Exhibit 99.1.
MARATHON REVIEWS PROGRESS OF UPSTREAM AND DOWNSTREAM BUSINESSES
New York, November 30, 2000 - At a meeting today with investors and
financial analysts, the Marathon Group (NYSE:MRO), a unit of USX Corporation,
reviewed progress of the strategic re-organization of its upstream business and
the competitive standing and marketing strategies of its downstream operations.
In addressing the upstream business, Marathon Oil Company president
Clarence Cazalot reviewed the strategic targets and achievements to-date towards
Marathon's upstream commitment to significantly improve shareholder return.
"The competitive challenges that we face are well understood," noted Cazalot.
"We have plans in place for dramatic change and improvement and I believe that
the organization is both ready for change and able to deliver on our
commitments."
CLARENCE CAZALOT introduced the new senior leadership team, announced in
September, and invited each to review their respective areas of responsibility
and outline the performance metrics that their businesses would be judged by.
In his introductory remarks, he noted that the reorganization and consolidation
of the upstream business announced in October was largely complete. Early
retirement programs in the U.S. and the U.K. have resulted in a little over 500
eligible employees electing to retire, while further job reductions underway in
the U.S., U.K. and Canada will eliminate 250 additional positions. "Overall, we
expect Marathon's worldwide exploration and production headcount to fall below
3,000, some 24 percent lower than at the end of 1999," noted Cazalot.
Commenting on the company's target of implementing $150 million of annual
repeatable efficiencies by the end of 2001, Cazalot added, "we are on track to
deliver a $75 million reduction in above-the-field costs and we have made
substantial progress towards cutting exploration expenses by $50 million. As we
also realize annual savings of $25 million through global procurement, we are
well on our way to meet our ambitious overall target."
PHIL BEHRMAN, senior vice president of Worldwide Exploration discussed
Marathon's plans to enhance near-term production in 2001 with a program
targeting U.S. prospects in Oklahoma and Texas and international prospects in
Western Canada and Norway. Regarding the mid to long-term, Behrman noted that
Marathon's emphasis would be on high impact exploration targeting access to the
best prospects adjacent to, or within proven trends. "We aim to grow and
enhance our inventory of quality opportunities," noted Behrman. "Towards this
objective, we have a focused deepwater program in 2001 targeting at least two
wells offshore Angola, one to two off Eastern Canada and five to six in the Gulf
of Mexico."
-more-
STEVE LOWDEN, senior vice president of Business Development highlighted
Marathon's renewed emphasis on resource capture within the upstream value chain.
Lowden saw niche opportunities for Marathon where the Company could leverage its
size by combining the technical competence of a `super-major' allied with the
agility of an independent. "We're looking to build three or four new
international core areas, starting with at least one next year. We see our
prime opportunities in North and West Africa, the Middle East and Southeast
Asia." noted Lowden. "Marathon intends to accelerate its business development
effort to acquire producing and development assets that enable us to balance
growth in both the near and medium term."
DAVE GOLDER, senior vice president of Commercialization and Development
gave an overview of Marathon's current development projects. He discussed
Petronius and Camden Hills in the Gulf of Mexico, the Corrib development off the
West Coast of Ireland, Foinaven in the U.K. Atlantic Margin and the Vale field
in the Norwegian sector of the North Sea. Golder highlighted the positive
experience Marathon gained on the Sakhalin project where the trade to Shell, in
exchange for production interests in the U.K. and Gulf of Mexico, is expected to
be completed in December. "Marathon has made a major contribution to this
world-class project," noted Golder. "The technical and project management
expertise that we have established, combined with valuable experience working
with diverse cultures and political systems, are transferable skills we can use
to our advantage in progressing future opportunities."
STEVE HINCHMAN, senior vice president of Worldwide Production Operations
provided an update of current production activities. He estimated that 2000
production rates would average around 416,000 barrels of oil equivalent per day
and forecast that 2001 rates would average slightly over three percent higher at
430,000 BOE/d. Hinchman noted that Marathon anticipated making a downward
revision of previous reserve estimates at year-end of approximately 100 million
barrels of oil equivalent as a result of production performance and
disappointing drilling results. Of this total, about half will move from the
proven reserve category to other, non-proven categories. This downward revision
will result in an asset impairment under FAS 121, which is presently estimated
to be approximately $200 million on a pre-tax basis.
"As we move forward, we will maintain our emphasis on top quartile safety
and environmental performance while continuing to drive down controllable
costs," noted Hinchman. "Our near term focus in the U.S. will be to leverage
production in core production areas such as the Gulf of Mexico, the Permian
Basin in Texas and the Anadarko gas basin in Oklahoma. Internationally, the
emphasis will be in Europe by maximizing our returns from the Brae
infrastructure and the newly acquired Foinaven asset in the Atlantic Margin."
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JOHN MILLS, senior vice president of Finance and Administration, reviewed
the financial performance metrics for the Marathon Group. He noted that the
upstream business would target income per barrel of $4 in a $19/barrel WTI spot
price environment, while the downstream business would continue to target top
quartile peer group performance for income per barrel of crude oil processed.
"The Marathon Group is working hard at optimizing its financial structure to
provide for future resource opportunities," Mills noted. "Our focus is on
maintaining financial discipline with the flexibility to pursue profitable
growth." Marathon pointed out that through the first three-quarters of 2000,
the Group's debt to total capital had fallen to 34 percent. Mills also noted
that since USX announced a $450 million buy back plan in July 2000,
approximately 3 million Marathon Group shares had been repurchased.
Regarding Marathon's downstream business, "Corky" Frank, president of
Marathon Ashland Petroleum LLC (MAP), and John Surma, who will succeed Frank
effective January 1, 2001, addressed MAP's competitive situation and market
strategies.
CORKY FRANK noted that MAP's record of success was consistently
outstanding. In 1998, its first year of operations, MAP finished second among
its competitor group in adjusted income from operations per barrel of crude oil
throughput. MAP finished first in 1999 and ranks second through the third
quarter of this year. MAP has realized more than $400 million in merger related
efficiency savings since its inception, while capital discipline has kept the
company, by its own estimate, first in return on net fixed asset investment.
"New investment should continue to provide good returns," said Frank. "A good
example is the coker to come on stream next year at the company's Garyville
Refinery." The coker will run less costly feedstocks and increase yields of
higher-value light products. Frank noted that company estimates put MAP number
one in gasoline market share in five of its core Midwest states. He said that
MAP was well positioned with refining and supply options in this product-short
market.
JOHN SURMA discussed progress on the company's Centennial and Cardinal
pipeline projects. Both projects should place MAP in a highly competitive
position to take advantage of changing Midwest product supply patterns. He
noted that MAP's strategy is to move an increasing share of its equity gasoline
production through its Marathon and Speedway brand units, capturing increased
margin and efficiency. The Marathon Brand is enjoying strong growth in
Minnesota and in the Southeast states. At the same time, Speedway is building a
nationwide system of truckstops and travel centers along major east-west
interstates. "Due to our strategic position in the Midwest," Surma said, "we
should be able to achieve very competitive returns because of the expected tight
supply in our major markets. This should allow us to generate above-average
returns on capital investments, including those for clean fuel requirements."
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Marathon Oil Company is a part of the USX-Marathon Group (NYSE: MRO), a
unit of USX Corporation.
# # #
Except for historical information this news release consists of forward looking
statements with respect to the timing and completion of various projects or
activities, progress on implementing efficiencies, that such efficiencies are
annually repeatable, plans to enhance near-term production, forecasted
production rates, adjustments to existing reserves and estimates of FAS 121
impairment. In accordance with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, USX has included in Form 10-K for the
year ended December 31, 1999 and any subsequent reports on Form 10-Q and Form
8-K cautionary statements identifying important factors, but not necessarily all
factors, that could cause actual results to differ materially from those set
forth in the forward-looking statements. The review of reserves is ongoing and
based upon a number of assumptions such as, presently known physical data
concerning the size and character of reservoirs, economic recoverability,
results of production performance and drilling results. Projections of 2000 and
2001 production are based upon anticipated investments in existing assets, as
well as, modest additions from development and exploration activity and
potential or future business development activity. Such projections are also
based upon certain assumptions, including (among others) prices, amount of
capital available for exploration and development, worldwide supply, regulatory
approval, production decline rates of mature fields, timing of commencing
production from new wells, and other geological and operating considerations.
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