MRO-2014.6.30-10Q/A


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-Q/A
Amendment No. 1

(Mark One)
 
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended June 30, 2014

OR

[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _____ to _____

Commission file number 1-5153

Marathon Oil Corporation
(Exact name of registrant as specified in its charter)

Delaware
 
25-0996816
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
5555 San Felipe Street, Houston, TX  77056-2723
(Address of principal executive offices)

(713) 629-6600
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.       Yes R No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes R No £
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer     þ  
Accelerated filer             o
Non-accelerated filer       o        (Do not check if a smaller reporting company) 
Smaller reporting company        o   
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).         
Yes o No þ
 
There were 674,484,400 shares of Marathon Oil Corporation common stock outstanding as of July 31, 2014.

Explanatory Note

The sole purpose of this  Amendment No. 1 to our  Quarterly  Report on Form 10-Q for the period  ended  June 30, 2014,  as filed with the  Securities  and Exchange  Commission (the “SEC”) on August 5, 2014 (the “Original Report”), is to include on the signature page the conformed signature of our principal financial officer,  which was unintentionally omitted from the Original Report. No other  changes  have been made to the Original Report other than the one  described above.  This Amendment No. 1 does not reflect  subsequent events occurring after the  original  filing  date of the Original Report or  modify  or  update  in any way disclosures made in the Original Report. As required by applicable SEC regulations, Exhibits 31.1, 31.2, 32.1 and 32.2 are being re-filed with this amendment.




MARATHON OIL CORPORATION
 
Form 10-Q
 
Quarter Ended June 30, 2014


 
INDEX
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
Unless the context otherwise indicates, references in this Form 10-Q to “Marathon Oil,” “we,” “our,” or “us” are references to Marathon Oil Corporation, including its wholly-owned and majority-owned subsidiaries, and its ownership interests in equity method investees (corporate entities, partnerships, limited liability companies and other ventures over which Marathon Oil exerts significant influence by virtue of its ownership interest).


1


Part I - Financial Information
Item 1. Financial Statements

MARATHON OIL CORPORATION
Consolidated Statements of Income (Unaudited)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(In millions, except per share data)
2014
 
2013
 
2014
 
2013
Revenues and other income:
 
 
 
 
 
 
 
Sales and other operating revenues, including related party
$
2,270

 
$
2,513

 
$
4,419

 
$
4,961

Marketing revenues
618

 
497

 
1,159

 
929

Income from equity method investments
120

 
77

 
257

 
195

Net gain (loss) on disposal of assets
(87
)
 
(107
)
 
(85
)
 
2

Other income
20

 
10

 
40

 
19

Total revenues and other income
2,941

 
2,990

 
5,790

 
6,106

Costs and expenses:
 

 
 

 
 
 
 

Production
562

 
552

 
1,104

 
1,085

Marketing, including purchases from related parties
614

 
494

 
1,156

 
927

Other operating
101

 
70

 
204

 
168

Exploration
145

 
125

 
218

 
582

Depreciation, depletion and amortization
680

 
626

 
1,323

 
1,257

Impairments
4

 
—

 
21

 
38

Taxes other than income
109

 
93

 
204

 
175

General and administrative
139

 
159

 
326

 
322

Total costs and expenses
2,354

 
2,119

 
4,556

 
4,554

Income from operations
587

 
871

 
1,234

 
1,552

Net interest and other
(76
)
 
(67
)
 
(125
)
 
(140
)
Income from continuing operations before income taxes
511

 
804

 
1,109

 
1,412

Provision for income taxes
151

 
563

 
351

 
1,013

Income from continuing operations
360

 
241

 
758

 
399

Discontinued operations
180

 
185

 
931

 
410

Net income
$
540

 
$
426

 
$
1,689

 
$
809

Per Share Data
 

 
 

 
 

 
 

Basic:
 

 
 

 
 

 
 

Income from continuing operations
$0.53
 
$0.34
 
$1.11
 
$0.56
Discontinued operations
$0.27
 
$0.26
 
$1.36
 
$0.58
Net income
$0.80
 
$0.60
 
$2.47
 
$1.14
Diluted:
 
 
 
 
 
 
 
Income from continuing operations
$0.53
 
$0.34
 
$1.10
 
$0.56
Discontinued operations
$0.27
 
$0.26
 
$1.36
 
$0.58
Net income
$0.80
 
$0.60
 
$2.46
 
$1.14
Dividends
$0.19
 
$0.17
 
$0.38
 
$0.34
Weighted average common shares:
 

 
 

 
 

 
 

Basic
676

 
710

 
684

 
709

Diluted
679

 
714

 
688

 
713

 The accompanying notes are an integral part of these consolidated financial statements.

2


MARATHON OIL CORPORATION
Consolidated Statements of Comprehensive Income (Unaudited)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(In millions)
2014
 
2013
 
2014
 
2013
Net income
$
540

 
$
426

 
$
1,689

 
$
809

Other comprehensive income (loss)
 

 
 

 
 

 
 

Postretirement and postemployment plans
 

 
 

 
 

 
 

Change in actuarial loss and other
(13
)
 
133

 
(43
)
 
146

Income tax benefit (provision)
5

 
(49
)
 
15

 
(54
)
Postretirement and postemployment plans, net of tax
(8
)
 
84

 
(28
)
 
92

Foreign currency translation and other
 

 
 

 
 

 
 

Unrealized gain (loss)
1

 
(3
)
 
1

 
(4
)
Income tax benefit (provision)
(1
)
 
1

 
(1
)
 
1

Foreign currency translation and other, net of tax
—

 
(2
)
 
—

 
(3
)
Other comprehensive income (loss)
(8
)
 
82

 
(28
)
 
89

Comprehensive income
$
532

 
$
508

 
$
1,661

 
$
898

 The accompanying notes are an integral part of these consolidated financial statements.


3


MARATHON OIL CORPORATION
Consolidated Balance Sheets (Unaudited)
 
June 30,
 
December 31,
(In millions, except per share data)
2014
 
2013
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
1,169

 
$
264

Receivables
2,042

 
2,134

Inventories
404

 
364

Other current assets
211

 
172

Current assets held for sale
392

 
41

Total current assets
4,218

 
2,975

Equity method investments
1,184

 
1,201

Property, plant and equipment, less accumulated depreciation,
 

 
 

depletion and amortization of $20,207 and $21,895
27,824

 
28,145

Goodwill
457

 
499

Other noncurrent assets
1,088

 
1,153

Noncurrent assets held for sale
1,164

 
1,647

Total assets
$
35,935

 
$
35,620

Liabilities
 

 
 

Current liabilities:
 

 
 

Commercial paper
$
—

 
$
135

Accounts payable
2,439

 
2,206

Payroll and benefits payable
121

 
240

Accrued taxes
193

 
1,445

Other current liabilities
147

 
214

Long-term debt due within one year
68

 
68

Current liabilities held for sale
1,006

 
25

Total current liabilities
3,974

 
4,333

Long-term debt
6,362

 
6,394

Deferred tax liabilities
2,525

 
2,492

Defined benefit postretirement plan obligations
668

 
604

Asset retirement obligations
1,804

 
2,009

Deferred credits and other liabilities
392

 
401

Noncurrent liabilities held for sale
342

 
43

Total liabilities
16,067

 
16,276

Commitments and contingencies


 


Stockholders’ Equity
 

 
 

Preferred stock – no shares issued or outstanding (no par value,
 
 
 
26 million shares authorized)
—

 
—

Common stock:
 

 
 

Issued – 770 million and 770 million shares (par value $1 per share,
 
 
 
1.1 billion shares authorized)
770

 
770

Securities exchangeable into common stock – no shares issued or
 

 
 

outstanding (no par value, 29 million shares authorized)
—

 
—

Held in treasury, at cost – 97 million and 73 million shares
(3,718
)
 
(2,903
)
Additional paid-in capital
6,530

 
6,592

Retained earnings
16,564

 
15,135

Accumulated other comprehensive loss
(278
)
 
(250
)
Total stockholders' equity
19,868

 
19,344

Total liabilities and stockholders' equity
$
35,935

 
$
35,620

 The accompanying notes are an integral part of these consolidated financial statements.

4


MARATHON OIL CORPORATION
Consolidated Statements of Cash Flows (Unaudited)
 
Six Months Ended
 
June 30,
(In millions)
2014
 
2013
Increase (decrease) in cash and cash equivalents
 
 
 
Operating activities:
 

 
 

Net income
$
1,689

 
$
809

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Discontinued operations
(931
)
 
(410
)
Deferred income taxes
173

 
35

Depreciation, depletion and amortization
1,323

 
1,257

Impairments
21

 
38

Pension and other postretirement benefits, net
26

 
33

Exploratory dry well costs and unproved property impairments
156

 
494

Net (gain) loss on disposal of assets
85

 
(2
)
Equity method investments, net
(10
)
 
—

Changes in:
 
 
 

Current receivables
(266
)
 
(11
)
Inventories
(58
)
 
(19
)
Current accounts payable and accrued liabilities
(31
)
 
(284
)
All other operating, net
(59
)
 
(18
)
Net cash provided by continuing operations
2,118

 
1,922

Net cash provided by discontinued operations
440

 
474

Net cash provided by operating activities
2,558

 
2,396

Investing activities:
 

 
 

Additions to property, plant and equipment
(2,230
)
 
(2,405
)
Disposal of assets
2,232

 
333

Investments - return of capital
27

 
29

Investing activities of discontinued operations
(233
)
 
(271
)
All other investing, net
—

 
15

Net cash used in investing activities
(204
)
 
(2,299
)
Financing activities:
 

 
 

Commercial paper, net
(135
)
 
(200
)
Debt repayments
(34
)
 
(148
)
Purchases of common stock
(1,000
)
 
—

Dividends paid
(260
)
 
(241
)
All other financing, net
86

 
46

Net cash used in financing activities
(1,343
)
 
(543
)
Effect of exchange rate on cash and cash equivalents:
 
 
 
Continuing operations
—

 
4

Discontinued operations
(10
)
 
4

Cash held for sale
(96
)
 
—

Net increase (decrease) in cash and cash equivalents
905

 
(438
)
Cash and cash equivalents at beginning of period
264

 
684

Cash and cash equivalents at end of period
$
1,169

 
$
246

 The accompanying notes are an integral part of these consolidated financial statements.

5

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)



1.    Basis of Presentation
These consolidated financial statements are unaudited; however, in the opinion of management, these statements reflect all adjustments necessary for a fair statement of the results for the periods reported.  All such adjustments are of a normal recurring nature unless disclosed otherwise.  These consolidated financial statements, including notes, have been prepared in accordance with the applicable rules of the Securities and Exchange Commission ("SEC") and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements.
As the result of the sale of our Angola assets in the first quarter of 2014 and the pending sale of our Norway business (see Note 5), the Angola and Norway businesses are reflected as discontinued operations in all periods presented. The disclosures in this report related to results of operations and cash flows are presented on the basis of continuing operations, unless otherwise noted. Assets and liabilities of these businesses are presented as held for sale in the consolidated balance sheets as of December 31, 2013 and June 30, 2014.
These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Marathon Oil Corporation 2013 Annual Report on Form 10-K.  The results of operations for the second quarter and first six months of 2014 are not necessarily indicative of the results to be expected for the full year.
2.   Accounting Standards
Not Yet Adopted
In May 2014, the Financial Accounting Standards Board ("FASB") issued an update that supersedes the existing revenue recognition requirements. This standard includes a five-step revenue recognition model to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Among other things, the standard also eliminates industry-specific revenue guidance, requires enhanced disclosures about revenue, provides guidance for transactions that were not previously addressed comprehensively, and improves guidance for multiple-element arrangements. This standard is effective for us in the first quarter of 2017 and should be applied retrospectively to each prior reporting period presented or with the cumulative effect of initially applying the update recognized at the date of initial application. Early adoption is not permitted. We are evaluating the provisions of this accounting standards update and assessing the impact, if any, it may have on our consolidated results of operations, financial position or cash flows.
In April 2014, the FASB issued an amendment to accounting standards that changes the criteria for reporting discontinued operations while enhancing related disclosures. Under the amendment, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. Examples include disposal of a major geographic area, a major line of business, or a major equity method investment.  Expanded disclosures about the assets, liabilities, income and expenses of discontinued operations will be required.  In addition, disclosure of the pretax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting will be made in order to provide users with information about the ongoing trends in an organization’s results from continuing operations.  The amendments are effective for us in the first quarter of 2015 and early adoption is permitted. We are evaluating the provisions of this amendment and assessing the impact, if any, it may have on our consolidated results of operations, financial position or cash flows.
Recently Adopted
In June 2013, the FASB ratified the Emerging Issues Task Force consensus which requires that an unrecognized tax benefit (or a portion thereof) be presented as a reduction to a deferred tax asset for an available net operating loss carryforward, a similar tax loss or tax credit carryforward. This accounting standards update was effective for us beginning in the first quarter of 2014 and is required to be applied prospectively. Adoption of this standard did not have a significant impact on our consolidated results of operations, financial position or cash flows.
In February 2013, an accounting standards update was issued to provide guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, except for obligations such as asset retirement and environmental obligations, contingencies, guarantees, income taxes and retirement benefits, which are separately addressed within United States Generally Accepted Accounting Principles ("U.S. GAAP"). This accounting standards update was effective for us beginning in the first quarter of 2014 and is required to be applied retrospectively. Adoption of this standard did not have a significant impact on our consolidated results of operations, financial position or cash flows.

6

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


3.   Variable Interest Entity
The owners of the Athabasca Oil Sands Project (“AOSP”), in which we hold a 20 percent undivided interest, contracted with a wholly owned subsidiary of a publicly traded Canadian limited partnership (“Corridor Pipeline”) to provide materials transportation capabilities among the Muskeg River and Jackpine mines, the Scotford upgrader and markets in Edmonton.  Costs under this contract are accrued and recorded on a monthly basis, with current liabilities of $3 million recorded at June 30, 2014, consistent with December 31, 2013.  This contract qualifies as a variable interest contractual arrangement and the Corridor Pipeline qualifies as a variable interest entity (“VIE”).  We hold a variable interest but are not the primary beneficiary because our shipments are only 20 percent of the total; therefore the Corridor Pipeline is not consolidated by us.  Our maximum exposure to loss as a result of our involvement with this VIE is the amount we expect to pay over the contract term, which was $622 million as of June 30, 2014.  The liability on our books related to this contract at any given time will reflect amounts due for the immediately previous month’s activity, which is substantially less than the maximum exposure over the contract term.
4.    Income per Common Share
Basic income per share is based on the weighted average number of common shares outstanding.  Diluted income per share assumes exercise of stock options, provided the effect is not antidilutive. The per share calculations below exclude 5 million and 6 million stock options for the second quarters of 2014 and 2013 and 4 million and 6 million stock options for the first six months of 2014 and 2013 as they were antidilutive.
 
Three Months Ended June 30,
 
2014
 
2013
(In millions, except per share data)
Basic
 
Diluted
 
Basic
 
Diluted
Income from continuing operations
$
360

 
$
360

 
$
241

 
$
241

Discontinued operations
180

 
180

 
185

 
185

Net income
$
540

 
$
540

 
$
426

 
$
426

 
 
 
 
 
 
 
 
Weighted average common shares outstanding
676

 
676

 
710

 
710

Effect of dilutive securities
—

 
3

 
—

 
4

Weighted average common shares, including
 
 
 
 
 
 
 
dilutive effect
676

 
679

 
710

 
714

Per share:
 

 
 

 
 

 
 

Income from continuing operations

$0.53

 

$0.53

 

$0.34

 

$0.34

Discontinued operations

$0.27

 

$0.27

 

$0.26

 

$0.26

Net income

$0.80

 

$0.80

 

$0.60

 

$0.60

 
 
Six Months Ended June 30,
 
2014
 
2013
(In millions, except per share data)
Basic
 
Diluted
 
Basic
 
Diluted
Income from continuing operations
$
758

 
$
758

 
$
399

 
$
399

Discontinued operations
931

 
931

 
410

 
410

Net income
$
1,689

 
$
1,689

 
$
809

 
$
809

 
 
 
 
 
 
 
 
Weighted average common shares outstanding
684

 
684

 
709

 
709

Effect of dilutive securities
—

 
4

 
—

 
4

Weighted average common shares, including
 
 
 
 
 
 
 
dilutive effect
684

 
688

 
709

 
713

Per share:
 

 
 

 
 

 
 

Income from continuing operations
$1.11
 
$1.10
 
$0.56
 
$0.56
Discontinued operations
$1.36
 
$1.36
 
$0.58
 
$0.58
Net income
$2.47
 
$2.46
 
$1.14
 
$1.14

7

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


5. Dispositions
2014 - International Exploration and Production ("E&P") Segment

In June 2014, we entered into an agreement to sell our Norway business, including the operated Alvheim floating production, storage and offloading vessel, 10 operated licenses and a number of non-operated licenses on the Norwegian Continental Shelf in the North Sea, with an effective date of January 1, 2014.  We expect the transaction to close in the fourth quarter of 2014, pending government and regulatory approvals, with net proceeds of $2.1 billion.
Our Norway business is reflected as discontinued operations in the consolidated statements of income and the consolidated statements of cash flows for all periods presented. Select amounts reported in discontinued operations were as follows:
 
Three Months Ended June 30,
Six Months Ended June 30,
(In millions)
2014
 
2013
2014
 
2013
Revenues applicable to discontinued operations
$
693

 
$
828

$
1,373

 
$
1,732

Pretax income from discontinued operations
$
598

 
$
662

$
1,130

 
$
1,422

After-tax income from discontinued operations
$
180

(a) 
$
158

$
322

(a) 
$
380

(a) 
Includes a tax benefit of $26 million related to a decrease in the valuation allowance on U.S. foreign tax credits from the Norway operations.
Assets and liabilities presented as held for sale in the June 30, 2014 consolidated balance sheet reflect the Norway business.
 
 
In the first quarter of 2014, we closed the sales of our non-operated 10 percent working interests in the Production Sharing Contracts and Joint Operating Agreements for Angola Blocks 31 and 32 for aggregate proceeds of approximately $2 billion. A $576 million after-tax gain on the sale of our Angola assets was recorded in the first quarter of 2014. Included in this after-tax gain is a deferred tax benefit reflecting our ability to utilize foreign tax credits that would have otherwise needed a valuation allowance.
Our Angola operations are reflected as discontinued operations in the consolidated statements of income and the consolidated statements of cash flows for all periods presented. Select amounts reported in discontinued operations were as follows:
 
Three Months Ended June 30,
Six Months Ended June 30,
(In millions)
2014
 
2013
2014
 
2013
Revenues applicable to discontinued operations
$
—

 
$
79

$
58

 
$
165

Pretax income from discontinued operations
$
—

 
$
37

$
51

 
$
78

After-tax income from discontinued operations
$
—

 
$
27

$
33

 
$
30

Pretax gain on disposition of discontinued operations
$
—

 
$
—

$
470

 
$
—

Assets and liabilities presented as held for sale in the December 31, 2013 consolidated balance sheet reflect the Angola business.
 
 
2014 - North America E&P Segment
In June 2014, we closed the sale of non-core acreage located in the far northwest portion of the Williston Basin for proceeds of $90 million. A pretax loss of $91 million was recorded in the second quarter of 2014.
2013 - North America E&P Segment
In June 2013, we closed the sale of our interests in the DJ Basin for proceeds of $19 million. A pretax loss of $114 million was recorded in the second quarter of 2013.
In February 2013, we conveyed our interests in the Marcellus natural gas shale play to the operator. A $43 million pretax loss on this transaction was recorded in the first quarter of 2013.

8

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


In February 2013, we closed the sale of our interest in the Neptune gas plant, located onshore Louisiana, for proceeds of $166 million. A $98 million pretax gain was recorded in the first quarter of 2013.
In January 2013, we closed the sale of our remaining assets in Alaska, for proceeds of $195 million, subject to a six-month escrow of $50 million which was collected in July 2013. After closing adjustments were made in the second quarter of 2013, the pretax gain on this sale was $55 million.
 
 
6.    Segment Information
  We have three reportable operating segments.  Each of these segments is organized based upon both geographic location and the nature of the products and services it offers.
•
North America E&P ("N.A. E&P") – explores for, produces and markets liquid hydrocarbons and natural gas in North America;
•
International E&P ("Int'l E&P") – explores for, produces and markets liquid hydrocarbons and natural gas outside of North America and produces and markets products manufactured from natural gas, such as liquefied natural gas ("LNG")and methanol, in Equatorial Guinea; and
•
Oil Sands Mining (“OSM”) – mines, extracts and transports bitumen from oil sands deposits in Alberta, Canada, and upgrades the bitumen to produce and market synthetic crude oil and vacuum gas oil.
Information regarding assets by segment is not presented because it is not reviewed by the chief operating decision maker (“CODM”).  Segment income represents income from continuing operations excluding certain items not allocated to segments, net of income taxes, attributable to the operating segments. Our corporate and operations support general and administrative costs are not allocated to the operating segments. These costs primarily consist of employment costs (including pension effects), professional services, facilities and other costs associated with corporate and operations support activities. Unrealized gains or losses on crude oil derivative instruments, certain impairments, gains or losses on dispositions or other items that affect comparability (as determined by the CODM) also are not allocated to operating segments.
As discussed in Note 5, we sold our Angola assets in the first quarter of 2014 and entered into an agreement to sell our Norway business in June 2014. The Angola and Norway businesses are reflected as discontinued operations and are excluded from the International E&P segment in all periods presented.
 
Three Months Ended June 30, 2014
 
 
 
Not Allocated
 
 
(In millions)
N.A. E&P
 
Int'l E&P
 
OSM
 
to Segments
 
Total
Sales and other operating revenues
$
1,540

 
$
347

 
$
383

 
$
—

 
$
2,270

Marketing revenues
540

 
61

 
17

 
—

 
618

Total revenues
2,080

 
408

 
400

 
—

 
2,888

Income from equity method investments
—

 
120

 
—

 
—

 
120

Net gain (loss) on disposal of assets and other income
15

 
15

 
1

 
(98
)
 
(67
)
Less:
 
 
 
 
 
 
 
 
 
Production expenses
217

 
99

 
246

 
—

 
562

Marketing costs
537

 
60

 
17

 
—

 
614

Exploration expenses
82

 
63

 
—

 
—

 
145

Depreciation, depletion and amortization
550

 
75

 
45

 
10

 
680

Impairments
4

 
—

 
—

 
—

 
4

Other expenses (a)
126

 
34

 
13

 
67

(c) 
240

Taxes other than income
102

 
—

 
6

 
1

 
109

Net interest and other
—

 
—

 
—

 
76

 
76

Income tax provision (benefit)
175

 
52

 
19

 
(95
)
 
151

Segment income/Income from continuing operations
$
302

 
$
160

 
$
55

 
$
(157
)
 
$
360

Capital expenditures (b)
$
1,102

 
$
115

 
$
55

 
$
10

 
$
1,282

(a) 
Includes other operating expenses and general and administrative expenses.
(b) 
Includes accruals.
(c) 
Includes pension settlement loss of $8 million.

9

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


 
Three Months Ended June 30, 2013
 
 
 
Not Allocated
 
 
(In millions)
N.A. E&P
 
Int'l E&P
 
OSM
 
to Segments
 
Total
Sales and other operating revenues
$
1,284

 
$
826

 
$
353

 
$
50

(c) 
$
2,513

Marketing revenues
439

 
49

 
9

 
—

 
497

Total revenues
1,723

 
875

 
362

 
50

 
3,010

Income from equity method investments
—

 
77

 
—

 
—

 
77

Net gain (loss) on disposal of assets and other income
6

 
7

 
3

 
(113
)
 
(97
)
Less:
 
 
 
 
 
 
 
 
 
Production expenses
195

 
83

 
274

 
—

 
552

Marketing costs
438

 
47

 
9

 
—

 
494

Exploration expenses
76

 
49

 
—

 
—

 
125

Depreciation, depletion and amortization
490

 
77

 
48

 
11

 
626

Other expenses (a)
94

 
21

 
2

 
112

(d) 
229

Taxes other than income
86

 
—

 
5

 
2

 
93

Net interest and other
—

 
—

 
—

 
67

 
67

Income tax provision (benefit)
129

 
512

 
7

 
(85
)
 
563

Segment income/Income from continuing operations
$
221

 
$
170

 
$
20

 
$
(170
)
 
$
241

Capital expenditures (b)
$
904

 
$
107

 
$
98

 
$
10

 
$
1,119

(a)Includes other operating expenses and general and administrative expenses.
(b)Includes accruals.
(c)Unrealized gain on crude oil derivative instruments.
(d)Includes pension settlement loss of $17 million
 
Six Months Ended June 30, 2014
 
 
 
Not Allocated
 
 
(In millions)
N.A. E&P
 
Int'l E&P
 
OSM
 
to Segments
 
Total
Sales and other operating revenues
$
2,932

 
$
727

 
$
760

 
$
—

 
$
4,419

Marketing revenues
980

 
131

 
48

 
—

 
1,159

Total revenues
3,912

 
858

 
808

 
—

 
5,578

Income from equity method investments
—

 
257

 
—

 
—

 
257

Net gain (loss) on disposal of assets and other income
18

 
32

 
3

 
(98
)
 
(45
)
Less:
 
 
 
 
 
 
 
 
 
Production expenses
428

 
199

 
477

 
—

 
1,104

Marketing costs
977

 
131

 
48

 
—

 
1,156

Exploration expenses
139

 
79

 
—

 
—

 
218

Depreciation, depletion and amortization
1,065

 
146

 
90

 
22

 
1,323

Impairments
21

 
—

 
—

 
—

 
21

Other expenses (a)
236

 
72

 
26

 
196

(c) 
530

Taxes other than income
192

 
—

 
11

 
1

 
204

Net interest and other
—

 
—

 
—

 
125

 
125

Income tax provision (benefit)
328

 
139

 
40

 
(156
)
 
351

Segment income/Income from continuing operations
$
544

 
$
381

 
$
119

 
$
(286
)
 
$
758

Capital expenditures (b)
$
1,969

 
$
220

 
$
123

 
$
13

 
$
2,325

(a) 
Includes other operating expenses and general and administrative expenses.
(b) 
Includes accruals.
(c) 
Includes pension settlement loss of $71 million.

10

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


 
Six Months Ended June 30, 2013
 
 
 
Not Allocated
 
 
(In millions)
N.A. E&P
 
Int'l E&P
 
OSM
 
to Segments
 
Total
Sales and other operating revenues
$
2,499

 
$
1,721

 
$
741

 
$
—

 
$
4,961

Marketing revenues
784

 
136

 
9

 
—

 
929

Total revenues
3,283

 
1,857

 
750

 
—

 
5,890

Income from equity method investments
—

 
195

 
—

 
—

 
195

Net gain (loss) on disposal of assets and other income
6

 
23

 
3

 
(11
)
 
21

Less:
 
 
 
 
 
 
 
 
 
Production expenses
379

 
161

 
545

 
—

 
1,085

Marketing costs
785

 
133

 
9

 
—

 
927

Exploration expenses
511

 
71

 
—

 
—

 
582

Depreciation, depletion and amortization
968

 
168

 
100

 
21

 
1,257

Impairments
23

 
—

 
—

 
15

 
38

Other expenses (a)
200

 
64

 
10

 
216

(c) 
490

Taxes other than income
162

 
—

 
11

 
2

 
175

Net interest and other
—

 
—

 
—

 
140

 
140

Income tax provision (benefit)
99

 
1,035

 
20

 
(141
)
 
1,013

Segment income/Income from continuing operations
$
162

 
$
443

 
$
58

 
$
(264
)
 
$
399

Capital expenditures (b)
$
1,874

 
$
194

 
$
143

 
$
40

 
$
2,251

(a) 
Includes other operating expenses and general and administrative expenses.
(b) 
Includes accruals.
(c) 
Includes pension settlement loss of $17 million.

7.    Defined Benefit Postretirement Plans
The following summarizes the components of net periodic benefit cost:
 
Three Months Ended June 30,
  
Pension Benefits
 
Other Benefits
(In millions)
2014
 
2013
 
2014
 
2013
Service cost
$
11

 
$
13

 
$
1

 
$
1

Interest cost
15

 
16

 
3

 
3

Expected return on plan assets
(14
)
 
(16
)
 
—

 
—

Amortization:
 

 
 

 
 

 
 

– prior service cost (credit)
2

 
1

 
(1
)
 
(1
)
– actuarial loss
10

 
16

 
—

 
—

Net settlement loss(a)
8

 
17

 
—

 
—

Net periodic benefit cost
$
32

 
$
47

 
$
3

 
$
3



11

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


 
Six Months Ended June 30,
  
Pension Benefits
 
Other Benefits
(In millions)
2014
 
2013
 
2014
 
2013
Service cost
$
23

 
$
26

 
$
2

 
$
2

Interest cost
31

 
31

 
6

 
6

Expected return on plan assets
(32
)
 
(33
)
 
—

 
—

Amortization:
 

 
 

 
 

 
 

– prior service cost (credit)
3

 
3

 
(2
)
 
(3
)
– actuarial loss
16

 
29

 
—

 
—

Net settlement loss(a)
71

 
17

 
—

 
—

Net periodic benefit cost
$
112

 
$
73

 
$
6

 
$
5

(a)  
Settlements are recognized as they occur, once it is probable that lump sum payments from a plan for a given year will exceed the plan's total service and interest cost for that year.
During the first and second quarters of 2014 and the second quarter of 2013, we recorded the effects of partial settlements of our United States ("U.S.") pension plans and we remeasured the plans’ assets and liabilities as of the applicable balance sheet dates. As a result, we recognized pretax decreases of $68 million and $32 million in actuarial losses in other comprehensive income for the second quarter and first six months of 2014 and a pretax decrease of $139 million in actuarial losses in other comprehensive income for the second quarter and first six months of 2013.
During the first six months of 2014, we made contributions of $37 million to our funded pension plans.  We expect to make additional contributions up to an estimated $52 million to our funded pension plans over the remainder of 2014.  Current benefit payments related to unfunded pension and other postretirement benefit plans were $47 million and $8 million during the first six months of 2014.
8.   Income Taxes
The effective income tax rate is influenced by a variety of factors including the geographic and functional sources of income and the relative magnitude of these sources of income. The provision for income taxes is allocated on a discrete, stand-alone basis to pretax segment income and to individual items not allocated to segments. The difference between the total provision and the sum of the amounts allocated to segments is reported in the “Not Allocated to Segments” column of the tables in Note 6.
Our effective income tax rates on continuing operations for the first six months of 2014 and 2013 were 32 percent and 72 percent.  The decrease in the effective tax rate on continuing operations in the first six months of 2014 is primarily due to a decrease in pretax income from Libya operations, where the tax rate is in excess of 90 percent. In Libya, we have had no oil liftings since July 2013 due to third-party labor strikes at the Es Sider oil terminal.
The tax provision (benefit) applicable to Libyan ordinary income (loss) was recorded as a discrete item in the first six months of 2014 and 2013.  Excluding Libya, the effective tax rates on continuing operations would be 34 percent and 39 percent for the first six months of 2014 and 2013. In Libya, there remains uncertainty around future production and sales levels. Reliable estimates of 2014 and 2013 Libyan annual ordinary income from our operations could not be made and the range of possible scenarios in the worldwide annual effective tax rate calculation demonstrates significant variability.  As such, for the first six months of 2014 and 2013, estimated annual effective tax rates were calculated excluding Libya and applied to consolidated ordinary income excluding Libya.
We have reviewed our foreign operations, including the disposition of Norway, and concluded that our foreign operations do not have the same level of immediate capital needs as previously expected.  Therefore, we no longer intend for previously unremitted foreign earnings of $746 million associated with our United Kingdom ("U.K.") operations to be permanently reinvested outside the U.S.  Foreign tax credits associated with these earnings would be sufficient to offset any incremental U.S. tax liabilities.  The remaining undistributed income of certain consolidated foreign subsidiaries for which no U.S. deferred income tax provision has been recorded because we intend to permanently reinvest such income in our foreign operations amounted to $862 million at June 30, 2014.  If such income was not permanently reinvested, income tax expense of approximately $302 million would be recorded, not including potential utilization of foreign tax credits.

12

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


9.   Inventories
 Inventories are carried at the lower of cost or market value.
 
June 30,
 
December 31,
(In millions)
2014
 
2013
Liquid hydrocarbons, natural gas and bitumen
$
100

 
$
55

Supplies and other items
304

 
309

Inventories, at cost
$
404

 
$
364

10.  Property, Plant and Equipment
 
June 30,
 
December 31,
(In millions)
2014
 
2013
North America E&P
$
15,595

 
$
14,973

International E&P (a)
2,617

 
3,590

Oil Sands Mining
9,494

 
9,447

Corporate
118

 
135

Net property, plant and equipment
$
27,824


$
28,145

(a) 
International E&P decrease is due to Norway assets reflected as held for sale in the June 30, 2014 consolidated balance sheet.
Beginning in the third quarter of 2013, our Libya operations have been impacted by on-going third-party labor strikes at the Es Sider oil terminal. In early July 2014, Libya's National Oil Corporation rescinded force majeure associated with these third-party labor strikes. However, liftings have yet to resume and there remains uncertainty around future production and sales levels. As of June 30, 2014, our net property, plant and equipment investment in Libya is approximately $772 million. We and our partners in the Waha concessions continue to assess the situation and the condition of our assets in Libya. Our periodic assessment of the carrying value of our net property, plant and equipment in Libya specifically considers the net investment in the assets, the duration of our concessions and the reserves anticipated to be recoverable in future periods.
Exploratory well costs capitalized greater than one year after completion of drilling were $102 million as of June 30, 2014 (including $44 million related to Norway project costs which are reflected in noncurrent assets held for sale) and $281 million as of December 31, 2013 (including $70 million related to Norway project costs). This $179 million net decrease was the result of a $153 million reduction due to the sale of our interests in Angola Blocks 31 and 32 and a decrease of $26 million due to the commencement of drilling at the Boyla development offshore Norway.
11. Asset Retirement Obligations
The following summarizes the changes in asset retirement obligations during the first six months of 2014:
(In millions)
 
Beginning balance
$
2,096

Incurred, including acquisitions
31

Settled, including dispositions
(96
)
Accretion expense (included in depreciation, depletion and amortization)
66

Revisions to previous estimates
41

Held for sale
(309
)
Ending balance(a)
$
1,829

(a) Includes asset retirement obligations of $25 million classified as a short-term at June 30, 2014.

13

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


12.  Fair Value Measurements
 Fair Values - Recurring
The following tables present assets and liabilities accounted for at fair value on a recurring basis as of June 30, 2014 and December 31, 2013 by fair value hierarchy level.
 
June 30, 2014
(In millions)
Level 1
 
Level 2
 
Level 3
 
Total
Derivative instruments, assets
 
 
 
 
 
 
 
     Interest rate
$
—

 
$
11

 
$
—

 
$
11

Derivative instruments, assets
$
—

 
$
11

 
$
—

 
$
11

Derivative instruments, liabilities
 
 
 
 
 
 
 
     Foreign currency
$
—

 
$
12

 
$
—

 
$
12

Derivative instruments, liabilities
$
—

 
$
12

 
$
—

 
$
12

 
December 31, 2013
(In millions)
Level 1
 
Level 2
 
Level 3
 
Total
Derivative instruments, assets
 
 
 
 
 
 
 
Interest rate
$
—

 
$
8

 
$
—

 
$
8

Foreign currency
—

 
2

 
—

 
2

Derivative instruments, assets
$
—

 
$
10

 
$
—

 
$
10

Derivative instruments, liabilities
 
 
 
 
 
 
 
     Foreign currency
$
—

 
$
4

 
$
—

 
$
4

Derivative instruments, liabilities
$
—

 
$
4

 
$
—

 
$
4

Interest rate swaps are measured at fair value with a market approach using actionable broker quotes which are Level 2 inputs.  Foreign currency forwards are measured at fair value with a market approach using third-party pricing services, such as Bloomberg L.P., which have been corroborated with data from active markets for similar assets or liabilities, and are Level 2 inputs.
Fair Values - Nonrecurring
The following table shows the values of assets, by major category, measured at fair value on a nonrecurring basis in periods subsequent to their initial recognition.
 
Three Months Ended June 30,
 
2014
 
2013
(In millions)
Fair Value
 
Impairment
 
Fair Value
 
Impairment
Long-lived assets held for use
$
—

 
$
4

 
$
—

 
$
—

 
Six Months Ended June 30,
 
2014
 
2013
(In millions)
Fair Value
 
Impairment
 
Fair Value
 
Impairment
Long-lived assets held for use
$
—

 
$
21

 
$
—

 
$
38

All long-lived assets held for use that were impaired in the first six months of 2014 and 2013 were held by our North America E&P segment. The fair values of each discussed below were measured using an income approach based upon internal estimates of future production levels, prices and discount rate, all of which are Level 3 inputs.  Inputs to the fair value measurement included reserve and production estimates made by our reservoir engineers, estimated commodity prices adjusted for quality and location differentials, and forecasted operating expenses for the remaining estimated life of the reservoir.

14

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


The Ozona development in the Gulf of Mexico ceased producing in the first quarter of 2013 and a $21 million impairment was recorded. In the first and second quarters of 2014, we recorded additional impairments of $17 million and $4 million as a result of estimated abandonment cost revisions.
In the first quarter of 2013, as a result of our decision to wind down operations in the Powder River Basin due to poor economics, an impairment of $15 million was recorded.
Other impairments of long-lived assets held for use by our North America E&P segment in the first six months of 2013 were a result of reduced drilling expectations, reductions of estimated reserves or declining natural gas prices.
Fair Values – Financial Instruments
Our current assets and liabilities include financial instruments, the most significant of which are receivables, commercial paper and payables. We believe the carrying values of our receivables, commercial paper and payables approximate fair value. Our fair value assessment incorporates a variety of considerations, including (1) the short-term duration of the instruments, (2) our investment-grade credit rating, and (3) our historical incurrence of and expected future insignificance of bad debt expense, which includes an evaluation of counterparty credit risk.
The following table summarizes financial instruments, excluding receivables, commercial paper, payables and derivative financial instruments, and their reported fair value by individual balance sheet line item at June 30, 2014 and December 31, 2013.
 
June 30, 2014
 
December 31, 2013
 
Fair
 
Carrying
 
Fair
 
Carrying
(In millions)
Value
 
Amount
 
Value
 
Amount
Financial assets
 
 
 
 
 
 
 
Other noncurrent assets
$
166

 
$
159

 
$
154

 
$
147

Total financial assets  
166

 
159

 
154

 
147

Financial liabilities
 

 
 

 
 

 
 

     Other current liabilities
13

 
13

 
13

 
13

     Long-term debt, including current portion(a)
7,133

 
6,394

 
6,922

 
6,427

Deferred credits and other liabilities
93

 
147

 
149

 
147

Total financial liabilities  
$
7,239

 
$
6,554

 
$
7,084

 
$
6,587

(a)      Excludes capital leases.
Fair values of our financial assets included in other noncurrent assets and of our financial liabilities included in other current liabilities and deferred credits and other liabilities are measured using an income approach and most inputs are internally generated, which results in a Level 3 classification. Estimated future cash flows are discounted using a rate deemed appropriate to obtain the fair value.
Most of our long-term debt instruments are publicly-traded. A market approach, based upon quotes from major financial institutions, which are Level 2 inputs, is used to measure the fair value of such debt. The fair value of our debt that is not publicly-traded is measured using an income approach. The future debt service payments are discounted using the rate at which we currently expect to borrow. All inputs to this calculation are Level 3.
13. Derivatives
For further information regarding the fair value measurement of derivative instruments, see Note 12. All of our interest rate derivatives are subject to enforceable master netting arrangements or similar agreements under which we may report net amounts. Netting is assessed by counterparty, and as of June 30, 2014 and December 31, 2013, there were no offsetting amounts. Positions by contract were all either assets or liabilities. The following tables present the gross fair values of derivative instruments, excluding cash collateral, and the reported net amounts along with where they appear on the consolidated balance sheets as of June 30, 2014 and December 31, 2013.

15

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


 
June 30, 2014
 
 
(In millions)
Asset
 
Liability
 
Net Asset
 
Balance Sheet Location
Fair Value Hedges
 
 
 
 
 
 
 
     Interest rate
$
11

 
$
—

 
$
11

 
Other noncurrent assets
Total Designated Hedges
$
11

 
$
—

 
$
11

 
 
 
June 30, 2014
 
 
(In millions)
Asset
 
Liability
 
Net Liability
 
Balance Sheet Location
Fair Value Hedges
 
 
 
 
 
 
 
     Foreign currency
$
—

 
$
12

 
$
12

 
Current liabilities held for sale
Total Designated Hedges
$
—

 
$
12

 
$
12

 
 
 
December 31, 2013
 
 
(In millions)
Asset
 
Liability
 
Net Asset
 
Balance Sheet Location
Fair Value Hedges
 
 
 
 
 
 
 
     Interest rate
$
8

 
$
—

 
$
8

 
Other noncurrent assets
     Foreign currency
2

 
—

 
2

 
Other current assets
Total Designated Hedges
$
10

 
$
—

 
$
10

 
 
 
 
 
 
 
 
 
 
 
December 31, 2013
 
 
(In millions)
Asset
 
Liability
 
Net Liability
 
Balance Sheet Location
Fair Value Hedges
 
 
 
 
 
 
 
     Foreign currency
$
—

 
$
4

 
$
4

 
Other current liabilities
Total Designated Hedges
$
—

 
$
4

 
$
4

 
 
Derivatives Designated as Fair Value Hedges
The following table presents by maturity date, information about our interest rate swap agreements as of June 30, 2014 and December 31, 2013, including the weighted average, London Interbank Offer Rate (“LIBOR”)-based, floating rate.
 
Aggregate Notional
June 30, 2014
 
December 31, 2013
 
Amount
Weighted Average, LIBOR-Based,
Maturity Dates
(in millions)
Floating Rate
October 1, 2017
$
600

4.64
%
 
4.65
%
March 15, 2018
$
300

4.48
%
 
4.50
%
As of June 30, 2014 and December 31, 2013, our foreign currency forwards had an aggregate notional amount of 2,870 million and 2,387 million Norwegian Kroner at weighted average forward rates of 6.003 and 6.060. These forwards hedge our current Norwegian tax liability and those outstanding at June 30, 2014 have settlement dates through October 2014.

16

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


The pretax effect of derivative instruments designated as hedges of fair value in our consolidated statements of income are summarized in the table below. There is no ineffectiveness related to the fair value hedges.
 
 
Gain (Loss)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In millions)
Income Statement Location
2014
 
2013
 
2014
 
2013
Derivative
 
 
 
 
 
 
 
 
Interest rate
Net interest and other
$
4

 
$
(12
)
 
$
3

 
$
(15
)
Foreign currency
Discontinued operations
$
(14
)
 
$
(21
)
 
$
(11
)
 
$
(46
)
Hedged Item
 
 

 
 

 
 

 
 

Long-term debt
Net interest and other
$
(4
)
 
$
12

 
$
(3
)
 
$
15

Accrued taxes
Discontinued operations
$
14

 
$
21

 
$
11

 
$
46

 Derivatives not Designated as Hedges
The impact of all commodity derivative instruments not designated as hedges appears in sales and other operating revenues in our consolidated statements of income and were net gains of $67 million and $13 million in the second quarter and first six months of 2013.
14.    Incentive Based Compensation
 Stock option and restricted stock awards
  The following table presents a summary of stock option and restricted stock award activity for the first six months of 2014: 
 
Stock Options
 
Restricted Stock
 
Number of
Shares
 
Weighted
Average
Exercise Price
 
Awards
 
Weighted
Average Grant
Date Fair Value
Outstanding at December 31, 2013
18,104,887

 

$27.27

 
4,031,888

 

$31.80

Granted
1,935,423

(a) 

$34.48

 
1,887,487

 

$34.84

Options Exercised/Stock Vested
(3,800,690
)
 

$20.15

 
(694,785
)
 

$33.10

Canceled
(440,429
)
 

$34.14

 
(319,737
)
 

$31.65

Outstanding at June 30, 2014
15,799,191

 

$29.68

 
4,904,853

 

$32.79

(a)    The weighted average grant date fair value of stock option awards granted was $10.50 per share.
Stock-based performance unit awards
 During the first six months of 2014, we granted 221,491 stock-based performance units to certain officers. The grant date fair value per unit was $34.28.
15.    Debt
As of June 30, 2014, we had no borrowings against our revolving credit facility, as described below, or under our U.S. commercial paper program that is backed by the revolving credit facility.
In May 2014, we amended our $2.5 billion unsecured revolving credit facility (the "Credit Facility"), including an extension of the maturity to May 2019. Terms of this amended Credit Facility include the ability to request two one-year extensions and an option to increase the commitment amount by up to an additional $1.0 billion, subject to the consent of any increasing lenders, and sub-facilities for swing-line loans and letters of credit up to an aggregate amount of $100 million and $500 million.  Fees on the unused commitment of each lender range from 8 basis points to 22.5 basis points depending on our credit ratings. Borrowings under the Credit Facility bear interest, at our option, at either (a) an adjusted LIBOR rate plus a margin ranging from 87.5 basis points to 150 basis points depending on our credit ratings or (b) the Base Rate plus a margin ranging from 0 basis points to 50 basis points depending on our credit ratings.  Base Rate is defined as a per annum rate equal to the greatest of (a) the prime rate, (b) the federal funds rate plus one-half of one percent or (c) LIBOR for a one-month interest period plus 1 percent.

17

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


The agreement contains a covenant that requires our ratio of total debt to total capitalization not to exceed 65 percent as of the last day of each fiscal quarter.  If an event of default occurs, the lenders holding more than half of the commitments may terminate the commitments under the Credit Facility and require the immediate repayment of all outstanding borrowings and the cash collateralization of all outstanding letters of credit under the Credit Facility.
16.  Reclassifications Out of Accumulated Other Comprehensive Loss
The following table presents a summary of amounts reclassified from accumulated other comprehensive loss to net income in their entirety:
 
Three Months Ended June 30,
Six Months Ended June 30,
 
 
(In millions)
2014
2013
2014
2013
 
Income Statement Line
Accumulated Other Comprehensive Loss Components
 
 
 
 
Income (Expense)
 
 
Postretirement and postemployment plans
 
 
 
 
 
Amortization of actuarial loss
$
(10
)
$
(16
)
$
(16
)
(29
)
 
General and administrative
Net settlement loss
(8
)
(17
)
(71
)
(17
)
 
General and administrative
 
(18
)
(33
)