Marathon Oil's newly announced CEO will bring international experience to enhance the company's global operations, analysts said Thursday.
Long-time leader Clarence Cazalot is stepping down as president and CEO on August 1, after 14 years at Marathon, the company announced Thursday. He will remain as executive chairman through December 31.
Stepping in as president and CEO will be Lee Tillman from ExxonMobil, an engineer who is expected to use his expertise in international exploration and production to enhance the company's overseas footprint.
"Marathon has been slowly shifting into a more domestic shale story but this hire confirms that the company will remain an international operator with large energy infrastructure projects and it is not going to morph into a shale pure play," said Raymond James analyst Pavel Molchanov.
"This shows that the international project skill set remains an important one for the company," said Molchanov.
Tillman has most recently been vice president of engineering at ExxonMobil Development Co. In his 24 years with the company, he garnered operations management experience spanning the globe from Jakarta to Stavanger and Equatorial Guinea.
Marathon's global exploration and production operations are primarily centered in Africa with some legacy holdings in Norway and the UK. It is currently drilling wells in Gabon, East Africa and Kurdistan, where Tillman's expertise will add value to assessing the results, analysts said.
"Rest assured Tillman has a tremendous background with the biggest company in the world," said Oppenheimer analyst Fadel Gheit.
"He is an engineer who is used to working on a big scale. Marathon has a lot of foreign and international exposure and they will be very comfortable with him," said Gheit.
The Eagle Ford is Marathon Oil's growth area now, said Gheit, but future growth could be outside the US and Tillman is well-placed to do that.
"He will definitely emphasize their international operations. And he is not going to be shy or bashful in putting in money or investments," Gheit said. Though he added that the financial principles that ExxonMobil embraces -- a strong balance sheet with a budget and cost-efficiency focus -- are very similar to those at Marathon.
Marathon is one of the bigger players in the North Dakota Bakken shale play as well as the Texas Eagle Ford shale. It has been moving away from some unconventional plays, such as its effort to sell its 20% stake in Canada's Athabasca Oil Sands Project. The company later said it failed to reach an agreement with a potential purchaser for the AOSP stake and that there were no further negotiations taking place.
This is part of its stated goal of selling between $1.5 billion and $3 billion of assets between 2011 and 2013.
The board plans to nominate Dennis Reilley, currently Marathon's lead director, as non-executive chairman once Cazalot leaves.
An analyst who did not wish to be identified said that the use of a non-executive chairman is gaining popularity in the US because it strengthens corporate governance, adding it is not at all unusual in Europe.
