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NEW YORK, Aug 1 (Reuters) Oil producer and refiner Marathon Oil Corp. on Tuesday said second-quarter profit more than doubled on strong oil prices and sharply higher refining margins.

Houston-based Marathon is the latest oil company to report blockbuster profits as the industry enjoys yet another quarter of soaring crude prices and higher refining margins.

The results easily topped Wall Street estimates, and Marathon shares touched an all-time high.

Marathon's net income jumped to $1.75 billion, or $4.80 a share, from $673 million, or $1.92 a share, a year earlier.

Excluding a gain on the sale of its Russian operations and a loss on British gas contracts, profit was $4.16 a share.

Analysts, on average, had expected $3.49 a share, according to Reuters Estimates.

A strong performance at both the company's refining and production units helped Marathon surpass Wall Street estimates, Credit Suisse analyst Mark Flannery said in a note.

''Both main segments contributed to the earnings surprise, with particular strength in international exploration and production (helped by an overlifting) and in refining and marketing (mid-west refining margins),'' Flannery wrote.

Refining and wholesale marketing gross margin almost doubled from a year earlier, and its refineries processed much more crude oil in the quarter, partly due to the expansion of its Detroit refinery.

Revenues increased to $18.29 billion from $16.02 billion.

PRODUCTION GROWS Marathon reported oil and gas sales volumes during the quarter averaged 392,000 barrels of oil equivalent per day, while production available for sale averaged 353,000 barrels.

It forecast average daily production available for sale of 350,000 to 370,000 barrels of oil equivalent this year.

Looking ahead even further, Marathon forecast 2007 production rising to between 405,000 and 450,000 barrels of oil equivalent per day, and 2008 output of between 440,000 and 490,000 barrels a day, driven by projects in Norway, the U.S. Gulf of Mexico and Equatorial Guinea.

Marathon expects to drill seven to eight additional exploration wells this year, bringing the total for the year to 15 to 16.

The company also said the estimated cost of expanding its Garyville, Louisiana, refinery has risen to $3 billion from the previously expected $2.2 billion, citing additional tanks and processing unit capacities as well as higher labor and raw material costs.

Marathon expects to decide in the fourth quarter on whether to pursue the project, and if approved, plans to begin construction by mid-2007.

Like others in the industry, Marathon has accelerated its stock buyback plan and expects to repurchase $1.5 billion of stock by the end of the year, with the rest of the $2 billion authorized program to be completed in 2007.

Shares were up 16 cents to $90.80 on the New York Stock Exchange in late afternoon trade. They hit an all-time high of $93.28 earlier in the day.

REUTERS VJ BST0115