Exhibit 99.1
MARATHON AND KINDER MORGAN ANNOUNCE PLANS TO
DISSOLVE MKM PARTNERS L.P. IN PERMIAN BASIN
HOUSTON, June 20, 2003 - Marathon Oil Corporation (NYSE: MRO) announced
today that it has, through its subsidiaries, signed a Dissolution and
Distribution Agreement with Kinder Morgan Energy Partners, L.P. (NYSE: KMP) to
dissolve MKM Partners L.P. (and a related company, MKM Holdings LLC), which has
oil and gas production operations in the Permian Basin of Texas. Marathon holds
an 85 percent equity interest in the MKM partnership.
Prior to the dissolution of the partnership, MKM Partners L.P., Marathon,
and Kinder Morgan have signed the following agreements related to other assets
in the Permian Basin:
>> A purchase and sale agreement under which Kinder Morgan will acquire
MKM Partners L.P.'s 12.75 percent interest in the SACROC field for
an undisclosed amount;
>> A letter agreement under which Kinder Morgan will acquire Marathon's
indirect, wholly-owned subsidiary, Marathon Carbon Dioxide
Transportation Company, which owns a 65 percent interest in The Pecos
Carbon Dioxide (CO2) Pipeline Company; and
>> An agreement under which Marathon and Kinder Morgan will explore the
potential sale of Marathon's interest in the Yates field to Kinder
Morgan.
Marathon anticipates the sale of MKM's interest in the SACROC field and the
dissolution of the MKM partnership will be concluded in the second quarter. The
sale of Marathon's interest in the Pecos CO2 Pipeline is expected to be
concluded during the fourth quarter. A decision on the possible sale of
Marathon's interest in the Yates field is expected during the fourth quarter. As
a result of the above, Marathon expects to take an after-tax charge of
approximately $75-85 million to second quarter earnings.
"These actions are consistent with the steps we are taking to optimize
Marathon's global asset portfolio, while adding financial flexibility in our
drive to improve profitability and build superior shareholder value," said
Clarence P. Cazalot, Jr., Marathon President and CEO.
Earlier this year, Marathon announced plans to divest of certain non-core
downstream and upstream assets. The company currently estimates that total 2003
asset sales are likely to exceed $700 million. Proceeds will be used to
strengthen the company's balance sheet and to invest in high potential business
opportunities.
MKM Partners L.P. was formed in January 2001. Marathon's current net share
of production from the SACROC field is approximately 2,000 barrels of oil
equivalent per day (boe/d) and 7,500 boe/d from the Yates field. At year-end
2002, Marathon held 9 million and 177 million barrels of net proved reserves in
the SACROC and Yates fields, respectively. The Pecos CO2 Pipeline is an
eight-inch, 25-mile long pipeline that runs from McCamey to Iraan, Texas.
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This news release contains forward-looking statements concerning asset
dispositions and investment in other business opportunities. Some factors that
could affect the disposition of interests in the SACROC field include customary
closing conditions. The forward-looking statements with respect to the potential
sale of Marathon's interests in the Yates field and Pecos CO2 Pipeline are based
upon certain assumptions including the successful negotiation of a purchase and
sale agreement, including an acceptable price and other terms and conditions,
satisfaction of customary closing conditions and any applicable regulatory or
third party approvals. The forward-looking information with respect to
investment in other business opportunities is based on certain assumptions
including, among others, asset dispositions, prices, worldwide supply and demand
of petroleum products, regulatory impacts and constraints, levels of company
cash flow and economic considerations. The foregoing factors, among others,
could cause actual results to differ materially from those set forth in the
forward-looking statements. In accordance with the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995, Marathon Oil Corporation
has included in its Annual Report on Form 10-K for the year ended December 31,
2002 and subsequent Forms 10-Q and 8-K, cautionary language identifying
important factors, though not necessarily all such factors, that could cause
future outcomes to differ materially from those set forth in the forward-
looking statements.
Media Relations Contacts: Paul Weeditz 713-296-3910
Susan Richardson 713-296-3915
Investor Relations Contacts: Ken Matheny 713-296-4114
Howard Thill 713-296-4140