Marathon Goes Free on October 25 and Embarks on Exploration 

Recent transformations of PanCanadian Petroleum to PanCanadian Energy and of Chevron and Texaco to ChevronTexaco seem to have been well received.  Next, expecting a supporting vote of shareholders, USX - Marathon Group will become Marathon Oil Corporation on October 25.  The tracking stock with potential liability for steel company debts becomes the unencumbered stock of a new entity completely separated from unrelated open-ended obligations.  

At the same time the outlook for the new company takes on a bit of excitement.  A revived exploration effort under new leadership exposes the stock to three high impact exploratory wells currently drilling and four more to be started before yearend.  The three prospects drilling include two in the deep Gulf of Mexico, Timber Wolf and Deep Ozona, and one offshore Nova Scotia, Southampton.  The next four are two in the deep Gulf of Mexico, Paris Carver and Redwood; one offshore Angola, Block 31; and the next test offshore Nova Scotia, Annapolis.

Any good exploration news ought to be helpful to an undervalued stock.  Nor should dry holes hurt too much as there appears to be little anticipation of success in Marathon's stock that trades at an unlevered cash flow multiple of less than 5.0 times.

Excerpt from October 15, 2001; Meter Reader: Not-So-Smart Money Buys Natural Gas, Too