Pro Forma Adjustments
Pro Forma
Revenues and other income:
Revenues from contracts with customers
$
5,902
$
(360
)
(a)
$
5,542
Net loss on commodity derivatives
(14
)
-
(14
)
Income from equity method investments
225
-
225
Net gain (loss) on disposal of assets
319
-
319
Other income
150
(122
)
(a)(b)
28
Total revenues and other income
6,582
(482
)
6,100
Costs and expenses:
Production
842
(122
)
(a)
720
Shipping, handling and other operating
575
(46
)
(a)
529
Exploration
289
-
289
Depreciation, depletion and amortization
2,441
(70
)
(a)
2,371
Impairments
75
-
75
Taxes other than income
299
-
299
General and administrative
394
(3
)
(a)(c)
391
Total costs and expenses
4,915
(241
)
4,674
Income (loss) from operations
1,667
(241
)
1,426
Net interest and other
(226
)
-
(226
)
Other net periodic benefit costs
(14
)
(6
)
(d)
(20
)
Income (loss) before income taxes
1,427
(247
)
1,180
Provision (benefit) for income taxes
331
(142
)
(a)
189
Net income (loss)
$
1,096
$
(105
)
$
991
Net income (loss) per share:
Basic
$
1.30
$
1.17
Diluted
$
1.29
$
1.17
Weighted average common shares outstanding:
Basic
846
846
Diluted
847
847
See accompanying notes to the unaudited pro forma consolidated financial statements.
MARATHON OIL CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
As of March 31, 2019
(In millions, except par value and share amounts)
Historical
Pro Forma Adjustments
Pro Forma
Assets
Current assets:
Cash and cash equivalents
$
1,019
$
94
(f)
$
1,113
Receivables, less reserve of $12
1,086
-
1,086
Inventories
83
-
83
Other current assets
160
-
160
Current assets held for sale
428
(409
)
(g)
19
Total current assets
2,776
(315
)
2,461
Equity method investments
719
-
719
Property, plant and equipment less accumulated depreciation, depletion and amortization of $17,669
16,714
-
16,714
Goodwill
97
-
97
Other noncurrent assets
440
-
440
Noncurrent assets held for sale
664
(636
)
(g)
28
Total assets
$
21,410
$
(951
)
$
20,459
Liabilities
Current liabilities:
Accounts payable
$
1,310
$
6
(h)
$
1,316
Payroll and benefits payable
76
-
76
Accrued taxes
149
-
149
Other current liabilities
220
6
(i)
226
Current liabilities held for sale
103
(101
)
(g)
2
Total current liabilities
1,858
(89
)
1,769
Long-term debt
5,501
-
5,501
Deferred tax liabilities
192
-
192
Defined benefit postretirement plan obligations
179
-
179
Asset retirement obligations
192
-
192
Deferred credits and other liabilities
317
-
317
Noncurrent liabilities held for sale
963
(953
)
(g)
10
Total liabilities
9,202
(1,042
)
8,160
Commitments and contingencies
Stockholders' Equity
Preferred stock - no shares issued or outstanding (no par value, 26 million shares authorized)
$
-
$
-
$
-
Common stock:
Issued - 937 million shares (par value $1 per share, 1.925 billion shares authorized)
937
-
937
Held in treasury, at cost - 117 million shares
(3,745
)
-
(3,745
)
Additional paid-in-capital
7,149
-
7,149
Retained earnings
7,808
51
(j)
7,859
Accumulated other comprehensive income
59
40
(k)
99
Total stockholders' equity
12,208
91
12,299
Total liabilities and stockholders' equity
$
21,410
$
(951
)
$
20,459
See accompanying notes to the unaudited pro forma consolidated financial statements.
MARATHON OIL CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(a)
Amounts reflect the pro forma effect of eliminating the results of operations of the U.K. business.
(b)
Represents adjustment as a result of the reduction of our U.K. asset retirement obligations.
(c)
Represents general and administrative costs related to the U.K. business removing the impact of corporate allocation costs.
(d)
Represents pension related costs for our U.K. employees.
(e)
Includes a non-cash deferred tax benefit of $18 million related to an internal restructuring for the U.K.
(f)
Primarily from the sale of the U.K. business.
(g)
These adjustments reflect the elimination of assets and liabilities attributable to the U.K. business which were treated as held for sale in the balance sheet.
(h)
Primarily represents previously recorded intercompany balances which became third party upon completion of the sale of the U.K. business and closing costs payable by Marathon.
(i)
Represents the estimated fair value of a guarantee which resulted from the disposition of our U.K. business.
(j)
Primarily includes the gain on sale that would have been recorded as of March 31, 2019. Due to a tax exemption available in the U.K., no income tax was recorded on the transaction.
(k) Primarily represents the actuarial loss in the postretirement and postemployment plans for the U.K. employees.

EX - 99 . 1 2 exhibit99 - 1proformaform8xk . htm EXHIBIT 99 . 1 Exhibit Exhibit 99 . 1 MARATHON OIL CORPORATION UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS On July 1 , 2019 , Marathon Oil Corporation ( " Marathon " ) completed the sale of its U . K . business to RockRose Energy PLC for proceeds of approximately $ 95 million , which reflects the assumption by the buyer of the U . K . business ' working capital and cash equivalent balances of approximately $ 345 million on December 31 , 2018 . The effective date of the transaction is January 1 , 2019 . The unaudited pro forma consolidated financial data was derived from Marathon 's historical consolidated financial statements . The unaudited pro forma consolidated balance sheet assumes the disposition of the U . K . business occurred on March 31 , 2019 . The unaudited pro forma consolidated statements of income give effect to the disposition of the U . K . business as if the disposition occurred on January 1 , 2018 . The following unaudited pro forma consolidated financial information should be read in conjunction with the Company 's historical financial statements and 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 estimates and subject to change . The unaudited pro forma consolidated information is not intended to reflect what Marathon ' s 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 the assets , liabilities and results of operations of the U . K . business , and give effect to various adjustments including cash proceeds and gain from the sale of the U . K . business . MARATHON OIL CORPORATION PRO FORMA CONSOLIDATED STATEMENT OF INCOME ( Unaudited ) For the Three Months Ended March 31 , 2019 ( In millions , except per share data ) Historical Pro Forma Adjustments Pro Forma Revenues and other income : Revenues from contracts with customers $ 1,200 $ ( 73 ) ( a ) $ 1,127 Net loss on commodity derivatives ( 91 ) - ( 91 ) Income from equity method investments 11 - 11 Net gain ( loss ) on disposal of assets 42 - 42 Other income 35 11 ( b ) 46 Total revenues and other income 1,197 ( 62 ) 1,135 Costs and expenses : Production 187 ( 28 ) ( a ) 159 Shipping , handling and other operating 154 ( 11 ) ( a ) 143 Exploration 59 - 59 Depreciation , depletion and amortization 554 ( 14 ) ( a ) 540 Impairments 6 - 6 Taxes other than income 72 - 72 General and administrative 94 ( 1 ) ( a ) ( c ) 93 Total costs and expenses 1,126 ( 54 ) 1,072 Income ( loss ) from operations 71 ( 8 ) 63 Net interest and other ( 49 ) - ( 49 ) Other net periodic benefit costs 5 ( 2 ) ( d ) 3 Income ( loss ) before income taxes 27 ( 10 ) 17 Provision ( benefit ) for income taxes ( 147 ) 20 ( a ) ( e ) ( 127 ) Net income ( loss ) $ 174 $ ( 30 ) $ 144 Net income ( loss ) per share : Basic $ 0 . 21 $ 0 . 18 Diluted $ 0 . 21 $ 0 . 18 Weighted average common shares outstanding : Basic 819 819 Diluted 820 820 MARATHON OIL CORPORATION PRO FORMA CONSOLIDATED STATEMENT OF INCOME ( Unaudited ) For the Year Ended December 31 , 2018 ( In millions , except per share data ) Historical Pro Forma Adjustments Pro Forma Revenues and other income : Revenues from contracts with customers $ 5,902 $ ( 360 ) ( a ) $ 5,542 Net loss on commodity derivatives ( 14 ) - ( 14 ) Income from equity method investments 225 - 225 Net gain ( loss ) on disposal of assets 319 - 319 Other income 150 ( 122 ) ( a ) ( b ) 28 Total revenues and other income 6,582 ( 482 ) 6,100 Costs and expenses : Production 842 ( 122 ) ( a ) 720 Shipping , handling and other operating 575 ( 46 ) ( a ) 529 Exploration 289 - 289 Depreciation , depletion and amortization 2,441 ( 70 ) ( a ) 2,371 Impairments 75 - 75 Taxes other than income 299 - 299 General and administrative 394 ( 3 ) ( a ) ( c ) 391 Total costs and expenses 4,915 ( 241 ) 4,674 Income ( loss ) from operations 1,667 ( 241 ) 1,426 Net interest and other ( 226 ) - ( 226 ) Other net periodic benefit costs ( 14 ) ( 6 ) ( d ) ( 20 ) Income ( loss ) before income taxes 1,427 ( 247 ) 1,180 Provision ( benefit ) for income taxes 331 ( 142 ) ( a ) 189 Net income ( loss ) $ 1,096 $ ( 105 ) $ 991 Net income ( loss ) per share : Basic $ 1 . 30 $ 1 . 17 Diluted $ 1 . 29 $ 1 . 17 Weighted average common shares outstanding : Basic 846 846 Diluted 847 847 See accompanying notes to the unaudited pro forma consolidated financial statements . MARATHON OIL CORPORATION PRO FORMA CONSOLIDATED BALANCE SHEET ( UNAUDITED ) As of March 31 , 2019 ( In millions , except par value and share amounts ) Historical Pro Forma Adjustments Pro Forma Assets Current assets : Cash and cash equivalents $ 1,019 $ 94 ( f ) $ 1,113 Receivables , less reserve of $ 12 1,086 - 1,086 Inventories 83 - 83 Other current assets 160 - 160 Current assets held for sale 428 ( 409 ) ( g ) 19 Total current assets 2,776 ( 315 ) 2,461 Equity method investments 719 - 719 Property , plant and equipment less accumulated depreciation , depletion and amortization of $ 17,669 16,714 - 16,714 Goodwill 97 - 97 Other noncurrent assets 440 - 440 Noncurrent assets held for sale 664 ( 636 ) ( g ) 28 Total assets $ 21,410 $ ( 951 ) $ 20,459 Liabilities Current liabilities : Accounts payable $ 1,310 $ 6 ( h ) $ 1,316 Payroll and benefits payable 76 - 76 Accrued taxes 149 - 149 Other current liabilities 220 6 ( i ) 226 Current liabilities held for sale 103 ( 101 ) ( g ) 2 Total current liabilities 1,858 ( 89 ) 1,769 Long - term debt 5,501 - 5,501 Deferred tax liabilities 192 - 192 Defined benefit post retirement plan obligations 179 - 179 Asset retirement obligations 192 - 192 Deferred credits and other liabilities 317 - 317 Noncurrent liabilities held for sale 963 ( 953 ) ( g ) 10 Total liabilities 9,202 ( 1,042 ) 8,160 Commitments and contingencies Stockholders ' Equity Preferred stock - no shares issued or outstanding ( no par value , 26 million shares authorized ) $ - $ - $ - Common stock : Issued - 937 million shares ( par value $ 1 per share , 1 . 925 billion shares authorized ) 937 - 937 Held in treasury , at cost - 117 million shares ( 3,745 ) - ( 3,745 ) Additional paid - in - capital 7,149 - 7,149 Retained earnings 7,808 51 ( j ) 7,859 Accumulated other comprehensive income 59 40 ( k ) 99 Total stockholders ' equity 12,208 91 12,299 Total liabilities and stockholders ' equity $ 21,410 $ ( 951 ) $ 20,459 See accompanying notes to the unaudited pro forma consolidated financial statements . MARATHON OIL CORPORATION NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS ( a ) Amounts reflect the pro forma effect of eliminating the results of operations of the U . K . business . ( b ) Represents adjustment as a result of the reduction of our U . K . asset retirement obligations . ( c ) Represents general and administrative costs related to the U . K . business removing the impact of corporate allocation costs . ( d ) Represents pension related costs for our U . K . employees . ( e ) Includes a non - cash deferred tax benefit of $ 18 million related to an internal restructuring for the U . K . ( f ) Primarily from the sale of the U . K . business . ( g ) These adjustments reflect the elimination of assets and liabilities attributable to the U . K . business which were treated as held for sale in the balance sheet . ( h ) Primarily represents previously recorded intercompany balances which became third party upon completion of the sale of the U . K . business and closing costs payable by Marathon . ( i ) Represents the estimated fair value of a guarantee which resulted from the disposition of our U . K . business . ( j ) Primarily includes the gain on sale that would have been recorded as of March 31 , 2019 . Due to a tax exemption available in the U . K . , no income tax was recorded on the transaction . ( k ) Primarily represents the actuarial loss in the post retirement and post employment plans for the U . K . employees .